Emperia Group posted positive results in the first half of 2015 despite continuing adverse macroeconomic conditions. All operating segments generated satisfactory positive results so far in 2015, in line with growth plans.
Group revenue in the first half of 2015 was PLN 982 431 000, close to the level seen in the same period last year. However, the Group’s earnings improved substantially. EBITDA in H1 2015 was PLN 55 223 000, versus PLN 44 995 000 in the first half of the comparative period, denoting 22.73% growth. The Group’s net profit improved in line with EBITDA, from PLN 17 355 000 in H1 2014 to PLN 29 072 000 in H1 2015, meaning growth of 67.51%. The Group’s markedly higher net profit in 2015 largely results from much stronger performance in the retail segment and the execution of a property disposal transaction.
In H1 2015, the Group continued its buy-back programme, spending PLN 34.1 million. A dividend of PLN 16.5 million was paid out on 19 June 2015.
The first half of 2015 was marred by unfavourable market conditions: deflation in food prices continuing from last year (food and non-alcoholic beverage prices fell 2.1% in the second quarter and 2.9% in the first half of 2015, according to GUS) as well as strong price competition in the retail segment. As a result, the retail segment generated sales revenue comparable to the same period last year. The segment’s EBITDA improved, however, reaching PLN 23 009 000 in the first half of 2015, compared to PLN 21 251 000 in H1 2014, which means 8.27% growth. The results were positively impacted by higher sales margins, a disciplined approach to costs and further improvement in in-house logistics.
The company is continuing its strategy of both organic growth and M&A. On 2 April 2015, an agreement was signed with FRAC, pursuant to which Stokrotka acquired 19 locations in southern Poland. This agreement makes it possible to substantially speed up expansion. The process of incorporating these stores into the chain will be completed by the end of September this year.
The first half of 2015 was very positive in terms of new store openings: a total of 16 stores were launched (4 supermarkets, 8 markets and 4 franchise stores). As of the end of this period, the Stokrotka chain had a total of 264 retail stores. An even greater increase in store openings is slated for this year’s second half. Since the end of Q2 2015, another 25 new stores have already been launched. The current growth rate is unprecedented in the history of the Stokrotka chain. The company plans to stick to this and expects new store openings in 2015 to reach close to 100.
Given this pace of organic growth, the company is similarly developing its in-house logistics network. On 20 June 2015, Stokrotka signed an agreement with MLP Group concerning a lease of close to 6000 sqm of space in the MLP Lublin logistics park. The launch of a local distribution centre in Lublin is scheduled to take place in January 2016. This solution will have a positive impact on logistics costs and the quality of logistics processes.
In the analysed period, the property segment generated stable revenue and earnings. In the second quarter of 2015, revenue from sales grew by 8.00%, and cumulatively in H1 2015 by 2.73%, from the same period last year. The segment’s net result for the first half of 2015 was PLN 19 836 000, up 68.36% from the comparative period. This improvement is largely due to the sale of two properties, which contributed PLN 7.8 million. First-half EBITDA was PLN 28 774 000, up 39.85% from the same period last year. The property segment is currently developing two new facilities, which are expected to launch in December 2015.
Emperia Group’s IT business, Infinite, is consistently strengthening its market position by expanding its portfolio of IT services and solutions. In the first half of 2015, this segment’s revenue from sale advanced 3.86% from the comparative period, reaching PLN 18 929 000. The share of external customers in overall sales revenue is also consistently growing, from 62.5% in H1 2014 to 71.8% in H1 2015. Infinite focuses its efforts on developing new products and solutions and is therefore investing in expanding its research and development capabilities and searching for highly qualified staff. The company is closely monitoring the market for any possible acquisition targets, preferably small and medium businesses with portfolios that are complimentary to Infinite’s products.