Distribuidora Internacional De Alimentacion SA (XMAD:DIA) (Q4 2024) Earnings Call Highlights: ...

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Sat, Mar 1, 2025, 12:03 AM 4 min read

Net Profit: EUR28 million.
Cash Flow: Positive cash flow generation.
Debt Refinancing: Refinanced syndicated debt, extending maturity to 2029, increasing liquidity by EUR92 million.
Leverage Ratio: 0.8 times adjusted EBITDA.
Net Debt: EUR241 million, EUR181 million lower than the previous year.
Gross Sales Growth in Spain: Like-for-like sales growth of 5.6%.
Adjusted EBITDA in Spain: EUR266 million, an improvement of EUR72 million from 2023.
Net Income in Spain: EUR58 million.
Online Sales in Spain: EUR227 million, representing 4.4% of total revenue.
Adjusted EBITDA Margin in Argentina: 1.6%, contributing EUR26 million to the group.
Net Income in Argentina: Minus EUR31 million.
Private Label Share in Argentina: Increased to 32.5%, up 3.2 percentage points from 2023.
Continued Group Revenue: EUR6,901 million, a growth of almost EUR160 million compared to 2023.
Adjusted EBITDA of Continued Group: EUR292 million, with a margin of 5.0%.

Warning! GuruFocus has detected 5 Warning Signs with XMAD:DIA.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Distribuidora Internacional De Alimentacion SA (XMAD:DIA) successfully completed the turnaround of its business, resulting in two high-performing platforms in Spain and Argentina.
The company achieved a net profit of EUR28 million and generated positive cash flow, highlighting significant progress in financial results and debt reduction.
DIA Spain's online business surpassed EUR227 million in 2024, increasing the share of online sales to 4.4% of total revenue, indicating strong growth in the digital channel.
The refinancing agreement extended debt maturity until 2029, providing a solid financial structure and increased liquidity by EUR92 million.
DIA Group's adjusted EBITDA improved significantly, with Spain achieving a profitability of over 6%, representing an improvement of 1.4 percentage points compared to 2023.

Negative Points

The business in Argentina faced challenges due to a significant decline in consumption, resulting in a decrease in net income to minus EUR31 million.
The discontinued businesses, particularly in Brazil, had a negative impact on the group's results in 2024, with a non-recurring negative effect of EUR107 million.
The refinancing agreement prevents the distribution of dividends to shareholders, including small shareholders, due to long-term financial obligations.
Despite improvements, the net income of the continued group decreased by EUR60 million compared to 2023 due to extraordinary effects in Spain during 2023.
The refinancing has been more costly than the previous debt, reflecting current market conditions and macroeconomic factors such as inflation and geopolitical risks.

Q & A Highlights

Q: The like-for-like sales have increased in Spain in the last term. What explains this behavior, and what do you expect for like-for-like sales in 2025? A: The positive evolution of like-for-like sales is due to improvements in customer experience, product quality, and assortment, as well as enhancements in the CLUB Dia program. We expect this trend to continue in 2025.

Q: The rate of the own brand in Spain is closed at 57.7%. What's your goal for this in the future? A: We aim to provide customers with a balance of private labels and national/international brands, allowing them freedom of choice. We do not have a specific target for private label participation.

Q: How has DIA Argentina managed to keep or increase market share in the context of high inflation and a decline in consumption? A: DIA Argentina's strong market presence, particularly in Buenos Aires, and its reputation for affordability and quality have helped maintain market share. The brand's affinity with customers has been crucial in this challenging environment.

Q: Why has the refinancing been more costly than the previous debt? A: The current refinancing reflects market conditions, including inflation and geopolitical risks, which differ from the context during the previous financial crisis. A consultant helped define the optimal capital structure.

Q: Is an exit from the business in Argentina suggested? A: No, Argentina remains a significant market for DIA. Despite economic challenges, the operation is strong, with a well-recognized brand and a strategic focus on Buenos Aires. We see long-term opportunities in Argentina.

Q: What's your take regarding the price of the stock of DIA, and how about the price of the stock of DIA in the future? A: We are focused on creating sustainable long-term value for shareholders. We will present our strategic plan for 2025-2029 on March 20, which will provide more insights into our future stock performance.

Q: What is the plan regarding generating profits, considering the current refinancing agreement prevents distributing dividends? A: While the refinancing agreement restricts dividend distribution, this is typical for long-term refinancing. We will reassess our dividend policy as we meet financial obligations.

Q: What are the volume and value expectations for 2025 in Spain, and what's the CapEx guide for 2025 in Spain and Argentina? A: We do not provide specific guidance but have started the year positively and expect to continue the positive trend. CapEx plans will focus on strategic growth and operational improvements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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