CECONOMY AG Q3/9M Results 2022/23 ended 30 June 2023 | 10 August 2023 |
CECONOMY reports good Q3 performance and revises its FY outlook
Q3 financial highlights
- Sales momentum continued; sales growth +7.4%1 yoy (+6.8% on a like-for-like basis); driven by continued recovery of our B&M business and strong growth in Türkiye.
- Adjusted gross margin2 stabilized in the quarter.
- Adjusted EBIT2 up by €43 m yoy to -€60 m (Q3 2021/22: -€102 m) due to positive operating leverage as well as successful cost control. EBIT improvement in all regions, driven by good cost management.
- Decrease in net result to -€186 m due to tax income in prior year. Undiluted EPS3 decreased by -€0.14 yoy to -€0.38.
- Strong lease adj. FCF +€996 m to -€87 m (9M 2021/22: -€1.082 m) in 9M driven by a favorable development in NWC. Q3 2022/23 FCF -€331m, +€157m yoy improvement. Net debt declined by -€496 m to €1.97 bn at the end of Q3 2022/23.
- Revised FY 22/23 outlook: based exclusively on Scenario 1 with a moderate increase in sales (vs. slight previously) and a clear increase in EBIT.
Comments from Dr Karsten Wildberger, CEO of CECONOMY AG
"We have made a successful start to the second half of the financial year, even though the economic environment remains challenging. Our strategy is clear, our implementation plan is solid, and our financial targets are set. We are making vital progress in our strategic core areas and incrementally but continuously moving towards a service-oriented platform centred on the customer. Therefore, we have adjusted our guidance for a more positive outlook."
Summary of key financial data
€m | Q3 21/22 | Q3 22/23 | Change |
Reported Sales | 4,659 | 4,527 | -2.8% |
thereof indexing effect IAS 29 (hyperinflation in Turkey) | -66 | -287 | - |
Sales development adjusted for currency and portfolio change | 6.3% | 7.4% | +110bp |
effects | |||
Like-for-like sales development | 6.7% | 6.8% | +12bp |
Adjusted gross margin2 | 17.6% | 17.6% | - |
Adjusted EBITDA2 | 61 | 105 | 71.4% |
Adjusted EBITDA margin | 1.3% | 2.2% | 85bp |
EBIT | -180 | -123 | 31.9% |
Adjusted EBIT2 | -102 | -60 | 41.6% |
Adjusted EBIT margin | -2.2% | -1.2% | 99bp |
Net result | -95 | -186 | -94.3% |
EPS undiluted3(€) | -0.24 | -0.38 | -0.14 |
Reported figures from continuing operations |
1Adj. for currency and portfolio change effects, pre IAS 29.
- Excl. associates, adj. for portfolio changes (Sweden, Portugal), pre IAS 29 and excl. non-recurring effects.
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Q3/9M Results 2022/23 ended 30 June 2023 | 10 August 2023 |
3Average number of shares in 485,221,084 since 3 June 2022.
Application of IAS 29, hyperinflation accounting
Given the technical impact of IAS 29 (hyperinflation) on sales in Türkiye in Q3, we comment on business dynamics pre-IAS 29.
Reported Sales | IAS 29 | Sales | Reported Sales | IAS 29 | Sales | |
€m | 2021/22 | effect | pre IAS 29 | 2022/23 | effect | pre IAS 29 |
Q1 | 6,854 | 0 | 6,854 | 7,066 | -15 | 7,080 |
Q2 | 5,019 | 0 | 5,019 | 5,302 | 32 | 5,270 |
Q3 | 4,659 | 66 | 4,593 | 4,527 | -287 | 4,814 |
Revised outlook for FY 2022/23
Q3 2022/23 results prompt us to choose scenario 1 as our sole guidance for 2022/23 with a moderate increase for sales vs. slight increase previously, to which the Eastern Europe segment, is expected to contribute.
FY 22/23 | ||
FY 21/22 | Guidance scenario 1 | |
Fx- and portfolio-adjusted sales | Moderate increase | |
(pre IAS 29) | ||
Adjusted EBIT 2 | €208m | Clear increase |
Key assumptions | - | No deterioration of current |
macroeconomic conditions |
(inflation, customer demand, availability of goods, no overall restrictions in the retail sector); relevant market for consumer electronics shrinks moderately at most.
Adj. EBIT 2021/22 is €208 m excluding Sweden and Portugal. The outlook is adjusted for portfolio changes and does not take into account the earnings effects from companies accounted for using the equity method. It also does not include non-recurring effects from efficiency increases in connection with the simplification and digitalization of central structures and processes, from the strengthening of the retail brands in Germany, and from legal risks in connection with changes in the legal framework. Accounting effects of the application of IAS 29 in Turkey as a hyperinflationary economy are likewise unaccounted for.
Group highlights
- Group NPS improved by +2 points yoy to 55 in Q3 2022/23 leading to 53 for 9M 2022/23
- Online sales declined by -6.6 % yoy (pre IAS 29) in Q3 2022/23. Online sales (pre IAS 29) share on sustained high level and reached 20.4% of total sales (Q3 2021/22: 22.9%); pick-up ratio came in at 41% (Q3 2021/22: 38%); online business on elevated level compared to pre-COVID times.
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Q3/9M Results 2022/23 ended 30 June 2023 | 10 August 2023 |
- Services & Solutions sales increased by +5.3 % yoy (pre IAS 29), amounting to 6.5% of total sales (Q3 2021/22: 6.5%); Services & Solutions business benefited from a strong demand for warranty extensions and an increase in Retail Media.
€m (reported) | Q3 21/22 | Q3 22/23 Change pre IAS29 | |
Online sales | 1,065 | 984 | -6.6% |
Services & Solutions sales | 299 | 302 | +5.3% |
Performance by segment
Q3 2022/23
Western/Southern | |||||
€m | DACH | Europe | Eastern Europe | Others4 | Group |
Sales (pre IAS 29) | 2,542 | 1,497 | 681 | 93 | 4,814 |
Growth1 (%) | 1.6 | -1.4 | 73.9 | - | 7.4 |
Like-for-like (%) | 1.1 | -1.0 | 69.6 | - | 6.8 |
IAS 29 | -287 | -287 | |||
Sales post IAS 29 | 4,527 | ||||
Reported yoy change (%) | 2.0 | -1.6 | -25.5 | -20.1 | -2.8 |
Adj. EBIT2 | -49 | -25 | 20 | -8 | -60 |
Adj. EBIT margin3 (%) | -1.9 | -1.6 | 3.0 | -1.2 | |
Adj. EBIT yoy change | 18 | 5 | 22 | -3 | 43 |
Q3 2021/22
Western/Southern | |||||
€m | DACH | Europe | Eastern Europe | Others4 | Group |
Sales (pre IAS 29) | 2,492 | 1,522 | 463 | 116 | 4,593 |
Growth1 (%) | 5.3 | -2.8 | 63.6 | 0.4- | 6.3 |
Like-for-like (%) | 6.8 | -3.0 | 58.9 | -1.3- | 6.7 |
IAS 29 | -66 | -66 | |||
Sales post IAS 29 | 4,659 | ||||
Reported yoy change (%) | 5.3 | -2.8 | 48.3 | -3.0 | +5.7 |
Adj. EBIT2 | -67 | -30 | -2 | -11 | -109 |
Adj. EBIT margin3 (%) | -2.7 | -2.0 | -0.4 | -2.4 | |
Adj. EBIT yoy change | -18 | -1 | 2 | 0 | -16 |
1Adj. for currency and portfolio change effects, pre IAS 29.
2Excl. associates, adj. for portfolio changes (Sweden, Portugal), pre IAS 29 and excl. non-recurring effects. PY 2021/22 still including Sweden and Portugal
3Margin calculation based on reported sales pre IAS 29 and adj. EBIT.
4Segment Others includes CECONOMY AG holding, hence respective EBIT margin would not offer a reasonable comparison.
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Q3/9M Results 2022/23 ended 30 June 2023 | 10 August 2023 |
Key highlights per segment in Q3 2022/23
- DACH: Sales increase in DE, AT and decline in HU and CH; EBIT improvement in all countries except CH supported by strong cost management.
- Western & Southern Europe: Sales growth in BE and NL, down in the remaining countries. EBIT loss reduction thanks to NL and IT. Underlying trend improvement in ES.
- Eastern Europe: Triple-digit sales growth in TR; decline in PL; Strong EBIT improvement due to positive operating leverage and gross margin development.
Free Cash Flow
€m | 9M 21/22 | 9M 22/23 | Change |
EBITDA | 627 | 549 | -78 |
Change in NWC | -765 | 55 | 820 |
Tax | -126 | -86 | 40 |
Other operating cash flow | -283 | -67 | 216 |
Cash investment | -159 | -167 | -8 |
Free cash flow | -706 | 284 | 990 |
Lease repayments | -376 | -371 | 5 |
Lease adj. Free cash flow | -1.082 | -87 | 996 |
- In 9M 2022/23 lease adjusted Free Cash Flow reached -€87 m; an improvement of €996 m yoy driven by a favorable development in NWC mainly due to efficient stock reduction and receivables manageAment
- Other operating cash flow normalizing in current year, previous year impacted by cash- out of deferred payments
- Cash investments increased by €8 m yoy to €167 m due to store modernization measures
Events after reporting date
On July 14, 2023, CECONOMY AG announced that the company's Supervisory Board had extended the management board contract of Dr Karsten Wildberger ahead of schedule and appointed him as CEO for a further five years one year before the end of his current term of office. The ordinary reappointment takes effect on August 1, 2023 and runs until July 31, 2028.
The closing of the MediaMarkt Sweden business took place on August 1, 2023. Please note that it is still included in our reported figures. However, it's excluded from the guidance-relevant KPIs currency- and portfolio-adjusted sales growth, as well as adjusted EBIT.
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Q3/9M Results 2022/23 ended 30 June 2023 | 10 August 2023 |
Results call
There will be a live presentation followed by a Q&A session; the call for investors and analysts will start at 9:00 am CEST today: webcast link.
The quarterly statement will be available on the following website www.ceconomy.de/en/investor-relationsat 07:00 am CEST. A recording of the conference call will also be available on our website shortly after the end of the call.
Store network
31/03/23 | Openings | Closures | 30/06/23 | |
Germany | 399 | 1 | -2 | 398 |
Austria | 53 | 1 | 0 | 54 |
Switzerland | 25 | 0 | 0 | 25 |
Hungary | 36 | 0 | 0 | 36 |
DACH | 513 | 2 | -2 | 513 |
Belgium | 22 | 0 | 0 | 22 |
Italy | 123 | 0 | 0 | 123 |
Luxembourg | 2 | 0 | 0 | 2 |
Netherlands | 48 | 0 | 0 | 48 |
Portugal | 10 | 0 | 0 | 10 |
Spain | 108 | 1 | 0 | 109 |
Western/Southern Europe | 313 | 1 | 0 | 314 |
Poland | 81 | 0 | 0 | 81 |
Turkey | 90 | 4 | 0 | 94 |
Eastern Europe | 171 | 4 | 0 | 175 |
Sweden | 29 | 0 | 0 | 29 |
Others | 29 | 0 | 0 | 29 |
CECONOMY | 1,026 | 7 | -2 | 1,031 |
Financial calendar
Commerzbank ODDO conference | Thursday | 5 September 2023 |
Corporate governance roadshow | Tuesday | 12 September 2023 |
Baader conference | Wednesday | 20 September 2023 |
Q4/FY 2022/23 trading statement | Thursday | 26 October 2023 |
Q4/FY 2022/23 FY results | Monday | 18 December 2023 |
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CECONOMY AG published this content on 10 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2023 05:02:04 UTC.
