Sonae slips as market digests inflation-squeezed earnings

Sonae SGPS SA

17/03/2023 14:04

** Sonae  YSO.LS  shares fall 8% as the market digests the
group's Thursday morning's annual results and management
comments that show margins coming under pressure from cost
inflation, higher discounts and trading down
    ** Sonae posted FY underlying EBITDA of 635 mln euros, with
margin decreasing 41 bps y/y to 8.2%
    ** Its unit Sonae MC, which runs super- and hypermarkets,
reported quarterly net income down 16% y/y to 56 mln euros due
to margin squeeze
    ** "Because of rising food prices, consumers ... buying
products that feature significant discounts", Renta 4 analyst
Alfonso Batalla says, adding the retail sector is cheap but
unattractive for investment due to the inflationary pressures
    ** He adds the trading down among consumer is set to
continue throughout the year, keeping margins under pressure
    ** Commenting on the delayed stock reaction, Batalla says
management commented the results only in the afternoon on
Thursday, leaving the market little time to digest them
    ** "We see that the inflation rate continues to be very high
... we also see that trading-down phenomena continues to be very
impressive," Sonae MC's CFO said in a call with analysts
    ** The shares are on track for their worst day in three
years

($1 = 0.9407 euros)

 (Reporting by Matteo Allievi)
 ((Matteo.allievi@thomsonreuters.com))