Following are highlights from PAP interview with listed retailer Dino CEO Szymon Piduch.
Q2 RESULTS & H2 PROSPECTS
We are pleased with the H1 results. We improved margins, increased sales by 31.6% y/y, our LfL sales increased by 14.7% y/y. We opened 49 new stores, we increased the land bank by 27% and now have 429. These are good parameters.
Adjusted EBITDA increased by 37.3% y/y to PLN 166.2 mln. That's EBITDA cleared of over PLN 12 mln IPO costs, of which PLN 7.5 mln were non-cash expenses related to the incentive program.
An improvement in efficiency is visible, given EBITDA growth above sales growth. I think we will be improving our efficiency every year due to the scale of our business. Revenues are growing dynamically and we have a lot of arguments for further improving our terms of trade. We are also seeing effects of scale; fixed costs are better spread out.
With the summer months ending, we've seen labor market conditions slowly improving from our point of view. We are currently seeing an influx of people willing to work, and it seems that the vacation months labor deficit will settle down until at least next summer. Summer is always the most difficult.
H2 financial results have historically been better than H1 which is connected in part to the higher number of stores opened during that period.
The gross margin has increased and we will do everything we can to maintain that level until the end of the year, or raise it a bit more.
A double-digit increase in LfL sales this year is not threatened in our view.
In August we see a full year of the effects of the [new family subsidy program] 500+. August proved to be a very successful months both for us and the sector with one of the best LfL results for the year. This creates very optimistic moods for Q3 and the whole year.
GROWTH
The growth rate for new openings is going to accelerate in H2.
We would like to open more stores this year than we opened last year when we had 123 openings.
The majority of H2 openings will take place in Q4.
In recent years, we have been increasing the number of openings by 20 stores a year on average and that is the pace we would like to maintain both this year and next year.
We maintain our strategic goal of exceeding 1,200 stores by 2020.
In H1, capex amounted to PLN 151 mln, of which PLN 130 mln was related to the openings of new stores. In H2, our spending on new stores will be higher. We are also extending our distribution centers and meat processing plants on account of the fast rising scale of operations. .
We estimate that the total capex for this year will be PLN 450-500 mln.
We have designated plots for the construction of two new distribution centers, which are planned to open in 2018. Construction will likely start at the end of this year. Total outlays for this are about PLN 120 mln.
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