CONSUMER STAPLES: Elo/Auchan; FY earnings

(ELOFR; NR/BB Neg)

Bonds up to +4.5pts richer. The separating of RE and retail financing is interesting but lacking details for now. It has reaffirmed paydown of the 25s (has ample cash to). Trends in 2H are pointing to a easing in margin pressure even in the face of still (likely) weak LFL sales trends (France LFL -5% over FY driving group LFL -3%).

• Retail revenues up +4% in the 2H (including casino and Dia acquired stores)
• Stabilisation of EBITDA in 2H (as leaks were indicating)
  • 2H Retail EBITDA -2.5% yoy on a 4.3% margin (-30bps)
  • It would have been up +€25m without acquired Casino stores that are negative on EBITDA (over FY24 -€100m). It is targeting -€50m in
  • Casino store EBITDA next year and breakeven from mid-2027.
     
• Property arm new Immo, revenues +5% and EBTIDA +1.4%
• Value of holdings at €7.2b (+1.4% LFL), rise in traffic of +4.5%, increase in rent of +5% LFL. Vacancy rate a low 4.3%
• LTV down from 39.6% to 35.2%
   
• We still see a -€100m 2H Group reported EBIT loss - it will attach some of that one one-off's including restructuring and impairment of goodwill
• FY operating cash flows €620m, net of capex FCF at -€301m (down -€233m yoy)
   
• Net financial debt (ex. leases) of €2.9b
  • that is split into near net cash position under retail (i.e. 0) with rest under the property arm
  • including leases (~€2b) it has the retail arm net 2.2x levered (against retail EBTIDA of €0.9b), and RE on LTV of 35.2%
  • Is considering separating the retail and real-estate arm (New Immo Holding) debt financing - more details to follow it says
     
• Liquidity includes €2.9b in cash and it has reiterated committed to paying down 25s without refi
• It notes Auchan retail itself has €5.9b in real-estate - that is separate to the €7.2b in the RE arm
  • Re the €5.9b it says €3.6b in France/Luxembourg, €1b in Poland/Romania and €1.4b in Spain Portugal
• Is planning €1b in RE disposals between 2025-26 to strengthen financial structure

2028 targets;

• EBTIDA >€1.6b (vs. €0.9b in '24)
• positive FCF > €0.4b (from -€0.3b in '24)
• leverage < 1.5x (net 2.2x in '24)