Pepco Group (PCO) H2 2024 earnings summary

Executive summary

• Group revenue reached a record €6.2bn, up 10.2% year-over-year, driven by new store growth and strong Pepco performance, despite negative like-for-like sales.

• Underlying EBITDA rose 25.2% to €944m, with Pepco's EBITDA up 41.7% and group gross margin improving by 390bps to 43.9%.

• Announced inaugural full-year dividend of 6.2 euro cents per share, reflecting strong free cash flow and balance sheet.

• Reported net loss of €662m due to a €775m non-cash impairment of Poundland, reflecting weak performance and outlook.

• New CEO Stephan Borchert joined in 2024, focusing on profitable growth, strategic reset, and management changes.

Financial highlights

• Like-for-like revenue declined 3.2% year-over-year, offset by 392 net new store openings.

• Group gross margin improved to 43.9%, led by Pepco's 46.9% (+530bps).

• Underlying pre-tax profit increased 27% to €271m; underlying PAT up 14% to €179m; underlying EPS up 14.3% to 31.1 cents.

• Free cash flow improved by €274m to €168m, reducing net debt (pre-IFRS 16) to €256m and leverage to 0.5x.

• Capex reduced 45% to €212m, supporting improved free cash flow.

Outlook and guidance

• Expecting to open around 300 net new stores in FY25, mainly in Pepco's CEE region.

• Focus on improving like-for-like revenues, especially in Pepco, which has shown positive LFL since September 2024.

• Group gross margin improvement continues into Q1 FY25, with ongoing cost discipline.

• Further strategic details to be shared at Capital Markets Day in March 2025.