Eurocash FY2024 Presentation: Digital Transformation Amid Market Challenges

Introduction & Market Context

Eurocash SA (WSE:WA:EUR), Poland’s largest franchise operator in the FMCG sector, presented its full-year and fourth-quarter 2024 results on April 3, 2025. The company highlighted its market leadership position with PLN 35.7 billion in franchisor revenue, significantly outpacing its closest competitors in a challenging market environment where FMCG growth slowed to 4% in 2024.

As shown in the following market leadership comparison, Eurocash maintains a substantial lead over other major retailers in the Polish market:

The broader FMCG market in Poland reached PLN 421 billion in 2024, with discounters continuing to hold the largest market share at 47%. Independent (LON:IOG) and soft-franchise stores, Eurocash’s primary focus, face increasing competitive pressure but remain a significant segment of the market.

Executive Summary

Eurocash reported stable sales of PLN 32,241 million for FY2024, with a gross margin of 13.4% and EBITDA margin of 2.9%. However, the company’s pre-IFRS EBITDA declined significantly by 29.1% year-over-year to PLN 417 million, reflecting challenges across its business segments.

The company’s business remains heavily weighted toward wholesale operations, which account for 72% of total sales, while retail represents 25% and growth projects contribute 3%. Eurocash’s market share in its Wholesale Relevant Market (WRM) increased to 25.5% in 2024, despite the overall WRM declining by 2.7% year-over-year.

The following chart illustrates Eurocash’s performance in its wholesale relevant market:

For Q4 2024, Eurocash reported:

• Sales of PLN 7,954 million, up 0.4% year-over-year
• Gross margin of 14.3%, down 0.2 percentage points
• Stable EBITDA margin at 4.1%

Detailed Financial Analysis

Eurocash’s 2024 financial performance revealed mixed results across its business segments. The wholesale segment, which remains the company’s core business, generated PLN 23,128 million in sales and PLN 561 million in EBITDA for 2024. The retail segment contributed PLN 7,925 million in sales and PLN 104 million in EBITDA.

The company’s growth platforms, including Frisco (e-commerce) and Duży Ben (alcohol retail), showed promising sales growth of 12.1% in Q4 2024 but continued to operate at a loss with a negative EBITDA of PLN 100 million for the full year, though this represented an 8.3% improvement over the previous quarter.

The following breakdown shows EBITDA performance by segment:

Eurocash made progress in improving its financial stability, with the cash conversion cycle improving by 4 days year-over-year to 23 days in 2024. The company’s Net Debt/EBITDA ratio stood at 0.63 before IFRS16 (2.53 after IFRS16), reflecting a strengthened balance sheet position.

Cost management remains a challenge, with total costs increasing by 1.9% versus FY 2023. This was primarily driven by a 7.4% rise in third-party service expenses due to higher agency fees and marketing expenditures, while salary and social security expenses grew by just 2.2%.

Strategic Initiatives

Eurocash is pursuing several strategic initiatives to address market challenges and position itself for future growth. A key focus is the expansion of its franchise network, with soft franchise stores increasing to 13,215 in 2024. While this represents a modest net growth of 51 stores for the full year, the company saw stronger momentum in the second half with 241 net additions.

Digital transformation represents another critical strategic pillar. Eurocash is implementing integrated digital retail solutions to enable transactional data collection and deliver tailored offers to its franchise partners.

As illustrated in the following slide, the company is developing a comprehensive digital ecosystem:

The "Moje Sklepy" platform is showing promising results, with a 67.6% folder participation ratio. Stores participating in digital promotions outperformed non-participants by 2.8% in value, 3.6% in volume, and 2.8% in transactions.

Eurocash has outlined its strategic progress and future focus areas:

Forward-Looking Statements

Looking ahead, Eurocash has outlined several growth ambitions focused on sales expansion, margin improvement, additional income streams, and cost optimization. Key initiatives include:

1. Expansion of franchise chains, building on the momentum of 241 net store additions in H2 2024

2. Revenue management and increased buying group leverage with 13,000 stores

3. Development of retail media and in-store digital advertising

4. Reduction of negative contribution from growth projects

In the retail segment, Eurocash’s Delikatesy Centrum format showed a slight LFL sales decline of 0.4% in Q4 2024, nearly in line with the previous year. The company is focusing on enhancing store-level sales and profitability optimization across its retail formats.

For its growth platforms, Eurocash is strengthening customer loyalty and acquisition for Frisco to optimize new warehouse operations in Warsaw, while Duży Ben continues to focus on enhancing store-level sales and profitability.

As Eurocash navigates a challenging FMCG market environment in Poland, its strategy centers on leveraging its scale as the country’s largest franchise operator while accelerating digital transformation to maintain competitive advantage against the growing dominance of discount chains.

Full presentation:

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