Welcome to Dia Group full year 2024 results presentation. The management of Dia Group will run you through the presentation, which will be followed by a Q&A session. If you wish to ask a question, please use the red question button that you can see on the webcast screen. Martín Tolcachir, Global CEO of Dia Group, and Guillaume Gras, CFO of Dia Group, will be presenting this conference. I now give the floor to Mr. Martín Tolcachir.
Good morning. Welcome to Dia Group full year 2024 results presentation. I am Martín Tolcachir, Global CEO, and I am joined by our Chief Financial Officer, Guillaume Gras. Thank you for joining us today. We will start the presentation by reviewing our strategic evolution, and then we will go over the operational and financial performance of the company in 2024. To conclude, we will discuss our outlook for the current year. After this, we will open a Q&A session to address any questions that may arise. Please feel free to submit your questions using the red button available on the webcast screen so we can address them at the end of the session. The 2024 fiscal year has been of great value for Dia Group. The achievements made have strengthened our market position and laid the foundation for a promising future.
This year marked the conclusion of the turnaround of our business, ending an intense period of transformation and simplification that has resulted in two high-performing platforms with strong growth potential: operations in Spain and Argentina. This transformation has allowed us to be more focused, agile, and efficient, optimizing our resources. As a result, Dia is better prepared to respond to market needs, placing the customer at the center of our decisions. Additionally, we decided to refinance our syndicated debt a year before maturity. We successfully achieved this, entering 2025 with a solid capital structure, financial ecosystem confidence, and the resources necessary to advance our roadmap. In terms of business performance, Spain has achieved excellent results, while the business in Argentina has demonstrated its ability to navigate a complex macroeconomic environment. Please allow me to highlight three key points.
Dia Spain continues to grow, achieving like-for-like sales above the market, driven by an increase in volume and customers both in-store and online, improving customer satisfaction. This allowed us to gain market share in the second half of the year. Dia Argentina closed a challenging year by gaining market share on a like-for-like basis and increasing the number of customers. This is because Argentinians recognize us as an ally in managing their budgets. Millions of households trust us, as reflected in the continued improvement of our customer satisfaction scores. At the group level, we achieved significant progress in financial results and debt reduction, obtaining a net profit of EUR 28 million and generating positive cash flow. The results we present today underscore the preference our customers have for Dia's proximity value proposition.
The professionalism and commitment of our team and franchisees have allowed us to exceed expectations on multiple fronts while maintaining our focus on customers. Dia has closed a crucial chapter in its 45-year history in 2024. Today, it is a company with a clear focus and a simpler structure, positioned to face new future challenges and achieve our growth objectives.
Thank you, Martín. Good morning to all participants in this results presentation. I am Guillaume Gras, CFO of Dia Group. In 2024, we successfully completed the sales of our businesses in Portugal, Clarel, and Brazil, allowing us to obtain funds for our debt leveraging strategy. These divestments were part of our plan to concentrate our efforts on key markets: Spain and Argentina. Dia Group holds a leadership position in proximity retail in these geographies and has greater growth potential.
The funds obtained provide us with increased financial flexibility to invest in our business and to strengthen our market position. Additionally, as Martín mentioned, we have closed a new refinancing agreement one year before the maturity of the syndicated debts. The new financing extends the debt maturity until 2029, providing us with a solid structure to execute our growth plan with confidence in the coming years. The new financing, secured with top-tier national and international financial institutions, increases liquidity by EUR 92 million compared to the previous position and ensures greater flexibility in its terms. This debt results in a low leverage ratio with a ratio of 0.8 times Adjusted EBITDA by the end of 2024.
Thank you, Guillaume. Now, let's delve into the business performance in Spain and Argentina. In Spain, Dia concludes its transformation phase with a network of over 2,300 modern and attractive proximity stores.
66% of the store network is managed by franchisees, local entrepreneurs who trust the strength of the Dia brand and with whom we share our passion for customer service. The franchisee is a key player in our business model, allowing us to reach every neighborhood, reinforcing our commitment to food accessibility and offering a value proposition and personalized experience that contribute to customer loyalty. Gross sales under the Dia banner have achieved a third consecutive year of growth, driven in 2024 by strong volume performance. Throughout the year, the positive trend has continued, and sustained growth reflects the effectiveness of our commercial strategy and our team's ability to consistently enhance the customer experience. The increase in the number of customers and sales volume is the best indicator of our business health. It enables us to improve efficiency and profitability.
Sales growth has been driven by a sustained increase in the number of tickets, which rose by 7.1% in 2024, thanks to higher visit frequency, strengthening our ability to increase customer loyalty and the acquisition of new customers. Offering an assortment that balances high-quality Dia products with the most recognized national and international brands allows us to meet the tastes and needs of all households, providing freedom of choices in proximity at affordable prices. Captivating our customers has been the guiding principle behind the transformation of our value proposition. We have renovated our stores to offer an easy and attractive shopping experience, enhancing the quality of Dia products and prioritizing fresh, locally sourced food.
Additionally, we have developed a new online offering to ensure a smooth and simple omnichannel experience, allowing customers to shop whenever and wherever they want, with all the benefits of Club Dia, always with a commitment to improving our service every day. Thanks to this great effort, we have continued to improve our customer satisfaction score, our NPS. This record-breaking figure is 10 points higher than the level achieved in 2022 and confirms the success of Dia's focus on proximity and delivering an exceptional, easy, and fast shopping experience with the best value for money. Our efforts to develop an omnichannel offering are delivering results. Dia Spain's online business has surpassed EUR 227 million in 2024, increasing the share of online sales to 4.4% of total revenue. This channel is an undeniable growth driver for Dia.
Thanks to the development of the new Dia app and website, dia.es, our customers enjoy a fast and convenient omnichannel experience. Additionally, this level of digitalization allows for more direct engagement with customers and the opportunity to develop personalized offers that enhance their shopping experience. We now continue with the analysis of the business in Argentina. In 2024, Dia Argentina successfully gained market share on a like-for-like basis, outperforming the competition despite a significant decline in consumption. Once again, Dia has demonstrated its ability to navigate challenging conditions with resilience and adapt to changing circumstances to remain close to households when they need it the most. The number of tickets has been affected by the decline in consumption in the country.
However, as a testament to the trust Argentinians have in Dia, the share of private label products in the shopping basket increased throughout the year to 32.5%, an improvement of 3.2 percentage points compared to 2023. Dia has historically been a key ally in household savings, and we put all our efforts into offering affordable prices that fit families' budgets. As you can see, in a challenging year, this customer-focused approach has resulted in increased satisfaction, reaching a record high, 73 points in the NPS index. We take great pride in the trust our customers place in us, and this further strengthens our commitment. Regarding the online business, significant progress has been made, both in the number of customers and in its share of total sales, supported by the improvements implemented over the past year.
Thank you, Martín.
We will now continue with the analysis of financial results and debt evolution. Starting with Spain, we can observe a remarkable consolidation of results. Despite the reduction in store perimeter, as part of our simplification strategy and focus on proximity, we have achieved significant gross sales growth and maintained three consecutive years of positive comparable sales, closing 2024 with a like-for-like of +5.6%, which, as mentioned earlier, is above the market in Spain. Adjusted EBITDA improved by EUR 72 million compared to 2023, reaching EUR 266 million and achieving a profitability of over 6%, representing an improvement of 1.4 percentage points compared to 2023. Compared to 2022 results, we have more than doubled adjusted EBITDA. This result is largely due to sales growth, our commitment to the franchise model, and improvements in the operational efficiency of our stores and logistic network.
As shown in the graph, the growth trend is clear and consistent. We are confident that this trend will continue in the future, thanks to the strength of our business model. Continuing with the analysis of Spain, I would like to highlight the excellent results achieved in net income and cash generation. Net income in Spain has experienced positive growth, reaching EUR 58 million. The historical series shown in the graph has been adjusted to remove the extraordinary impact from 2023, and we can observe the sustained improvement in the business in Spain. The consolidation of the return to positive profitability in Spain is an important milestone for Dia Group. It demonstrates that our transformation strategy is paying off and that we are on the right path to creating sustainable value for our shareholders.
This improvement in results has also led to significant cash generation in the business, further boosted by the reduction in CapEx after several years of strong investment in the transformation of the network. This strong cash-generating capacity will be important to finance our future strategic plan. As we mentioned earlier, the business in Argentina has been impacted by the general decline in consumption in the country. Despite this macroeconomic context, the business has been able to defend its position, gaining market share in comparable surface area and maintaining operational profitability with an Adjusted EBITDA margin of 1.6%, contributing EUR 26 million to the group. This has been possible thanks to our focus on proximity and a value proposition committed to saving for Argentine families, where we have continued to strive to be a reference for quality and affordable prices.
Additionally, we have implemented a series of cost containment and efficiency measures that have allowed us to reduce the impact of the volume decline on Adjusted EBITDA. Regarding the net income in Argentina, it has decreased to EUR -31 million, mainly due to the drop in volume and the hyperinflationary effect on costs, especially observed in the first half of the year. In addition to the previously mentioned measures on efficiency and cost reduction, special attention has also been given to the cash situation. Throughout the year, a series of measures for controlling spending and investment, as well as optimizing working capital, have been implemented, allowing us to close the year with positive cash generation of EUR 45 million. This demonstrates the business's ability to be self-sufficient, where even in a context of a pronounced decline in consumption, they have been able to increase their available cash.
The continued group formed by Argentina and Spain, excluding Clarel, and the large format stores sold during 2023 continues to grow and reaches EUR 6,901 million. This represents a growth of almost EUR 160 million compared to 2023. The group has been impacted by the exit of the Clarel, Portugal, and Brazil businesses, which represent a reduction in the total business figure. However, as we will see later, this results in an improvement in the profitability and cash-generating capacity of the group. The Adjusted EBITDA of the continued group reaches EUR 292 million, with a growth of EUR 39 million, driven by Spain, which compensates for the decline in Argentina. This allows the group to absorb the lower profitability, enabling the continued group to achieve a margin of 5.0%, similar to that of 2023, with Spain gaining 1.4 percentage points over the previous year.
The discontinued businesses have still had a negative effect on the group in 2024 due to the impact from Brazil, which had a negative result of EUR 49 million during the first half of the year. With the sale of the Brazil business, this negative impact is avoided in the future. The net income of the continued group has decreased by EUR 60 million compared to 2023 due to the extraordinary effects in Spain during 2023, including approximately EUR 43 million from tax effects and the negative net income from Argentina. Despite this drop, the continued group still reports a total profit of EUR 28 million, consolidating the profitability of the continued business. Additionally, the consolidated group's results have been impacted by the sale of Brazil, with a non-recurring negative effect of EUR 107 million. Going forward, the exit from Brazil will result in a significant improvement for the group's results.
At the cash level, the results of the continued group highlight the health and growth potential of the business, both in Spain, where cash generation exceeded EUR 150 million, and in Argentina, where, despite a decline in consumption, the business has achieved positive cash generation of EUR 45 million. The group continues to undergo significant deleveraging, having closed 2024 with a leverage ratio of 0.8 times Adjusted EBITDA. This represents a reduction of more than half of the leverage ratio compared to 2023 and is below one times Adjusted EBITDA. Net debt, thanks to the strong cash generation from the Spain, Argentina, and Argentina businesses, closed at EUR 241 million, EUR 181 million lower than at the end of the previous year. Meanwhile, gross debt has been reduced by EUR 16 million compared to the end of the previous year.
This situation, achieved after the refinancing agreement, places us in an excellent financial position to carry out our future strategic plan.
Thank you, Guillaume. Dia's purpose is to be close every day to offer the highest quality within everyone's reach. This is the guiding beacon of our strategy and the driving force that moves us individually and collectively to ensure that our decisions contribute to creating value for our customers, our team, our franchisees, suppliers, shareholders, and investors, and for all the communities we are part of. During 2024, significant progress was made within the 2024-2025 sustainability strategic plan, Cada Día Cuenta, that is, Every Day Counts, and its four strategic pillars, developing the proximity economy, promoting a diverse and inclusive culture, caring for the natural environment, and driving a more sustainable value chain.
At Dia, we are committed to integrating sustainability into our business strategy to generate long-term value for our shareholders, employees, customers, and the communities in which we operate, as well as ensuring regulatory compliance. Moreover, we are already working on the 2026-2029 sustainability plan, which will build on the achievements to date and strengthen our ambition to be a sustainability leader. In summary, the results of 2024 confirm the success of our strategy and the fulfillment of a roadmap that has turned Dia Group into a robust and profitable company, with the agility and vision required by such a dynamic sector as food distribution. We have started 2025 in a solid position and with the determination to accelerate growth and improve business performance. Our ambition is to be the customer's favorite food store, both in every neighborhood and online.
Therefore, our priorities for this year will be the following: First, to continue organic growth in Spain by expanding comparable surface area. Second, to begin the expansion plan for the store network in Spain. Third, we want to continue attracting and captivating new customers through our unique value proposition in proximity. We will enhance the visibility of improvements made to keep growing our customer base and achieve loyalty through an extraordinary shopping experience. Fourth, we will continue supporting Argentine customers while protecting the business profitability and cash flow. Fifth, we will consolidate the improvement of financial results. Sixth, we will increase the visibility and improve the perception of Dia's stock, something we are already working on with the goal of having Dia's stock price accurately reflect the company's strong results.
Seventh, we will begin to evaluate strategic alternatives, both organic and inorganic, that can support Dia's development and long-term value creation. The financial communication plan aims to strengthen our relationship with the market by increasing visibility and interaction with investors and analysts. Within this framework, on March 20, 2025, we will organize Capital Markets Day 2025, an event where we will share the group's strategic plan for the coming years. We look forward to meeting you all there. We are very grateful and proud of the progress we are presenting today. This has been possible thanks to a committed, resilient, and talented team with an undeniable passion for the customer. They work hard to ensure that Dia creates value for all our business partners.
I want to reiterate my gratitude to all of them for their support and trust during these years of transformation: our team and franchisees, our supplier network, our shareholders and investors, and of course, our customers. Proud of what we have achieved, we now look forward. We are committed to taking Dia to the next level, generating value for our customers and the communities we are part of. Thank you for joining us today. That's all on our side. After a short video, we will proceed to opening the Q&A session to address any questions you may have.
Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please use the red question button that you can see on the webcast screen. The like-for-like sales has increased in Spain in the last term. What explains this behavior?
In addition to this, what do you expect for the like-for-like in 2025, and which are the growth levers?
Right. The positive evolution of the like-for-like continues throughout the year. Yes, of course, with an acceleration in the last part of the year. That is also a result of temporary conditions, but fundamentally to the impact, that the positive impact of all the measures that we are developing to improve customer experience at stores, which are consistent with our value proposition, that is continuing to improve quality and freshness of our products, continuing to improve our assortment, and also all the work around Club Dia, which has enabled us to continue to improve the personalization and experience of the acquisitions and purchases of the customers.
The weight of the own brand in Spain is closer at 57.7%.
What's your goal for this in the future?
Now, the value proposition from Dia in Spain is providing our customers with the possibility of choosing between an own label, private label of the best quality at an affordable, very affordable price, and at the same time, having the capacity to choose national and international brands that are the most relevant ones. Now, this proposal of providing the customer with that freedom of choice is a key piece of differentiates us in this Spanish market, proximity market. Now, we don't have a specific goal of the participation of the private label. We have a balance of 50%, 50% between private labels and labels from the providers, and it is actually customers that choose, and they can do that on a daily basis freely.
The EBITDA margin in Spain reached 6.2% in 2024, but it's been 5.5% in the first term and 6.9% in the second term.
What's your best expectations for 2025, and which are the growth levers for the margin from now onwards?
Now, we closed 2024 with a margin of 6.2% in Spain compared to 4.8% in 2023 and 3.3% in 2022. Now, this remarkable improvement in EBITDA is based on the sales growth and on an improvement of several operational levers that have increased profitability. We sincerely believe that we continue to have room for improvement when it comes to our margins above the current results if we continue to implement cost efficiencies and if we continue to make sales grow.
How has Dia Argentina managed to keep or increase market share in the context of high inflation and a decline in the consumption?
Dia Argentina is a high performance, very high performance operation to us. It is a network store of more than 1,000 stores in the country with a very good concentration, particularly in the city and the province of Buenos Aires. It is a brand that is very much loved by Argentinians who feel very close to the brand, and which has also been positioned as an ally in terms of easing the purchases, accessibility, accessible prices, and very high- quality products close to home. Now, this value proposition, this affinity of Argentinian customers has allowed us so that in this context of losses for the consumer, people have approached out to Dia, and that explains the good relative performance of Dia when it comes to gains in market share.
What's the explanation of the fall in the net benefit in Spain compared to 2023?
The net benefit reported in 2023 of EUR 122 million included two extraordinary elements. One of them was EUR 40 million corresponding to the sales operation of large format operations to Al Campo, and a second element of EUR 43 million corresponding to the claim over the tax regarding the fiscal years 2016-2017. When excluding these extraordinary effects, the net result for Spain was EUR 38 million in 2023, and we've seen a growth of up to EUR 58 million in 2024. Now, this means an improvement of almost EUR 20 million.
Why the refinancing has been most costly than the previous debts?
We cannot actually compare the current cost and the cost of the previous debt because the previous debt was negotiated in a specific context of financial crisis. Second, the current refinancing, we can say that it reflects the market conditions.
We have now with us a consultant that helped us to define the better capital structure and to organize a competitive process from where this cost stemmed. Also, the macroeconomic context is different, and we know that today inflation, together with the geopolitical risk, can also explain largely this higher cost.
What is your take regarding the price of the stock of Dia, and how about the price of the stock of Dia in the future?
For the future, we are working to grow a sustainable value in the long term for our shareholders. I invite you all to participate next March 20 in an event when we will introduce our strategic plan for the next five years, 2025 to 2029.
What is the plan regarding generating profits?
The current refinancing agreement, if I am not mistaken, prevents distributing dividends to shareholders, including small shareholders.
I would appreciate knowing the plan in this regard. Actually, it's not allowed because of the refinancing distributing dividends and what is normal in this kind of refinancing in the long term, almost without amortization. It's not something definitive, but as we progress when it comes to meeting our financial obligations, we can reassess our dividends policy.
Which volume expectations and value expectations do you have for 2025 in Spain? What's the CapEx guide for 2025 in Spain and also for Argentina?
As you know, we don't provide guidance when it comes to future performances, but we can say that we have started the year positively and we have expectations to continue with a positive trend.
What do you mean with looking for strategies in the long term for Dia? Are alliances with other companies being looked for or the arrival of a new capital?
Our priority, our absolute priority and our focus today is on growing. We mainly focus on the stores we have. We have a potential to continue to grow in like-for-likes, always being consistent with the value proposition and improving frequency, customer loyalty. Also, one of our priorities and part of our plan is going back to the expansion and grow regarding the number of stores, thus increasing our network. That said, our responsibility is also to look for and to assess strategic opportunities that, on the one hand, are consistent with the proximity strategy of Dia Group, and that, on the other hand, become an opportunity to enhance the competitive position of Dia. Now, all these assessments will be carried out with the perspective of creating value for the shareholder in the long term.
Is an exit from the business in Argentina suggested?
No.
Argentina is a business that is very relevant for Dia. We have a very performing operation in a clearly delicate context. Dia has a network of almost 1,000 stores in Argentina. It is the network with the highest number of stores in the country. Our strategic location is privileged for mainly focused in Buenos Aires. As I said before, we have a well-recognized brand, a well-recognized label by Argentinians. It is a brand that is seen as loved and the first one in terms of accessibility, support, and affinity with our customers. Therefore, we have a very powerful operation based on a network of franchisees that is very well consolidated and with a professional team that is deeply committed with the customer and also with Dia.
Now, we are fully convinced that Argentina, even taking into consideration the uncertainty of the market, Argentina is to us a source of opportunities in the long term. Argentina will also be an opportunity to generate value for the shareholder in the long term.
Will we see a guidance in the Día del Inversor with estimates, financial estimates and results estimates?
We will check if the goals we have for this plan are up to 2029. We will share that.
What can you tell us regarding the fiscal or the tax credits? When will you apply them?
Tax credits result from different accrued losses in previous years. We can acknowledge some of these losses when the group goes back to a positive net result or net income.
We don't have any more questions. Thank you very much for your time today.
Please do not hesitate to contact our relationship with investors team for any additional doubt you may have. Thank you very much.