Good morning. We welcome you to today's first half 2025 results conference call. During the presentation hosted by Mr. João Dolores, Sonae's CFO, all the participants will be in listen-only mode. Q&A is available after the presentation. If you wish to ask a question during the Q&A session, you may do so by pressing the star key followed by one on your telephone keypad. If you are experiencing any difficulty in listening to the conference at any time, please try calling from a different device. I will now hand over the call to Mr. João Dolores. Please go ahead, sir.
Thank you. Good morning, everyone. Thank you for joining us for Sonae's results presentation for the first half of 2025. Besides myself and the Investor Relations team, we have in the call with us Cristina Novais from Bright Pixel, Fernando Van Zeller from MC, Paulo Simões from Worten, and Miguel Moreira from Sierra. I'll start with a brief reminder of our most recent portfolio changes. As you know, we made an important investment in the pet care space last year by acquiring a controlling stake in Musti, and then by making a first international expansion move into the Baltics with the acquisition of Pet City. We also established a strategic partnership with Druni, thereby creating the leading health, wellness, and beauty player in Iberia. More recently, in May this year, we reached an agreement to sell MO and Zippy, two of our fashion retail banners.
Last week, we announced the closing of this transaction. These operations reflect our active portfolio management and disciplined capital allocation approach. We are now focused on helping our new companies grow, building on our know-how and on our capabilities. Just to give you a few examples, we are currently helping Musti on several fronts, namely by leveraging our scale in areas such as IT and product sourcing, but also by providing support in store operating models, streamlining of logistics, and M&A. Musti's expansion into the Baltics through the acquisition of Pet City is a clear opportunity to add value to this operation, namely by exploring synergies in product development, sourcing, and IT between the two companies. With the partnership with Druni, our health, wellness, and beauty companies are already benefiting from enhanced efficiencies and improved value propositions across all banners.
Let's now move on to our results, business by business, starting with MC. In grocery, Continente once again outperformed the market, reinforcing its position as the leading grocery retailer in Portugal. Like-for-like sales grew 10.5% in Q2, supported by strong volumes performance, which also benefited from the timing of Easter this year. If we look at half-year growth, like-for-like sales growth reached 7.8% and 9.5% in total, representing yet another significant increase in market share. Grocery underlying EBITDA margin improved by 60 basis points year on year to 10.4%, driven by the evolution of turnover and also important efficiency gains. In health, wellness, and beauty, results were driven by the contribution of Druni Group, which has been consolidated into our accounts since the third quarter of last year, but also by organic growth and expansion. Revenues reached €415 million in the quarter, further reinforcing our banner's leadership positions across Iberia.
Underlying EBITDA margin increased by 1.4 percentage points to 12.5% in Q2, reflecting stronger profitability through the successful integration of Druni in Spain and also solid improvements in operating profitability at Wells in Portugal. Overall, if you look at consolidated results at MC, we see an increase in revenues of 27% to €2.1 billion, or 11.4% year on year on a comparable basis, excluding the contribution from Druni. MC was able to improve underlying EBITDA margin by about 90 basis points year on year to 10.8%, supported by stronger performance across both the grocery and the health, wellness, and beauty segments. Regarding financial leverage, MC kept a comfortable position with total net debt to EBITDA reaching 2.8 times at the end of June 2025.
Moving on to Worten, the company reinforced its market share in Portugal once again on the back of a strong performance of the online channel in particular. We continue to increase our market leadership position in both the offline and online channels since the beginning of the year. In Q2, total turnover grew by 10.6% to €313 million, backed by a robust like-for-like growth of 6.9% in a challenging environment with intense promotional activity. Worten delivered top-line growth across all segments with volume gains in core electronic categories, strong double-digit growth in new product categories, and continued momentum in the services division. In what regards to profitability, underlying EBITDA margin reached 2.5% in the quarter. This was a decrease in margin, which was influenced by a higher cost base associated with strategic growth initiatives, mainly impacting logistics and staff costs, as well as persistent inflationary pressures.
We are now working to make sure that we mitigate these impacts on the cost base until the end of the year. As for Musti, the company released its quarterly results earlier this week. As you might have seen, during the period, Musti strengthened its leadership position in the Nordics pet care retail market on the back of a rebounding market after a period of weaker market growth. Nevertheless, the company increased its market share quite clearly. Like-for-like sales improved yet again this quarter, reaching 5.7% in total, with particularly solid display from Norway and also Finland, which is the company's original core market. Total turnover grew 17% to €122 million, supported also by the consolidation of Pet City. Despite a still challenging operating environment, underlying EBITDA rose to €12.9 million, although the margin remained under pressure due to continued investments in growth and market share and higher operational costs.
Even here in profitability, both in terms of gross margin and underlying EBITDA margin, we are seeing month-on-month improvements, which also give us confidence to what remains for the rest of the year. Moving on to Sierra, our real estate business, the company maintained a strong momentum in the second quarter of the year across its European shopping center portfolio. While services continue to follow the diversification strategy and the development activity progressed steadily throughout the quarter, Sierra's European shopping center portfolio posted solid results, as I said, with tenant sales continuing to grow, footfalls rising again, and we have nearly full occupancy levels in all of our shopping centers. In line with its long-term value creation strategy, Sierra also initiated key expansions and refurbishments across several assets aimed at unlocking additional value and improving the customer experience.
Overall, Sierra's net results rose to EUR 33 million in Q2, up by 5.7% year on year, supported by the strong operational performance and at the indirect result level by higher shopping center valuations, which contributed to an increase of NAV to just over EUR 1.1 billion. Moving on to telecom technology, NOS already reported its results to the market, as usual, maintaining a strong focus on delivering advanced solutions to customers in all segments, supported by its next-generation network footprint. Total revenues reached EUR 458 million in Q2, driven by continued growth in the core telco business, with a specific highlight to the significant growth in the corporate segments, which totaled 9%. Consolidated EBITDA also increased to EUR 203 million, with all business areas contributing positively for this performance. Operational profitability improved.
The Norsk contribution to Sonae's equity method results was lower year on year, as the prior year benefited from one-off gains related to the sale of towers and also the activity fees from Pentacom. On a comparable basis, profitability was better than last year. On April 24, Norsk paid an ordinary dividend of EUR 0.35 per share and an extraordinary dividend of EUR 0.05 per share related to the 2024 results, which meant a EUR 77 million cash in for Sonae. Finally, Bright Pixel, with more than 50 companies in the portfolio, invested in five new companies since the beginning of the year until the end of June and continued the development of a pipeline of new ventures to expand the portfolio over the coming months. NAV reached EUR 328 million, with cash invested totaling 213, implying a potential cash-on-cash return at this stage of 1.5 times. Moving on to our consolidated view.
Overall, our consolidated turnover grew 24% year on year to EUR 2.7 billion, driven by strong organic growth across our core businesses and also the contribution from new companies to the portfolio, including Druni and Pet City. Excluding portfolio changes, consolidated turnover posted a solid 11% year on year increase. Underlying EBITDA amounted to EUR 255 million, improving by 38% versus last year. This positive performance of our fully consolidated businesses, combined with a EUR 33 million result in terms of equity method, led consolidated EBITDA to reach EUR 274 million in Q2, up by 38% year on year. Net results group share increased to EUR 59 million, an increase of 23% versus last year, driven by the improved operational performance across our portfolio companies and also favorable indirect results, mostly related to Sierra's shopping center revaluations.
Net debt before dividends paid increased €75 million in the last 12 months due to the significant acquisitions that were executed in the last year. If we look at the performance of the original portfolio, Sonae registered a total of €254 million in free cash flow as we continue to generate healthy levels of cash flow across all our main businesses. We continue to have a quite solid financial position with significant available liquidity facilities and a well-balanced debt maturity profile. The holding loan-to-value stood at 13.8% at the end of June, down from 15.9% at the end of December last year, as we progress on our deleveraging path. As a final note, I would like to highlight the evolution of our net asset value, which grew 7.3% year to date and reached EUR 4.7 billion at the end of June, which equates to EUR 2.44 per share.
This positive evolution was mostly fueled by improved valuations of MC and also received dividends, which offset the softened performance of the Norsk stock price in the period. This is all for now. Thank you. You can now open the session to Q&A.
Thank you. If you would like to ask a question on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. Please ensure your line is unmuted locally, and you will be advised when to ask your question. That was star one on your telephone keypad. We do have a question coming through from the line of José Rito calling from CaixaBank. Please go ahead.
Yes. Hi. Good morning to all. Thank you for the presentation. I have one question on the health and beauty business, just to have some clarity on the slowdown that we saw in Q2. If this was only because of the comparison base, or if you are seeing some moderation on the market growth? Related to this, I witnessed that minorities in that P&L increased substantially in Q2. Is this related with Druni? This will be my first question. The second on Worten. We are seeing a very strong top-line performance, but then both margins and EBITDA declining year on year. I think that in the past, you mentioned that this is related to the growth investments that the company is doing. Could you explain a little bit better in terms of the dynamics of the margins?
If you are seeing a dilution also from the margin mix, so mainly the fact that you are investing in iServices online or the fact that online expansion or the growth of the online channel is also diluting margins. Some visibility on this will help. Finally, on MC, if you can detail a little bit of the difference between volumes and price component in the like-for-like in Q2, and also what was the market share gains in the first half for Continente. Thank you.
Thank you, José. I'll hand your questions directly over to Fernando on the MC ones and then to Paulo on the Worten question as well. Fernando, do you want to start?
Sure. Hi, José. Good morning. Thank you for your question. Starting from health, wellness, and beauty, the like-for-like, as you rightly pointed out, the like-for-like of health, wellness, and beauty was around 2.9% in Q2 2025. I would like to highlight that if you pro forma for Druni, the like-for-like goes up to 7.2% in Q2. When you look at H1, the pro forma is also 7.6% versus 4.6% without Druni. The main reason for the slowdown of Q2 in terms of like-for-like is really the impact on RNL from the integration. We are, over the last couple of months, making significant changes to the developer position of RNL, both offline and online, and that has an impact on the like-for-like.
When you pro forma for Druni and also when you take into account the performance of Wells, we are seeing a like-for-like of about 7% to 8% year to date. There is very positive momentum in the business despite also, obviously, the changes we are making in RNL, which during the course of this year should have a negative impact on the like-for-like, which, as we do not have Druni in Q2, you can see more of the impact of RNL and from Q3 and Q4 less because we have this pro forma. That being said, it is obviously a very competitive market these days, mainly in Spain, and the market is growing about 5%. We are clearly growing market share in this market in Spain and Portugal. Going to the second question around minorities, yes, the impact is really on Druni.
As you know, we have a 50/50 partnership with the Cast family for Spain, but we fully consolidate our P&L. This is really the impact of the minorities of Druni in our P&L of MC. Going to the questions on grocery, when you look at Q2 in terms of the 10.5% of like-for-like, as you know, it has probably around two percentage points of impact of the Easter in this year of being in Q2. When you break it down in terms of volumes and price, we are talking about price inflation around 3% over the quarter, slightly above 3%, 5% of volumes, and 1% to 2% of improved mix. The mix in Q2 because of the Easter is positive, is particularly positive in these months. That is really the core of the breakdown.
In terms of market share, in the first half of the year, we improved our market share in Continente about close to 0.5 percentage points. I think that is it on my end. Thank you.
Thank you, Fernando. Paulo, do you want to take the Worten question?
Sure. Good morning, everyone. José, thank you for your question. Regarding the margin at Worten, margin percentage-wise is stable, so no impact there. Worten is having a good market and customer momentum. We are growing significantly by 7% in the quarter, 5.4% on a like-for-like basis. Very healthy growth, as you said, and we are very happy with those results. Our NPS is also increasing one percentage point in this period. Overall, margin is stable, no dilution there, and the excellent sales growth gives us growth in margin in euros. What's happening at the EBITDA level is that we have higher logistics costs as a result of higher stock level. Consequently, we had to rent additional warehouse space, people, and equipment to operate those warehouses, and that brought some inefficiency. Additionally, we are building our future logistics platform near Lisbon. That also impacted a bit our cost base.
Also, stock levels, we tested increasing customer service in store and accelerated the growth of some new business areas, like services, for example. We have been testing that with additional people in the stores. Now we are able to pinpoint those services that require more people and have positive impacts in growth and profitability, so we will adjust going forward. Additionally, we had a spike in shrinkage, especially in the first quarter. That is now back under control. We reinforced security in our stores, and things seem to be back to normal now. Those costs will not carry over in the second half of the year. Finally, we also had an impact of higher energy costs, especially in the first quarter, also resulting from a spike of energy costs in the Iberian market. Now it's back again to lower prices. Hopefully, this will not happen also in the second quarter.
Overall, in summary, we have stable growth margin, no dilution there, excellent growth in sales, especially online, very good performance in the market and with improving customer relationship. We are investing to accelerate growth, had some learnings, and we will now focus on streamlining the cost base. Hopefully, in the second half of the year, we will recover profitability again. That's it.
Okay. Understood. Thank you. I assume that these logistics investments that you are making, that you mentioned, that eventually increase the cost base in H1, will fall in the second half, but then in 2026, it will not be there, right? Just to.
Logistics, specifically, I think we will need some more time to solve it. We still have a bit of stock above the optimum level that we will be dealing with over the next semester. We will have the additional space needs still in place for a couple of months. Let's see how sales grow. If sales growth is good in the second half of the year, and we expect that to be the case, those costs will also come down. We will have to wait, but there's still some lag in solving the logistics part.
Maybe I would just add to Paulo's remarks that, I mean, I think looking at this performance from Worten, what we see is a quite positive performance in terms of growth and market share gains, and a healthy growth in the sense that, as Paulo mentioned, gross margin is relatively stable versus last year. We do have a few cost lines that we need to work on until the end of the year, which the team is addressing now. We are also optimistic on what lies ahead.
Okay, thank you.
Thank you. We currently have no further questions coming through. As a reminder, if you would like to ask a question on today's call, please press star one on your telephone keypad now.
If I can, I think we got two additional questions from Julien from Kepler on the chat, which I can address. The first one is, could you give us a more detailed explanation on the like-for-like for MC's health and wellness and beauty division, and what's your outlook for the second half of the year? I will let Fernando answer this question in a minute. The second one is, your NAV discount is now at 45% versus share price below your 15-year historical average. Which are the drivers you identified that could narrow it? I'll take this one first, and then I'll ask Fernando to answer the one on the like-for-like of health and wellness and beauty. We're very happy with the performance of Sonae's share price since the beginning of the year.
It's true that we have been able to narrow significantly the discount versus NAV, but we're still not happy. We still feel, obviously, that there's a huge potential to unlock value in the share price given the intrinsic value of our assets. The drivers that we identified that can narrow it are multifold. I would say that the main driver has to be our continued strong performance, right? It's only with continued strong results that we are able to prove to the market that we have winning value propositions with very capable management teams that are able to win in their respective markets and generate value for our shareholders. That has been happening consistently throughout the last quarters in the last few years. That's the main driver. If we keep consistently delivering results, I think that's the most important thing that we can do.
There are a number of other things that we are doing, making sure that our investor relations activity is as far-reaching as possible, that we explain Sonae's equity story and value creation story to the market, that we reach more investors. We have also been doing and investing a lot in that area in the last few months. I think also the international investments that we've done in the last 18 months have helped us reach the attention of a base of investors that was not there before. They're now looking more at Sonae and at our performance. I think it's a number of things put together. I think we're on a good track, and we are very confident that we can continue on this positive path, closing down the gap versus NAV. Fernando, do you want to take the health and wellness and beauty question?
Sure. I think the question was more or less the same as José, but just to clarify, we have a 2.9% like-for-like in health and wellness in Q2. If we pro forma it for the acquisition or the partnership with Druni, we get to 7.2% pro forma, which is more or less in line with what we have seen over the last quarters for health, wellness, and beauty. This is mainly due to the fact, as I was mentioning before, that RNL, we are making important changes to the value proposition, which is impacting the like-for-like, and we expect that to happen over the course of this year. On the second part of your question around the second half, it's obviously difficult to predict what's going to happen.
I would say that if the macro environment stays the same, we should expect, I would say, more or less the same level of like-for-like of around 7% in the health and wellness division. That being said, obviously both for grocery and health, wellness, and beauty, it's going to be key really to understand if the macro stays as robust as it is in Iberia, mainly driven by disposable income, immigration, tourism. I would say that if the macroeconomic environment stays the same, that's more or less our expectation and the continuation of the growth in market share, both in Portugal and in Spain.
Thank you, Fernando.
Thank you as well.
We do have some further questions coming through via the audio lines. The next question comes in from the line of António Seladas, calling from AS Research. Please go ahead.
Hi. Good morning. Thank you for the presentation and thank you for taking my questions. I have two. The first one on Bright Pixel is to provide some color on the environment because I noticed that you have been buying assets, but it seems difficult to sell it or at least to do the asset rotation. The second question is on Sierra. I know Sierra pays a generous dividend, $49 million, I think. Is that something that should be repeated in the coming years, or was it just a one-off payment? Thank you very much.
Thank you, António. Cristina, do you want to take the Bright Pixel one?
Yes, of course. Thank you. António and all the rest. Good morning to everyone. Giving some color about the market is very difficult, but we have mixed times nowadays. We have some parts of the world, namely U.S., with higher activity, mainly focused on AI investments with strong valuations. The rest of the world is more calm. Even Europe is very stopped. We keep continuing investing, as you said, in our rhythm. We are investing since the last 12 months more than €50 million. We are doing some exits. We did it in the last quarter of last year. We did more exits this year, and we are working on a couple of them. This depends not only from our side. Our main focus is to keep our strategy in our first segment, of course, coupled with a good level of recycling capital.
We hope that in the next quarter we have some exits and continue investing in the portfolio.
Okay.
I don't know.
Miguel, do you want to take the Sierra one?
Yes, I go for the question. Thank you, António. Regarding dividends, what we can say is that they are 50/50% between the more recurrent component and the other not so recurrent. We have a stable policy regarding dividends with our shareholder. That policy is supported by the distribution of dividends related with our current activity and non-activity, but also the dividends that result from the adjustments from the portfolio and the sale of assets and all that. These results are composed by these two components and 50% division between them.
It means that around between $20 million and $25 million is the [crosstalk].
Yes. . Correct.
Okay. Thank you. Just on Worten, a follow-up question on Worten, taking margins and so on, you mentioned that it should improve. Nevertheless, if you look for it, it seems the margins have been under pressure, not just this quarter, last quarter, but over the last year. It seems that there's a downward trending on margins. I don't know. It seems that it's not just a specific reason of logistics or whatever. It seems that it's the market environment that is very tough. I don't know if you could provide more color on this or some more insights.
Maybe I can start because I gave that answer, and then I'll let Paulo complement. What we're seeing is in terms of commercial margin versus last year, it's true that it's always been under pressure, and this is a challenging sector. If you take a comparison with last year, it's fairly stable if you take into consideration the mix of products and services that we have had in recent months. That's why I was saying that we are not unhappy with the performance in terms of sales and in terms of commercial margin. Obviously, it's below that that we are seeing some additional pressure that we are working to try to solve. I will let Paulo complement my answer as well.
Yes. Thank you, António, for the question. We don't feel that this year we have especially an aggressive competitive environment in terms of price. We don't feel that on the competitive environment, and there's no impact whatsoever on commercial margin. We are happy with the margin performance in the company. As I and João already reinforced, these are operational costs. We did some tests in terms of accelerating growth. We will be correcting those excess costs going forward. We expect the company profitability to recover in the second half and going forward. We don't have that view that the competitive environment is worsening our results this year.
Okay. Commercial margin is gross margin, yes?
Exactly. That's it.
Okay. Thank you very much.
Thank you, António.
I believe we have further questions coming through from the webcast. I'll hand it back across to yourselves.
Okay. We have a couple of additional questions from Luís Culaço, from JB Capital Markets. Can you please provide us with some color on how the competitive environment in the food retail sector has been evolving over the past six months? Which players and segments are underperforming? Also, can you please provide us some color on the indirect income results that were much higher than in the most recent quarters? What drove this revaluation? I can start with this one. It is true that we had important revaluations during the quarter, and we had revaluations in both senses. Most were on the positive side. The most important ones come from Sierra, revaluation of assets, real estate assets. That has mostly to do with the net operating income of the assets because yields have been fairly stable since the beginning of the year.
This is just a revaluation based on the positive performance of our shopping center assets. We also have some positive impacts in our Spark Food division from some revaluations of participations there. We had some headwinds in terms of the U.S. dollar euro exchange rate, which brings down, which slightly counters these positive impacts at Bright Pixel. As you know, we have several investments which are denominated in dollars. It is a combination of different things, but mostly positive effects. Fernando, do you want to take the one on the competitive environment in food retail?
Sure . Hi, Luís. Good morning. Thank you very much for your question. Around grocery retail, as I was mentioning before, the market overall is growing at a healthy pace, and this is mainly driven by macro, disposable income, again, immigration, tourism. When we look at the competitive environment, it remains quite challenging and fierce. When we look at all the initiatives of the different players around price, promotions, and new products, assortments, on one hand, we're seeing a lot of pressure on that side. On the other hand, when you look at the expansion and remodelings, we continue to see a various number of players opening new stores, remodeling their stores as well as we are doing. We feel that on the two angles, all the big players in the Portuguese market are investing in their value propositions as well as new stores and remodelings.
In terms of segments, as you asked, I would say that the segments, the growth is more or less homogeneous. That being said, we see the fresh products in the market outperforming the FMCG in total. This is mainly driven by fruits and vegetables, meat, fish. Those are the categories that are growing at a faster pace in the market as we stand. All in all, the market is growing at a healthy pace, mainly driven by macro, but remaining with a very competitive market in all its dimensions.
Thank you, Fernando. We have an additional question from Luís. If we can provide more detail on the EUR 14 million negative non-recurrent items. This is, we have several impacts here, but the two biggest ones are the capital loss that stems from the transaction, the sale of Mall and Bibi. We had announced to the market an estimated capital loss of roughly EUR 24 million. It was actually a bit below that. It was EUR 19 million. We have a positive impact from Sierra's activity that relates to portfolio management in Brazil, which is EUR 8 million positive. These are the two main impacts of that line. We have some smaller non-recurrent items, but these are the two most important impacts. We do have a couple of additional questions from Rita Velo and from Kaiser BI. What's the market share of Sonae's health, wellness, and beauty segments in the Iberian beauty sector?
Also a question for Worten. During the last quarters, we have seen a decrease in Worten's EBITDA margins. Do you expect operating profits to be positive in 2025, or do you expect profitability to remain pressured in the second half of the year? I believe we mostly covered this question. I will ask Fernando to take the one on the health, wellness, and beauty segments.
Hi, Rita. Thank you very much for the question. Quite a good one and a very complex one. As you know, in terms of our value proposition, we have a lot of different segments: health, beauty, optics across Iberia. We don't have a market definition overall or any kind of public information and source that gives us the combined market share, obviously. That being said, I can give you a couple of data points. In terms of health and beauty in Spain, Druni and Arenal, they are clearly the market leader in health and beauty, specialized retail, obviously, excluding the grocery, let's say, size of this market. When we look at health and beauty in Portugal, Wells is already also the leader in this sector. When we go to optics, obviously, Wells, it's still growing its business.
It's not the market leader, but it already has an interesting close to 10% market share in these segments. All in all, I would say we are the market leaders in all the different dimensions. That being said, even the definition of the different segments or markets, they are not super easy to make. It's difficult to give you an aggregated market share, but clearly the leaders in all the different segments and reinforcing the positions this year.
Thank you, Fernando. Just to comment on Rita's second question, we do expect, obviously, Worten's operating profits to be positive in 2025 and recovering in relative terms from what we saw in the first half of the year. I believe we have another question on the call.
The next question comes in from the line of José Rito, calling from Kaiser Bank. Please go ahead.
Yeah. Just a question on Musti, just to ask if you think that the bottom has been reached in Q2.
I suspect it did. Was that on Musti?
Mufti, yes.
Musti. Okay. Yes, we're very happy with the performance of Musti in Q2. We see the market rebounding in terms of total growth. As you know, the pet care retail market had a rough year in 2024 overall and globally. We are seeing now the market rebounding to coming back to growth. Musti is clearly growing ahead of the market, as I said. We are growing right now in Norway at double-digit like-for-like, in Finland at high single-digit like-for-like, and in Sweden a bit lower because we are managing a bit more for margins and for profitability. Still, in all the geographies, we are increasing our sales ahead of the market, taking share from the competition and seeing our operating profitability also improve. That's on the back not only of global sales, total sales, but also on the back of the mix.
We are seeing a rebound in all categories and particularly discretionary spending, which is especially relevant in terms of profitability. Now we are seeing positive figures in food, disposables, and also toys and accessories. That's very, very important for us to make sure that the economic equation is a sound one for the company. We also are implementing a number of efficiency measures, working collaboratively alongside the Musti team to make sure that these efficiency gains are extracted. We are quite positive in what concerns the rest of the year. We are positive that the second half of the year will follow the trend that we have been seeing in recent months of recovery, not only in terms of top line, but also in terms of profitability.
Okay. Thank you, João.
Thank you, José. We do have another question in the chat from Alexandre Dupré. Could you please comment on the outlook for MC in the second half of the year? Fernando?
Hello, Alexander. Thank you very much for the question. In terms of the second half of the year, difficult to forecast at this stage. As you know, the first half of the year was quite positive, driven both in food and health, wellness, and beauty. In terms of the top line, I would say that clearly the key driver of the potential growth over the next months is going to be the macro environment. I think that's going to be critical. In terms of margin, in the first half, we have seen the commercial margin more or less flat. We would say, given the competitive pressure we're seeing, we expect more or less the same trend over the second half. The market's quite competitive, mainly in price promotions. We are not expecting an improvement in commercial margin clearly over the course of the rest of the year.
In terms of the margin profile, mainly across the grocery sector, I would say that the evolution of the margin is really going to depend on the top line. As you can see, with the commercial margin flat, we have a very, very important and relevant cost-to-serve program to make our company more and more efficient. The fact that the top line has grown significantly in the first half of the year also helped, obviously, to dilute some of the fixed costs we have. I would say that in terms of profitability, it's really going to depend on also how the top line evolves. What we have seen also in the first month of H2, in July, is a similar trend to the first half. Let's see how it evolves over the next months.
Okay. Thank you, Fernando, for that answer. Thank you, everyone, for the questions that you posed. As you can imagine, given the performance that we saw in H1, we are quite positive about what remains of the year. We will be back in November to comment on the Q3 results. Thank you very much, and see you then.
Thank you.
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