Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to Sonae's first quarter 2019 results. We will have a ques during the presentation, we will have a question and answer session, at which time, if you wish to ask a question, you will need to press star and one on your telephone and wait for your name to be announced. I must advise you this webcast is being recorded today, Thursday the 16th of May 2019. I'd now like to hand the webcast over to our presenter, Sir João Dolores. Please go ahead.
Hello, good afternoon everyone. First of all, apologies for this delay, but there seems to be a technical problem. Thank you all for attending Sonae Q1 2019 results conference call. Together with me today, we have the following CFOs of our businesses: Rui Almeida from Sonae MC, Paulo Simões from Worten, Miguel Moreira from Sonae Fashion, Carlos Silva from Sonae Investment Management, and also our investor relations team. As always, and before the results are reviewed, I would like to make a couple of remarks. First of all, as you know, from this quarter onwards, our reporting structure includes the new Sonae MC segment, which is comprised of the historical Sonae MC segment, MaxMat, and Sonae RP's operational assets. Also, the former Sonae Sports and Fashion segment was split into Sonae Fashion and ISRG, given the different nature and independent management teams of both businesses.
Additionally, this will be the first full year of line-by-line consolidation of Sonae Sierra's accounts. We will have Sonae Sierra's first quarter statutory accounts consolidated into Sonae's accounts for the first time. In addition, and as you already know, 2019 also marked the adoption of the IFRS 16 accounting standard. All in all, and for comparable reasons, historical figures were restated to include all of the above-mentioned changes, with the exception of Sonae Sierra consolidation, as we only acquired the additional 20% in September last year. Given these initial notes, I will now make an overview of our results for Q1, starting with the highlights from the individual businesses and then finally covering Sonae's consolidated figures.
Starting with Sonae MC, Sonae MC had a good start of the year, outperforming once again the market with top-line growth of 7.4%, with a like-for-like growth of 1.1%, despite the negative seasonal effect of Easter, and thus reached a total revenue figure of EUR 1.048 billion. During this quarter, Sonae MC continued expanding its store network with 14 new company-operated stores, including three Continente Mobile stores and Proximity Four Max. In addition, Sonae MC completed the acquisition of a 60% stake in Ernau in Spain, reinforcing its position in the health and wellness segment, one of its main strategic development pillars. In terms of profitability, underlying EBITDA grew by 8.1% year-on-year to EUR 81 million, implying a stable margin of 7.7%. You can see more detailed information which was published by Sonae MC and is available on our website.
At Worten, the first few months of the year at the business were impacted by the effects of a later Easter and also atypical weather conditions, both having a significant impact on total market growth in the quarter. Worten also had a challenging comparable like-for-like growth, so that 9% last year. All these effects played a role in the year-on-year decrease in sales of 2%. This top-line performance, coupled with both the store expansion in the last 12 months and also continued efforts towards digital transformation, led to an underlying EBITDA of EUR 8.1 million, EUR 1.8 million below last year. Still in Portugal, Worten further reinforced its market share, and the online channel continues to record strong growth. Moving on to Sonae Fashion, after a challenging year of 2018, the first few months of 2019 showed a resilient performance, with Sonae Fashion growing above market references.
Despite the calendar effects of a later Easter, like-for-like growth stood at 4.4%, and total turnover increased 1% year-on-year, reaching EUR 98 million at the end of Q1. This was mainly fueled by a strong omnichannel performance that compensated lower wholesale and franchising sales. In terms of profitability, the adverse calendar effect had a slightly negative impact on underlying EBITDA, having decreased 1.9% to EUR 8.2 million in the quarter. As in all retail businesses, the first half results will provide a better picture of the performance of the business. Regarding ISRG, our partnership in the sports retail sector, the last quarter of the company's fiscal year produced a very positive performance, with sales growing 12% year-on-year and EBITDA improving 2.9 percentage points to 10.3% at the end of Q4.
For Sonae, these results are accounted for through the equity method, and in our P&L, we had a EUR 4.6 million positive impact when compared to Q1 2018. In our financial services division, we continue to have a positive evolution. Turnover increased by 17% year-on-year to EUR 8.1 million in Q1, and underlying EBITDA almost doubled to EUR 2 million, which equates to a margin of 25%. The Universal Credit Card continues to have an important role in the payments market in Portugal, with the number of cards subscribed reaching 775,000 at the end of March, an increase of 138,000 cards year-on-year. This also means a reinforced market share in terms of the payments market that grew 1.3 percentage points over the last 12 months and reached 12.8% in March this year.
Sonae Investment Management, during Q1, Sonae Investment Management reinforced its participation in some portfolio companies, sold 100% of Safety to a management buyout, and invested in TV4, a company based in Israel that provides a patented artificial intelligence software solution for brick-and-mortar retailers. Regarding its operational performance, Sonae Investment Management's turnover, fueled by the integration of Nextel and Exelium recent acquisitions, increased by more than 40% year-on-year to EUR 44 million, and even on a comparable basis, turnover increased by 19% with positive contributions across most companies. Underlying EBITDA decreased EUR 1.4 million, or EUR 0.4 million on a comparable basis, to basically a flat level of EBITDA in the first quarter. Total EBITDA actually increased EUR 4 million to EUR 4.9 million, underpinned by the capital gain generated by the sale of Safety, which also has an impact on Sonae's consolidated results.
Regarding Sonae Sierra, the company once again showed a solid performance, with proportional EBIT increasing 8.6% year-on-year to EUR 29 million, and direct results reaching EUR 20 million, a 16% year-on-year increase. This was fueled by both the European portfolio's performance and also by an improved performance in the services division. At the end of March, NEV stood at EUR 1.48 billion, a slight growth of 1.6% compared to the value registered at the end of the year. During the first three months of 2019, Sonae Sierra continued the execution of its capital recycling strategy with the sale of Luke 5 in Germany and opened its first shopping center in Colombia, Cucuta, which is an important milestone for the company's international development activity. Beyond that, it continues the development of several projects in Spain, Morocco, and Portugal.
Also, on the services front, Sonae Sierra continued to accelerate its activity and acquired a 50% stake in Balmain, a Polish multi-service provider for retail and leisure assets. Regarding NOS, as you know, NOS already published its Q1 results. Just a couple of quick highlights here. Consolidated revenues reached EUR 385 million, 0.6% year-on-year growth, driven by more robust growth in the telco business. EBITDA increased more than total revenues, about 2% year-on-year, which reflects solid cost discipline and also operating leverage. Net results increased more than 20% from EUR 35 million last year to EUR 43 million this year, and the company's transformation program is on track, and that is reflected also in terms of profitability. Q1 has seen good free cash flow momentum, thus reinforcing the company's solid capital structure.
Finally, looking at our consolidated figures, I would say that despite the observable calendar impact in Q1, which particularly affects our retail businesses, total turnover posted a 9% year-on-year growth, surpassing EUR 1.4 billion in the quarter. Underlying EBITDA reached EUR 105 million, an increase of 16% year-on-year, and this was mainly fueled by Sonae MC and also the full consolidation of Sonae Sierra. EBITDA reached EUR 136 million, a EUR 34 million increase when compared to Q1 2018, and this was underpinned by the growth in underlying EBITDA and also by equity method results of EUR 26.5 million, with a particularly positive note for Sonae Sierra and also ISRG. Also, non-recurrent items of EUR 4.6 million, which are mostly related to the capital gain from the sale of Safety by Sonae Investment Management.
This good performance at the EBITDA level drove direct results to EUR 32.8 million, EUR 24 million above 2018, and therefore net income group share increased 6.5% to EUR 18.3 million. Regarding our capital structure and on a like-for-like basis, Sonae Net Debt decreased by EUR 99 million year-on-year to EUR 1.167 billion. Total Net Debt stood at EUR 1.7 billion, driven by the acquisitions of the 20% stake in Sonae Sierra and also the 60% stake in Ernau. Both the cost of debt and our average maturity are quite comparable levels, and since the beginning of the year, we have already refinanced EUR 230 million in long-term facilities, being currently financed for the next 18 months. Overall, I would say that we are quite pleased with this solid set of results and also quite confident for the rest of the year.
I will now end this brief overview of our Q1 results and invite you to ask your questions. You can please open the session to Q&A. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone keypad and wait to be advised your line is open. Please state your first and last name before you ask your question. If you wish to cancel your request, please press star and two. Once again, star and one to ask a question. Thank you. We will now take our first question. Please go ahead. Your line is open. Felipe Rosa your line is open.
Hi, good afternoon, everyone. Three questions for me, if I may.
The first one, probably on non-food retail, I was curious because you said that you managed to take share on Worten, and I was looking at the data for the electronics market in Portugal, and I believe it grew in the first quarter. I would like to understand if your sales in Iberia have dropped. Probably that would imply that the performance in Spain was very negative and in Portugal was positive. Just trying to understand between Portugal and Spain, whether there has been a very different performance and why. Okay, I know that the comparable was tough, but we have not seen in the market such a big effect from Easter.
Okay, still related with that, if you could give us the evolution of sales up to April, because I think that we did not have a negative quarter for Worten in terms of sales growth for a long time. That would be my first question. Also, on fashion, I was seeing that clothing sales in Iberia, they did not grow much, but they also grew more than the clothing sales of Sonae. It seems like you continue to lag in that industry, and I would perhaps compare with the performance you have of the adjacent formats from Sonae MC, which have a high single-digit like-for-like despite this Easter effect. I would like to understand both for Worten and for fashion, why the top-line performance has been so weak, taking into account the overall backdrop that we have seen in Iberia, which has been quite supportive. Okay?
The second question relates to Sonae MC. Whether you could update us on what has been the performance up to April, for us to have a better idea of what could be the impact from Easter. With the information you have as of today, whether you could elaborate a little bit on the competitive backdrop and what is the outlook for the full year in terms of like-for-like, because you are doing very well if you adjust for Easter. Just trying to understand whether you think that you could have a like-for-like, I don't know, higher or something similar to what you had in Q1, but adjusting for the calendar effect. In terms of margins, whether you think that the trend in Q1 could be replicated for the full year because the overall like-for-like should be better than in Q1. Okay?
Finally, my third question relates to net debt. Net debt in Q1 has been above my forecast. Just trying to understand for the full year, probably it's better to put it this way. What do you think it would be a reasonable evolution for the net debt, taking into account that, of course, for the full year, the impact of the acquisition of Sierra will no longer be there? I think that in terms of the acquisition of Ernau, this would be the big change versus 2018. If you could guide us for your expected evolution for net debt for the full year. Thank you very much.
Okay, thank you, Philippe, for your questions.
I will first hand it over to Paulo to answer the question on Worten, then to Miguel to address the question on fashion, then to Rui for the one on MC, and then finally, I will take the next one up. Thank you.
Good afternoon, all. Thank you, Philippe, for your question. Regarding the market behavior in Iberia, what we have seen from the data that we have, and maybe we do not have exactly the same source, the market overall has been more or less flat in Iberia. Clearly not showing the same kind of performance that it was showing last year. Regarding our general performance, we already gave you the main effects. The calendar effect of Easter did impact Worten. We also felt unfavorable weather conditions that negatively impacted sales of cold season products like drying clothes, machines, and heaters, for example.
In addition to that, there was some aggressive promotional activity from some of our competitors in Spain, which we decided not to follow. In fact, we lowered our promotional activity overall in the first quarter versus last year in Iberia and improved our commercial margin in percentage points. It was a decision taken. It is a fact that we have gained market share in Portugal and, in addition to that, also in some regions in Spain like the Canary Islands. The most recent performance on turnover has been more encouraging, so we are not really concerned going forward. I think I've gone through your questions regarding Worten. Thank you. Thank you. Thank you. Goodbye, Philippe.
Regarding Sonae Fashion, we know that we only grew about 1% our turnover, but we have to look into the sales to understand exactly the movement that we made because the performance that we have in our conditional operations was very positive, as Ron said, and we reached more than 4% growth in this first quarter. That compares positively to the market, to the referentials that we have from the market, both in Portugal and in Spain, where we saw rates below this grow in both markets according to the information that we have. That is why we said that we have been improving our market share. On the other hand, we have some delays in our achievements and in our performances of franchising and wholesale that we are recovering in the months after the first quarter.
We really believe that we are gaining market share in our operations.
Thank you. Now it's my turn. Hi, Philippe. Thank you for your time. This is Rui Almeida speaking. The impact of seasonal effect in our first quarter in terms of sales has been more than two percentage points. Excluding this effect, one can say that all formats are presenting positive like-for-likes and growing in terms of volume. Larger stores were being more impacted by the Easter effect, but regaining momentum in April. They are now presenting very good figures year-to-date.
Okay. Now it's my turn to take the net debt question.
Regarding the net debt evolution, and as you know, we do not provide guidance for the future, but what I can tell you is that on a comparable basis, we, as I said before, decreased our net debt level by approximately EUR 100 million year-on-year, which is, in essence, the level at which we have been decreasing our debt level in the last few years. We remain confident that we will continue the sliding path going into the future, both due to operating cash flow generation and also due to further potential asset disposal evolutions in our several sub-folders.
Okay. Thank you very much. Can I just follow up just to try to understand in terms of competitive backdrop for the food business? Sorry because I have asked just to whether there has been any change, and then we will be done. Thank you. Sorry, could you repeat the question, please?
On the competitive backdrop in the food business, okay, whether you've seen any changes because it seems like the economy is quite supportive and. No, no, no. We see we are facing the same situation that we were facing in the last year. The competitiveness of this market has been basically the same. In fact, for instance, in terms of promotional activity, promotional activity increased slightly by almost 1 percentage point, and we are basically seeing the same situation in the first quarter of this year. The current situation was pretty much similar to the situation we faced in the last quarter of 2018. It's pretty much the same. Okay. Okay. Thank you very much. Thank you, Philippe. Thank you. We will now take our next question. Please go ahead. Your line is open. José Rito, your line is open. Please go ahead. Yes, hi. Good afternoon.
I have some follow-up questions on Philippe, main points. Firstly, on the debt evolution, João Dolores just mentioned that we have declined on a comparable basis by EUR 90 million in Q1, and the company is not seeing any change that should lead to any different evolution going forward. The fact is that the seasonality in food and holding in Q1 was a little bit stronger than usual. I think this was related to the Easter. My first question is if, up until April, this seasonality because of the Easter has smoothed. That will be my first question. Second, also on this net debt evolution, it shows that the EUR 90 million is a reference, but before you had no consolidation contribution from Sierra. Now we are consolidating Sierra, and Sierra also increased EUR 100 million net debt versus the year-end.
Should these EUR 90 million be a reference going forward now that Sierra is included, or could eventually Sierra lead to some additional seasonality going forward? On foods, final question also on the margin side. It was slightly up in Q1. Was this due to lower promotions due to the fact that we had no Easter in the quarter? How do you see this evolving? Also, if Ernau is equitative on margins. I know that this is a small operation, but just to understand if this is equitative for the busine
On the debt question, as you said, it is normal for this coming year to have some seasonality in terms of working capital management. That is the case also this year.
This year, we had slightly higher impact in terms of seasonality, also because of a lower level of sales at Worten, which also played a role. We expect this to normalize in the future. Sonae Sierra also had an impact. Obviously, it was the first time in the first quarter in which we consolidated Sonae Sierra's net debt. Here, we have also some typical behavior of debt at this coming year, driven by the distribution of dividends to the partners we have at the fund or asset level. This year, in particular, also due to the efforts done in a number of our development projects, namely expansions of our current shopping centers. I think those are the main drivers explaining the deviations that you mentioned. Now I'll hand it over to Rui. Hi, Rui. This is Rui. Thank you for your questions.
Yes, Ernau is equitative in terms of our margins. Again, as you said, you are totally right. The first quarter of this year is a little bit not typical, as we were suffering in terms of sales, suffering in terms of we were not having the same calendar effect that we had last year in terms of sales. That impact, obviously, the margins. Again, margins are being kept at the level that we were having in last year and evolving accordingly with sales. Okay, thank you. Just to follow up on the net debt for us, basically to forecast this evolution in Sierra, it was slightly more than EUR 100 million in full year 2018, the net debt that the company reported. How do you see this evolving going forward? It increased in Q1.
Should we assume that it will maintain roughly stable when compared with 2018? Or what should be our expectation for this business going forward? Yes. No, go ahead. Go ahead. In terms of margins, what you are saying is that, for instance, in Q2, because you'll have the Easter, eventually the margin evolution in year-end could even be slightly higher than it was in Q1 because I remember that last year it increased slightly in Q1, and that was not the case in Q2. Theoretically, eventually, the companies will be a little bit easier for the food for Sonae MC in Q2, just to clarify this. Okay, great.
It's a bit hard to give you guidance on the net debt for Sonae Sierra, given the moment that Sonae Sierra is living in terms of its strategy execution, namely given the number of acquisitions that the company has done, also a number of development projects that are underway, and also the capital recycling strategy that is being implemented by the business. There is a number of factors that will probably significantly influence Sonae Sierra's net debt going forward. What I can tell you is that on a like-for-like basis, yes, there is some seasonality at Sonae Sierra as well, and we would expect this seasonality to play a role, particularly in the first quarter. Regarding margins in the second quarter, as I have relegated to Philippe, the market is being a little bit more aggressive in terms of promotional activity.
Yes, first of all, we need to consider that, we are in May. It's too soon to give you some guidance just for the second quarter, but we are very confident to maintain margins and continue to grow because we are focused in continuing to grow our market share in our sales and keeping the margins at the same level that we were having last year. Okay, understood. Thank you. Thank you, José. Thank you. Once again, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. There are no further questions coming through on the line, sir. Okay. Thank you very much, everyone, and looking forward to talking to you again for the Q2 results. Thank you. That just concludes.