Ladies and gentlemen, thank you all for standing by and welcome to Sonae's first TAP 2017 results conference call. During the introduction hosted by Mr. Luis Reis, Sonae's Chief Corporate Center Officer, all participants will be on a listen-only mode. After the introduction, there will be an opportunity to ask questions. If any participant has difficulty in hearing the conference at any time, please press the star followed by the zero on your telephone for operator assistance. I will now hand the conference over to Mr. Luis Reis. Thank you, please go ahead, sir.
Hi, hello, good afternoon to everyone, and thank you very much for attending our first half results conference call. I do hope all of you have had or still will have restful holidays. Together with me today, we have Rui Almeida, the CFO of Sonae MC; Miguel Alvares, the CFO of Worten and Sonae Sports & Fashion; Edmundo Figueiredo, CFO of Sonae Sierra; João Dolores, who is our Central Planning and Management Control, as well as all the IR team. As usual, I will do a brief introduction, and then we will all be open to Q&A. Just a note, we changed the timing of the conference call to this time because we had some demands from U.S. investors to do so. From now on, you'll probably have all our conference calls around the same time, 3:00 P.M. U.K. time, 10:00 A.M. New York time.
Three initial notes that will, in a way, translate our key messages for the first semester of 2017. The first one is that we are positive about the results. They came slightly ahead of our best expectations in the vast majority of our businesses. A second note on the fact that we are facing quite intense competition in the key business arenas where we are operating. Despite that increased competition, we've been able to keep increasing our market share in all relevant markets. We've been able to achieve some significant gains in terms of productivity that allowed us to post what we believe are quite interesting profitability results. The third note on the digital transformation of our businesses and companies, as you all know, we are accelerating that transformation, and we are seeing some quite encouraging results from that transformation.
I would like to just particularly highlight the fact that Worten posted significant growth on its e-commerce platform in Spain, more than 17% growth in Spain, more than 50% growth in Portugal, good results also for Salsa with a growth of over 40%. Even in Sonae MC, our food division in Portugal, we have more than 20% growth in e-commerce. We are seeing positive signs in all the divisions. Having given you this brief introductory note, I will just go through our Sonae consolidated results and then point one or two key messages for each business unit. First note on Sonae turnover, it grew 8% on the half, but accelerated during the second quarter to 10%. The underlying EBITDA grew more than the turnover, 9.2%.
The recurrent EBITDA, which is probably the most important indicator to follow this half, has grown 12.2%, which even further shows the gains in productivity that I've mentioned at the beginning. Sonae EBITDA is obviously slightly below last year, but that comes mostly from the fact that we did not announce any sell and lease-back transactions during the first half of this year, whilst last year we had posted a gain of [EUR 16 million] in capital gains due to those lease-back transactions. Also, an important note on equity method results. We are now already having nine companies being consolidated through the equity method, and that is probably going to grow during the next couple of quarters. The contribution from those nine companies stood at EUR 17 million in the second quarter of 2017. Also, a note on indirect results that grew considerably from EUR 11 million to EUR 33 million.
That growth comes from two contributions. Half of it comes from Sierra's asset valuation, and the other half comes from the deconsolidation of MBS. MBS is a brokerage firm that we own 50.1%, and we've deconsolidated it because we are now on a 50/50 joint venture with our former partner, the Brazilian company Suzano. As a result of all these lines, net income reached EUR 75 million, almost in line with last year, but this net income doesn't have any contributions from sell and lease-back transactions. Our capital structure remains quite solid. We still have an average maturity of our debt close to four years. The average cost of debt decreased again from 1.6% in the first half of 2016 to 1.3% in the first half of 2017. Net debt increased marginally to EUR 1.419 billion, but the average debt considered for the last couple of months continued to decrease.
It decreased slightly by EUR 11 million. We keep debt at this stage at a very controlled level. Our financial leverage ratio even improved from 42.3 to 41.1. We have improved our gearing during this half. Some notes to each one of our businesses, starting with food. Food is a key business for Sonae. Very, very interesting first half in our food business. Turnover increasing 5.1 percentage points, 7% in the second quarter of 2017. That is very relevant if you take into consideration the fact that this is the seventh quarter in a row where Sonae MC increases its market share in the Portuguese market, with that result showing how adjusted and how clear its value proposition is currently being understood by the Portuguese consumers. The Portuguese consumers are responsible by giving us these seven quarters as continued gains in market share.
Obviously, turnover has benefited slightly from a like-for-like sales growth, 0.7%. Albeit small, it's still very, very relevant. As all of you know, we are still increasing our square meters in Portugal because we believe that we have an additional space opportunity in convenient formats that up until now have been proven to be very successful. The underlying EBITDA margins stood at 4.6%, 20 basis points below last year. As I've been explaining, this is mostly to be explained by the dilution effect caused by the opening of these new formats, these new more convenient stores that are smaller, that have a slightly smaller EBITDA contribution, and that also have some time to get to maturity. Obviously, we are living under a very intense promotional market, and we didn't see any signs of this elevation of that competitiveness during the past half.
I would also like to note that even if we had a decrease of 20 basis points on the underlying EBITDA margin, our absolute EBITDA grew again on absolute terms, and we think that that was a very positive and important achievement from our team at Sonae MC. Worten, our electronics business, is right on track. We qualify ourselves with first half as a very strong half for Worten. That starts with a turnover increase of 7.6%, like-for-like sales of 5.3% growth, further strengthening of our market leadership position in Portugal, and also gains in our market share in the Spanish market with a stable number of stores. Worten is obviously benefiting from a very positive performance in e-commerce that I've already mentioned. It has also benefited from a quite significant acceleration of the sales performance during the second quarter of 2017.
That is more than explained by the Easter calendar effect. We had clearly a very strong second quarter, both in Portugal and in Spain, in Worten. The like-for-like sales growth during the second quarter was 12.4%, and the total turnover growth of the second quarter was 15.7%, showing how strong the quarter was for Worten. It is also worthwhile mentioning that we are doing that, but at the same time, the underlying EBITDA margin almost doubled from 0.8% in the first half of 2016 to 1.4% in the first half of 2017. For those of you that are following our conference calls, we have been telling you that we believe that Worten will achieve its minimum viable scale around EUR 1 billion and around 5% EBITDA margin. We are right on track to get to those figures, and we are very happy with the performance of Worten during this first half.
Regarding Sonae Sports & Fashion, obviously, we have a significant increase in turnover, 28.8%. That comes mostly still from the fact that we are consolidating Salsa that we were not consolidating last year, but all other businesses have contributed positively for this growth. Sport Zone, MO, Zippy, and Losan, they all have posted positive sales growth during the half. Some specific numbers I would like to mention. The like-for-like sales performance at MO, that was in the second quarter, 13%. At Zippy, that was 15% in the second quarter. Salsa in Spain, where we started betting heavily during this quarter, the growth was 16%. As I have already mentioned, the online growth was 40%. The underlying EBITDA increased by almost EUR 10 million when compared to the first half of 2016. It is now barely breaking even.
That comes half from the consolidation at Salsa, and the other half comes from the improvement across all the other businesses that we have in the portfolio. This portfolio is now much healthier than it was last year, with all the businesses contributing positively both at the top level and also at the profitability level. A note on the deal that we are closing in sports. Everything is right in line with the calendar that we announced in March 2017. At that time, we said that we believe that we could close all the legal documents and all the contractual documents during the summer. That is still pending, but we are still believing on that calendar. We hope that then the process of clearance from the relevant authorities will be completed around the end of this year.
Regarding Sonae RP, as you all know, it's our division that is responsible for the management of the real estate portfolio of Sonae. It currently has assets with a net book value of EUR 940 million. During the half, it didn't announce any sell and lease-back deal since we were already close to the 50% free-hold level that we've announced as being our target. During 2017, in July, actually, we've announced a small deal for four food retail assets in the amount of EUR 45 million. On those four assets, we made a capital gain of around EUR 10 million. The deal was quite good, and we said that we will keep looking at very interesting opportunities, and the Portuguese market is still very interesting for deals on the real estate arena. That's why we did this particular deal. The current free-hold is around 48%.
We will keep the free-hold close to 30%-50%, but we will not miss very interesting opportunities like the one we just announced. Also, a note on Sonae Sierra. Operationally, it was one of the best quarters ever of Sonae Sierra. Global occupancy of the portfolio above or around 96%. Tenant sales further increased by almost 12% in the first half. Good signs on the capital recycling strategy. Some good acquisitions with partners, both with Bank Inter and AXA that have joined Sonae Sierra in launching funds for acquiring particular assets in real estate. Good signs from the development activity. We have six projects now in the pipeline: Nuremberg in Germany, the designer houses in Málaga, Spain, Zenata in Morocco, Cúcuta in Colombia, and the expansions of NorteShopping and Centro Colombo here in Portugal. All these developments are evolving according to the plan.
Also, a positive note on the refinancing activity during the first half of 2017. Sonae Sierra has contracted new bank loan facilities in the amount of EUR 730 million in very, very favorable funding conditions. All of these deals are, or the vast majority of these deals are, project-based deals, and they are deals used to support either the refinancing or the expansion of our shopping malls. Direct results increased 12.5%, and the indirect results also were positive. They improved to EUR 2 million versus the first half of 2016, mainly driven by further yield compression in the Iberian assets. Also, very solid operating performance now. Again, a turnover increase on a declining market, 3.5% growth during the first half of 2017. More than that at the profitability level with the EBITDA increasing 4.8% and the net result increasing 41.1%.
Particularly good results at the free cash flow level where it reached EUR 102 million, representing a very material increase from the EUR 24 million of free cash flow that was recorded in the first half of 2016. A note on the dividends paid by NOS during the first half, because that was at the point in time of discussion from the market. NOS paid EUR 103 million in dividends, showing its commitment towards a quite interesting payout ratio from NOS going forward. In Sonae Investment Management, Sonae Investment Management groups a couple of controlling and non-controlling stakes that we have in technological businesses related either to retail or to financial services or to telecoms, mostly to retail and telecoms. Those investments in Sonae Investment Management have posted a significant increase in turnover, 14.5%, EUR 69 million, and a positive underlying EBITDA of EUR 2.4 million.
This is an area where we keep buying and selling assets and where we will continue to report not only the operational activity but also the capital gains that we will be doing in this particular unit. Finally, a very brief note on the youngest business unit of Sonae Financial Services. We have a total production of EUR 368 million, a growth of 22% compared to last year. Turnover, which is basically commissions, of EUR 11 million, a growth of 40% compared to last year, and a positive EBITDA of EUR 1.4 million and an EBITDA margin of 12.3%. Very, very positive results on this business unit with quite encouraging signs of growth. A note also here, because as of June 2017 and after we have deconsolidated MDS, we will now manage and start reporting MDS under these new business units, Sonae Financial Services.
MDS, as you know, is our brokerage operator that we own 50% together with the IPLF Suzano partner in Brazil. MDS is the largest brokerage company in Portugal, the largest independent broker in Brazil, and the largest shareholder of the fourth international brokerage company, BrokerLink. These are the results of the first half of 2017 from Sonae. As I said at the beginning, we are quite happy with these results. They did surpass our expectations at the beginning of the year. Thank you all for your time. Thank you all for attending this conference call. I will now open for Q&A. Thank you. Okay. I think I was clear enough, and I hope that you are all well. If there are no further questions in the next minute, I will close the conference call.
Yes.
Once again, as a reminder, that is star one should wish to ask a question. Your first question comes from the line of Sonae Motor Operators. Please ask your question.
Good afternoon. Hi. I have one question regarding the tax effect. Could you give us just a little more detail on what happened for those large that change in terms of taxes? I am not wishing to hear an overall report in terms of yield breakdown for Sierra, but just if you could give us your opinion in terms of further yield behavior going this year. If you are expecting any further compression going forward, it would be appreciated too. Thank you.
Thank you for your question. Regarding the tax, there is a quite complex explanation for the tax effect. Actually, one is very simple and the other one is very complex.
Starting with the very simple one, we did register in this quarter some fiscal gains that come from incentives to innovation. Sonae is investing significantly in research and innovation projects, and it has registered during this quarter some tax incentives related with grants to some of our research and development projects from one side and also grants related with CC, which was the most substantial value that was registered during this quarter. More than half of the explanation comes from that CC contribution to our innovation project. That is part of the explanation. That's the easiest part of the explanation. Everything else comes from a technical effect that comes from the fact that, as you know, we are a group. As a group, each company pays its tax individually and registers its tax individually.
When we consolidated all the taxes of the group, we have some technical effects that have led to the positive registration of the remaining half of the effect that you have in the quarter. Having said that, I will now hand it over to Edmundo regarding the yield compression.
Good afternoon. This is Edmundo. Thanks very much for the question. The yield compression we have experienced in Portugal and Spain in the first six months of the current year were 13 and 19 basis points respectively. Given the magnitude of this compression, we do not anticipate that there will be material variations or compressions in yields for the rest of the year. Thank you.
Thank you very much. I have no further questions.
Right.
Once again, that is store one should wish to ask a question. The next question comes from the line of Bruno Bessa. Please ask your question.
Hi. Good afternoon. Starting with the retail business, which actually posted an EBITDA margin decline in the quarter, which was better than what consensus was expecting. My question is, if the 20 basis points EBITDA margin compression that we have seen in the first half of this year in the food retail business, if this could be a good proxy for what could be the performance in the full year and link it with this, what are your expectations regarding the promotion intensity in the Portuguese market towards the year-end? Second question on the non-food division, how do you see this division in terms of potential new moves or JVs if you could see something happening in the electronics business as we have seen in the sports unit?
How do you see this industry in two, three years' time in terms of numbers of players in Iberia if you see consolidation on this front? The third question related with Sierra, the company disclosed a EUR 75 million dividend. My question is if we should assume this dividend as sustainable going forward? Thank you very much.
Thank you very much for your questions. We will start with Sierra just in a second, but please bear in mind that we have a strict no-guidance company policy. Both myself and my colleagues will be having some trouble answering some of your questions that imply a lot of guidance. We will try to do our best, but under that very strict company policy of no guidance. I will hand it over to Edmundo to start with.
Given these restrictions, what I can say is that the dividend we have distributed stems from sales that we have done in the recycled capital strategy that we have been implementing since the last five years.
Okay. That's what we can tell. Regarding now Sonae M C, which was your first question, I'll just make a quick note on the promotional intensity and on the margins, and then eventually Rui will give you some more detail. Continente has a very clear value proposition in the market today. It's a clearly winning value proposition as seen for the consistent gains in market share that we've been posting. Also, we have other measures showing consumer or customer measures showing how it's performing well. We are keeping our value proposition very stable.
What is driving the promotional intensity in the market or what is driving that promotional intensity has mainly to do with some competitors of ours that some of them have not yet found a clarity on their value proposition. They are trying to experiment with very different sets of things. They are still in the middle of an, I would say, learning curve, trying all sorts of different things. That is leading to some promotional aggressiveness. We do not see it—we see it as a plateau. We do not see it declining, but we are not also seeing it going any further. Actually, as it is public, 45% of the products in Portugal are being sold at promotional or at discount levels. That is the highest number that we have ever seen in any market in Europe. It is quite unsustainable, that level of promotional intensity going forward.
We do not see it as a structural situation in the market. Regarding margins, I just want to get clear on this. We keep expanding, and it is obvious that expansion usually is done more in the second half of the year than in the first half of the year. Particularly this year in Portugal, we have elections for municipalities, and that is causing some delay in some of our store openings. It is probable that we will open more stores in the second half than what we have anticipated. Clearly, what is still contributing mostly to the compression of our margin is the opening of new stores. If any further regulation in our margin has to be expected, that is clearly linked and will be clearly attached to our expansion plan. I will leave Rui to give you further details on this.
Thank you, Luis.
I think you have just said everything regarding the questions that have been raised. I do not have much to add to your comments. Just one thing which is important for us. We are market leaders in Portugal. As Luis was basically saying in the beginning, we have been awarded by our customers by the increasing levels of good perception. We are committed to those actions, and we will need to continue to do that. Sometimes we need to be open to do what needs to be done in order to surpass the actions being done by the, as Luis said a while ago, our competitors that are searching and finding the best way to being rewarded as well by their customers. I think you have just said everything, Luis. Thank you.
Regarding Worten, that was your question on consolidation moves on electronics.
Obviously, I can give you a broad perspective. If you want a more industrial view of it, I will hand it over to Miguel Alvares. I'll give you the shareholder view both on that industry and on those consolidation moves. As a shareholder, first of all, we believe that we are very close and we are almost there to have a strong link in our portfolio called Worten. I keep mentioning those two figures, EUR 1 billion and 3% on BSL, 3% EBITDA margin. We are very close to that. We think that that asset is per se a long-living asset after having achieved and even probably or possibly surpassing that level. That is a first view from a shareholder perspective. The second view is that we continue to believe that the electronics market will be an important market.
We think that there will always be room for integrated players with a strong online presence and a strong physical presence, especially when those presences are reinforced by also a strong service presence. That is precisely the model that Worten is offering both in Portugal and in Spain. That is the model that is winning both in Portugal and, to a certain extent, is starting to win in Spain. It's a model that integrates completely the physical presence with a very strong online presence and with a very, very strong service presence. We believe that there will be players like Worten surviving in all the different markets across Europe and even across the occident. Regarding consolidation, it's true that consolidation is playing a role in many markets. It's possible that consolidation will also affect or come more to the electronics market.
If consolidation comes to Iberia, we believe that Worten is a player that is probably the best-placed player to take place in any kind of consolidation move in Iberia. Obviously, as a shareholder and an active manager of a portfolio, we will look into that as we did with Sport Zone. If there is a value enhancing deal, we will be open to study that deal. For the moment being, there is nothing being discussed or planned at that level. If you want any further explanation regarding the industry, I will be glad to leave that to you, but I will be glad to pass you on to Miguel Alvares.
Thank you very much.
We will leave it there.
Thank you. Your next question comes from the line of Felipe, Rosa. Please ask your question.
Hi. Good afternoon, everyone. Three for me.
The first one on MC, just a follow-up question. Just because I think that in the beginning of the year, you talked about that your expectation was to be able to maintain the EBITDA in absolute terms for Sonae MC, okay? In the first half, you are roughly flat year on year, slightly up. I'm not 100% sure, but it's around flat. Do you think that despite these new promotional campaigns being launched by your competitors that are trying new ways to attract clients, do you think that it makes sense to maintain that expectation? That's my first question. My second question would be regarding the electronics. You mentioned the EUR 1 billion in sales and the 3% EBITDA margin. I think that the big gap to your competitors, it's in terms of CapEx to sales. You're investing much more than your competitors.
Could you also provide some color on what is your expectations for the long-term CapEx to sales? I think that you are investing like three times more than your competitors, and that hurts a lot the NPV of your free cash flow. My third question relates to working capital. There have been some improvements in terms of stocks and in terms of clients received. My question is that trade payables remain much lower than what one could expect taking into account that your sales rose 7% in Q2. Can we see, should we expect any improvements over the next quarters in terms of trading working capital, or do you think that the improvements that you are trying to achieve, and you mentioned in the Q1 results, coffers call, you have tried, and so far you have not succeeded on that?
This is linked to one of your measures that you talk about a lot, which is capital employed, okay? Your capital employed at Sonae M C is rising 9% year on year in Q2, and your EBITDA is largely flat, okay? Could you just elaborate a little bit around the working capital? Thank you very much.
Thank you very much, Felipe. I will hand the first question to Rui Almeida, and obviously the second one to Miguel Alvares. Since it's a broader one, I will take the first one then. Rui, please, the first one.
Exactly. Regarding the EBITDA levels in terms of absolute terms, we are looking very tightly into those figures, and we try to aim to maintain those levels.
Even considering, as Luis mentioned a while ago, that we are opening several stores to increase our market share, to improve our market share, and to enlarge our portfolio in terms of proximity stores. Those stores in the very beginning, they do not have the same level of profitability that the other stores have in our portfolio. We are suffering to that regarding those issues. Nevertheless, we continue to be looking very, very tightly to maintain the EBITDA levels that we used to have in the past.
Okay. Now, Miguel.
Hello, Felipe. Good afternoon to you all, and thank you for your question. Regarding our CapEx to sales ratio, as you mentioned, we are aware that we are relatively a bit higher than our competitors, even though it is sometimes difficult to know exactly what criteria everyone is using and if it is completely comparable.
That being said, we are aware that we are slightly on the high side for now, and that stems from three main reasons. First of all, as we have been saying, we have been investing heavily on developing a truly omnichannel value proposition, and that has put some pressure on investments, namely at IT level. This is part of the reason why we are investing a bit more than in the past. Secondly, we have been opening new stores, both in Portugal and in Spain, and the pace of growth in terms of number of stores has actually been much stronger than the comparables you are using. That is basically we have been doing those openings and seeing very good results. We do not expect those to produce any poor value for the company.
We do expect it to slightly slow down in Portugal as we sort of fill the gaps that were still remaining in the market. In Spain, we will probably keep the pace as we have been doing in the past few semesters. Thirdly, there is an important element here of refurbishments as well. Refurbishments, I would like to add a bit of color to that. On the one hand, we were quite light on refurbishments throughout the crisis years, namely in Portugal, and that has put some aging on our store portfolio. We have decided to refurbish at a normal pace our stores. All the tests that we have done, all the pilots that we have done have been tremendously value-enhancing.
A large part or a good part of the EBITDA enhancements that you see in our accounts actually comes from improvements in the stores that we have been refurbishing. Obviously, there was a moment where we invested less throughout the highest peak of the crisis. We are now investing a bit more than we normally would, given that we are picking up the pace from those slower years. That is probably most likely going to be reduced in the future, the refurbishment cycle. CapEx on that front will be reduced. In total, if you take all these effects into account, we expect the CapEx to sales ratio to evolve in a positive way. It will be reduced, the ratio, and it will basically maintain the company in the growth that we have seen.
One thing also that you should bear in mind, our CapEx to sales ratio, as any ratio, has a CapEx and then it has sales. We believe, and our figures show that, that we can reduce that ratio both from controlling CapEx as well as from increasing sales. In that sense, the likes of figures that we've been posting will help tremendously as well.
Thank you very much.
Okay. Felipe, just a quick comment on what Miguel said, and I think it's very important. In all the remodelings that Miguel is mentioning and that have been quite successful, a couple of those remodelings have included reductions in sales area, which proved also to be quite good for the model that we are exploring.
More on that front will come, and I think that's an important note just to add to what Miguel said, and I think it was very clear the answer. The last one is working capital, and it's indeed, I would say, probably one of our weakest results that were posted in the half. It's true that for us as a shareholder, return on invested capital is clearly the key metric that we use, as you all know. We are, as a shareholder, putting a lot of pressure on the teams, and we are not indeed quite happy with this figure. We also believe that we have room to improve on this front. We hope that some improvements will be achieved during the second half, mostly on the food area. There are some reasons behind a part of this working capital deterioration that I want to mention.
The first one has to do with expansion, not only because we are opening smaller stores, but just by the simple fact that we open stores, we have to increase stocks during the pre-opening period and during the launch of the stores. That is hurting us, and since we are still accelerating the pace, that is producing some impact in our working capital. The most significant reason is linked with the intensity of the promotions that I've already mentioned. As long as the market is still so promotional, we will have to deal with vast quantities of products entering and abandoning promotions, and we have to account for the peak sales during promotions, and then we have the negative impact of those peak sales in the remaining products.
There is a lot of adjustment that the company needs to do, the food part of our company needs to do to compensate for those effects. We are still struggling to find a better model to adjust for that very intense promotional market. Having said that, I think that there is, or we at Sonae, we think that the team in general, in all our food and non-food business, have room to improve on that particular front.
Thank you very much, Luis. I do not know if there are any further questions, but if you do not mind, may I make two more questions if you take the time? Can I do it?
Yeah, of course. Yes, of course. You can. You can. Yes. Okay. Go ahead.
Okay.
One is a very quick one, is just because you reported in other income subsidization adjustments, a EUR 9 million loss, EUR 9 million loss. It's just to have an understand whether there's been something strange or the idea is for us to have an idea what could be the full-year impact of these adjustments line for us to be able to estimate because this number has been much higher than everyone was expecting. That would be the first one. The second one, and just coming back to Worten, okay, you talked about consolidation, but we already had the first move, okay? Ceconomy has bought a 24% or 25% stake in Fnac. So far, it's just a financial stake, but it could evolve to a deeper integration.
Don't you see this potential M&A between these two companies as a major threat to your operation in Portugal because the two together could become a more important threat than the two alone? Thank you.
I'll just start by the last one. As I said, we believe that Worten is absolutely dominant in Portugal. Just as a note, figures for that dominance, the market share of Worten is bigger than the aggregated market share of the four players that come after Worten in the market. Even that combination will create a player that I believe will be, if that combination is to be achieved, because what you have for the moment being is a very preliminary movement that we don't really know how it will end. That will create a player that is probably going to be the third player in Portugal.
I think that that does not change the importance of Worten in Portugal, nor its importance related to other players that will want eventually to consolidate the market in Europe. We are not feeling any type of particular pressure coming from there. There are other players willing to consolidate different parts of or in different parts of Europe. We still think that Worten has remained as a very interesting potential target for consolidation if that is to be discussed, which is not being discussed at the current moment. Regarding your other question, yes, it is true we have a big jump or a big slump in the or a big increase in others, in eliminations and adjustments. That comes mostly from the fact that we are having a more complex company with more intra-group movements.
We are also consolidating in that other companies that are not aligned in any of our current business units. Just to give you an example that is well-known, Públic, which is a very, very small media asset that we still have, is now being considered precisely on that line. We do have also some internal consolidation adjustments that go into that line. I think that you will see 2017 as a stabilization year on that particular line and nothing to be expected after 2017 because, as you saw during this year, we are reporting now under a very clear structure. We are, in a way, giving sense to our portfolio, putting the portfolio on each one of the businesses in its adequate bucket.
That has created some eliminations and adjustments that we needed to go through, but that will disappear, or those jumps will disappear going forward in the years to come.
Okay. Thank you very much.
You're welcome. Thank you.
The next question comes from the line of Emmanuel Figueiredo. Please ask your question.
Yeah. Good afternoon. I just have two questions which stem from the start of your presentation. You gave some statistics on the growth rate of e-commerce. I was wondering if you could share with us what proportion of sales are actually done through e-commerce, and I'd be particularly interested in Worten and in food. That's the first one. The second one, I think you mentioned something that you have nine companies now being consolidated through the equity method, and that will probably grow in the next quarters.
Could you explain a little bit better what you mean by that? Do you mean that we should expect some change in the consolidation perimeter or some M&A? Thank you.
You're welcome, Emmanuel. Actually, probably the second question. I mentioned that because we've been clearly presenting ourselves to the market more as a holding company. Since we are becoming more and more active in being a portfolio manager, it's probable that we end up having more companies where we have stakes that are below the level of control. That will mean that we will have more and more companies being integrated in our accounts through the equity method. That doesn't mean that we are actively looking for those companies. It's just the nature of Sonae as a holding company that will end up increasing the number of companies being integrated by the equity method.
There is no expected short-term change in the perimeter that we are consolidating. It is more a strategic view going forward. Regarding e-commerce, I think that regarding Worten, on previous calls, we have mentioned a metric that is even more important, and that is the one that we are sharing with the market, than the proportion of sales that are done through e-commerce, which is the proportion of sales that is done with more than one of our channels. Sales that are really omnichannel sales, sales that are done starting in the internet and ended up in the store, starting in the store and ending up in the internet or in any other different kind of channel. We are now more than 1/4 of our sales are done in an omnichannel manner, and that is growing quarter after quarter.
I think that gives you a perspective of how successful our omnichannel operation is being in Worten. Regarding foods, it is still very small. We have not yet achieved, we are around 2% or slightly below 2% of our total sales being done through e-commerce. We are trying to increase that number. We are doing everything we can to increase that number because we are strong believers in e-commerce in all categories, but also in food. We were the second player in Europe in launching an e-commerce operation dedicated to food. We are feeling some resistance from the Portuguese consumer to food e-commerce sales. That certainly does not change our willingness to continue to invest in that growth avenue.
I can guarantee to you, and I think that that's quite important, that both the level of service and the variety and the pricing of our e-commerce store is benchmarked when compared to the best benchmarks that you can find in the U.K., for example. It is not a problem of not having an adequate service or offer in our e-commerce platform. It is just the market is not yet, as we believe, there. Since it is the first time you are asking that question, our market share in e-commerce in food is currently above 80%. We are leading by far that market. That is also one of the reasons why we keep investing in a market where we have a far bigger share than we have in physical terms.
That is clear. Thank you.
Thank you. You are welcome.
Thank you. We have no more questions. Please continue.
Okay.
Thank you all, not only for attending but also for your questions. I hope to have all of you in our next conference call, which will be the conference call for our third-quarter results. Thank you very much.
Thank you, ladies and gentlemen. That concludes our conference call today. Thank you all for participating. You may now disconnect.