Good morning, everyone, and welcome to Sonae's second quarter 2026 results conference call. Today's call will be conducted in two parts. First, Sonae's Chief Financial Officer, Mr. João Dolores, will present the group's results. This will be followed by a Q&A session. During the Q&A, you may ask questions in one of two ways, by submitting a written question using the box below the webcast player, or by joining the conference call and pressing the pound, hash key, followed by five on your telephone keypad to enter the queue. I will now hand the call over to Mr. João Dolores. Sir, please go ahead.
Thank you. Good morning, everyone. Thanks for joining us for Sonae's Q2 results presentation for 2026. Besides myself and the investor relations team, we have with us Cristina Novais from Bright Pixel, Fernando van Zeller from MC, Paulo Simões from Worten, and Miguel Moreira from Sierra. Let's begin with the highlights of the quarter, starting with MC. In the second quarter of 2026, MC once again reinforced its leadership position across both grocery and Health and Beauty in Portugal and Iberia, respectively. In grocery, turnover increased by 5.7% year-on-year to EUR 1.8 billion, supported by like-for-like growth of 5.1%, which was broad-based across all physical formats, with the online channel continuing to outperform. This performance was driven by volumes and translated into further market share gains, in decelerating but still highly competitive markets. During the quarter, we opened two new Continente Bom Dia stores.
At the same time, profitability continued to improve. In the first half of the year, underlying EBITDA increased by EUR 29 million to EUR 349 million, with the margin improving 20 basis points to 9.9%, supported by sales momentum and solid efficiency gains. In Health and Beauty, turnover increased by 13.1% year-on-year to EUR 469 million, underpinned by sustained like-for-like growth across Wells and Druni, and by the continued expansion of their respective store networks, both in Portugal and in Spain. In the first half of the year, turnover increased 12.3% to EUR 906 million, with both banners gaining market share. As a result, the underlying EBITDA margin improved from 12.5%- 13.1% in the quarter, and from 12%- 12.6% in the first half of the year, more than offsetting an intense competitive environment, particularly in the beauty category. Overall, MC continued to deliver strong top-line growth while simultaneously improving profitability.
Turnover increased by 7.2% year-on-year, reaching EUR 2.3 billion in the quarter, and by 7.9% to EUR 4.4 billion in the first six months of the year. The company's underlying EBITDA margin increased from 10.8% to 10.9% in the quarter, and from 10.2% to 10.5% in the first half of the year, which equated to a total underlying EBITDA of EUR 463 million. This strong operational performance continues to translate into solid cash flow generation and further deleveraging. As a consequence, net debt to EBITDA reduced further from 2.8x to 2.5 x, reinforcing MC's strong financial profile. Moving now to Worten. Worten delivered another solid quarter, combining sales growth with a healthier level of operating profitability. Turnover increased by 5% year-on-year to EUR 329 million, supported by a like-for-like growth of 4.5%. Since the beginning of the year, turnover increased 7% to EUR 681 million.
This performance was broad-based, with solid demands in core electronics and domestic appliances, driven by higher volumes alongside double-digit growth in services. Both the offline and online channels contributed to growth, with online already representing around 20% of total turnover, while the Worten app continues to gain relevance and strengthen consumer engagement. iServices maintained its solid momentum, increasing its weight on total turnover and opening 10 new stores in the quarter, eight of which outside Portugal. Profitability improved significantly during the quarter. The underlying EBITDA margin increased from 2.5%- 3.9%, and from 3.2%- 4.5% in the semester, with underlying EBITDA up EUR 10 million- EUR 31 million. This reflects a stronger sales performance, commercial margin expansion, and the growing contribution of higher-margin services. Regarding Musti, the company continued to scale its operations while simultaneously investing in transformational initiatives to support further growth.
Sales increased by 13.8% year-on-year to EUR 139 million, supported by like-for-like growth of 2.1%, temporarily impacted by the rollout of a new e-commerce platform and by the integration of ZU in Portugal. In the first six months of 2026, turnover grew 14.7% to EUR 277 million. Core markets performed well. Norway delivered particularly strong growth, Finland remained broadly stable, and Sweden maintained the positive momentum of recent months, while the integration of Pet City in the Baltics is reaching its final stages. Gross margin improvements supported adjusted EBITDA growth to EUR 14 million in the quarter. The adjusted EBITDA margin at 10.1% continues to reflect strategic investments in digital capabilities, logistics, and scalability. After the end of the quarter, Musti announced the acquisition of three Gaston stores from ICA in Sweden and entered into discussions for a potential long-term partnership to explore additional Arken Zoo stores alongside ICA supermarkets.
Pet care remains a structurally attractive category with strong long-term fundamentals, and Musti continues to represent a key growth platform within Sonae's portfolio. Moving now to Sierra. Sierra sustained a solid operational performance during the quarter, supporting further value creation across its integrated real estate platform. Across the European Shopping Center portfolio, tenant sales increased by 4.6% on a like-for-like basis in the first half of the year. Occupancy remained close to 99%, with no issues in terms of rent collections. The services business continued to expand, supported by momentum in property management, including the integration of the German platform, and by further growth in investment management, where Sierra and Hahn Gruppe started deploying their Southern European food retail strategy through several acquisitions across Portugal and Spain.
Development activity progressed steadily, with construction advancing and commercialization getting traction, while the residential pipeline expanded with Portugal's largest affordable build-to-rent project currently under development in partnership with the Porto Municipality and Solive. Direct results increased by 19% year-on-year, while net results decreased by EUR 3 million, reflecting the absence of the positive non-recurring indirect result recognized in Brazil last year in the second quarter. Overall, assets under management increased by over EUR 450 million year-on-year to EUR 7.1 billion. NEV grew to EUR 1.2 billion, an increase of EUR 89 million year-on-year after the payment of EUR 25 million in dividends to Sonae. NOS delivered another solid operational and financial performance during the quarter, with further profitability growth in a quite competitive consumer market.
Consolidated revenues totaled EUR 458 million, broadly stable year-on-year, with growth in the enterprise and IT businesses offsetting the ongoing pressure in the consumer segment and the small decline in the cinema and audiovisual business. EBITDA increased by 1.5% year-on-year to EUR 206 million, with the margin expanding by 70 basis points to 44.9%, while free cash flow, excluding non-recurring items, rose 9% to EUR 63 million, reflecting higher profitability and the maturity of the current network investment cycle. NOS contributed EUR 28 million to Sonae's equity method results in the second quarter and EUR 48 million in the first half of the year. In May, the dividends paid by NOS generated an inflow of EUR 87 million for Sonae. At the same time, Bright Pixel maintained a quite disciplined investment approach, balancing selective capital allocation with the evaluation of diversified investment opportunities.
During the quarter, four companies were added to the active portfolio with net capital deployment of EUR 17 million. The active portfolio reached an NEV of EUR 335 million at the end of the first half of the year, implying a potential cash-on-cash multiple of around 1.4 x. Moving on to the consolidated view. Overall, our total turnover grew 5.6% year-on-year to EUR 2.9 billion and 6.3% to EUR 5.6 billion in the first half of the year, driven by solid performances across all our retail businesses. MC Grocery accounted for around EUR 100 million of increase, followed by Health and Beauty with around EUR 50 million, and by Worten and Musti, which more than offset the deconsolidation of the MO and Zippy fashion banners last year.
Underlying EBITDA grew EUR 26 million or 10.2% year-on-year to EUR 281 million, driven primarily by MC, which added EUR 19 million to this indicator and supported by positive contributions from the remaining retail businesses. The underlying EBITDA margin improved from 9.5% in Q2 last year to 9.9% in Q2 this year, and from 9% in the first semester 2025 to 9.6% this year. Consolidated EBITDA increased by 15.1% year-on-year to EUR 316 million, supported by the solid evolution of underlying EBITDA and by improved equity method results. All in all, the result, which is attributable to Sonae shareholders, grew 27% to EUR 75 million in the quarter and 20% in total to EUR 123 million in the first half of 2026.
The strong operational performance generated EUR 289 million of operational free cash flow in the last 12 months, which enabled further progress in our deleveraging path, with consolidated net financial debt decreasing by over EUR 180 million year-on-year to EUR 1.8 billion. As a result, loan-to-value reduced from 13.8% to 10.6% this year, a reduction of 3.2 percentage points. Our net asset value grew 18% year-on-year to EUR 5.6 billion. This after a EUR 121 million of dividends paid to Sonae shareholders this quarter. This evolution was driven by the strong operational performance of our retail businesses, in particular MC, the appreciation in the NOS market value, as well as positive contributions from Sierra. On a per share basis, NAV reached EUR 2.89, and the Sonae share price has appreciated 67% year-on-year to EUR 2.015.
The discount between NAV per share and the share price narrowed from 51% at the end of the first semester of last year to 30% at the end of June of 2026. Still, the potential upside remains substantial at 43%. We therefore remain fully committed to further reducing this gap. This is all for now. Thank you. You can now open the session to Q&A.
If you wish to ask a question, you may do so by submitting a written question in the box below the player, or click on the blue hand button on the audio player to ask orally. You can also ask a question via the conference call and dial pound key five on your telephone keypad to enter the queue.
Okay. All right. I think we have first questions in the chat. We will start there. We have a couple of questions from Julian, from Kepler. The first one is if we can share where Continente's market share stands as of Q2 this year, and a second question, if we can comment on the current competitive dynamics in the Portuguese food retail markets. Are we seeing any increase in pricing or promotional activity from competitors? How do we see the competitive environment evolving over the coming quarters? Why isn't Portugal behaving like similar European markets, where discounters continue to grab market share aggressively? Then on Musti, the business continues to deliver strong top-line growth while we are investing in digital capabilities, logistics, and integrating recent acquisitions.
Once these investments integrations are behind, should we think about a medium-term EBITDA margin or EBITDA run rate for the business? I'll ask Fernando to cover the initial two questions, then I'll comment on the Musti one.
Okay. Julian, thank you very much for the questions. In terms of market share, as we have previously disclosed, Continente is a little bit above 37% of market share in Portugal, and we actually have increased our market share in the first half of 2026, given our strong performance. In terms of competitive dynamics, it's true, we're seeing in Q2 a higher promotional activity as well as a more aggressive price activity across the players, I would say, across the market. We expect this to continue in the second half of 2026. As the market, as you know, has recently shown a slight deceleration, we are seeing more and more pressure from all the players in the market, and that's clear also in our performance. When we talk about discounters, the truth is discounters are gaining share in Portugal.
Continente, as the leader, continues to gain share and is not a discounter, obviously, but we continue to see a trend where discounters are continuing to gain market share in Portugal. That being said, they're not gaining market share at the level they were growing probably one or two years ago. In that path, I would say that the trend is more or less in line with the other European countries.
Okay. I'll take the Musti one. It's true, as you point out, Julian, that the top-line growth is quite positive at Musti, as is the evolution of gross margin. The performance has been quite strong there. It's true that the underlying EBITDA margin or the adjusted EBITDA margin continues to be a bit pressured by the investments that we have been doing in the last few months in terms of platform changes, logistics, and also integrating recent acquisitions. This is an investment that will probably continue up until the end of this year, beginning of next year. We do expect the margins to start to recover to higher levels in 2027, and we would expect a run rate margin in this business to be closer to 15% than what we are seeing right now. We have another question here from Alexandre.
If we could comment again on Continente on volume, price, and mix evolutions in Q2 in the grocery segment. Fernando?
Sure. Thank you again for the question. As you know, in Q2, Continente has shown a like-for-like of around 5%. This was mainly driven, as João mentioned in the call, by volume performance. We had a 3% volume increase, more or less in line with Q1. In terms of mix, it was more or less the same as Q2 2025. The remaining 2% are related with the price increase in the market. As you know, inflation as a whole in the market has been a little bit higher than 2%, but as of today, in Q2 2026, we have seen around 2% inflation in Continente.
Okay. Thank you, Alexandre.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
Okay. We have today the questions are all coming through the chat. António Seladas from AS Independent Research: "Druni keeps burning cash on a quarterly basis. Could you please comment on this topic? Like-for-like sales at MC Grocery slightly adjusted, the pace went down. Should we expect this pattern of the remaining of the year?" Fernando, you want to cover both?
Sure. António, thank you very much for the questions. Again, in terms of like-for-like of Continente, which is probably easier to answer because it has been the path we have been following this call. It's true that we have reduced the increase of like-for-like to about 5% in Q2. Mainly driven in Continente, it's important to say, increased their market share in Q2. This is mainly driven by the market slowing down in Portuguese grocery retail in Q2. It's difficult to predict what's going to happen in the next two quarters of the year. That being said, our expectation is the market won't get to the levels they were growing in Q1 because that was obviously a very high level of growth.
Probably if we had to estimate at this point, the growth of the market should be more in line with Q2 for the remaining of the year versus Q1, which was abnormal in terms of growth. In terms of Druni, it's easier to answer. Druni, in terms of cash flow generation profile, the majority of the cash flow is generated towards the end of the year. It's part of the nature of the business. Also Druni, as you know, has an aggressive expansion plan, which is going extremely well, where we are opening close to 30 stores in Spain. We are also opening very successful Druni stores in Portugal. We have an ambitious plan for this year.
I would say it's normal the cash flow profile skew towards the end of the year. Also we are also investing more in terms of expansion because we see a strong opportunity for Druni to be quite successful, both in Portugal and Spain. The market share that we have been grabbing in both markets, I think really translates the successful concept we have here.
Very good. Thank you, António. I'm not seeing any more questions. Maybe we'll just give it a few more seconds to see if we have any questions coming in. Maybe I will just take the moment to do a brief comment on the results. I think we are obviously very happy with the results of the initial six months of the year. I think they show the strong profile of our businesses and the ability that we have shown to increase market share in practically all the markets in which we operate. We see this positive momentum carrying into the second half of the year. Looking forward to being here and presenting our results for Q3 when we next meet. If there are no further questions, thank you very much for listening.
Thank you very much for the questions you sent across and see you in our next quarterly announcement. Thank you.