Good afternoon, everybody. I would like to welcome you all to the AmRest First Quarter 2024 Results Call. My name is Prisca, and I will be your moderator for today. All lines are on mute for the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. Otherwise, you can type a text question in the Q&A checkbox provided online in the right-hand corner of your screen. I would now like to pass the conference over to your host, Lukasz, with WOOD & Company, to begin, so please go ahead.
Okay, thank you. My name is Lukasz Wachelko. I'm presenting WOOD & Company. Again, the pleasure of moderating the call with AmRest. The company is being presented by CFO, Eduardo Zamarripa, and Chief of IR Santiago Camarero. Guys, not to take much time of yours, we already have a four-minute delay. Mic is yours.
Thank you, Lukasz, and good afternoon, everybody, and thank you for joining us in today's first quarter 2024 AmRest result presentation. It is always a pleasure to have the opportunity to share with you AmRest results and our views on our passionate industry. This first quarter of the year show a business that was accelerating as the quarter progressed, even though most European countries have started 2024 with a timid economic growth that was lower than initially expected. At the same time, inflation has also been declining faster than expected, mainly thanks to the sharp correction in energy prices. This price moderation, together with the continued strength of the labor market, is starting to have a positive effect on real wage growth and household purchasing power.
However, the context of high political risk remains, and this has affected consumer confidence and propensity to consume in this beginning of the year. But let's start with today's presentation. If we go to Slide 2, please. As you know well, AmRest is Europe's leading restaurant operator, with a portfolio of almost 2,200 restaurants in 22 countries across Europe, Middle East, and China. We keep a balanced portfolio of franchise and proprietary brands that covers a wide spectrum of location of use. As a result, more than 30 million customers visit our restaurants every month, where they find a distinctive service provided by over 45,000 passionate AmRest teams. If we move now to Slide 3, I am going to try to summarize in 5 points the most relevant event in the beginning of the year.
First, AmRest generated revenues of EUR 593 million in the first quarter of 2024, a growth of 5.2% compared to the same period in 2023. Second, the EBITDA generated amounted to EUR 81.1 million, up 14.9% versus the same period of 2023, which puts the EBITDA margin at 13.7%, over 1 percentage point higher than in the same period of 2023. Third, the net profit generated in the period amounts to -EUR 2.1 million. The progress at the commercial level were offset by higher financial expenses as a result of the higher rates. Four, the group's leverage ratio, defined as Net Debt/ EBITDA, ex IFRS, stood at 2x. This is at the low end of the target level range defined for the group.
Fifth, finally, at the end of the first quarter of 2024, AmRest managed a portfolio of 2,097 restaurants after a net increase of 9 units, mainly located in CEE countries. In the following slides, we will go into more depth and detail of these points, but let's first start with what we are doing in our different brands on slide 4. The commercial position of our brand plays a crucial role in the value generation of AmRest. Let me start with a quick service and coffee brands in slide number 4. Starbucks is the brand that turns everyday beverage into a cherished moment. In first quarter of 2024, with a growing lineup of limited time offer drinks, we aim to enhance the Starbucks reputation as a source of creativity, inspiration, and joy.
In KFC, since the beginning of the year, we have been delighted our customers by consistently offering their favorite chicken classics. But that's not all. We have also introduced exciting new flavors. Well-known and iconic products mixed with totally new, delicious, wild products. At KFC, everyone will find a taste for themselves. For Burger King in 2024, started with a revolution in digital aspects. Through the digitalization, the brand aims to provide every customer the majestic experience of feeling like a queen or king. Now, moving to the fast casual and dinner and dining brands in slide 5, please. At Sushi Shop, the Spanish chef, Albert Adrià, has signed the new menu. Committed to both tradition and innovation, the three-star chef is an emblematic figure in world gastronomy. Exclusive and original recipes combining new flavors and new forms of sushi perfectly completed our existing menu.
At Pizza Hut, a strong promotion returned in January through an all-you-can-eat mechanism. This time, not only in full-service restaurant, but also in fast casual, enabling the mechanism to be implemented in more countries. At La Tagliatella, we maintain our commitment of providing exceptional service to our guests and serving the finest Italian recipes. All the new dishes at La Tagliatella are associated with innovation, quality, and origin. We launched our 2024 menu, including new additions like the Pizza Tricolore, emulating the Italian flag with new ingredients. Finally, at Blue Frog, we are providing to our guests an unforgettable taste adventure, whether it's a reunion fest or a cozy date. Blend of tradition, delicacies, and modern flavors, delivering a unique culinary experience. If now we move to slide 6, please. As I mentioned, revenue generation in the quarter accelerated as the third quarter progressed.
After a weak January, sales gradually recovered, and we closed the quarter with almost EUR 593 million of revenues generated in the first quarter of 2024, a growth of more than 5% compared to the same period of 2023. At the same time, you can find on the right-hand chart, the evolution of the 12-month trailing average revenue per store, that is growing steadily for the last three years, providing a good indicator of both the health of the business and the level of exploitation of economies of scale through the sales leverage. Moving to slide 7, we have discussed on several occasions the prominent role that the technological innovation is having in the transformation of the restaurant industry. In this slide, we provide the evolution of two key indicators that explains this statement.
First, on the left-hand graph, you can find an increasingly wide channel between the growing total sales and the part of the sales coming from the dine-in channel. This is the space occupied by the alternatives, takeaway and the drive-thru distribution channels. Secondly, in the graph on the right, you can see the rapid growth of digital sales. That means the orders that we receive through digital channels. In the first quarter of the year, they accounted for 56% of the group total sales. The importance of these orders come from the higher value that we are able to extract. Now, moving to slide eight, let me share a few comments on the group profitability. The EBITDA generation stood at EUR 81 million in first quarter of 2024. This is an increase of 15% compared to the first quarter of previous year.
The EBITDA margins reached 13.7%. This is over one percentage point higher than in the same period of 2023. The moderation in both supply prices and energy costs are the main reasons behind the improvement in profitability, which also reflects the progress made in terms of efficiency, the positive effects of economies of scale, and appropriate pricing decisions. In terms of operating profit, EBIT, the annual growth was even higher and it stood at 30%. This represent an EBIT margin of 3.1% versus 2.5% in the first quarter of 2023. If we can go now to slide 9, you can see that AmRest operates directly or via franchisees, a portfolio of 2,197 restaurants.
This portfolio has undergone structural changes during the last years in order to provide a better and more efficient capital allocation, which results in the transfer and closure of underperforming businesses, which together with our relevant organic growth of restaurants, 11% on the net basis since COVID eruption, has shaped a current portfolio. With this, Santi, if you can go over the main financial highlights, please.
Many thanks, Eduardo, for sharing your insights with us, and good afternoon, everyone. It is always a pleasure to have the opportunity to address you on our results presentation. I would like to tackle three things before starting. As Eduardo has explained, overall, we have a good business performance during the first quarter of the year, especially after the low start. However, 2024 is a year in which we expect a gradually improving commercial momentum in most of the 22 markets where we operate as the year progresses. Secondly, we are starting to see the fruits of the work done in the efficiency front, and we have, for the first time in years, a tailwind that supports margin expansion, thanks to the moderation of the still high cost pressure. And please, let me emphasize, this is still high.
Nonetheless, the leakage of this tailwind is something that will gradually be captured in our results as we continue to renew supply contracts during the year. Third, a headwind. This is in form of higher cost of debt due to the floating structure of our loan contracts. In addition, this quarter, we have booked the origination fees and other related costs to the new credit facility, which have resulted in a significant cash outflow in the quarter. As you know well, to be prepared for this situation, we reduced drastically the debt levels of the company on previous quarters. With this, let me now jump to the slide 12, with the main financial highlights of the quarter. During the first quarter of the year, revenues amounted almost EUR 593 million.
This is 5% higher than in the same period of 2023, with a same-store sales level of 102. In this regard, the most up-to-date information for 2024, this is the first week of May, points to a level of 101. In terms of transactions, the aggregate growth, it was 1.4%. The EBITDA generation represented a new record high in nominal terms for a first quarter of the year, after a growth of almost 15%, which puts the EBITDA margin at 13.7%. This is over one percentage point higher than in the same period of 2023. In terms of the operating profit, EBIT, we generated almost EUR 19 million, with an annual growth of 30%.
This is an EBITDA margin of 3.1% versus 2.5% for the first quarter of 2023. Finally, CapEx stood at EUR 29 million. In this regard, let me share that we expect a more linear allocation during the year of investments and new restaurant openings than we have on previous occasions. Moving to slide 12, you can find quarterly sales and same-store index evolution. The upward trend in terms of revenue generation continues with the normal seasonality of our business, where always the first Q of the year is the slowest in the year. In terms of the same-store sales, the index has stabilized after a very strong growth on previous quarters. In slide 13, you can observe the recovery of profitability and our standard business seasonalities that we have already referred to.
Just let me highlight once more the rate of growth of our main profitability measures. The EBITDA, growing at 15%, and the operating profit growing at 30%. In slide 14, you can find the cash flow generation of the group, and I would like to point out two things from this slide. The first is the net operating cash flow comparative shown in the slide, that is affected by the perimeter change after the disposal of the Russian business last year. Second, the net investment cash flow includes the execution of the investment accomplished at the end of last year, that concentrated a large part of the total year openings.
Overall, this number reflects the normal seasonality of the cash generation of our business during the first quarter of the year, the payment of the transaction costs related to the new debt agreement, and the execution of the CapEx from the previous year. In the slide 15, you can find the organic changes in the restaurant portfolio. The relevant points were already addressed by Eduardo. Just to recap, that we had a net growth of 9 restaurants during the quarter, with 19 new openings and the closure of 10 units. With this, at the end of the quarter, AmRest operated a portfolio of 2,187 restaurants. Moving now to slide 16, please. Here, you can find the cash and debt evolution.
The group's gross financial debt remained virtually stable during the quarter at EUR 621 million, while the net financial debt stood at EUR 555 million. This is an increase of EUR 57 million. The reason behind this increase is the decrease in EUR 60 million of the group cash, which nonetheless remained at a very prudent level of EUR 167 million. This decrease in cash, as we explained before, is the result of the normal seasonality in the cash generation of the business during the first quarter of the year, the payment of the transaction costs related to the new debt agreement that we referred before, and the execution of the CapEx from the previous year. We expect to reverse, nonetheless, this cash accumulation trend on the next quarter.
In addition, we mark that AmRest has available trade and use facilities for EUR 255 million. Let me conclude that the group's financial debt and leverage profile remains at the low end of our target, with a leverage ratio of 2x. In slide 17, you can find our financial debt structure and maturity profile. Basically, no changes with respect to the previous quarter, when we signed the new loan agreement that smooth the maturity profile of our debt in the next coming years. 91% of the current financial debt is long-term debt. Next, let's focus on the results by different segments. So on slide 18, you can find the breakdown of revenues, EBITDA, and the number of restaurants that we have in each segment. Segments comprising businesses in 22 countries, where we observe different dynamics depending on the market.
In slide 19, as usual, we will start with Central and Eastern Europe, our more relevant region from business perspectives. This segment recorded the group's strongest sales growth and margin expansion in the first quarter of the year. Revenues in this period reached EUR 335 million, a growth of more than 10% compared to the same quarter of 2023. EBITDA generation amounted almost EUR 59 million, with a growth of 23%. This represents an EBITDA margin of 17.5% and an expansion of 1.8 percentage points. AmRest had 1,185 restaurants in the region at the end of the first quarter. This represents a quarterly growth of nine restaurants after opening 12 new units and closing three. Let's continue now in slide 20 with Western Europe.
Quarterly revenues achieved in the region amounted EUR 290 million, an increase of almost 3% compared to the first quarter of 2023. EBITDA generated amounted EUR 28 million, representing a year-on-year increase of 16%, and EBITDA margin stood at 12.7%. This is 1.5 percentage points higher than in the first Q of 2023. Once again, there is a wide disparity in the evolution of the business between different countries. On the positive side, revenues in Spain increased by almost 14% and EBITDA by 21%, resulting in a significant expansion of margins. On the other hand, revenues in France fell by 5%, although EBITDA generated grew strongly by 36%, leading to an expansion of almost 2 percentage points in the EBITDA margin.
In terms of the portfolio of restaurants, at the end of the first quarter of 2024, AmRest had 923 restaurants in the region after opening 5 units and closing 6 during the quarter. Moving now to the slide 21, we will see China. The drop in consumption was significant, especially during the first weeks of the year, but consumer sentiment, and consequently, AmRest sales figures, improved significantly as the quarter progressed. In addition, the currency effect with the depreciation of the renminbi have a considerable impact for another quarter in the region's group's results. Revenues generated during the first quarter of 2024 amounted to EUR 21.6 million, a decline of almost 13% compared to the same period of 2023. In local currency terms, the effect is reduced to 7%.
Nonetheless, let me remark that this revenue represents less than 4% of total AmRest turnover. The EBITDA generated in the region amounted 4.1 million euros, compared to 5.6 million euros a year earlier.
... This represents an EBITDA margin of almost 19%, another decline of 3.7 percentage points in terms of profitability. Despite this drop in profitability levels, the group's business in the countries has adapted efficiently to the new macroeconomic context and market situation, preserving a level of EBITDA margin close to 20%, and maintaining an excellent position to achieve margin expansion if there is a slight improvement in consumption. The number of restaurants in the country at the end of the first quarter was 89 units, following the opening of 2 new restaurants and the closures of 1. And with this, back to you, Eduardo.
Thank you, Santiago. And now we are ready to open the line for questions. Please, operator.
Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypads now. If you change your mind at any time and would like to remove your audio question, please press star then two. If you would like to type a text question, please use the Q&A text box provided online in the top right-hand corner of your screen. We will pause here while questions are registered.
Okay, so maybe taking the privilege of the moderator, I really want to start. I'd like to ask about the key markets which stand out from your financials. On the positive end, Poland, we are seeing a major 46% growth of EBITDA. Do you find it related to long-awaited improvement of Polish consumer or it's your competitive pressure on others? Well, what's still behind and what should we expect going forward?
Well, in terms of Poland, and thank you for the question, Lukasz. We are seeing a very strong consumer in that market. Now, in fact, in all the CEE regions, we are seeing a strong consumer, no? And we add that also with the initiatives that we are taking in the different markets and how we approach the consumers, no? We are being very active in terms of the digitalization and how we approach to the market, marketing campaigns, being close to the consumers, finding their appetites, and having a very close relationship with them. Now, as you can see, in terms of the growth of the different channels, digital has been growing the most.
This is the result of investment that we have made during the last, during the latest years in terms of how to approach the consumer. Now, the kiosks continue being a very important tool for us, and that gives a very appealing approach to the consumer, and also drives, according to the way that is programmed, the needs of the consumer so that we can increase the average ticket that we have with the consumer.
No, but I would say that there are both factors in terms of recovery, as we were mentioning in terms of the opening remarks, that inflation is going down, and we see the purchasing power going up, and second, the initiatives that we are putting in place in the market with the different brands.
Okay, thank you. And, maybe as we shall move on to the two markets which were on the weak end and which are on that scale. Germany was improving profitability for a couple of quarters. What happened in the first quarter of this year when we've seen some erosion back then?
I would say that, in terms of the Western, on the Western Europe market, now I'm getting a little bit advanced on what you are asking. We have two main countries that continues being challenging for us, no? Germany and France. So we are focusing our efforts on those markets. The economy, not in the whole Europe, the economy is performing in the same, in the same way, no? In Germany, the consumer in Germany is quite cautious, and that's something that we are seeing in the latest year. In terms of the different, the industrial production in Germany is quite tough, and as you know, the German consumer is quite like to increase the savings amount in times of uncertainty. So that's what we are seeing. That's what we are seeing over.
And that also applies to France, or the French market is a bit different anymore? It's still issue with the-
The-
... Sushi Shop and the prices of salmon, or it's still mainly the consumer problem?
In different, let's say, different factors affected different countries, but also France is a country that remains challenging for us. Now, the consumer also is not recovering as much as we see that in the CEE markets.
... Okay, then later this year, we have two major events, France Olympic Games, Germany, the Euro 2024, Football Cup. Do you expect any boost coming from those events, or they are not exactly your target group?
That increases. It's interesting because there's a switch of the consumers that you have on this kind of events. Some of the local of the local population goes out of the cities, and you have a lot of tourists. Now, so we would say that the ones that get more benefit with these kind of events are more the international brands, more than the local brands. But of course, we have put a lot of activities there to try to catch some of the traffic that we will see in those countries, in those specific events.
Okay. Thank you. Operator, do we have another question from the room?
We currently have no questions registered, but as a reminder, please press star followed by one. Otherwise, you can type a text question today.
Okay. So, if there are no questions yet, let me follow. As I see in your presentation, you've shown, like-for-like for the first quarter of 2% and, like-for-like year-to-date of 1%. So it implies, something around -1% for our present beginning of May. Do I read it correctly?
That, that's correct, but there is one effect, and thank you for making that question, Lukasz. I think it's a very interesting one. We need to take, in consideration certain, of course, seasonality, and second, let's say, the-
Easter
... the Easter week last we had in is jumping in different quarters this year and last year. So that's something that is, that of course is having an impact, is having an impact on the same, on the same-store sales. Now, so net-net, the trend is, the trend is positive, but we need to take that into, that into consideration.
Okay. So can you estimate what kind of a shift of like-for-like happened between the quarters, let's say like 2 points or more?
I think that here, now, what is important is that, as we were seeing now in February, that we were having same store sales of around 98, 98. We have recovered to levels that are about 100, and this is the trend that we are seeing, no? As we were mentioning on several occasions during the call, what we are expecting here is, that this trend, it will be accelerating during the next months to come. And we continue strict to our guidance, now, that we provided, that we expect to close the year with revenues increasing at double-digit levels.
Okay, great. Thank you. Operator, are there any questions? I don't wanna apologize at all.
I can confirm we have no questions registered.
Okay, so maybe a question from my end on VAT increase or return of VAT on food products in Poland, one of your strongest markets. Have you seen any impact starting from first of all in terms of profitability, you've passed on those costs on to customers, you took part of the hit to you, or there was no impact? So how it looks so far from one of the key markets?
There are a lot of factors to take into consideration. Of course, taxes is one, but also the way that inflation is performing in the different markets. I would say that we make a lot of efforts in terms of revenue management, and we try to place the products in the price that is correct for the consumer. And we need always to have a balance between, of course, the product that we deliver and the value perceived of that product. And that's always the equilibrium that we try to have, considering all the aspects that are related to the P&L of the product.
Now, so there are several aspects to take into consideration in that equation in order to make the decisions in terms of pricing.
Okay, great. Thank you. I have no further questions.
Operator, is there any question?
I can confirm we have no questions registered.
Perfect. So if there's no question, we'd like to take the opportunity to thank you for dialing in to the conference call of AmRest. It's always a pleasure to share the results. It's been a positive quarter for us and looking forward to the best in the following quarters, and hope to see you soon in one of our restaurants. Thank you very much.
Thank you very much.
Thank you.