Good afternoon, everyone. Welcome to the Eurocash First Quarter 2025 Results Conference, and thank you for joining us online. I'm Jan Domanski, Investor Relations Director at Eurocash. With me today are Paweł Surówka, our CEO, with a brief business update, and Mr. Piotr Nowjalis, our CFO, with the financial results. We will open the floor for your questions after the presentations. Now, over to Paweł.
Thank you very much, Jan. Good day, everybody. Thank you very much for joining our conference. As Jan mentioned, I will do a quick introduction into the business update and where we stand, and then hand it over to Piotr to walk you through the detailed results. Overall, as you know, this quarter has been particularly driven by the sales development in our group, which has been below our expectations, and then also I imagine the expectation of the market. Sales have declined year by year by 7.6 percentage points, from PLN 7.4 billion of sales in 2024 to over PLN 6.8 billion. This is partially something that can be explained by the calendar effect, meaning that obviously we had the Easter effect, that Easter has come in in the second quarter, and there is an additional effect on the quarter, which means that we have been expecting lower sales.
The overall decline on the wholesale relevant market that I will discuss in a second on the next slide has nevertheless surprised us to the downside. Having said that, we see a clear reversal on the sales side in April, so we can see that the Easter effect has been pretty much flattened out and was really just linked to the fact that Easter was later. Still, sales below last year, below our expectations. On the EBITDA and net profit level, I assume that this was obviously still below our ambitions. As I mentioned to you, we believe that we can bring the company back into a profitability closer to the years 2023. The EBITDA level, even though it is low and I imagine has been below your expectations for this quarter, nevertheless, the EBITDA level and the net profit level was in line with our expectations.
We were cautious of the fact that the Easter prolongation to the second quarter, linked to the fact that we will have some one-off impacts from the closed doors that I will talk a couple of slides later about, will have a negative impact on our Q1 results, and therefore the Q1 results will be affected by these measures. Therefore, being given, I can say that while sales has surprised us to the downside, EBITDA and net profit was in line with our expectations and in line with our net profit. We, obviously not knowing what the sales development will be in the next quarters, still uphold our expectations that we will improve the profitability of the company in the entire year significantly. Why is that so?
On the one hand side, this is because, as you can see, we have maintained a pretty strong cost discipline, even though sales have been below last year quite significantly by over 7%. Net profit has been slightly higher, quasi the same as last year, which shows you that we had a big discipline on costs. We still experience cost inflation, but we have reduced costs, particularly on the FTE side quite significantly. Piotr will talk about this more in depth. We have worked also particularly on our revenue management and on the margins, which allowed us to show a similar result year- on- year with much less sales.
We believe we are very confident that as sales pick up both seasonally and structurally in the next quarters, we will see that this lever that we have created from lower cost and higher margin will show itself in the results going forward. There are also a couple of non-recurring items that have affected our results this quarter. One of them is the consolidation of Inmedio. Piotr will talk about it a little bit more. The other element is the closure of some stores. 19 Delikatesy Centrum stores have been closed in the first quarter. 40 Duży Ben stores have been closed in the first quarter. Overall, the negative one-off impact of these changes has been PLN 8 million in this quarter. We will close a total of 35 Delikatesy Centrum stores. That will, however, be it in terms of bigger store closures.
Those store closures have been done in a spirit of revision of our entire own store network that has been done particularly by some of the new members that have joined our team and are reviewing our overall retail operations. We have done this in a prospect of making sure that each of our retail stores eventually becomes profitable. The stores that we have now closed are the ones where the team agreed that even if we put in our best effort, their particular situation does not give us a prospect to deliver a break-even profitability on those stores in a foreseeable and close time. Therefore, we have closed them. The overall negative contribution of the closed stores for 2024 was just below PLN 25 million.
It can be expected that next year's result will be accordingly improved by PLN 25 million thanks to the store closures that we have now enacted, which again have negatively impacted our Q1 results, but will positively affect our results going forward from the lack of this negative contribution. Overall, again, sales have been down partially because of seasonality and calendar effect, partially because the market has been lower than we forecasted. Still, we've been able to maintain the profitability from last quarter thanks to cost discipline and particularly revenue management. We expect with the sales uptick that we get in the second quarter and a further development of all the cost-saving measures that will develop over the last of the year, that this will help us to drive profitability going forward.
I'm pretty confident that for the entire first half results, we will show a clear improvement year- on- year on net profit and EBITDA level. I already mentioned that yes, the entire FMCG market in Poland has been up in the first quarter, driven particularly by discounters. However, our market, the wholesale relevant market that we are selling to, so the so-called traditional stores, have been down -4.1%, excluding the calendar effect that would have been a -2.5%. We have forecasted and budgeted lower sales this quarter. This has still been lower than expected, and we are confident and hope that the market will rebound in the next quarters. Obviously, that's the biggest question mark for us so far.
Having said that, we are focusing on the elements that we can affect, which is, again, improvement of our retail companies and bringing most of our companies to better profitability, particularly also the projects that I will highlight later. That is a brief market introduction, and maybe I will ask Piotr to walk you through the precise numbers.
Thank you. Looking deeper into the sales dynamics split by segments and business units, as usually at Eurocash Group, the wholesale business stands for the vast majority of sales and EBITDA. We observed in the first quarter a significant drop of cash and carry sales in relation to last year, first quarter. It was 11.9%. As concerns the distribution part of the wholesale segment, it was a 9% drop. Also, our impulse and tobacco business, Eurocash service, dropped by 5.9%. As concerns retail sales, we observed a similar drop, 8.1%. The franchise part of the business was down by 8.4% from PLN 651 million to PLN 596 million. Owned stores and joint ventures dropped by a similar number, by 7.9%, which means effectively a drop from PLN 1,090 million to PLN 1,004 million.
As concerns growth platforms, as we call them, we are quite positive on Frisco, and the increase of 7% of the segment was mainly driven by 17% growth of Frisco business. We will elaborate more on this in a second. Duży Ben increased the sales quarter by quarter by 5%.
I will maybe just add one thing, one thing that I omitted to mention on the market segment and also on the sales development, particularly the drop in sales on Eurocash service, so our tobacco company. This is a drop that is here particularly driven by the calendar effect here. It is the postponed entrance of the very high increase in excise tax that has been affecting in Poland the way how stores stock themselves. It was a development that was pretty difficult for us to forecast because we have not had the situation yet where the excise tax increase actually only comes in the end of April, and we did not know how stores are going to adapt and stock.
What we have seen is that over the first three months, clearly we had less sales and less stock up from the stores and tobacco products in EC service. But we see very clearly that as they have now to stock up with new products with the new excise tax, this negative trend has been pretty much reversed. That is really just a calendar effect and more of a one-off link to the changing of the calendar by the government.
We are recovering, obviously, in the next month. Yes. Looking deeper into the EBITDA in both wholesale and retail segments, we observed a drop compared to last year from PLN 144 million to PLN 125 million. As concerns the retail part of our business, it was also a drop by 40 basis points from PLN 47 million to PLN 37 million, which transfers into a drop from 2.7% in terms of profitability to 2.3%. As mentioned before, we charged the calendar for the drop in sales, which other participants of the market confirmed. Not happily, not eagerly, but it was the fact for the first quarter, definitely. Pawel, if you could comment a little bit more on Frisco development and Duży Ben.
Yes, as you had already mentioned, Frisco is developing very much in line with our expectations, even exceeding them. We have strong customer acquisition, particularly in what we call the VIP customers, so regular loyal customers that buy from us at a very high basket. We have a certain drop in the basket size, which, however, is also something that we have expected and that is not so much linked into a changing of consumer behavior, but more linked to the fact that with the very strong acquisition that we have, normally clients that enter the network buy at a somewhat lower level on the basket, and then as they mature, the basket gets bigger. A reduction on the average basket size is to be expected if we have strong customer acquisition, which we currently have. We are broking on both fronts.
On the one hand side, strong consumer acquisitions, particularly in Warsaw, where we have the new warehouse that we need to fill, but also in locations like Poznań that we are now maturing in and penetrating much stronger. On the other hand, we are working very strongly on consumer loyalty with our loyalty program and also a dedicated push to understand clients better and understand our share of wallet and adapting ourselves to our clients. Something that the new Frisco team is very much focused on, and we see very clear results. Here, Frisco is on course of doing our expectations. As already mentioned, I believe that by 2026, Frisco should reach the point of being a break-even company. The same ambition we have for Duży Ben.
As already mentioned, we are now reviewing the entire network to make sure that we drive the expanded network to profitability, looking now over location by location and taking concrete measures from clusterization to also working on other categories to make sure that we reach full profitability on the network while growing sales. In this spirit, we have closed 40 locations where in the review of the full network, we have decided that we can allocate our resources better in terms of driving profitability. We will continue opening new stores in other locations, but as we are growing very fast, sometimes the choice of locations has to be reviewed. We have done this now, and so minus the 40 that we have identified as elements to eliminate, we are now focused to get all the other stores up and running and really get them to break even.
On the one hand side, this is driven by sales, but also very strong work on margin. We are currently reviewing the entire assortment, trying to add also high margin elements to the Duży Ben portfolio to drive both the like-for-like sales, but also the profitability. Duży Ben is one of the companies that I allocate a lot of focus right now, and I hope we will come back very quickly with you with an update on the exact timeline of how we can, when Duży Ben will reach full break-even status.
I would be more than happy to comment on cost because that's something we are proud of in terms of what we managed to deliver in Q1. In this very challenging environment, we managed to decrease the costs in the company by 1.2%. With the exclusion of depreciation, it's even more. It's 1.6%, dropped from PLN 838 million to PLN 824 million. The most significant category within the cost categories we deal with, I mean salaries and social security, dropped by 5% from PLN 431 million to PLN 409 million. The only one significant increase was the third-party service expense driven mainly by agency fees and marketing expense. This part of the business is extremely important for all wholesale and retail businesses.
In Q1, Eurocash, being quite well optimized in terms of working capital management, managed to extend the payment terms in respect of liabilities by six days while keeping both receivables and inventory on track compared to Q1 2024. The overall cash conversion cycle is negative, of course, in the company and is estimated at - 28 days. As concerns net financial expense, quite similar to what we observed in Q1 2024 because of very similar level of both bank debt and other financial instruments, I mean factoring and reverse factoring. What is extremely important for us is keeping stability and safety of the business, which is explained by the ratio of net debt to EBITDA. Both before IFRS 16 and after IFRS 16, we are on a very safe level in the toughest quarter of all quarters, I mean Q1. Last year, the ratio was 0.95.
This year, it's 1.12 with the nominal value of the debt of PLN 448 billion compared to PLN 400 billion last year. As concerns net debt to EBITDA after IFRS 16, insignificant increase from 2.59 to 2.71. It's still a very comfortable range. Please keep in mind this quarter was very challenging and tough in terms of not only lower sales dynamics, but also challenging market conditions. Paweł, would you like to comment on store closures maybe?
Yes, yes, absolutely. I think I already mentioned a lot in the previous slides. As already mentioned, we now really take a non-compromise approach to making sure that the three areas where we are still below zero profitability, which is the Delikatesy Centrum owned stores, Duży Ben, and Frisco, that we drive them close to break even as fast as possible. I already mentioned that Frisco is very well on track. In the two areas that remain, Delikatesy Centrum and Duży Ben, we have now focused all our resources on making sure to get them to profitability. In Delikatesy Centrum, that is being done by the new excom. We had a new head of the owned stores, Krzysztof Trojanowski, who joined us from Maxima Group, so Stokrotka, which is the most similar format to ours in Poland.
A new buying head, Arkadiusz Duda, who joined us from Profi in Romania, has now reviewed together with us the full network, and we have come up with an action plan of getting all of the locations to profitability in a very quick time frame. At the same time, we had identified 35 stores altogether where we say we do not have the prospect in a quick time to get them to profitability, and that is why we decided that it is better to focus our efforts where we see a better return on investment, and therefore have decided to close those stores. The same approach we have taken in Duży Ben. A total of 75 stores are going to be closed this year, 35 in Delikatesy. There are still 16 to be closed and remain to be closed in Delikatesy in the second quarter.
Duży Ben. From this, as already mentioned, we have one-off costs that have to a big extent affected the first quarter negatively, but the annualized savings should be in the realm of PLN 25 million, simply avoiding the negative contribution that we had incurred. As we go into the next quarters, we will see this in an improved profitability of our retail operations in Delikatesy and in Duży Ben.
A short summary, key financials of the first quarter 2025. As we both, Paweł and myself, mentioned, it was not a very good quarter in terms of sales dynamics - 7.6%. In terms of gross profit on sale, it was - 3.2. As you may guess, it must have meant the increase in the gross profitability on sales, and that was indeed the increase by 60 basis points from 13.1 last year to 13.7. The EBITDA dropped from PLN 136 million to PLN 121 million by 11%, while keeping the EBITDA profitability on the level of very similar 1.9% to 1.8% year- to- year. In terms of EBIT profitability, we dropped from a loss of PLN 12.5 million to a loss of PLN 28.9 million, which means dropped in profitability margin by 20 basis points. Gross profit, it was of course PLN -90 million loss, gross loss compared to PLN 76 million gross loss last year.
On continued operations, we posted net loss of PLN 82 million compared to PLN 78 million in 2024. This difference between continued operations and discontinued operations, of course, is a result of Inmedio being treated by the company as an asset dedicated for sale, as a company dedicated for sale with all the consequences, assets and liabilities dedicated for sale, of course. The overall net profitability of the company is negative, - 1.2%. The effect of Inmedio being discontinued and unconsolidated is - 8.6% last year and - 5% this year. Last but not least, loss on the period, loss for the first quarter was PLN 87 million compared to PLN 87.3 million, so just a slightly tiny positive difference compared to last year. That is what the company delivered in terms of financial and economical results. We are more than happy to answer your questions.
Thank you very much. We have a number of questions already in our chat panel, so please feel free to ask further questions if anything we should discuss in more detail. Let me group them in topics. Starting with market and sales, if you could give us some more light on sales underperformance and the market dynamics, the wholesale relevant market and the chains have been doing better than Eurocash. You mentioned the excise tax on tobacco and alcohol impacting this. Could you give us more light on that topic?
Yes, so it is true that sales have been below our expectations and the wholesale relevant market has been well below the total FMCG market, and therefore that has driven also our sales. Here, I already mentioned a couple of factors. Obviously, Easter affected all of us. Having said that, our market has always been particularly driven by Easter buying. There is an effect on the tobacco part that I already mentioned and linked to the excise tax, and this is something that has affected the sales quite significantly in the tobacco market and will be reversing in Q2.
There is also the element that probably also linked to the Easter effect, but more pronounced than we have seen and already maybe expected from the postponement of the Easter part, is that the biggest part of the decline in the wholesale relevant market has been driven by strong alcohol and then later a little bit of beer. Both the beer and strong alcohol category have performed particularly badly, not only in the wholesale relevant market, but overall, but the wholesale relevant market is very much overrepresented. These categories are overrepresented in the wholesale relevant market, and therefore a drop in those two categories has on the one hand side affected the wholesale relevant market stronger than it has, for example, the discounters. It has also affected Eurocash stronger than maybe other players because it is a domain in which we are particularly strong normally.
The fact that these categories have been so much underwater is, so the entire category just below a two-digit decline on strong alcohol, for example, is quite remarkable. We have been that our market and us have been very affected by this. Now, we do not believe that this is a structural change. This is not coming from the fact that now in Poland, people have stopped consuming strong alcohol, or it is not also in the fact that there is such a big channel change that now the entire strong alcohol sale has wandered off to discounters. We believe it is really more linked to the fact that the Easter holidays have been drawn out to the second quarter. A certain proof point for that has been our April sales, where the like-for-like sales of all of our franchise stores have been well into the double-digit terrain.
We saw that the retail sales have been strong, and therefore we just believe it's more of a seasonal swap in calendar. Having said that, now, April has been pretty strong. May sales have been now a little bit affected by weather, but I still believe that we see a certain reversal of the trend that we have seen here in the second quarter.
Okay, thank you. We have a set of questions on the closed stores. I would refer to that. First, whether they've been franchised or owned and how it's impacting the working capital related to those stores. Then, yeah.
Yes, so first of all, the short answer is it's only owned stores. As mentioned before, we have a couple of elements that are drawing our EBITDA in the entire group, which are negative contribution parts of our business. The main parts are owned retail stores. The others are particularly in Delikatesy Centrum. The second one is Duży Ben owned stores. The third are Frisco. As we are committed as a management board to get all those three areas into profitability, we have now taken a very strong second look in our entire network. In Delikatesy Centrum, this has been done additionally through the fact that we have a new team that has really reviewed again all the locations that we have.
Particularly as we are now implementing the DC2.0 project, we have said, okay, which are the locations that we really believe that together with the DC2 and the agents project, we can get the profitability. In the fact that we are now spending money on converting those stores, we had to ask ourselves again, are there any locations where we do not believe that it makes sense for us to spend the money on the additional change in layout because the return on investment just is not there. The location will probably not turn profitable within the next year. With this in mind, we have taken the decision, not lightly, but we have taken the decision to close those stores.
As they have been quite unprofitable, as you can see from the numbers of the negative contribution, this will have a net effect, quite positive net effect on our retail part and will not affect the sales so much because partially the reason why they have been so unprofitable is that they were lacking sales in a quite significant manner. We prefer to now focus our resources on the stores where we do see a positive outlook and getting them to profitability within the next year. This is what we are now focused on. There has been the impact of negative contribution on the networking capital. Obviously, we are trying to recuperate as much as we can from their stock and just distribute it among other stores. If we have assets, fixed assets that need to be written off, we are writing them off.
That's part of the PLN 8 million charge that you have seen in the first quarter that we are showing. On the sales side, it doesn't really affect so much the entire operations. I don't know what you want to comment on otherwise on the working capital part, but I think that's pretty much the most important part.
If you could go back to slide 10 because there's exactly this. Here, the question was whether the PLN 19 million cost savings relate only to Q1 or first half combined. If you could tell us first half, it's a higher number.
I was saying 19.2. Is this the question?
19.2, that relates to the.
Delikatesy Centrum, yes, but please bear in mind these are annualized figures. So this is the negative contribution of those stores from 2024, actually. So if you are looking at the full impact on our company, the full impact will be materialized in 2026 when we will have the entire year without this negative contribution. Obviously, there is a ratio effect this year because we have not closed those stores on the 1st of January. We continue paying the rent, so we will only see a part of this saving this year. Obviously, as we get into the Q3, Q4 quarters, we will see a pro rata impact of those annualized PLN 20 million in Delikatesy Centrum.
Are you planning any further closes of the stores?
Not in that scale. We are reviewing the network, and as I said, we have taken a pretty much no compromise approach to saying we really want to drive now the business units to profitability, and we want to get them over the line as quick as possible. There might be a certain network hygiene where stores that are surprising us on the downside will be closed, but we will try to offset them with new store openings on the other side. That is why I would consider that this has been an exercise where we take a certain line. On that scale, I do not expect to have significantly more store closures in the quarters in this year.
Thank you. We'll close this topic, and the next one would be about the gross margin. Should we expect the improvement to continue in the future? What are the drivers of the gross margin improvement in the first quarter? Basically, if you could give us more light on that.
Yes, I think I mentioned during the presentation of our annual results that one of the changes that we have done in line with the change of our board member responsible for purchasing, so Marcin Celejowski, has joined us not so long ago, I think in October last year. One of the changes that he has enacted on the purchasing team was to obviously take a harder look at our overall margins and make sure that we are very much disciplined in our negotiations with suppliers. The other side was also to form and set up a new revenue management team in the company, which has the purpose of really allocating our margin investments and taking a much more data-driven approach into how we allocate our margin investments and what is the return on investment on those margin investments.
Obviously, as you know from other retail companies, if you have a company like ours that has a lot of products, we are dealing with over 40,000 SKUs in the entire network, and we have a lot of people who touch pricing. We have salespeople, regional directors, promotional directors who have a certain influence on price decisions. If you have such a scattered decision tree on pricing decisions, you're not always taking pricing and margin decisions in an optimal way. Particularly in a company like ours, which is a sales company, you are mostly biased towards sales. The revenue management function that we had has particularly reviewed our investments and margins and has put certain guardrails into price adaptations that we can take.
We have also reviewed client segments, taking a harder look at non-profitable transactions and also thought very strongly about how we can get clients into a profitability milieu that we want to see. It has been a couple of measures. The first one was to review degrees of freedom in pricing decisions on the ground, and we have put certain guardrails here. We have reviewed client segments, particularly reducing unprofitable sales, particularly to other wholesalers and big chains. We have also taken additional measures to expand the profitability of our current clients, where the biggest driver of increased client profitability is additional loyalty. Here, the actions of the revenue management team are very much in line with the actions of the overall company, which is to drive our client loyalty.
If you have been following Eurocash for some time, you know that a very big push of ours in the past was to be able to work on loyalty better thanks to our POS system. In a certain way here, all things align themselves because thanks to the POS system, we have a better understanding and a better view on how our pricing decisions are translating into additional loyalty of our clients, and we can take better informed decisions. The improvement in gross margin that we can see here is on the one hand side an effect of tougher negotiations with suppliers that I expect to continue, but on the other side, a wiser and I would say more smart and data-driven approach to building our margin and also thinking about how to grow our sales growth.
Our sales growth now has been really boiled down to two very simple measures, which is we want to increase franchise stores and we want to increase the loyalty of our franchise stores, and we want to do so in the most profitable way possible. I believe, and that's why I see those Q1 results in a more optimistic measure than maybe an outside investor is looking at, is that we've been able to do just that over this quarter. On the one hand side, we've increased store count and our franchise network has expanded quite significantly in Q1. On the other side, we've been able to grow client loyalty by one to three percentage points depending on the banner over the same time. We've done so in a way which was quite disciplined in a margin investment level.
We have not sacrificed margin while getting additional loyalty. That is something that, to answer the question, we will continue doing in the future. I think you can expect that this improvement in gross margin will still take place in the next quarters. Having said that, in Q1, it was particularly pronounced because we had a relatively low margin in cash and carry last year linked to a very big certain price war that has been taking place in the cash and carry segment last year that we did not repeat or has not repeated this year. The discipline on margin and the efficiency of investment of our margin and therefore working on our cash margin is something that is going to continue also in the next quarters.
I think with this answer, you also sorted out the next question, which was just recapping the strategic view. What's your vision over the long-term run in terms of market positioning, revenue mix, and supply chain management? What is or will be your key competitive advantage over companies like Zabka? I think you gave lots of insight to that. Just summarizing the long-term positioning, I think would be helpful.
Yes. I mean, again, our approach is to say we want to be the number one franchise organizer in Poland based on the existing stores that we have. We want to expand our franchise network and continue expanding it both in terms of store count and in terms of loyalty of those clients. Obviously, also competitiveness of those stores. What we have seen is that our franchise stores are expanding. We can see that our franchise offer is attractive compared to the franchise offers on the independent market because we see quite well reception in the sense that stores are switching from other banners to ours in the independent market. We are able to grow our store count. In the same time, stores are buying more from us. We can see that we have an attractive offer.
In that respect, this is our growth strategy as a wholesaler. On the other side, obviously, as a retailer, as a franchise organizer, we have to be constantly thinking about how to improve the profitability and competitiveness of those stores. We are implementing a lot of measures in that respect, something that maybe around the first half of the year, we will also share with you in more of a strategic update. This boils down to the fact that we are more and more getting active also in the retail propositions of the franchise stores that work with us. Particularly through our POS systems, we are now able to implement prices and promotions on store level on a bigger and bigger part of the assortment.
We have now rolled out a system where we are proposing price points for 1,000 SKUs on most of our franchise stores, which already takes a significant portion of their sales. Through that program, we are getting into our strategic direction, which is to slowly but slowly get from a pure wholesale relationship to a more franchise retail relationship with our partners. This is exactly what we're doing.
We have here a question dedicated to Mr. Piotr Nowjalis. As the new CFO, you've been very positive about the potential for financial improvements. However, there are no improvements yet. They're just the opposite. Can you update us on your view after more time spent as CFO?
That is a very interesting question because it is to some extent contradictory. Of course, there is financial improvement in terms of working capital, for example. That is what I promised. It will be my top priority. It just began to be delivered. Frankly speaking, I do not understand the nature of the question. I may guess, however, it is a question about financial results and improvement in terms of profitability compared to last year. So far, of course, such an improvement has not been observed. As you know, the first quarter is the toughest quarter in our business. This is not the quarter you should expect the improvement in profitability or basically dynamics of the company. What we are not happy, however, is, of course, the sales dynamics. Drop of 7.6% in relation to last year is not something we should be delighted at.
We are not, obviously, as we both, me and Paweł, tried to explain. However, myself, it's a question to me, so let me explain on my behalf. I'm absolutely positive on next quarter potential in terms of both gross margin potential, profitability, and working capital improvement. That's kind of a statement I'm happy to deliver. I will be more than happy to discuss about it after first half results and third and fourth quarter results.
I think one of the final questions is regarding Inmedio. If you could give us more information about the impact on the consolidation and generally about the process, how you see it's going forward, whether the potential, what are the price.
Yes, of course. In terms of balance sheet effect of this deconsolidation process and Inmedio shares being treated as a company dedicated for sale, it is more than PLN 200 million of assets that we are not showing in the balance sheet. We show it as a discontinued operation. As concerns the profitability, Inmedio, being a company generating losses last year and this year, in fact, effectively putting Inmedio shares into the category of an asset being dedicated for sale means improvement in net result. However, this year, effect is PLN 5 million in comparison to the effect on Q1 2024 of PLN 8.6 million. The process we are involved in at shareholders is being conducted for a couple of months. So far, there are no new developments we can reveal or comment on.
I think slowly we can conclude the.
Okay. Thank you very much for your questions. Thank you for bearing with us. Again, I understand that, and this is almost always the case, the first quarter results of Eurocash are always not the best ones. Having said that, we would like to assure you that we continue the track and we are both committed to implement the structural changes that we've talked to you about and that we are enacting every day. Obviously, having more sales would be nice. This quarter has particularly not been kind to us and a lot of elements have overlapped to lead us to a negative trend in sales. The way that we saw it here, I'm pretty confident that this quarter, the second quarter, this will already be different. I think that then the overall result situation of the company will also look very different.
Thank you very much. I'm looking forward to seeing you next quarter.
Thank you. With any further questions, I'll be happy to take them offline to address everything and not leave you without answers. Thank you very much.
Thank you.