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Portugal's Sonae Q4 profit rises 46%, sees challenges ahead

LISBON, March 17 (Reuters) - Sonae, which owns Portugal’s largest food retailer, said on Thursday fouth-quarter net profit rose 46% after most coronavirus restrictions were lifted, though challenges linked to rising inflation and war in Ukraine loom.

Sonae, whose businesses range from food retail to telecoms, earned 109 million euros ($120.40 million) from October to December, up from 75 million euros a year earlier, when the pandemic still restricted private consumption.

Consolidated sales rose 6.7% to 2 billion euros in the fourth quarter, it said in a statement.

As the effects of the pandemic wane, the company faces the consequences on the Portuguese economy of the war in Ukraine, which include inflation as a result of shortages of food commodities.

Sales from its food retail unit Sonae MC, which runs around 300 hypermarkets and large supermarkets under the Continente brand, grew by 8.9% to 1.5 billion euros, though the war in Ukraine and rising energy costs “could put pressure on its businesses,” the statement said.

Chief Executive Claudia Azevedo said that in 2022 the uncertainty and challenges “will not be lower” than those of the last two years of the pandemic, but Sonae has a “very stable financial situation, which allows it to explore new and attractive opportunities”.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 7.9% to 208 million euros in the quarter, while its EBITDA margin remained stable at around 10.3%.

For the whole of 2021, Sonae’s profit almost quadrupled to 268 million euros, while EBITDA increased 18% to 738 million euros.

Its debt was cut almost in half to 563 million euros in 2021, while operating capex increased by 5.8% to 279 million euros, it said.

Portuguese rival Jeronimo Martins reported a 49% increase in fourth-quarter net profit last week.

$1 = 0.9053 euros Reporting by Sergio Goncalves; editing by Inti Landauro and Barbara Lewis

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