Zabka Group (ZAB) Q4 2024 earnings summary

Executive summary

• Achieved a successful IPO on the Warsaw Stock Exchange in October 2024, unlocking new growth opportunities and exceeding IPO guidance with strong financial and operational performance.

• Opened 1,166 new stores, including 60 in Romania, and expanded digital and convenience offerings.

• Upgraded digital ecosystem with a new app, achieving break-even in digital customer offering and positive EBITDA in Q4 for QCommerce and rapid delivery.

• Recognized for sustainability and workplace excellence, including EcoVadis Platinum Medal, Retailer of the Year, and Gallup awards.

• Maintained robust like-for-like growth of 8.3%, slightly above the midpoint of the 7.5-9.0% target range.

Financial highlights

• Sales to end customers rose 20% year-over-year to PLN 27.3 billion, driven by network expansion and 8.3% like-for-like growth.

• Adjusted EBITDA increased 24% to PLN 3.5 billion, with margin up 40bps to 12.8%.

• Adjusted net profit surged 66% to PLN 714 million, with margin up 70bps to 2.6%.

• Free cash flow reached PLN 1.5 billion, over three times higher than the previous year, supported by strong working capital release and EBITDA growth.

• Leverage reduced to 1.5x EBITDA from 2.3x, supported by strong cash flow.

Outlook and guidance

• Plans to open over 1,100 stores in 2025, exceeding midterm guidance and maintaining 1,000+ p.a. in the medium term.

• Targets mid to high single-digit like-for-like growth and stable adjusted EBITDA margin at the top end of the 12-13% range.

• Adjusted net income margin expected to improve toward 3% in the near term and 4.5% in the medium term.

• Committed to doubling sales to end customers between 2023-2028 and confident in delivering growth and profitability in line with IPO guidance.