Bellis Finco (ASDA) Q4 2023 earnings summary

Executive summary

• FY23 revenue and underlying profitability grew; reported profit rebounded from FY22 losses, supported by stronger trading, impairment reversal and acquisitions.

• Convenience expansion accelerated with the October acquisition of 356 forecourt stores and 419 food service sites; 470 acquired stores were converted to Asda Express by March 2024.

• Underlying free cash flow reached £776m and leverage declined to 3.0x, while strategic investment continued in store conversions and IT separation.

Financial highlights

• Revenue rose to £25,616.9m from £24,477.8m; revenue excluding fuel was £21,898.4m, up 7.1% YoY, with like-for-like growth of 5.4%.

• Operating profit was £568.6m versus a £140.7m loss; excluding £68.0m of non-underlying costs, operating profit was £636.6m versus £425.4m.

• Profit before tax was £180.3m versus a £431.5m loss; net profit was £194.5m versus a £353.9m loss, including the £225.7m net impairment reversal.

• Adjusted EBITDA increased 24.3% to £1,078m from £867m; EBITDA was £1,032m versus £922m.

• Underlying free cash flow was £776m, up £185m YoY; operating cash flow was £1,245.8m, including a £223m working-capital inflow.

Outlook and guidance

• UK food and non-food markets were expected to remain resilient in 2024, with inflation moving nearer historical norms; household cost pressures and geopolitical uncertainty were expected to persist.

• Priorities include sustaining value in food, non-food and fuel, extending convenience reach, and targeting a return to the number-two UK grocery market-share position.

• Post-year-end plans included a new €900m-equivalent, seven-year term loan B syndication, extension discussions for the RCF and Term Loan A, and a cash tender offer for 2026 secured notes.