Grupo Gigante (GIGANTE) Q2 2023 earnings summary

Executive summary

• Q2 2023 revenue rose 6.4% YoY to MXN 7,884.2m; gross margin expanded to 41.2%, while EBITDA fell 6.3% to MXN 969m and consolidated net income increased 12.8% to MXN 262.1m.

• H1 revenue grew 8.0% to MXN 16,394.8m and EBITDA rose 4.9% to MXN 2,182.6m; net income declined 10.2% to MXN 547.5m, mainly due to higher financial costs.

Financial highlights

• Q2 same-store sales increased 4.9% YoY to MXN 7,607.7m; H1 same-store sales grew 7.1% to MXN 15,857.4m.

• Q2 gross profit rose 9.9% YoY to MXN 3,244.7m; gross margin improved to 41.2% from 39.9%, as cost of sales fell to 58.8% of revenue from 60.1%.

• H1 operating income was MXN 1,352m versus MXN 1,364m; finance costs increased 21.7% to MXN 911.4m and net finance expense rose 31.6% to MXN 714.7m.

• H1 basic EPS was MXN 0.47 versus MXN 0.58; Q2 EPS was MXN 0.23 versus MXN 0.21.

Outlook and guidance

• Priorities include disciplined debt management, profitable organic growth, selective expansion and consolidation, e-commerce, digital transformation, efficiency, and technology, logistics and distribution synergies.

• Management cited gradual recovery from economic reactivation and stronger operating cash generation, especially in restaurants; continued focus includes cash strengthening, refinancing and cost savings.