Pepco Group (PCO) H1 2026 earnings summary

Executive summary

• Delivered strong H1 FY26 results with revenue up 5% to €2,470m and underlying EBITDA up 17.5% year-over-year, driven by gross margin expansion and strategic execution.

• Achieved sixth consecutive quarter of positive like-for-like growth, with Western Europe and South CEE leading performance.

• Accelerated Western Europe expansion, aiming to double store count by FY2030 with at least 600 new stores between FY27–FY30, and announced pilot entry into Ukraine and North Macedonia.

• Completed €200m share buyback ahead of schedule; announced additional €400m tender buyback for H2 FY26.

• Transformation plan progress includes exit from FMCG, focus on higher-margin categories, and digital initiatives such as a new mobile app and loyalty program in Poland.

Financial highlights

• Group revenue: €2,470m (+5.0% year-over-year); underlying EBITDA: €516m (+17.5%); underlying EBIT: €323m (+53.1%).

• Group gross margin expanded by 250bps to 49.7%, driven by exit from low-margin FMCG and improved product mix.

• Underlying profit after tax rose 52.3% to €198m; underlying EPS up 56.6% to 35.4c/share.

• Unlevered free cash flow reached €181m, up over 250% year-over-year, with 91% conversion of profit after tax.

• CapEx guidance for FY26 remains €160m–€180m, with spend weighted to H2; H1 CapEx was €48m, with increased IT investment.

Outlook and guidance

• Upgraded FY26 EBITDA guidance to low teens percent growth and net earnings to at least 50% growth.

• Gross margin guidance raised to at least 49.4%; unlevered free cash flow guidance increased to over €250m.

• Revenue growth guidance unchanged at 6–8%; net new store openings for FY26 expected to be around 250.

• Plans to return all excess levered free cash flow to shareholders from FY27 via dividends and buybacks, with payout ratio rising toward 40%.

• Q3 to date shows Pepco LFL +1.5% (excl. FMCG), with strong momentum in May.