Uniao Pet Participacoes (AUAU3) Q4 2023 earnings summary

Executive summary

• FY2023 gross revenue reached R$3.8bn, up 12.5% YoY; operating cash generation covered investments for the first time.

• 4Q23 gross revenue rose 5.2% to R$983.8m, while adjusted EBITDA fell 3.5% to R$66.8m and adjusted net income declined 22.0% to R$19.4m.

• Sales recovery is expected from 2H24, supported by a more favorable macro backdrop and maturation of internal initiatives; priorities include profitable growth, efficiency and retention.

Financial highlights

• 4Q23 gross profit was R$382.1m, up 4.5% YoY; gross margin was 38.8%, down 0.3pp YoY.

• FY2023 gross profit was R$1.5bn, up 9.5%; adjusted EBITDA rose 2.9% to R$267.1m, while adjusted net income fell 28.8% to R$77.9m.

• FY2023 gross margin was 39.1%, down 1.0pp YoY; adjusted EBITDA margin was 7.1%, down 0.7pp.

• 4Q23 operating expenses rose 6.3% YoY to R$315.3m; selling expenses increased 12.5%, while G&A declined 7.9%.

Outlook and guidance

• Sales recovery is expected from 2H24, with a goal of growth above the market that is solid, sustainable and profitable; this is an expectation, not formal financial guidance.

• 2024 priorities include increasing basket size, CRM-led retention and repurchase, improved store assortments, service-capacity optimization and customer-service improvements.

• Expansion plans include smaller ~400–500 m² stores, more Zee.Dog franchises and a Zee.Now neighborhood-store pilot; a private-label dry-food launch is planned for 2H24.

• 30 stores opened in 2023, meeting the 30–40-unit guidance; the network ended the year at 246 stores across 23 states.