FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 2024
Brazilian
Distribution Company
(Translation of Registrant’s Name Into English)
Av. Brigadeiro Luiz Antonio,
3142 São Paulo, SP 01402-901
Brazil
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F)
Form 20-F X Form 40-F
(Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101 (b) (1)):
Yes ___ No X
(Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101 (b) (7)):
Yes ___ No X
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes ___ No X
Earnings release 1Q24
São Paulo, May 7, 2024. GPA [B3: PCAR3] announces the results for the 1st quarter of 2024.
As a result of the process of discontinuing the activities of the Extra hypermarkets, in 2021, and Almacenes Éxito S.A. (“Éxito”), in 2022, as disclosed in the material facts and notices to the market, these activities are accounted for as discontinued (IFRS 5 / CPC 31). Accordingly the income statement were retroactively adjusted, as defined by CVM Deliberation 598/09 – Non-current assets held for sale and discontinued operations.
From 1Q24, gas stations activities (“Gas Stations”) passed to be accounted as discontinued activities (IFRS 5 / CPC 31). Accordingly the Income statement and the notes of financial statement were retroactively adjusted, as defined by CVM Deliberation 598/09 – Non-current assets held for sale and discontinued operations.
The following comments refer to the results of continued operations, including the effects of IFRS 16/CPC 06 (R2), and comparison relative to the same period in 2023, unless otherwise indicated.
Continuous operational improvement with an increase of 1.8 p.p. in the Adjusted EBITDA Margin and significant reduction of R$ 1.4 billion of net debt vs. 1Q23
| · | R$ 428 million in Operational Free Cash Flow(1) in the last 12 months, representing an improvement of R$ 736 million vs. 1Q23; |
| · | Gross revenue growth of 8.2% vs. 1Q23; |
| o | Sales growth of 10.3% in Pão de Açúcar banner and 22.8% in Proximity format(2) |
| o | Strong growth of 25.1% in E-commerce operation |
| · | Increase of 8.1% in Same-store sales (5.4% ex. calendar effect) vs. 1Q23; |
| o | Strong growth of 9.3% (6.7% ex. calendar effect) in Pão de Açúcar banner and solid seasonality performance |
| · | Sixth consecutive quarter of Market share(3) gains, with a 0.2 p.p. increase vs. 1Q23; |
| · | Gross profit of 27.2%, 1.5 p.p. increase vs. 1Q23; |
| · | Adjusted EBITDA Margin(4)(5) of 8.1%, an increase of 1.8 p.p. vs. 1Q23, and growth of 41.4% in the same period; |
| · | Net debt reduction of R$ 1.4 billion with 6.8x of deleverage pre-IFRS 16(6) vs. 1Q23. |
| INCOME STATMENT R$ million, except when indicated |
GPA Consolidated | GPA Consolidated | GPA Consolidated | |||||
| 1Q24 | Gas Stat. IFRS 5 |
1Q24 w/ Gas Stat. | 1Q23 | Gas Stat. IFRS 5 |
1Q23 w/ Gas Stat. | Δ | Δ w/ Gas Stations | |
| Gross Revenue | 4,867 | 356 | 5,223 | 4,496 | 340 | 4,836 | 8.2% | 8.0% |
| Net Revenue | 4,586 | 356 | 4,942 | 4,157 | 339 | 4,496 | 10.3% | 9.9% |
| Gross Profit | 1,245 | 31 | 1,276 | 1,068 | 28 | 1,096 | 16.6% | 16.4% |
| Gross Margin | 27.2% | 8.6% | 25.8% | 25.7% | 8.4% | 24.4% | 1.5p.p. | 1.4p.p. |
| Selling, General and Administrative Expenses | (919) | (23) | (942) | (842) | (22) | (863) | 9.2% | 9.1% |
| % of Net Revenue | 20.0% | 6.4% | 19.1% | 20.2% | 6.3% | 19.2% | -0.2p.p. | -0.1p.p. |
| National Equity Income | 16 | 0 | 16 | 8 | 0 | 8 | 100.4% | 100.4% |
| Adjusted EBITDA GPA Brazil (4)(5) | 372 | 8 | 380 | 263 | 7 | 270 | 41.4% | 40.7% |
| Adjusted EBITDA Margin - GPA Brazil (4)(5) | 8.1% | 2.2% | 7.7% | 6.3% | 2.1% | 6.0% | 1.8p.p. | 1.7p.p. |
| International Equity Income (7) | 0 | 0 | 0 | (46) | 0 | (46) | 0.0% | -100.0% |
| Adjusted EBITDA GPA Consolidated (5) | 372 | 8 | 380 | 217 | 7 | 224 | 71.1% | 69.3% |
| Adjusted EBITDA Margin - GPA Consolidated (5) | 8.1% | 2.2% | 7.7% | 5.2% | 2.1% | 5.0% | 2.9p.p. | 2.7p.p. |
| Other Operating Revenue (Expenses) | (205) | (0) | (205) | (51) | 0 | (51) | 300.0% | 300.0% |
| Net Income Controlling Shareholders - Continued Op. | (407) | 5 | (402) | (319) | 4 | (315) | 27.6% | 27.6% |
| Net Margin Controlling Shareholders - Continued Op. | -8.9% | 1.3% | -8.1% | -7.7% | 1.1% | -7.0% | -1.2p.p. | -1.1p.p. |
| Net Income Controlling Shareholders - Discontinued Op. (8) | (253) | (5) | (258) | 71 | (4) | 67 | n.d. | n.d. |
| Net Income Controlling Shareholders Consolidated (9) | (660) | 0 | (660) | (248) | 0 | (248) | 166.5% | 166.5% |
(1) Adjusted EBITDA pre-IFRS 16, excluding equity income, minus variation in working capital, minus Capex; (2) Excluding “Aliados” revenue; (3) In comparison with total sales in the Brazilian self-service market, calculated by Nielsen Consulting; (4) GPA Brazil excludes impacts from the international perimeter (Cnova); (5) Operating income before interest, taxes, depreciation and amortization adjusted by other Operating Income and Expenses; (6) Net Debt divided by GPA Brasil Adjusted EBITDA pre-IFRS 16 LTM; (7) As of 4Q23, due to the sale of the total participation held in Cnova, the equity income from international operations is null; (8) It includes the results from the discontinued operation of hypermarkets, gas stations and Éxito Group; (9) It considers results from continued and discontinued operations.
| 2 |  |
Subsequent events, sales of equity participations and non-core assets, and public offering of shares
| · | On October 16, 2023, GPA's Board of Directors approved the signing of a pre-agreement for the sale of GPA's entire remaining 13.3% stake in Éxito for US$ 156 million (R$ 789 million) to the Calleja Group, owner of the leading supermarket retail group in El Salvador, as part of a Tender Offer (“TO”) launched by the Calleja Group in Colombia and the United States. Access the relevant fact in more detail at the link. In January 2024, the TO was concluded and the Company announced the receipt of R$ 789 million. In this way, the Company concluded the sale of the entire remaining 13.3% stake held in Éxito. Access the material fact in more detail at the link. |
| · | On March 13, 2024, the Company concluded the public offering process for the primary distribution of shares issued by the Company, through the issuance of 220 million new shares, totaling R$ 704 million. Access the relevant fact in more detail at the link; |
| · | On April 2, 2024, after the public offering for the primary distribution of shares, the Casino Group announced the reduction of its stake in the Company to 22.5% (link), resulting in the end of its control of GPA; |
| · | On April 18, 2024, the new Board of Directors, now comprising nine members, took office, including: six independent members (vs. three previously), two members of the Casino Group (vs. six previously) and one member of management (CEO). With the majority of independent members (six out of nine members), new expertise added, greater diversity (two new female members) and with the new chairman position now being held by an independent member, we made another important advance in the Company's governance (link); |
| · | On April 30, 2024, we announced adherence to the ICMS debt settlement program of the Government of the State of São Paulo, which allowed a reduction, according to the discounts resulting from this agreement, of approximately 80% for the settlement of contingencies that amounted to R$ 3.6 billion. Access the relevant fact in more detail at the link; |
| · | On May 2, 2024, we announced the sale of our administrative headquarters building as part of initiatives to sell non-core assets to reduce the Company's financial leverage. The transaction value totaled R$ 218 million. Access the relevant fact in more detail at the link. |
| 3 | |
Message from the CEO
|
GPA recorded solid growth in revenue across all its banners, with emphasis on the Pão de Açúcar banner, in a process of continuous improvement in operational performance. The adjusted EBITDA margin reached its best result in the last nine quarters, at 8.1%, a solid expansion of 41.4% compared to 1Q23, a result that highlights the consistency of our turnaround plan that arrives, in 2024, at the end of its first three-year period. Discipline and, especially, consistency in execution to deliver the objectives and goals established in the six strategic pillars, has achieved, month after month, more recognition from our clients: there are already six consecutive quarters of market share increase, considering the self-service market, despite a strong comparison base with 1Q23; and an increase of 13 points in NPS in the last 12 months. |
 |
The operational delivery is accompanied by a very solid movement to improve the capital structure, with important events starting in 2023, which contemplate from the sale of non-core assets, to the follow-on process, which culminated in the increase in GPA's share capital and a new corporate structure, until the definitive resolution of relevant issues such as the issue of contingencies, announced recently.
We start 2024 with a lighter company, with an even more balanced structure, which gives us more flexibility to execute the business recovery plan we propose, with increased profitability and accelerated results
Marcelo Pimentel
GPA CEO
| 4 | |
Sales Performance
Solid growth of same-store sales with sixth consecutive quarter of market share gains
| GROSS REVENUE (R$ million) |
1Q24 | Var. 1Q24/1Q23 | ||||
| Total Sales | Share of sales (%) | Total sales | Same Store Sales | Same Store Sales ex. calendar effect(5) | ||
| Pão de Açúcar | 2,433 | 50.0% | 10.3% | 9.3% | 6.7% | |
| Extra Mercado(1) | 1,618 | 33.2% | 5.3% | 7.2% | 4.5% | |
| Proximity(2) | 535 | 11.0% | 22.8% | 4.9% | 2.3% | |
| Other businesses(3) | 63 | 1.3% | 2.7% | n.d | n.d | |
| GPA ex Aliados | 4,649 | 95.5% | 9.7% | 8.1% | 5.4% | |
| Aliados | 219 | 4.5% | -15.1% | n.d. | n.d. | |
| GPA(4) | 4,867 | 100.0% | 8.2% | 8.1% | 5.4% | |
(1) Remaining Compre bem stores were converted into Extra Mercado between July and August 2023; (2) Excludes “Aliados” revenue (3) Revenues mainly from commercial centers rentals agreements, Stix Fidelidade, Cheftime and James Delivery; (4) Excludes Gas Stations revenue, which was classified as discontinued activities since 1Q24; (5) Adjustment of 2.7 p.p., mainly due to Easter (03/31 in 2024 vs. 04/09 in 2023) and an extra day of sales on 02/29/24.
Total sales reached R$ 4.9 billion in 1Q24, an increase of 8.2%. The highlights were the Pão de Açúcar banner, which showed double-digit growth of 10.3%, driven by the performance of same-store sales, and the Proximity format, with an increase of 22.8%, supported by the opening of 61 stores in the last 12 months (9 stores in 1Q24), which showed accelerated maturation (approximately seven months, on average).
Growth was once again higher than the self-service market, with an increase of 0.2 p.p. in market share, despite the strong basis for comparison with 1Q23, in which we already had the positive effect of the conversion of part of hypermarket stores into supermarkets.
From this quarter onwards, we opted for the managerial segregation of the part of the proximity sales that is characterized by direct sales to small businesses (“Aliados” format). Within the context of the evolution of the turnaround plan, this decision aims to give greater visibility to the Company's different business profiles. In the last two years, we began to invest more significantly in the expansion of premium proximity stores under the Minuto Pão de Açúcar banner, making this format one of the Company's strategic pillars with a strong path of growth.
Finally, this quarter we began to demonstrate the Gas Stations as a discontinued operation (IFRS 5/CPC 31) and, in this way, the gross revenue, as well as costs and expenses, began to be consolidated in the income statement in discontinued activities.
Solid growth of same-store sales, above inflation
| Same Store Sales(1) | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 |
| Pão de Açúcar | 0.1% | 4.2% | 5.5% | 6.7% | 7.5% | 8.6% | 7.2% | 4.2% | 6.7% |
| Extra Mercado | 0.6% | 4.8% | 2.0% | 4.1% | 2.2% | 3.5% | 2.5% | 2.0% | 4.5% |
| Proximity(2) | 1.3% | 8.6% | 13.1% | 13.5% | 8.8% | 5.4% | 0.4% | 0.2% | 2.3% |
(1) Excludes calendar effect of 2.7 p.p.; (2) Excludes “Aliados” revenue
Same-store sales showed growth of 8.1% (5.4% ex. calendar effect), with a performance considerably higher than the inflation of the period, measured at 2.5%.
In Pão de Açúcar, same-store sales grew by 9.3% (6.7% ex. calendar effect), also showing strong progress in relation to 1Q23. The increase was driven by the volume of sales and the increase in the average price and in the flow of customers in stores. The category highlight was fruits & vegetables, fish counter and complementary grocery, the last two driven by seasonal events occurred in this quarter. Basic grocery has a relevant growth as well, driven by inflation in some food items (such as rice, refined sugar and olive oil). Finally, it is worth mentioning the continuous increase in the Premium & Valuable customer base, a strategic pillar for increasing sales and profitability, with growth of 5.9% vs. the previous year.
In Extra Mercado, same-store sales had an increase of 7.2% (4.5% ex. calendar effect), best same-store sales growth since 2Q22. The highlights also were fruits & vegetables, fish counter and complementary grocery. In 1Q24, we continued to upgrade the customer experience, with an improvement in NPS, and the implementation of the category management project and assortment and price review, whose positive impact on the banner's sales is expected in the coming quarters of this year.
| 5 | |
In the Proximity format, we presented strong growth of 22.8% in total stores, driven by the accelerated ramp-up of new stores. In the same store comparison, we presented an increase of 4.9% (2.3% ex. calendar effect), with highlight to the vintage of stores inaugurated since 2021, that presents a double digit same-store growth and which already has sales per square meter, on average, 8% higher than older stores. This performance is explained by the adjustments made in the expansion process in recent years, with better demographic positioning of stores, focus on the premium Minuto Pão de Açúcar banner in the most affluent neighborhoods of the city of São Paulo, better positioning of the perishables categories, among other aspects. In 1Q24, as in previous quarters, we continued to gain market share (+0.9 p.p.) with a margin-promoting format for the Company.
The “Aliados” format, which we passed to present segregated from this quarter onwards, is the Proximity format model of direct sales to small businesses that was launched in 2017. We currently have more than 2.2 thousand partners in this format, which generated sales of R$ 219 million this quarter. This format's main characteristics are low investment and significant commercial and logistics synergies with the rest of the operation. From the beginning of 2024, we started a process of rebalancing this format, focusing on profitability, offering an assortment mix with higher margin, increased promotional efficiency and greater dilution of logistics costs, resulting in smaller but more profitable sales, which should contribute positively to the recovery plan for the Company's operating margin.
Consistent market share gains in all formats
Six consecutive quarters with increase of market share
|
Since April 2022, with the kick off of GPA’s turnaround plan, we have maintained discipline and consistency in delivering the objectives of the six strategic pillars, resulting in growing recognition from our clients, which may be observed by the relevant gains in market share. In 1Q24, we grew our market share by 0.2 p.p. compared to the previous year, this being the sixth consecutive quarter of increase, according to data from Nielsen Consulting, considering the self-service market in Brazil. |
 |
Pão de Açúcar showed an evolution of 0.1 p.p. vs. the self-service market in compared to the previous year. The consistent increase in market share is mainly due a result of advances in the perishables categories, with the capture of new customers and growth of the Premium & Valuable customer base. Extra Mercado, in turn, remained stable compared to the same basis. The proximity format, with the Minuto Pão de Açúcar and Mini Extra banners, had a gain of 0.9 p.p. in comparison with small supermarkets in greater SP, reinforcing the success of the proposal of value delivered to customers in this format
Expansion: 64 stores opened in the last 12 months, with 9 stores in 1Q24
R$ 659 million of incremental sales in the quarter generated by opened stores since 2022
The focus of our stores expansion project is the proximity format, with the Minuto Pão de Açúcar banner. This banner has a scalable and mature format, with strong capillarity potential, foreseeing the densification and verticalization of the city of São Paulo and its metropolitan region. The Minuto stores, focused on the high income public, are in premium locations and present a quickly maturation, seven months in average. They also have high performance, and the newest stores, opened in 2022 and 2023, overcome, in terms of profitability, the stores opened previously, and with an average profitability higher than the Company’s consolidated profitability. In 1Q24, we opened 9 stores being 7 Minuto Pão de Açúcar and 2 Mini Extra. In the last 12 months, we accumulate 64 new stores, being: (i) 61 in proximity format, 53 Minuto Pão de Açúcar and 8 Mini Extra; and (ii) 3 Pão de Açúcar. |
 |
| 6 | |
E-commerce with strong growth acceleration and Improvement in 1P indicators
Strong increase of 25.1% of revenue, with profitability progress and operational indicators improvement
In 1Q24, we presented an increase of 25.1% in e-commerce revenue, an acceleration when compared to the last quarters, reaching R$ 503 million in sales. The penetration reached 11.8% of total food sales, representing an increase of 1.6 p.p. when compared to the last year. Both formats, 1P and 3P, presented a strong double digit growth. Among the highlights of the quarter is the increase in the perishables’ penetration in the 1P channel, which increased 6.3 p.p. compared to 1Q23, reaching 34% of channel sales, which is a fundamental pillar of differentiation of our value proposition. |
 |
Additionally, other critical indicators of the 1P operation have shown solid progress. The perfect order (order with 0% stockout) and on time in full (delivered on time and with all items purchased) increased by 4.4 p.p. and 7.5 p.p., respectively, vs. o 1Q23.
Finally, the format's EBITDA margin reached a high single digit, with a significant improvement in the format's EBITDA compared to 1Q23.
Customers & NPS: Significant improvement in customer satisfaction
Greater customer satisfaction translates into greater flow and frequency
The consistency of focusing on the customer at the center of decisions continues to produce important advances in NPS across all of our banners. In 1Q24, we reached 77 points in NPS, considering all brands, a strong increase of 13 points in the last 12 months, with highlights being the improvements achieved in price perception and waiting time in the checkout line. It is also worth highlighting the excellent customer perception regarding the quality of products and service in the store. This strong evolution of the NPS permeates all of our banners and we continue to see opportunities to keep evolving throughout 2024 quarters.
At Pão de Açúcar, we continued to see growth in Gold and Black customers (Programa Mais), classifications with a higher level of loyalty. This increase continues to drive growth in the number of Premium & Valuable customers, a group with the highest purchase frequency and highest monthly expenditure, which increased by 5.9%, demonstrating the effectiveness of the new program in generating value for the customer.
Still on the topic of customer loyalty, we have a privileged position in Private Brands and great potential for the development of this platform, which is connected to the strong level of trust that our customers have in our brands. In 1Q24, we increased sales by 12.0% vs. 1Q23 and reached a penetration of 21% in total sales of our banners, improvement of 0.9 p.p. vs. 1Q23. In Extra Mercado Banner the Private Brands play an even more relevant role and presented a penetration of 26% of sales in 1Q24, 1.2 p.p. higher than the same period in 2023. The value proposition in Private Brands aims to deliver high quality products to the customer, comparable to the category leader, at an extremely competitive price. The high loyalty generated with customers can also be measured in the relevant share that Private Brands have in customers' baskets, with 8 out of 10 customers consuming our brands, in addition to the 2.4 times higher average frequency of these customers in relation to those who still do not buy Private Brands.
We also highlight Stix, GPA's loyalty coalition platform that brings together Pão de Açúcar, Extra, Droga Raia and Drogasil, Sodimac, C&A, and from April 2024 Shell gas stations. The platform reached 6.9 million of active clients, a growth of 15% when compared to 4Q23, and 9.5 billion of redeemed points, an increase of more than 100% vs. 1Q23
| 7 | |
Financial Performance
Given the discontinuity in the results of the activities of the Gas Stations (IFRS 5), which are classified as available for sale, we will demonstrate, by way of comparison, the gross margins and adjusted EBITDA in the views without and with the inclusion of the Stations. Gross Profit and adjusted EBITDA reflect the operation excluding Stations.
Acceleration in gains of gross margin
Solid expansion of 1.5 p.p. when compared to 1Q23 and 0.2 p.p. vs. 4Q23
Gross Profit totaled R$ 1.2 billion in 1Q24, with a margin of 27.2%, showing an improvement of 1.5 p.p. and 0.2 p.p. compared to 1Q23 and 4Q23, respectively. The continuous evolution of Gross Profit compared to the previous year is mainly the result of continuous progress in commercial negotiations, reduction in shrinkage and efficiency gains in logistics costs.
Selling, General and Administrative Expenses totaled R$ 919 million in the quarter, representing 20.0% of net revenue, which is the lowest level since 1Q23, excluding 4Q23 that is favored by seasonal sales at the end of the year. The efficiency gain was 0.2 p.p. vs. 1Q23 due mainly to savings in operating expenses in stores, mostly utilities and facilities, and, in part, as a result of captures from the Zero Base Budget project.
Equity Income, formed by GPA's participation in FIC's results, totaled R$ 16 million, an increase of R$ 8 million compared to 1Q23. This improvement is substantially due to the change in the Pão de Açúcar card points program and the reduction in costs of bad debt provision. It is worth remembering that, since 4Q23, with the complete sale of GPA's stake in Cnova, we no longer have the negative impact of the equity equivalence of international operations.
| 8 | |
Best Adjusted EBITDA margin in the last 9 quarters
Solid expansion of 0.7 p.p. when compared to 3Q23 and 1.8 p.p. vs. 4Q22
As a result of the effects mentioned above, GPA's Adjusted EBITDA was R$ 372 million, representing a growth of 41.4% vs. 1Q23, and adjusted EBITDA margin of 8.1%, showing an improvement of 1.8 p.p. vs. 1Q24. These results demonstrate the consistency of the Company's turnaround process, with the sequential expansion in the Adjusted EBITDA margin.
For the upcoming quarters, we will continue to make progress: (i) in negotiating with our suppliers on commercial aspects; (ii) in the completion of projects that will impact the rebalancing of categories in light of GPA's new value proposition; (iii) capturing the reduction in expenses based on the project to implement the Zero Base Budgeting methodology; and (iv) the best promotional balance with the growing perception of the brands' new value proposition by customers.
OTHER CONSOLIDATED OPERATING INCOME AND EXPENSES
In the quarter, Other Income and Expenses reached R$ (205) million. This result is mainly due to expenses related to: (i) adherence to the ICMS debt settlement program of the State of São Paulo (R$ 86 million); (ii) impairment related to the sale of the Company's administrative headquarters (R$ 25 million); and (iii) store restructurings, store closures and other extraordinary expenses.
After individual analysis of eligible legal proceedings, weighing risks and benefits, the Company joined the State of São Paulo's debt settlement program (“Settlement”) with the amount of R$ 533 million in probable risk contingencies (provisioned) and R$3.1 billion related to possible contingencies. Given the discounts provided by the State, the value resulting from the Settlement totaled R$ 794 million, representing a reduction of around 80% in relation to the contingency values, for payments over 10 years, adjusted by the SELIC rate. With the conclusion of the Settlement, we made a provision of R$ 261 million in the 1Q24 results, of which R$ 86 million in other income and expenses from continued operations and R$ 175 million in discontinued operations.
| 9 | |
CONSOLIDATED NET FINANCIAL RESULT
| FINANCIAL RESULT (R$ million) |
GPA | ||
| 1Q24 | 1Q23 | Δ | |
| Financial Revenue | 79 | 92 | -14.1% |
| Financial Expenses | (254) | (313) | -18.8% |
| Cost of Debt | (164) | (223) | -26.5% |
| Cost of Receivables Discount | (17) | (19) | -10.5% |
| Other financial expenses | (73) | (71) | 2.8% |
| Net Financial Revenue (Expenses) | (175) | (221) | -20.8% |
| % of Net Revenue | 3.8% | 5.3% | -1.5 p.p. |
| Interest on lease liabilities | (122) | (110) | 10.9% |
| Net Financial Revenue (Expenses) – Post IFRS 16 | (297) | (331) | -10.3% |
| % of Net Revenue – Post IFRS 16 | 6.5% | 8.0% | -1.5 p.p. |
At the end of 1Q24, the Company’s net financial result totaled R$ (175) million, representing 3.8% of net revenue. This result represents an improvement of 20.8% compared to the same period last year, mainly due to the reduction of R$ 1.4 billion in net debt and the reduction in the basic interest rate. Adding interest on lease liabilities, the amount reached R$ (297) million, equivalent to 6.5% of net revenue.
CONSOLIDATED NET INCOME OF CONTINUED AND DESCONTINUED OPERATIONS
| ON-OFF EFFECTS CONTINUED NET INCOME (R$ million) |
GPA | ||
| 1Q24 | 1Q23 | Δ R$ | |
| Controlling Net Income - Continued Activities | -407 | -319 | -88 |
| (+) Adjustment in Other Operating Income and Expenses | 111 | 0 | 111 |
| Provision of São Paulo ICMS' Settlement | 86 | 0 | 86 |
| GPA's headquartes' Impairment | 25 | 0 | 25 |
| (+) Non recognition of credits of Income Tax/CSLL | 99 | 15 | 84 |
| Controlling Sharholders Adjusted Net Income - Continued Operations | -197 | -304 | 107 |
The Net Loss from Continued Operations reached R$ (407) million in 1Q24, vs. a loss of R$ (319) million in the same period of last year. The increase in losses, despite the improvement in adjusted EBITDA and Financial Result, is mainly due to one-off effects related to: (i) the impact on other operating revenues and expenses generated by adherence to the debt settlement program ICMS with the State of São Paulo and the GPA’s headquarter impairment after the asset sale; and (ii) the lower recognition of tax credits in Income Tax and CSLL related to accumulated tax losses.
Excluding these one-off effects, the Adjusted Net Loss from Continued Operations reached R$ (197) million, an improvement of R$ 107 million compared to 1Q23.
The Net Loss from Discontinued Operations reached R$ (253) million, mainly due to the impact of the provisioning of: (i) Extra Hiper’s Labor contingencies; and (ii) adherence to the ICMS debt settlement program with the State of São Paulo, with an impact of R$ (175) million.
| 10 | |
CASH GENERATION AND NET DEBT
| NET DEBT VARIATION - MANAGERIAL VIEW (R$ million) |
GPA | |||||
| 1Q24 | 1Q23 | Δ R$ | LTM(5) 1T24 |
LTM(5) 1T23 |
Δ R$ | |
| Adjusted EBITDA GPA Brazil pre-IFRS 16(1) | 157 | 62 | 95 | 527 | 309 | 219 |
| (-) Share Profit of Associates Brazil | (16) | (8) | (8) | (59) | (44) | (15) |
| Income tax paid | (0) | (0) | (0) | (1) | (0) | (0) |
| Working Capital of Goods Variation | (665) | (670) | 6 | 211 | 221 | (10) |
| Inventory Variation | 67 | (34) | 101 | 196 | (12) | 208 |
| Suppliers Variation | (795) | (732) | (63) | 98 | 229 | (131) |
| Receivable Variation | 63 | 95 | (32) | (83) | 4 | (87) |
| Other Operational Asset and Liabilities Variation | (19) | 0 | (19) | 426 | 232 | 194 |
| Operational Cash Flow | (543) | (616) | 74 | 1,106 | 718 | 388 |
| Capex adjusted by BTS(2) | (157) | (205) | 49 | (678) | (1,026) | 348 |
| Operational Free Cash Flow | (699) | (821) | 122 | 428 | (308) | 736 |
| Other Operation Income and Expenses | (167) | (159) | (8) | (813) | (1,310) | 497 |
| Dividends | 94 | 230 | (136) | 114 | 560 | (446) |
| Adjusted Operational Free Cash Flow | (772) | (750) | (22) | (271) | (1,058) | 787 |
| Sale of Assets(3) | 1,500 | 21 | 1,479 | 2,271 | 3,616 | (1,345) |
| Cash Flow after Sale of Assets | 729 | (729) | 1,458 | 2,000 | 2,559 | (558) |
| Net Financial Cost(4) | (146) | (204) | 58 | (677) | (860) | 183 |
| Net Debt Variation | 583 | (933) | 1,516 | 1,323 | 1,698 | (375) |
(1) it considers EBITDA adjusted by Other Operating Income and Expenses, with the result of Equity Income from National Operations and with rental costs and expenses; (2) net from the financing of built to suit (BTS) format to the new stores of Pão de Açúcar; (3) it Includes revenues of asset sales and strategic projects, such as Follow-on, sale of Extra Hiper stores and the sale of participation in Éxito; (4) It includes interest of gross debt, cash profitability, cost with banks guarantees and cost with discount of receivables; (5) Last twelve months
In 1Q24, net debt showed a reduction of R$ 583 million vs. o 4Q23, impacted by the sale of the remaining stake in Grupo Éxito (R$ 789 million) and the public offering of shares (R$ 704 million). The Operating Free Cash Flow was negative by R$ 699 million, reflecting the seasonality of the first quarter, with greater use of working capital in suppliers. Notwithstanding, in comparison with the same period in 2023, it showed an improvement of R$ 122 million, with gains in efficiencies in main operating lines: EBITDA, inventory and Capex. These developments are a direct result of initiatives to gain operational efficiency, with increased operating margins, control of expenses, gains in efficiency in inventory turnover and greater control of investment projects.
In the 12-month period ended in 1Q24, net debt was reduced by R$ 1.3 billion, excluding not discounted receivables, impacted by the sales of non-core assets and the public offering of shares, which totaled R$ 2.3 billion and also due to the generation of operational free cash, which totaled R$ 428 million compared to a consumption of R$ 308 million in the 12-month period ending in 1Q23. This significant improvement of R$ 736 million in operating free cash flow is the result of the increase in EBITDA and inventory turnover, and the reduction in Capex. In other cash flow lines, it is worth mentioning: (i) the improvement of R$ 497 million in Other Operating Income and Expenses, mainly due to the reduction in labor contingencies and other costs related to the sale of Extra Hiper stores; and (ii) the improvement of R$ 183 million in net financial costs impacted by the reduction in financial leverage.
Below is a table detailing the working capital of goods, highlighting the eight-day improvement in inventory turnover in the comparison between 1Q24 and 1Q23.
| WORKING CAPITAL OF GOODS (R$ million) |
GPA | ||||||
| 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | 1Q24 vs 1Q23 | 1Q24 vs 4Q23 | |
| (+) Suppliers | 2,127 | 2,197 | 2,219 | 3,020 | 2,225 | 98 | (795) |
| (-) Inventory | (2,079) | (1,965) | (1,992) | (1,950) | (1,882) | 196 | 67 |
| (-) Receivables | (322) | (292) | (352) | (468) | (405) | (83) | 63 |
| (=) Cash Flow After Receivables | (273) | (59) | (126) | 603 | (62) | 211 | (665) |
| In Days of COGS | |||||||
| (+) Suppliers | 54 | 55 | 54 | 73 | 53 | (1) | (20) |
| (-) Inventory | (53) | (49) | (49) | (47) | (45) | 8 | 2 |
| (-) Receivables | (8) | (7) | (9) | (11) | (10) | (1) | 2 |
| (=) Cash Flow After Receivables | (7) | (1) | (3) | 15 | (1) | 5 | (16) |
| 11 | |
NET DEBT CONSOLIDATED
Strong reduction of R$ 1.4 billion with deleverage of 6.8x pre-IFRS 16
| INDEBTEDNESS (R$ milhões) |
GPA | ||
| 1Q24 | 1Q23 | Δ R$ | |
| Short-Term Debt | 1,016 | 1,124 | (108) |
| Loans and Financing | 952 | 1,044 | (92) |
| Debentures | 64 | 80 | (15) |
| Long-Term Debt | 3,536 | 5,436 | (1,900) |
| Loans and Financing | 168 | 2,244 | (2,075) |
| Debentures | 3,368 | 3,192 | 175 |
| Total Gross Debt | 4,552 | 6,560 | (2,007) |
| Cash and Financial investments | (2,832) | (3,516) | 684 |
| Net Debt | 1,720 | 3,043 | (1,323) |
| On balance Credit Card Receivables not discounted | (115) | (30) | (84) |
| Net Debt incl. Credit Card Receivables not discounted | 1,606 | 3,013 | (1,407) |
| EBITDA Ajustado GPA Brasil(últimos 12 meses) | 1,388 | 1,092 | 297 |
| Net Debt including Credit Card Receivables not discounted / | 1.2x | 2.8x | -1.6x |
| Adjusted EBITDA GPA Brasil (LTM) | |||
| Adjusted EBITDA GPA Brasil pre-IFRS16 (LTM) | 527 | 309 | 219 |
| Net Debt including Credit Card Receivables not discounted / | 3.0x | 9.8x | -6.7x |
| Adjusted EBITDA GPA Brasil pre-IFRS16 (LTM) | |||
Net debt, including the balance
of not discounted receivables, reached R$ 1.6 billion, a reduction of R$ 1.4 billion vs. the same period of the previous year. Pre-IFRS
16 financial leverage, measured by net debt divided by GPA Brasil's adjusted EBITDA pre-IFRS 16, which includes rental expenses, showed
a reduction of 6.8x compared to 1Q23, reaching 3.0x.
| 12 | |
INVESTMENTS
| ADJUSTED CAPEX(1) (R$ million) |
GPA Consolidated | |||||
| 1Q24 | 1Q23 | Δ | LTM(2) 1T24 |
LTM(2) 1T23 |
Δ R$ | |
| New Stores and Land Acquisition | 43 | 39 | 4 | 131 | 172 | (42) |
| Store Renovations, Conversions and Maintenance | 40 | 84 | (44) | 216 | 475 | (259) |
| IT, Digital and Logistics | 74 | 82 | (8) | 331 | 378 | (47) |
| Total Investments GPA Consolidated | 157 | 205 | (49) | 678 | 1,026 | (348) |
| (1) | Net from the financing of built to-suit format to the new stores of Pão de Açúcar. |
In 1Q24, adjusted Capex for built-to-suit operations (“adjusted Capex”) reached R$ 157 million, a reduction of R$ 49 million vs. o 1Q23, mainly in Renovations, Conversions and Maintenance. In the 12-month view, adjusted Capex reached R$ 678 million, a reduction of R$ 348 million vs. 12 months ended in 1Q23, mainly in Renovations, Conversions and Maintenance, which in 2022 showed a greater concentration of investments in renovations for the conversions of Extra hypermarket stores to the supermarket format.
| 13 | |
ESG AT GPA
Agenda with and for society and the environment
Promotion of diversity and inclusion: reinforcing our commitment to racial equity, in 1Q24 we started the third class of the Internship Program exclusively for black and brown people, and of the 30 vacancies available, 54% were filled by black women. We continue to reinforce this theme in all Company selection processes, with the objective of reaching at least 50% of our workforce to be self-declared black and brown people. Strengthening the commitment to gender equality, during the month of March, more than 17 actions were carried out in celebration of International Women's Day, including lectures, training, workshops and internal engagement actions, in total more than 4,100 employees were directly impacted during the period.
Combating climate change: as a result of the actions and projects to replace gases and retrofit the engine rooms initiated, in addition to continuous improvement in our processes of preventive identification and rapid remediation in cases of refrigerant gas leaks, we reduced our emissions by 8% (scope 1 and 2) in 1Q24 (compared to 1Q23), in line with our public commitment to reduce emissions in these scopes by 50% by 2025 (base year 2015).
Animal welfare in the value chain: In 1Q24, we reached 44.5% of egg sales being cage-free in our stores, with highlights for Private Brands which reached 66.9% and e-commerce with 58.5%. This evolution is the result of a strategy that involves consumer communication, store supply, supplier development, internal training, and sectoral activities, among others. Reinforcing our commitment to raising consumer awareness on the topic, in our e-commerce, from 1Q24 onwards, products with animal welfare attributes are now identified by a seal, supporting and encouraging consumers to choose these products.
Social Impact: we renewed our successful partnership with the NGO Gerando Falcões, with the launch in 1Q24 of another social product (nachos snacks) whose entire profit from the sale will be directed to the NGO's projects, which works to interrupt the cycle of poverty in favelas with innovation and technology. This initiative reinforces our purpose of nurturing dreams and lives.
Ethics and Transparency: In 1Q24, we disclosed information about our environmental impact through the CDP (Carbon Disclosure Project) with an "A-" grade in the Climate Change questionnaire. In the CDP Florestas ranking, we evolved from B to A- in the beef chain category, achieving the best retail score, reinforcing our commitment to combating deforestation. Furthermore, the annual sustainability report was recognized as one of the 10 best on the market according to the Reporting Matters Brazil 2023 Report, carried out by the Brazilian Business Council for Sustainable Development (CEBDS), which analyzed 77 sustainability reports. This is further recognition of all the work done to provide greater transparency in the dissemination of information.
| 14 | |
BREAKDOWN OF STORE CHANGES BY BANNERS
In 1Q24, we opened 9 new proximity format stores (7 Minuto Pão de Açúcar and 2 Mini Extra), and closed 7 stores (1 Pão de Açúcar, 5 Mini Extra and 1 Minuto Pão de Açúcar).
The closures carried out in the quarter are in line with the process of adjusting the store network based on the assessment of store performance, competitive market conditions and movements in the rest of the store network.
| Store by Banner | 4Q23 | 1Q24 | |||||
| No. of Stores | Openings | Openings by conversion | Closing | Closing to conversion | No. of Stores | Sales area ('000 sq. m.) | |
| GPA Brazil | 767 | 9 | 0 | -7 | 0 | 769 | 644 |
| Pão de Açúcar | 194 | 0 | 0 | -1 | 0 | 193 | 265 |
| Extra Mercado | 178 | 0 | 0 | 0 | 0 | 178 | 212 |
| Mini Extra | 147 | 2 | 0 | -5 | 0 | 144 | 36 |
| Minuto Pão de Açúcar | 176 | 7 | 0 | -1 | 0 | 182 | 46 |
| Gas Stations | 71 | 0 | 0 | 0 | 0 | 71 | 83 |
| Stores under Conversion / Analysis | 1 | 0 | 0 | 0 | 0 | 1 | 2 |
| 15 | |
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet
| BALANCE SHEET | |||
| (R$ million) | ASSETS | ||
| Consolidated | |||
| 03.31.2024 | 03.31.2023 | ||
| Current Assets | 6,428 | 27,985 | |
| Cash and Marketable Securities | 2,832 | 3,516 | |
| Financial Applications | 17 | 0 | |
| Accounts Receivable | 405 | 322 | |
| Credit Card | 115 | 30 | |
| Sales Vouchers and Trade Account Receivable | 269 | 268 | |
| Allowance for Doubtful Accounts | (2) | (3) | |
| Resulting from Commercial Agreements | 24 | 26 | |
| Inventories | 1,883 | 2,079 | |
| Recoverable Taxes | 605 | 1,058 | |
| Credits with Controlling Shareholders | 0 | 0 | |
| Noncurrent Assets for Sale | 310 | 20,531 | |
| Claims with Related Parties | 0 | 0 | |
| Prepaid Expenses and Other Accounts Receivables | 376 | 479 | |
| Noncurrent Assets | 14,434 | 15,469 | |
| Long-Term Assets | 5,442 | 5,727 | |
| Accounts Receivable | 0 | 0 | |
| Credit Cards | 0 | 0 | |
| Recoverable Taxes | 2,862 | 2,766 | |
| Deferred Income Tax and Social Contribution | 1,099 | 1,106 | |
| Amounts Receivable from Related Parties | 54 | 295 | |
| Judicial Deposits | 474 | 742 | |
| Prepaid Expenses and Others | 953 | 818 | |
| Investments | 786 | 835 | |
| Investment Properties | 0 | 0 | |
| Property and Equipment | 6,257 | 6,905 | |
| Intangible Assets | 1,949 | 2,003 | |
| TOTAL ASSETS | 20,863 | 43,454 | |
| 16 | |
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet
| BALANCE SHEET | |||
| (R$ million) | LIABILITIES | ||
| Consolidated | |||
| 03.31.2024 | 03.31.2023 | ||
| Current Liabilities | 5,763 | 16,715 | |
| Suppliers | 2,401 | 2,304 | |
| Trade payable, agreement | 104 | 147 | |
| Loans and Financing | 952 | 1,044 | |
| Debentures | 64 | 80 | |
| Lease Liability | 449 | 497 | |
| Payroll and Related Charges | 397 | 287 | |
| Taxes and Social Contribution Payable | 592 | 264 | |
| Financing for Purchase of Fixed Assets | 145 | 74 | |
| Debt with Related Parties | 15 | 315 | |
| Advertisement | 17 | 15 | |
| Provision for Restructuring | 14 | 6 | |
| Unearned Revenue | 171 | 221 | |
| Liabilities on Noncurrent Assets for Sale | 22 | 11,112 | |
| Others | 420 | 349 | |
| Long-Term Liabilities | 10,433 | 13,072 | |
| Loans and Financing | 168 | 2,244 | |
| Debentures | 3,368 | 3,192 | |
| Lease Liability | 3,872 | 3,555 | |
| Financing by purchasing assets | 271 | 0 | |
| Income tax payable | 0 | 0 | |
| Related Parties | 0 | 31 | |
| Deferred Income Tax and Social Contribution | 0 | 4 | |
| Tax Installments | 664 | 104 | |
| Provision for Contingencies | 1,611 | 2,682 | |
| Unearned Revenue | 70 | 91 | |
| Provision for loss on investment in Associates | (0) | 889 | |
| Others | 409 | 280 | |
| Shareholders' Equity | 4,667 | 13,667 | |
| Attributed to controlling shareholders | 4,660 | 11,442 | |
| Capital | 2,511 | 8,466 | |
| Capital Reserves | (75) | 15 | |
| Profit Reserves | 2,226 | 4,800 | |
| Other Comprehensive Results | (1) | (1,839) | |
| Minority Interest | 6 | 2,225 | |
| TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | 20,863 | 43,454 | |
| 17 | |
INCOME STATEMENT – 1st QUARTER OF 2024
| (R$ Million) | Consolidated | ||
| 1Q24 | 1Q23 | Δ | |
| Gross Revenue | 4,867 | 4,496 | 8.2% |
| Net Revenue | 4,586 | 4,157 | 10.3% |
| Cost of Goods Sold | (3,311) | (3,061) | 8.2% |
| Depreciation (Logistics) | (29) | (29) | 2.2% |
| Gross Profit | 1,245 | 1,068 | 16.6% |
| Selling Expenses | (766) | (711) | 7.8% |
| General and Administrative Expenses | (153) | (131) | 17.0% |
| Selling, General and Adm. Expenses | (919) | (842) | 9.2% |
| Equity Income | 16 | (37) | n.a. |
| Other Operating Revenue (Expenses) | (205) | (51) | 300.0% |
| Depreciation and Amortization | (256) | (247) | 3.4% |
| Earnings before interest and Taxes - EBIT | (118) | (110) | 7.2% |
| Financial Revenue | 79 | 92 | -14.4% |
| Financial Expenses | (376) | (423) | -11.1% |
| Net Financial Result | (298) | (331) | -10.1% |
| Income (Loss) Before Income Tax | (415) | (441) | -5.8% |
| Income Tax | 10 | 122 | -91.8% |
| Net Income (Loss) Company - continuing operations | (405) | (319) | 27.3% |
| Net Result from discontinued operations | (253) | 124 | n.a. |
| Net Income (Loss) - Consolidated Company | (659) | (195) | 238.1% |
| Net Income (Loss) - Controlling Shareholders - continuing operations | (407) | (319) | 27.6% |
| Net Income (Loss) - Controlling Shareholders - discontinued operations | (253) | 71 | n.a. |
| Net Income (Loss) - Consolidated Controlling Shareholders | (660) | (248) | 166.5% |
| Minority Interest - Non-controlling - continuing operations | 1 | 0 | 6318.7% |
| Minority Interest - Non-controlling - discontinued operations | 0 | 53 | -100.0% |
| Minority Interest - Non-controlling - Consolidated | 1 | 53 | -97.8% |
| Earnings before Interest, Taxes, Depreciation, Amortization - EBITDA | 167 | 166 | 0.6% |
| Adjusted EBITDA(1) | 372 | 217 | 71.1% |
| % of Net Revenue | Consolidated | ||
| 1Q24 | 1Q23 | Δ | |
| Gross Profit | 27.2% | 25.7% | 1.5 p.p. |
| Selling Expenses | -16.7% | -17.1% | 0.4 p.p. |
| General and Administrative Expenses | -3.3% | -3.1% | -0.2 p.p. |
| Selling, General and Adm. Expenses | -20.0% | -20.2% | 0.2 p.p. |
| Equity Income | 0.4% | -0.9% | n.a. |
| Other Operating Revenue (Expenses) | -4.5% | -1.2% | -3.2 p.p. |
| Depreciation and Amortization | -5.6% | -5.9% | 0.4 p.p. |
| Earnings before interest and Taxes - EBIT | -2.6% | -2.6% | 0.1 p.p. |
| Net Financial Result | -6.5% | -8.0% | 1.5 p.p. |
| Income (Loss) Before Income Tax | -9.1% | -10.6% | 1.6 p.p. |
| Income Tax | 0.2% | 2.9% | -2.7 p.p. |
| Net Income (Loss) Company - continuing operations | -8.8% | -7.7% | -1.2 p.p. |
| Net Income (Loss) - Consolidated Company | -14.4% | -4.7% | -9.7 p.p. |
| Net Income (Loss) - Controlling Shareholders - continuing operations | -8.9% | -7.7% | -1.2 p.p. |
| Net Income (Loss) - Consolidated Controlling Shareholders | -14.4% | -6.0% | -8.4 p.p. |
| Minority Interest - Non-controlling - continuing operations | 0.0% | 0.0% | 0.0 p.p. |
| Minority Interest - Non-controlling - Consolidated | 0.0% | 1.3% | -1.2 p.p. |
| Earnings before Interest, Taxes, Depreciation, Amortization - EBITDA | 3.6% | 4.0% | -0.4 p.p. |
| Adjusted EBITDA(1) | 8.1% | 5.2% | 2.9 p.p. |
(1) Adjusted EBITDA excludes Other Operating Income and Expenses
| 18 | |
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO | |||
| Date: May 7, 2024 | By: /s/ Marcelo Pimentel | ||
| Name: | Marcelo Pimentel | ||
| Title: | Chief Executive Officer | ||
| By: /s/ Rafael Sirotsky Russowsky | |||
| Name: | Rafael Sirotsky Russowsky | ||
| Title: | Investor Relations Officer | ||
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.