Benefit Systems expects short-term pressure for results overseas

Listed employee benefit schemes provider Benefit Systems anticipates that investments in foreign markets may put pressure on segment profitability in the short term. In Poland, the company expects a slight improvement in EBIT profitability in the second half of the year, board member Marcin Fojudzki told a conference call.

"We are planning to invest in infrastructure, new clubs and sales force overseas, so we expect that this may put pressure on operating profitability compared to last year, but we believe that this will be a temporary effect and in the long term beneficial for the future development of this segment," Fojudzki said.

He added that in Poland the company expects a slight year-on-year improvement in EBIT profitability in the second half of the year.

"There will no longer be such dynamic increases in EBIT profitability due to the increase in the base in Poland, but we still expect profitability increases," the board member assessed.

For the full 2024, Benefit Systems expects a year-on-year increase in operating profitability (excluding incentive programme costs).

In the first half of the year, operating profit adjusted for the costs of the incentive programme amounted to PLN 333.1 million (EUR 77.7 mln), up by 56 percent year on year. The EBIT margin was 20.2 percent, up 4 percentage points.

In the second quarter alone, operating profit excluding the impact of the incentive programme amounted to PLN 202 million (EUR 47.1 mln), an increase of 38 percent year on year. The company reported that this was a record level of this result, with the Polish segment mainly contributing to the increase in profit.

"The overseas results are burdened by the negative impact of exchange rate differences and the dynamic investments we are undertaking," Fojudzki said.

Since the beginning of the year, Benefit Systems has opened 7 clubs in Poland (while closing 2) and 8 clubs abroad.

The company also continues to analyse the market for investment and M&A opportunities. This year it bought 7 clubs in Poland and 23 abroad (in Croatia, Czech Republic and Bulgaria).

"We plan to double the network abroad by the end of 2024. Current estimates assume that we should end the year with 74-75 clubs, while we started with 31 clubs," Fojudzki said.

In Poland, the company plans to open 8 new clubs organically in the fourth quarter.

"We opened 48 clubs in Poland in 2023 and we plan to develop 20 clubs organically in 2024. (...) We think that we will end the year with a minimum level of 238 clubs, without taking into account potential M&A that may take place by the end of the year," the board member said.

"This would mean that the network in Poland will grow by 78 clubs in 24 months, or by about 40 percent," he added.

At the end of the second quarter, Benefit Systems had PLN 469 million (EUR 109.4 mln) in net cash.

The company reiterated that its goal for the whole of 2024 is to increase the number of sports cards in Poland by 150,000 and in foreign markets by a maximum of 80,000.

pel/ ao/