Zabka grocer sees potential to improve its adj. net profit margin to 3 pct in short term

"Regarding our 2025 assumptions, we remain confident that we will produce an LFL of between mid and high single-digit levels for the full year. We will open more than 1,100 shops in Poland and Romania and achieve a stable adjusted EBITDA margin at the upper end of the 12 to 13 percent range in the short to medium term," CEO Tomasz Suchanski told a conference call.

"At the same time, we see the possibility of further improving our adjusted net profit margin to 3 percent in the short term," he added.

In the first quarter of 2025, the Zabka group recorded an adjusted EBITDA of PLN 596 million (EUR 140.2 mln), up from PLN 518 million (EUR 121.8 mln) in the prior year period. The net loss was PLN 125 million against (EUR 29.4 mln) versus a PLN 99 million (EUR 23.3 mln) loss of a year earlier. Adjusted net loss was PLN 77 million (EUR 18.1 mln) against a loss of PLN 97 million (EUR 22.8 mln) in the first quarter of 2024.

Revenues amounted to PLN 5.666 billion (EUR 1.33 bln), up from PLN 5.015 billion (EUR 1.18 bln) in the prior year period. Sales to end-customers rose to PLN 6.618 billion (EUR 1.56 bln) from PLN 5.767 billion (EUR 1.36 bln) in the first quarter of 2024.

Adjusted EBITDA margin remained unchanged year on year at 9 percent. Adjusted net profit margin was negative at minus 1.2 percent against minus 1.7 percent in the prior year period.

LFL sales grew by 6 percent, compared to 11.5 percent growth in the prior year period.

"Our results for the first quarter of this year are in line with our expectations. We achieved this in a stable market environment. Customers remain loyal, nevertheless there are ambiguous signals in the market indicating the uncertainty created by the current geopolitical situation," CEO Suchanski assessed.

The CFO of Zabka Marta Wrochna-Lastowska pointed out that the group's results are characterised by seasonality, with the first quarter being the weakest of the year.

"Our sales are seasonal and depend largely on the number of customer visits to our shops and weather conditions. Unlike some large retailers, periods such as Christmas and Easter are not the most important for us. We tend to record our highest sales levels during the summer months, especially in July and August, when the weather is conducive to outdoor activities, leading to more frequent, spontaneous visits to our shops and an increase in impulse purchases," the CFO explained.

"Conversely, in the first quarter of the year, cold temperatures reduce customer mobility, which reduces the number of visits to our shops," she added, pointing out that the seasonal effect is even more evident at EBITDA and net result level.

Chief Strategy & Development Officer Tomasz Blicharski, when asked about the impact of low temperatures on LFL in May, replied: "The temperature in the first two weeks of May is significantly lower than the five-year average. However, this is a short period of time, and the weather tends to even out throughout the year. From a long-term perspective, this does not have a significant impact on our business."

The debt to adjusted EBITDA ratio fell to 1.6x at the end of March from 2.1x in the first quarter of 2024.

"In line with our previously communicated assumptions, we will continue our debt reduction process, aiming to achieve a net debt to adjusted EBITDA ratio below 1x in the medium term," CFO Wrochna-Lastowska said.

In May 2025, the Zabka group issued sustainability-linked bonds, backed by a guarantee from Zabka Polska, with a nominal value of PLN 1 billion (EUR 235.2 mln). As reported by the CFO, the bond issue under the previously established bond issuance programme does not increase the group's net debt level.

pel/ ao/