DIA reduces losses by 55% thanks to cost containment

May 13 (Reuters) – Spanish supermarket group DIA reported a 55% year-on-year cut in its losses to March on Thursday, driven by more effective cost management despite the negative effect of Latin American currencies and the unfavorable comparison with the strong sales of a year ago due to the pandemic.

In the first quarter of the year, the group DIA’s losses amounted to 63.8 million euros, compared to the 142.6 million lost a year ago, according to it said in a statement to the CNMV.

The group controlled by the Russian investor Mikhail Fridman attributed this improvement to the operational improvement measures implemented since 2019, which allowed it to register a positive adjusted gross operating profit (EBITDA) of 7.1 million euros as of March, compared to the negative figure of 0.5 million a year ago, and a gross margin on sales of 21.9%, compared to 21.1% a year ago.

The group explained that, in addition to the improvement in ebitda, the reduction in losses was due in part to “the reduction in financial losses, benefited by an active management of exchange rate risk.”

These factors offset the lower sales compared to a year ago, since in the first quarter of 2021 they fell by 7.3% to 1,571.6 million euros due to the reduction of stores and unfavorable exchange rates in their Brazilian markets and Argentine.

Comparable sales in the period fell 0.9% year-on-year, although the group pointed out that the comparison with March 2020 was affected by the strong hoarding comparisons that were registered then in the face of confinements due to the COVID-19 pandemic.

“The extraordinary demand that food distributors have registered during all the months of confinement in 2020 will have an impact on the comparative results in year-on-year terms during 2021, so we remain cautious about the environment that is to come,” he said DIA CEO Stephan DuCharme.

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As of March 31, DIA had a total of 6,100 stores, 69 less than a year ago, with 3,530 of its own stores and 2,570 in franchise.

At the end of the year, DIA’s net financial debt amounted to 1,344 million euros, an increase of 68 million compared to the end of 2020 that the group attributed to the fact that the cash flow from operations remained flat, to the control of investment expenses (capex) and the stability of working capital.

(Information from Darío Fernández; edited by Tomás Cobos)

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