Sonae, SGPS, S.A. (OTC:SOSSF) Q2 2022 Earnings Conference Call July 29, 2022 6:00 AM ET
Company Participants
João Dolores – Chief Financial Officer
Rui Almeida – Chief Financial Officer, MC
Paulo Simões – Chief Financial Officer, Worten
Hugo Martins – Chief Financial Officer and CDO, Zeitreel
Luís Mota Duarte – Chief Digital Officer, Sierra
Steven Wise – Bright Pixel
Conference Call Participants
Jose Rito – CaixaBank
João Pinto – JB Capital
Artur Amaro – CaixaBank
António Seladas – AS Independent Research
Operator
Good morning. We welcome you to Sonae’s First Half 2022 Results Conference Call. During the presentation hosted by Mr. João Dolores, Sonae’s CFO. All participants will be on a listen-only mode. There will be an opportunity to ask questions after the presentation. [Operator Instructions]
I’ll now hand the conference over to Mr. João Dolores. Please go ahead, sir.
João Dolores
Good morning, everyone. Welcome to Sonae’s results conference call for the first half of 2022 and apologies for the slight delay, but we had a glitch in uploading the slides onto the webcast, but I think the problem is solved.
So as usual besides myself and the Investor Relations team, we have on the call, Rui Almeida from MC; Paulo Simões from Worten; Hugo Martins from Zeitreel; Luís Mota Duarte from Sierra; and Steven Wise [ph] from Bright Pixel.
As you know, after an intense pandemic period during the last two years, 2022 continues to be marked by challenging macroeconomic conditions, with strong inflation, rising energy costs, disruptions in supply chains and overall high uncertainty level, in particular, given the ongoing war in Ukraine.
However, I’m glad to say that our businesses proved once again their ability to adapt and respond to consumer needs in a volatile environment. We continue to grow, because our customers basically recognize our efforts to meet their needs.
So I will start by giving you a quick update on our recent portfolio management activity. During the last three months, Bright Pixel remained quite active and closed two exit agreements, Cellwize and Maxive. It also executed to two new acquisitions and some follow-on investments in his portfolio company.
As you know, Maxive is a cybersecurity group, which was developed by Bright Pixel over the last few years, and which we agreed to sell to Thales for a total enterprise value of €120 million and an estimated capital gain for Sonae of just over €60 million. This transaction is expected to be completed during the second half of the year after the required antitrust clearances are obtained.
The same can be said about MDS. As you know, we recently announced the agreement to sell our 50% stake in that business for a total consideration of around €100 million. And we are currently awaiting for regulatory clearance, which we also expect to come through in the second half of the year.
So that being said, let’s go through the performance of each one of our businesses in the second quarter. Starting with MC, MC delivered another strong set of results this quarter. The war in Ukraine had an important — impact on the business. So we had significant disruptions in the global supply chain and commodities markets that deeply impacted food inflation in Portugal, which reached almost 12% in Q2.
Nevertheless, MC was able to adapt to this context and reinforce its support to consumers by deploying distinctive competitive offers in order to alleviate the pressure faced by Portuguese families on their disposable incomes.
In the Q — and Q2 turnover grew by 11% year-on-year, 11.4%, to be more precise, with a like-for-like increase of 9.8%, fueled by Continente strong like-for-like growth, and also the recovery of non-food formats, which were highly affected by the restrictions we felt back in 2021.
In the first half of the year, turnover amounted to €2.7 billion, with a 7.6% year-on-year growth and a like-for-like growth of 6%. This topline performance led to yet another reinforcements of Continente market share, which we estimate to have been around 50 basis points year-on-year.
Online sales currently represent 3% of total turnover, decelerating from the abnormal peak demand levels during the pandemic period. Although still remaining above 2 times pre-pandemic levels and Continente continue to lead the grocery ecommerce market in Portugal.
Regarding profitability, we obviously had significant pressure on important cost lines, such as energy where we saw a €10 million year-on-year increase in the quarter and also fuel costs. And we had a non-negligible impact from the cyber attack, which affected our operations for a few days back at the beginning of the quarter.
This being said, underlying EBITDA reached €242 million in the first half of the year, improving both in Q2 and in the first semester, with a margin standing at 9%. Net profits improved €14 million year-on-year in the first half of the year to €62 million. In terms of free cash flow, MC generated €279 million, which after the dividend payments of €243 million led net debt to reduce to €628 million, implying a total net debt to underlying EBITDA ratio of 3.1 times at the end of June, down from 3.3 times last year.
For Worten, Q2 was marked by the recovery of a very challenging Q1. The Portuguese electronics market recovered in the quarter after being impacted by a deceleration from the peak demand for IT related products during the pandemic period last year and also a milder winter that limited the demand for seasonal categories.
In this quarter, Worten delivered the 5.9% year-on-year increase of its topline to €261 million with a like-for-like growth of 4.2%. This led to a year-to-date level of sales, which is already above last year. So in the semester turnover grew 0.6% year-on-year reaching €521 million.
Online sales reached 15.6% of total turnover, also decelerating from the unusual peak demand levels that we saw during the pandemic period, but remained significantly above pre-pandemic levels, so 5% above the first half of 2019. The company reinforced its already solid and undisputed leadership position in Portugal, with leading market shares both offline and online.
A special note for the services business line, which grew about 30% and increased its weights on Worten’s total sales. This is I would say particularly relevant as it highlights the successful execution of Worten’s omni-channel strategy with an important focus on customer intimacy and advisory.
In terms of profitability, the positive topline evolution and a more favorable sales mix, partially offset the pressure on costs, most importantly, from store energy costs, together with the company’s investments in its digital and services strategy. In Q2 underlying EBITDA stood at €12 million, with a margin of 4.7% and €26 million in the first semester with a margin of 4.9% below 2021, but clearly above previous comparable periods.
Moving on to Zeitreel, our fashion business, Q2 continue to be characterized by a recovery of the activity to pre-pandemic levels, despite the demand in context, which affected consumer confidence and also disposable income.
In Q2 turnover increased 4.3% year-on-year to €78 million, with a like-for-like increase of 6.2%, driving total year-to-date sales back to 2019 levels, reaching €174 million, an increase of 28% year-on-year and a like-for-like of almost 33%. The online channel represented 9% of total sales, remaining significantly above pre-pandemic levels.
Following this topline performance, Zeitreel was able to post an improved underlying EBITDA in the first semester of €6 million year-on-year to just above €7 million, which despite the pressure on its cost base represents a significant improvement from 2020 levels, an increase of €18 million due to the operational recovery and also the efficiency gains implemented in the last couple of years.
Now to our sports business, ISRG continue to demonstrate its superior value proposition and operating model, and delivered a very strong set of results, despite the challenging macro context and the supply chain disruptions that have been affecting the sector.
In Q1 of the business which consolidates into our Q2 accounts, total sales increased 80% year-on-year to €255 million. This was fueled by all the brands including the newly acquired businesses that already represent more than 20% of total revenues. But even without those acquisitions sales increased 36% year-on-year.
Overall total sales in the six months up to April registered a growth of more than 71% year-on-year to €621 million. The online channel continued to increase its contribution, reaching 20% of total sales, a good sign of a company’s digital strategy execution.
The highlight also for the integration of SUR in the Netherlands, which is showing quite positive signs, giving us an even higher level of confidence in the ability of the team to continue to grow the business internationally.
In terms of profitability, EBITDA increased €15 million year-on-year in Q1 and €18 million in the last six months to €14 9 million, fueled by the strong sales performance and also operating leverage.
All-in-all, ISRG’s improved performance allow for a higher equity metric contribution to Sonae’s equity — Sonae’s results, reaching €1.7 million in the quarter and €8.3 million in the last six months.
Moving on to Sierra, Sierra had a very positive Q2 across all activities, namely the performance of its shopping centers, the services business lines and also the execution of its growth avenues. In the first half of the year, Sierra European portfolio recorded at 60% year-on-year like-for-like increase in current sales outperforming 2019 levels consistently across all countries, with also a higher occupancy rate in the portfolio of just over 97%.
Additionally, the company continued to progress in the execution of its growth strategy, namely by converting its development pipeline into projects under construction, also by entering the final stages of new investment vehicle developments, and by signing new contracts for retail and condominium management, leasing services and new projects. In total, the services income was up by more than 20% year-on-year in the quarter.
In terms of proportional management accounts, Sierra reached a total net result of €28 million years in the first half of the year, split between €20 million from direct results and €8 million from indirect result, mainly due to significant property revaluations in the European portfolio, following the recovery of operational performance across all geographies. These positive net results lead Sierra’s NAV to increase in the quarter to €978 million, despite the dividend payment which took place in Q2.
Finally, and what concerns the company is leveraged profile, Sierra’s gross LTV stood at 44.3%, a reduction of 1.5 percentage points versus the end of 2021, fully within the targets that we have for the company and with all assets in vehicles and healthy financial conditions.
Regarding Universo, Q2 solid recovery of performance, which was in line with our expectations. The company has been executing its strategy, building its credit factbook, while improving its performance. In total Universo’s production volume in Q2 increased by 13% year-on-year, fueled by all business lines and reached €528 million in the first half of 2022, implying a 17% year-on-year increase.
The customer base also continued to grow, with a very important milestone this quarter, which was €1 million, the 1 million credit card users which were reached in the quarter. This represents a 92,000 new customers versus last year and with 65% of the total customer base already been digital users. The company’s financial results in the quarter continue to improve with turnover more than doubling versus Q2 last year and underlying EBITDA improving by €4 million year-on-year.
Moving on to Bright Pixel, our Corporate VC are in technology, Q2 was another active quarter in terms of portfolio movements as we saw before. The company reached an agreement for the sale of Maxive to Thales, as I mentioned. It also completed the sale of its minority stake in Cellwize, which represented €22.5 million of cash proceeds and a capital gain of €14 million for Sonae.
Additionally, Bright Pixel continued to expand its portfolio with two new minority investments, which totaled €12.8 million in the retail tech and digital infrastructure segments. Last but not least, we further invested in existing portfolio companies to follow-on investments, namely in Sales Layer and Portainer. In the last 12 months, Bright Pixel have invested a total of €51 million in new investments and follow on.
All-in-all, at the end of June, the cash invested in the active portfolio reached €171 million and NAV stood at €416.5 million, an increase of 10% versus the end of Q1 and 5.4% versus the end of 2021. This reflects the impact of the most recent acquisition, and more importantly, the positive evolution in the value of our historical investments, which more than offset the exits in the periods.
And finally NOS, NOS published its results last week and they were also a solid set of results. Q2 was marked by a strongest play of the core telco business with solid net adds in the B2C segments, growth in B2B revenues, and overall recover — recovery in roaming revenues as well, and the return of viewers to cinema theaters.
Therefore, in the second quarter turnover increased by 8% year-on-year to €369 million with a growth of 68% year-on-year in the media and entertainment segments, and 5.6% in the telco business.
In the first six months of the year, turnover reached €742 million and 9.4% year-on-year increase. As for profitability, Q2 EBITDA grew 5.4% year-on-year to €163 million and in year-to-date terms, EBITDA stood at €322 million, an increase of 5.1% year-on-year with a 43.4% margin.
Net income increased 2% to €44 million in Q2 and 15.5% to €85 million in the first half of the year, leading to an equity method contribution to Sonae’s results of €10 million in the quarter and €19 million in the first half of the year.
Free cash flow totaled €30.6 million in the quarter, slightly above last year, with higher EBITDA levels more than offsetting the higher CapEx levels, particularly related to the deployment of next-generation networks.
Finally, in terms of capital structure, after the dividend payments of €142 million, net financial debt-to-EBITDA after lease payments stood at 2.15 times, a conservative level of leverage, which will be further reduced with a cash in of €155 million related to the agreement with Cellnex to sell an additional 350 towers in the second half of this year.
Now looking at our consolidated results, an overall turnover increased 11% year-on-year in Q2, mainly fueled by MC, leading to an 8% growth in the first half of the year to €3.4 billion. EBITDA reached €172 million in the quarter and €319 million in the first half of the year, a €31 million year-on-year increase, driven by the improved performance of our consolidated businesses, but also by better results from our equity consolidated businesses namely NOS and ISRG, and also capital gains from Bright Pixel’s portfolio activity.
Direct result increased 14% in Q2 to €63 million, driven by the improvements in EBITDA and indirect results reached €30 million in Q2, positively impacted by the dividends received from the direct stake in NOS, the revaluation of Sierra’s investment properties and Bright Pixel’s portfolio revaluations.
All-in-all, net results improved to €76 million in the second quarter, having almost doubled in the first half to €118 million versus €62 million last year, mostly driven by the recovery and performance of the businesses most affected by last year’s pandemic restrictions.
In the last 12 months, Sonae generated €632 million of cash flow underpinned by the solid operational results of our businesses and also the portfolio management operations executed in the period.
After the dividend payments in May, net debt decreased almost €400 million year-on-year to €1.1 billion and our capital structure remains robust, with comfortable leverage ratios and liquidity levels, as well as the low cost of debt and an average debt maturity profile of over four years.
In Q2, MC close the first Iberian ESG linked supply chain financing solution aiming to support the ESG transition of our suppliers and reinforce our commitment to sustainability.
All in all, Sonae’s NAV stood at €3.8 billion at the end of June, positively influenced by the good results of our businesses, which partially offset the negative sentiment in equity markets in anticipation of a more challenging economic context, which resulted in the decline of market multiples.
Sonae’s share price increased 17% versus the end of last year. I would say remarkable performance against the market and total shareholder return reached 54% at the end of June.
Going forward the outlook remains uncertain and volatile. But given our portfolio, the quality of our teams and also our solid financial position, we remain confidence that we are well equipped to face the coming months.
So this is it from me for now. Thank you. We can now open the session to Q&A.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from Jose Rito of CaixaBank. Jose, please go ahead.
Jose Rito
Yes. Hi. Good morning. So, two questions, one on Sonae MC, so we saw these 40 basis points decline in the margin in the first half. I think that comparison easier in the second half of this year. So is it fair to assume that we should expect a lower margin decline in the second half? This will be my first question. Then the second question on the — on Worten, if you can provide the percentage of marketplace in total sales versus one year ago and on the like-for-like the contribution from the new categories of products that you have been adding? That’s it. Thank you.
João Dolores
Thank you, Jose. So I’ll hand it over directly to Rui to answer the MC question and then to Paulo to take the Worten question. Rui?
Rui Almeida
Hi. Hi, everyone.
Jose Rito
Hi, Rui.
Rui Almeida
So, regarding your question, Jose, thank you. It’s too soon to give you a proper answer on that issue. And recently we don’t know what will happen in terms of energy costs, fuel costs, what will happen in terms of the response from other — from our consumers regarding the high levels of energy and how they will react to consumption in those.
But we are very confidence at least as I answered you in previous conference call, to continue to improve our profitability and that we need to understand the profitability in terms of return on invested capital. We need to understand that the — in terms of EBITDA margin it is too soon to give you on what will happen in terms of profitability — operational profitability in the current condition. But, again, we feel very confident and very committed to continue to improve our profitability in our operation. Thank you.
João Dolores
Paulo, do you want to add. Sorry, I think we’re still missing the answers of one of the questions. Paulo, do you want to cover the Worten question?
Paulo Simões
Yeah. Sure. Hi. Good morning, everyone. Good morning, Jose. Thank you for your question. So regarding the marketplace, defendants on our overall turnover is still small, it’s single digits. No, it’s not still a very relevant business. But it’s really fast.
So we have been betting strongly on the marketplace. We have from last year double the number of sellers that we have available and selling — actively selling on our website that has led to double the number of SKUs available and the same with sales.
So the business is almost doubling its performance versus last year. Not quite, but almost there. So, quite good performance and we are very pleased with devolution. Hopefully it will continue like this and we will be able to grow a significant business via the 3P sale — 3 — third-party sales.
Operator
Our next question comes from João Pinto of JB Capital. João, please go ahead.
João Pinto
Hi. Good morning, everyone. Thanks for taking my question. Three on MCs and one on Worten. Starting with MC, can you please quantify basket inflation? And my second question, are you seeing already trading down signs in Portugal and if you could elaborate on them? And how many stores do we expect to open in 2022? In — regarding Worten, we have seen a deceleration in like-for-like versus pre-pandemic levels and are we seeing volumes getting weaker amid the current inflation backdrop? Many thanks.
João Dolores
Thanks, João. Thanks for your question. So I’ll hand it over to the same people, Rui for the three MC questions and Paulo for the Worten. Thank you.
Rui Almeida
Hi, João. Thank you for your questions. And regarding inflation, in the last quarter it was at least about — don’t lose this, while again in last quarter mutation rate as we have in our stores is pretty much aligned with inflation rate that we have in the market about 12%.
In the last month, mainly in July, the inflation rate is around — in our stores is around — is pretty much the same that we have in June this year, about 13% to 14%. Too many figures also we indicated in previous in terms of inflation seems to have that they being kept regarding to the previous month or last month of the second quarter.
Regarding trading down, yes, we see some signs of trading done mainly measured by the level of the weight of the product level is increasing in our portfolio of stores. In fact, in the last quarter, the profit level increased significantly around several points in our — in the sales of our company in the past really consumer goods.
In terms of number of stores, we are keeping our targets to continue to open at least 20 new stores — 20 to 25 new stores in the proximity and supermarket that work that we have in Portugal that we need to also to consider that when you open other stores from the past six months from the complimentary and growth businesses like, ethanol, wells, et cetera. But on the food format will maintain our target again from 20 to 25 new stores in Portugal. Thank you.
João Pinto
Okay. Thank you.
João Dolores
Paulo?
Paulo Simões
Okay. Yeah. So regarding inflation in the consumer electronics market, so what I can tell you is that, market grew around 2% during the second quarter and that was driven by price increases of around 9% and quantity decreasing around 7%. So it’s very obvious that consumers are adapting to the new inflationary environment and they are indeed buying less — lower quantities versus last year.
The effect to Worten is less relevant than in the market overall, because we were able to grow also above the market, we have gained market share. So it’s true that we think we see the same kind of effect but not in the same level.
João Pinto
Thank you very much.
João Dolores
Okay. Thank you, João.
Operator
Our next question comes from Artur Amaro of CaixaBank. Artur, please go ahead.
Artur Amaro
Hi. Good morning, everyone. Thanks for taking my questions. I don’t know if it’s possible to disclose how much of market shares on IMC has at the moment or at least if it gained market share during the quarter? Another question on MC, if it’s possible to disclose how much was the volume decline, I assume that revenues were up because of the price increases, but volumes were down, if it’s possible to have an idea on how much the volumes decline and that’s it, my two questions. Thank you.
João Dolores
Hi, Artur. Thank you for the questions. On the market, so just a note, I mentioned in the initial presentation that our estimate is that we increased by 50 basis points our market share year-on-year, but maybe if we can provide some more color on that and also on the volumes question.
Rui Almeida
Thank you, Artur, for your questions. Well, it’s very difficult for us to provide you with a proper figure, an accurate figure regarding amount of sales. As João said while ago, we follow the information from Nielsen, how the market is evolving [Technical Difficulty] accurately in terms of the evolution.
In terms of the markets, as correct CFO file on for all our position here in also, very difficult, there are several, there is no — well, there is no independent institution that will provide us with accurate figure of the market trend. According to our estimation and — our estimate — estimates and we feel that our market share is a little bit above 24%.
Artur Amaro
24%.
Rui Almeida
And…
Artur Amaro
Okay.
Rui Almeida
24%.
Artur Amaro
Okay.
Rui Almeida
Okay. So we need to follow several incredible figures from the Portuguese and at least around 24%. But most importantly due to, okay, keep in mind that we grew 50 basis points in the last — in the first half of this year and we are growing…
Artur Amaro
Yeah.
Rui Almeida
… and we are keeping the growth and we are keeping — gaining market share as we are growing above what the market is growing presently, but according to our figures and figure that Nielsen is providing that market is above, I am so sorry, slightly above 2% and we are growing more than that in the like-for-like basis. So, you are gaining market share in the like-for-like basis.
In terms of volumes — well, in terms of volumes, is this — as you mentioned — as I mentioned while ago, the market is growing 2% and inflation rate is — significantly the inflation rate in first half was about 9%. So the market as a whole is losing almost 7 points in terms of volumes.
In the second quarter, we — in fact, we grew slightly below the levels of the inflation rate. So we lost some volume comparing to last year, we lost. According to this is very rough calculation, we lost 3% in terms of volumes comparing to last.
But, again, this isn’t fair to do this type of calculation, because we were in a solid panic mode last year and two years ago. So if you look, for instance, how we evolved in terms of volumes, comparing to the pre-pandemic situation against 2019, we are growing significantly in terms of volumes comparing to a pre-pandemic moment. So…
Artur Amaro
Okay.
Rui Almeida
… more than 3%, which is fantastic and we feel very comfortable in that situation. But, again, in the last quarter, yes, we had inflation. We have this situation that last year with the majority we retailers were benefiting from the situation that the people were in remote and the …
Artur Amaro
Okay.
Rui Almeida
…restaurants and continues were closed. So we — in terms we are benefiting from that situation not anymore as you may understand, we are coming to the old normal and in that situation, we continue to gain market share comparing to the pre-pandemic situation.
Artur Amaro
Okay. Very clear. Thank you very much.
Rui Almeida
Thank you for your question.
Artur Amaro
Thank you.
Operator
Our next question comes from António Seladas of AS Independent Research. António, please go ahead.
António Seladas
Hi. Good morning. Thank you for taking my questions. I have two questions on MC. First one is to related with operating margin and sorry to see something on this issue. But you mentioned that is too — is still too soon to talk about operating margin for the second half, that it means that you still believe that you could go for flat operating margins over the second half against last year or is this too optimistic? So that is first question. The second question that is also related in market share, if you can talk a little bit about the competitive environment, because you have been, if you are — if you have been gaining market share, it probably means that the competitive environment could be suffering in the future, because someone are probably losing market share. So if you can talk about — a little bit about competitive environment? Thank you very much.
João Dolores
Thank you, António. Maybe I could just do — give you a quick first remark and then I’ll hand it over to Rui. On the operating margin, and as Rui said, it’s — I mean, as you know, we do not give guidance to the market and he expects particularly in the current macro context, given the uncertainty that we have, it’s very difficult to give you a projection of how the year is going to end.
As you know, we have several factors that may affect our profitability and that are affecting our profitability and those factors are hard to predict at this moment in time. And so, obviously, we have the aim to maintain or even increase our profitability going into the future. At this point in time, it’s very difficult to give you a projection. But I will also ask Rui to comment on this and on the market share question.
Rui Almeida
Thank you, João. António, thank you for your question. Well, just follow — giving some follow up in the answer that João spoke and he provide well. Well, as João mentioned while ago, if — for instance, if we exclude energy and fuel costs in our P&L formula in the first quarter, we will increase our EBITDA margin in the first quarter very, sorry, in the first half comparing to last year.
As João was basically saying, well, it’s too soon to give you a proper answer, because we don’t know what will happen in terms of energy costs and we don’t know what will happen in terms of reduce fuel costs, so we will give you an accurate figure regarding that matter.
But, again, as I mentioned, while ago to Artur, we do — we feel very confident and maintain very efficient and very profitable operations in the positive market as we — as you may understand as we have already very profitable in that benchmark pricing in terms of profitability into pricing [ph].
Going back to the other question, which is very difficult to answer to you, according to what we know, we are gaining markets. Obviously, really mid-cap volume [ph] is gaining market share, because they are increasing number of stores and their foot print here in Portugal take benefit of that situation, they are increasing their stores per year, meaning that they are increasing roughly more than 25% of their footprint in Portugal and this increase is very significant and I believe that they are launching their operation in Portugal and that maybe which likely to increase market share gains in the Portuguese market.
The other players like, for instance, [inaudible] is also growing, it’s growing market share as they are normally, they are doing very positive decision against last year. But we need to understand that they lost a market share in previous year and they are coming back to the figures that we were having in the past.
We are also gaining market share, meaning that there are some other players losing market share as I think is not any surprise versus meaning we are increasing in fact market share again. They are — also they are not really — and their ongoing at least that are now going Portugal and they are losing market share.
We believe possible performing quite well. Other retailers in Portugal, they are losing some market share, as you may understand and the results are losing. But more important than that is the some market share from traditional players are — they are also losing a lot. And they gain a lot of markets during the pandemic period. But now they are losing a lot comparing to what they had last year or even what they have in 2019. So meaning the organized players are gaining the more — the bigger — more organized players are gaining market share and traditional players are losing significantly in this first half of 2022.
António Seladas
Okay. Thank very much. Just one the energy…
João Dolores
António maybe…
António Seladas
Yes.
João Dolores
I would just like to add something on the competitive landscape, right, and then on our performance and just to complement what we said. I mean, we are, to be clear, very confident on our ability to continue to grow in the Portuguese markets and even to grow market share, right, because we have quite distinctive value proposition and our like-for-like growth has been quite strong.
And on top of that, and as we mentioned before, we have an ongoing expansion program, which obviously adds to that. And we are one of the fastest growing companies in Portugal in terms of square meters. And so the two things put together, we remain very confident on our ability to continue to grow and gain market share in Portugal.
António Seladas
Okay. Thank you very much for your answers. Thanks very much.
João Dolores
Thank you, António.
Operator
We have a follow-up question from Jose Rito of CaixaBank. Jose, please go ahead.
Jose Rito
Yes. Hi, again. So just to clarify human tender objective of growing EBITDA for Sonae MC this year?
João Dolores
Sorry. We’re not — we are hearing you very, very…
Jose Rito
Is it better.
João Dolores
I think it’s better now. Will you try again? Yes.
Jose Rito
Yes. So the question is, if you maintain the objective of growing EBITDA for Sonae MC this year and this is also the case for the second half. Was it clear the question?
João Dolores
Yeah. Yeah. It was clear. And we’ve covered that question in previous conference calls and the answer is, yes, our goal is still to increase EBITDA on absolute terms this year. But, again, I mean, as we’ve said and as Rui said as well. It is a very uncertain context, very volatile context and it depends really on what’s going to happen up until the end of the year.
Jose Rito
Okay. And the second question on the private labels and this trading down that we have been seeing, for sure, this imply more sales, but just to confirm in terms of margins for Sonae MC, this is relative the private — your private label?
João Dolores
Okay. Rui, you want to take this one.
Rui Almeida
Very, very difficult question. Well, there are some categories, as I mentioned to you last conference call, last question, there are some categories that we have very solid margins in our product level, but other when our margin in — at least in euros, what is in euros is going to be concerned the euros and as private label has lower price with a very good quality, but in euros margin is lower, the prices are lower as well as you may understand. In euros not as a percentage of our sales and in euros margins of our products are lower, meaning if we maintain the volume, the euros will probably be below.
But what concerns to private label, private label is very important for us, in order to maintain very attractive our private exposure, meaning we are increasing the volumes in our private label this year and we are increasing our sales people, understand that this is product as we are offering is very, very solid difficult moment that we are living in crisis increasing significantly and people see come to our stores having the certain that they will have a higher level of variety they could choose between the products they want to buy. And we are offering private label at a very good prices in a very high level of quality. People feel very confident and we know that, for sure, this product will get more customers coming to our stores. By the end of the day we gain in terms of EBITDA in euros, not as a percentage as we probably would understand that we will get an limitation, okay. Thank you.
Jose Rito
Thank you, Rui.
Operator
We have no further questions on the phone line. So I’ll hand back to Mr. João Dolores.
João Dolores
Okay. Thank you very much. Thanks everyone for attending our conference call for Q2 results. And I would like to wish everyone going on holidays, a good holiday period and see you — talk to you again when we disclose our Q3 accounts later in the year. Bye-bye. Thank you.
Operator
This concludes today’s call. Thank you for joining. You may now disconnect your lines.
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