Sonae, SGPS, S.A. (OTC:SOSSF) Q3 2022 Earnings Conference Call November 10, 2022 10:00 AM ET
Company Participants
João Dolores – Board Member & Chief Financial Officer
Hugo Martins – Chief Financial Officer and Chief Digital Officer, Zeitreel
Luís Mota Duarte – Chief Financial Officer & Executive Director, Sierra
Paulo Simões – Chief Financial Officer, Worten
Rui Almeida – Chief Financial Officer & Executive Director, MC
Cristina Novais – Chief Financial Officer, Bright Pixel
Conference Call Participants
Jose Rito – CaixaBank
João Pinto – JB Capital
António Seladas – AS Research
Artur Amaro – CaixaBI
Operator
Good afternoon. We welcome you to the Sonae’s Nine Months 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 his presentation. [Operator Instructions]
I’ll now hand the conference over to Mr. João Dolores. Please go ahead, sir.
João Dolores
Hello, everyone. Welcome to Sonae’s results conference call for the third quarter of 2022. As usual, beside myself and the Investor Relations team, we have on the call [indiscernible] from Bright Pixel; Hugo Martins from Zeitreel; Luís Mota Duarte from Sierra; Paulo Simões from Worten; and Rui Almeida from MC.
As you all know the last month have been quite challenging as the geopolitical and macroeconomic instability continues to provide a challenging backdrop with significant impacts on our businesses and on our daily lives. Energy prices persisted at very high levels and supply chain disruptions were exacerbated by the war in Ukraine and continue to impact both our businesses and our customers.
As such, the inflation rates escalated again in the quarter, driven by energy, but especially by food inflation reached new highs at the end of September. We saw inflation of around 15% in food retail in Q3 and 11% in total in the first nine months of the year.
It’s worth mentioning that the growth in consumer food prices has been much lower than in food production prices showing that retailers have been absorbing part of the purchase price increases in an effort to protect families and their companies.
Additionally, reference interest rates return to public ground and started already to impact consumer budgets. As a consequence, equity market suffered a significant hit in Q3, and Solane’s share price fell roughly 30% from June to September.
We’ve since seen a solid recovery in the last few weeks, and our share price has increased substantially and is now close to €1 per share again, which still represents a large discount versus the intrinsic valuation of our assets as we will see in a minute.
So regarding our portfolio management activity, Bright Pixel continues to actively manage its investments with around €20 million invested in portfolio expansion and also a number of follow-ons in existing assets. In Q4, already the sale of Maxive to Thales was finally concluded and will represent an important level of cash proceeds for the group.
Also, as you know, at the end of Q3, Sonaecom announced the termination of the partnership with ZOPT, a move which is fully aligned with our intention to remain a reference shareholder of NOS and to ensure adequate conditions for the company to deploy its strategy.
In the quarter, we also continued to increase our direct shareholding in NOS, and we now own a stake which is equivalent to 37.4% split between Sonaecom and Sonae. And we are confident that this level of shareholding is adequate for the level of economic exposure and influence we want to maintain in the company.
Sonae’s net asset value amounted to almost €4 billion at the end of September, 3% above the level we saw at the end of June. This was mainly backed by the operational improvements in our businesses and also by the increased NAV at both Sierra and Bright Pixel. Sierra’s NAV increased 3% versus June, overcoming €1 billion, mainly driven by the positive direct result in the period a positive FX evolution and also capital gains from asset sales. Sierra’s direct results performance was driven by a good set of operational indicators, which continue to recover well from pandemic levels, with shopping center, retail sales remaining significantly above 2019 levels, which shows the quality and resilience of the company’s real estate portfolio and also the services business lines, which performed quite well.
Concerning Bright Pixel, the active NAV stood at €457 million at the end of September, implying a 10% growth versus June, which reflects the impact of recent acquisitions as well as the positive evolution of the value of existing investments. NAV continues to be more than double the amount of invested capital in this stockholding.
NOS had a negative contribution to Sonae NAV evolution in the quarter as the pressure on equity capital markets also weighed on the company’s share price, but in any case, NOS had a quite solid performance in Q3 with strong growth and improving profitability.
Now let’s take a look at our consolidated results. Sonae’s consolidated turnover increased 15% year-on-year in the quarter, surpassing €2 billion, mainly fueled by MC, but with important contributions also from the other retail businesses, which led to a 10% growth in the first nine months to €5.5 billion. MC continued to reinforce its leadership position in the context of rising food inflation that more than offset the decrease in volumes in the food format.
Non-food formats continued to benefit from the normalization of consumption after the pandemic restrictions back in 2021. So total turnover increased 16% year-on-year in Q3 with a like-for-like evolution of 13.3% in the business. Worten also had an important contribution towards our consolidated top line performance with a double-digit growth to €315 million in Q3 and a like-for-like of 8.5%, fostered by the positive contribution of seasonal category sales. And in year-to-date terms, the positive trend of the last two quarters pushed turnover to grow 4% in total and the Worten to continue to reinforce its market share in the 4Q market, both online and off-line.
As for Zeitreel, in Q3, we continued to witness a recovery to pre-pandemic levels. Total turnover grew by 8% year-on-year in Q3 to €102 million, with a particularly positive contribution from retail operations. A quick note regarding our online sales. So despite the deceleration of e-commerce sales in the market, our businesses continue to develop their digital value propositions and Sonae’s overall online sales actually grew year-on-year in Q3 as we continue to lead our markets in both the physical and digital channels.
Consolidated underlying EBITDA increased 7% year-on-year to €181 million, however, with a lower margin versus last year, driven by the cost pressures that we are receiving across all businesses, mainly in what regards energy and also due to the investment in prices to ensure the most competitive offering in the market.
MC in particular, saw its operating margin decreased by 100 basis points to 9.9%, and was the main driver of the group’s 64 basis points decrease in underlying EBITDA margin. Still, our businesses were able to sustain these pressures with an outstanding level of resilience and a clear long-term perspective on our value propositions and also our competitive positions. Consolidated EBITDA reached €224 million in Q3, 5% below last year, mainly due to the pressure on our operating profitability and also to the capital gain from the sale of Maxive back in 2021. Therefore, our EBITDA margin contracted by 2.4 percentage points to 11% in the quarter.
Direct results in Q3 stood at €101 million, a decrease of €14 million year-on-year, following the EBITDA contraction we saw before, and indirect results was slightly above last year in the quarter and benefited mostly from Bright Pixel portfolio revaluations. Therefore, net results in total reached €92 million, 4% below last year.
Overall, and despite the challenging context and also the strong level of investments in the quarter, both operational and financial investments, the group registered a healthy level of cash flow generation that reached €81 million.
Consolidated net debt actually increased year-on-year, but this was well expected, given the level of M&A CapEx that was deployed in the last 12 months, namely with the acquisition of Grosvenor’s 10% stake in Sierra, the investment in LOFF [ph], the acquisitions and follow-on investments of Bright Pixel and also the investments made by Sierra to execute its strategy.
Our financial position allows us to continue to invest to reinforce our value propositions, ensure our portfolio companies have to best conditions to succeed and also create value in the long run.
If we look at our key leverage ratios, these remain at quite conservative levels. MC and LOFF continue to have investment-grade leverage levels. Sierra continues to show a prudent level of loan-to-value and Sonae’s own LTV remains well below the 50% threshold. The Group’s capital structure remains quite solid with comfortable liquidity levels, and we are fully financed until early 2024 and with an average cost of debt of around 1%.
So going forward, the outlook remains uncertain, obviously. Energy supply, particularly of natural gas will remain a source of concern in most countries, while inflation rates are expected to stay high for a while, forcing central banks to continue to raise interest rates. However, given our financial position and the quality of our portfolio and our team, we continue to be well positioned for what’s ahead.
Thank you. That’s it for now. You can now open the session to Q&A.
Question-and-Answer Session
Operator
Ladies and Gentlemen, the Q&A session starts now. [Operator Instructions] Our first question comes from Jose Rito of CaixaBank. Please go ahead.
Jose Rito
Yes. Hi. Good afternoon. So I have just one question on Sonae MC. What is your view in terms of food inflation over the coming months? Should we expect that food inflation continues to increase? And on this environment, any reason to assume that EBITDA should not grow over the next quarter.
So we have been seeing that despite the margin dilution, the top line has been more than offsetting this and EBITDA has been increasing. So some view on how to expect this to evolve for the next quarter? And finally, on hedging — energy hedging, if you have already contracted anything going into 2023? So that will be my questions on Sonae MC, then I can come back later.
João Dolores
Okay. Thanks, Jose. So I will hand it over to Rui tackle the first question of MC.
Rui Almeida
Hi, Jose. Well, regarding the first question, it’s very difficult to answer to that question, because, simply, we don’t know. Well, we are — as João said a while ago. The inflation rate continues to increase and push-pull. In fact, during the last — in the third quarter, we reached 50% in terms of the inflation in our stores also in the market. Last year, what we are witnessing in our stores, the inflation rate is not decreasing, continues to — in fact it continue to go up maybe very aggressively in last month.
Currently we don’t know what will happen in the future. But what we can see is very important is the inflation in the producer side is much higher comparing to the inflation on the consumer side. But we generally measure inflation in our stores, especially the inflation on the consumer side, which in the last quarter was pretty much 15%. But if we measure the inflation according to the data that the National Institute of Statistics in Portugal is providing us, the inflation in the price index from the producers is much higher. It’s almost reaching levels of more than 25%.
So yes, inflation is not giving any sign that it will start to slow down. It is giving some signs that it will prevail for very high in the future as well as sales market. And we need to cope with that situation in the future. But is again, probably we don’t ways. We are now looking to the market. We are reacting to what is happening in the market. And as I mentioned while ago, again, we are absorbing part of the inflection that we, retailers, are absorbing part of the inflation that is now — we are having in the market. Production is increasing more than we’re seeing at the seller side.
In terms of EBITDA figures. Well, currently, as I mentioned to you in the very beginning of the year, we fight to continue to increase with our ambition to continue to increase the EBITDA figures at the maximum optimizing all the operations that we have. If the EBITDA margin will decrease as a percentage of turnover, probably, because we are focused on EBITDA margin in euros and then probably what will happen. And again, we are continuously focused in EBITDA in euros and free cash flow in euros as well. And again, we are focused on maintaining our assets very well profitable and very attractive.
What we’ll have in the future? Well, I’m pleased to give you a clue about what will happen in terms of EBITDA figures. In terms of energy, for 2023, we will have roughly 55% of our energy totally hedged in our portfolio of assets.
Jose Rito
Thank you. Sorry, on the energy, this 25%, how it compares to 2022? How much was the percentage that was hedged at the beginning of the year?
Luís Mota Duarte
Sorry, I didn’t understand. Could you repeat your question, please?
Jose Rito
You mentioned that 25% is in 2023.
Luís Mota Duarte
No, 2023, it will be 55% – 5-5.
Jose Rito
Yes, 5 – 5. And how much was this year, at the beginning of 2022?
Luís Mota Duarte
At the beginning, it was about 20%, as I mentioned in the very beginning of this year.
Jose Rito
Okay, I got. Thank you.
Operator
The next question comes from the line of João Pinto from JB Capital. Please go ahead.
João Pinto
Hi. Good morning everyone, and thanks for taking my questions. On Sonae MC, on the 100 basis points fall in EBITDA margin in the third quarter, can you tell us how much of it was gross margin drop? I’m just trying to understand the different drivers of trading down in price investments versus OpEx inflation. Also, could you elaborate on the trading down in Portugal, which changes you’re seeing in the consumer behavior? And finally, on capital allocation, you have increased your position this year in NOS. Do you plan to increase further? You’re happy with your position? I mean, just to better understand your capital location. Thank you.
Paulo Simões
Thank you, João. I’ll take the capital allocation question first, and then I’ll hand it over to Rui to answer the two questions on MC. So, as I mentioned at the beginning, we currently have a position in NOS, which is roughly around 37.4% direct and indirect stake in the company, and we feel comfortable with that level of exposure. So we feel that level of economic exposure together with the level of insulin that we have in the company, is sufficient for us to ensure that the company has the right conditions to execute it’s strategy. And so, our short-term plan is not to further increase our exposure to the company right now. Rui, do you want to take the MC questions?
Rui Almeida
Sure, sure, sure. Well, two questions, two very important questions. One was starting by the trading down. Well, trading down for us is sort of things that is happening. Well, the first measure is that, we are witnessing in terms of trading now is our product level is getting some weight. And in fact, comparing to the third quarter that we had in last year, the private level is accounting for more three percentage points in terms of weight in our portfolio of products. And then, again, speaking only of fast-moving consumers because we — as you may know, we have — it’s very difficult to give you a figure for private level in terms of cash province and also in [indiscernible] majority of the brands are totally controlled by buyers. So that’s the figure.
And I’ll just give you some figures about has [indiscernible] in order to have you very simple figures to compare to other players because that’s coal when we compare to ourselves to other players is only in fastenings. And what is happening in the private level in our stores is the weight of private label in our store is increasing significantly. But again, it’s very difficult to give you the proper figures regarding the trading for instance. In terms of fish, well, we are witnessing that there are certain types of patients like [indiscernible], et cetera, we are selling less than we were selling in terms of kilos comparing to last year. Since they are novel fishes and one more expensive fishes that people are trading down those — the consumption — that consumption of fish pull less expensive efficiency fishing.
But for instance, in terms of mix, we are waiting that people are preferring to buy pork and instead of buying this, that’s another issue that, for instance, we are witnessing in our stores. But again — in terms of fruits, people prefer to – well, they don’t buy much tropical fruits and grapes comparing to what they were buying last year, and we are seeing that situation. And as you may understand, those fruits are more expensive and give us much more levels of EBITDA figures in Euros comparing to what we were having last year. But again, we are selling quite well, and we are doing quite well, and we are increasing the level of customers in our stores. And we are doing quite well, and we are appreciating very much the value proposal we are offering and consumers are also appreciated the value proposal they are receiving, and this combination is quite positive for us.
In terms of gross margin, I’ll just give you some figures. In the last quarter, we decreased our EBITDA margin by one percentage point. Half of that figure is pretty much explained by the increasing — very dramatic increase in prices in terms of energy due to the weight of energy that we have in company. And then we also have efficiency gains that completely are a part of the decrease we have in commercial margin in terms of – due to the investment in prices that, João mentioned a while ago, in order to continue to be more effective in our value proposal and also due to the fact that the trading is down, because due to this trading down effect, mainly due to the fact that we are selling more at private label.
And as you may understand, in commercial terms, the gross margin is pretty much difficult to quantify and to measure. But the fact that the – our product label is less expensive comparing to the suppliers grant and the operation costs to deal with those products in our stores are pretty much the same, the EBITDA margin of the product label is much lesser comparing to the suppliers brand. So it’s one of the reasons that we – our margin is being impacted by this drilling down phenomenon. But again, the majority of this impact in terms of EBITDA is related to the energy costs we supported during the third quarter of this year. Thank you.
João Pinto
Thank you very much, Hugo. And if I may, just one question on Worten, because we saw a great acceleration between the second quarter and the third quarter, I would like to know to add some color on the drivers for this good sales performance in the third quarter.
João Dolores
Sure. Paulo, do you want to take that?
Paulo Simões
Yeah. Hi, Well, João, the main driver were as João already mentioned, were the seasonal category sales. We have a particularly hot summer that really drove significantly. So, that was good. Also, inflation helps in terms of value of euro sold, it also helps. And those are two driver’s inflation and seasonal categories.
João Pinto
Many, thanks.
Paulo Simões
And sorry, last one, which is important, we gained market share. So it’s also important to say we have been able to gain market share in all geographies, both online and off-line. So, it was a good performance also operational from the company, of course.
João Pinto
Thank you.
João Dolores
Yeah, I would stress the third point, I think it’s important to mention that Worten has been gaining market share, both offline and online. And the execution of its strategy, which leverages an omni-channel experience with an expansion of categories also in the marketplace, and a very strong offering in terms of services, has been quite instrumental and successful in ensuring the performance of the business in the last couple of quarters.
João Pinto
Thank you very much.
João Dolores
Thank you, João.
Operator
The next question comes from the line of António Seladas from AS Research. Please go ahead.
António Seladas
Hi. Good afternoon. Thank you for taking my questions. Three questions. The first one — the first two is with ITL [ph] if you can provide some breakdown on capital spending or explain why the figures were so wide?
Second question is related with the yields that have been increasing. Should we assume that NAV will go down by the end of the year or not necessarily, because your execution as also has been also, well, strong very strong?
The third question is related with cost about MC. Sorry, make this on issue, but it’s important, as you can imagine. So from my understanding, or if you can explain, you cover 55% of the energy that we are going to consume in 2023 was already hedged. So does it mean that your energy bill will go down versus taking consideration for interest energy prices or not necessarily?
João Dolores
Okay. Thank you, António. I will hand it over to both Hugo and Luis to take the questions. I would just mention that regarding this last question, I mean it’s no certainty that our energy bill will go down obviously because half of our energy consumption is not hedged, and we don’t know what the evolution in the market price will be.
And so obviously, we are more protected, we are more confident also because we are not only hedging a significant part of our consumption, but we are also deploying a number of energy efficiency measures, which are quite important, and we are increasing, for instance, the deployment of photovoltaic panels in our facilities as well. And so this all contributes to hedge the risk.
But obviously, we do not know what’s going to happen in the market in the next year. And our actual energy bill at the end of 2023 will be very much dependent still on what happens in the market. And I will ask Luis to complement the center and also for Luis to comment on your question.
Luís Mota Duarte
So from my side, I don’t have anything to add to your commentary, you’re correct. And again, yes, we — the most important for us is we set up several PPAs, power purchase agreements. We can — we are totally committed to in order to give some commitment in terms of energy. And in terms of energy, we are basically buying agreement by green energy. These our purchase agreements are based on solar energy, wind energy and also the energy sales is totally due to that situation, and we set up several agreements with several companies in order to buy those in order to have those power purchase agreements set up for the next five to 10 years.
António Seladas
Okay. So — but nevertheless, the prices below are recurring prices, I guess.
Luís Mota Duarte
Exactly for those PPAs sector that are below the recurring prices. Yes, it is true. But the problem is that frankly, we don’t know what will happen in the other 45% of the consumption that we will have because we in spot market. I mean, again, in the spot market, we don’t know what will happen in average in terms of average that we will pay in the next year. But again, we have 55% hedge for next half.
António Seladas
Yes, I understand. So just asking if we assume energy — current energy prices will stay for 2023. I guess that your energy grew will go long
Paulo Simões
Yes. Antonio, this is what we are expecting.
António Seladas
Okay. Thank you very much.
Luís Mota Duarte
Okay. Good afternoon. António to your first question, I mean, we set out a strategy roughly a year ago. And what you’re seeing now is the execution of that strategy. We’re making investments across the different growth strategies that we had identified. We’re talking about growth investments plus growth CapEx in the typical areas like in development and investment management, which can be vehicle, investment vehicle for other types of real estate-related investment strategies. So it’s growth and it’s completely core to our strategy.
The other area, I would say — so the other question is a much more difficult question because I’m looking at purely the fundamentals. If we look at shopping centers today, we are seeing month after month, the highest sales that we’ve ever seen in our shopping centers. We are performing significantly above 2019 levels. We have real growth in our centers. So from a resilience point of view, from a COVID impact point of view, we’re very comfortable that the shopping centers have returned and have exceeded 2019 levels on a consistent basis. And we’re seeing that throughout on a month-on-month basis.
So from a risk profile point of view, shopping centers have been intact and recording strong performance. If we look at more macroeconomic figures, if you look at the spread of yields against the risk-free rate, and yes, we’ve all seen the risk-free rate increase, but we have also seen the risk-free rate decrease over time and yields have not followed that. So if we just look at yields and shopping centers compared to the risk-free rate, we are very close to what the average spread has been over the last many years.
If we also look at the spread of shopping center yields against other real estate sectors, we are at a record spreads, which means that there is a significant gap between shopping center yields and other asset classes. Which in reality, what I’m saying purely looking at fundamentals, there is a strong argument to say that shopping center yields should not be affected by the current market dynamics.
Having said that, given sentiment and given general macro sentiment, we are expecting yields to expand in our December valuations, but I have to emphasize that it’s a reflection of sentiment and of simplification rather than anything related with fundamental performance of this asset class.
João Dolores
Okay. Thank you, Luis. Thank you, Antonio, for your questions.
Operator
The next question comes from the line of Artur Amaro from CaixaBI. Please go ahead.
Artur Amaro
Hi. Good afternoon everyone. I think most of the questions have been answered. Just a quick one. If you can give us an opinion about the current buzz regarding the possibility of the Portuguese government creating a special tax on abnormal profit, whatever that means for the retail sector. So that would be my first question. And the second one, if I understood correctly, you said that 55% of your energy costs are covered for next year. So if we assume that the energy prices won’t go up much more, could we see a stabilization of the EBITDA margin next year? And that would be my second question. Thank you.
João Dolores
Okay. Thank you, Arthur. Maybe I’ll cover the first question, and then I’ll ask Luís to comment on your second one. I mean on the first question, we still don’t know how this tax will be implemented and what the impact for Sonae will be. What I can tell you is that we do not recognize the concept of abnormal or expected profit. We are not seeing extraordinary profits in any of our businesses that results from taking advantage of the inflationary context.
On the contrary, as you saw, we are giving a tremendous pressure on our cost base, and we are seeing margins actually deteriorate. So, I think we should really demystify the. We continue to operate in an extremely competitive market, where all the players are fighting for market share and trying to offer the best value for money to consumers.
And this context together with very high energy cost plays a huge pressure on profitability. So, the image that some people are trying to create, I believe, it’s simply not true.
And I would also add that the food retail sector was essential to support the country during the pandemic period with very difficult operational challenges, additional costs, and we are now being faced with another very challenging context, and we are trying to mitigate the impact of inflationary pressures on consumers as Rui rightly pointed out. So, talking about expected profits really makes no sense to us. I will ask Luis to cover the topic on energy cost. Luis?
Rui Almeida
Hi Artur. Thank you for your question. Well, in fact, as I mentioned in one, we have roughly 55% of our energy concentrate two to three years. Yes. If we — if the prices in spot markets are to maintain in the next year with the prices that we have today, yes, we have a sort of an advantage — a very significant advantage for next year.
If the margins will stabilize or increase, frankly, we don’t know because it will depend on the market evolution, the reaction, what will happen in terms of evolution of prices, trading phenomena, et cetera, et cetera, et cetera. But we, in fact, I tend to agree with you. We have an advantage comparing in terms of energy prices comparing to this year.
Artur Amaro
Okay. thank you very much. Just another quick one, if I may. Can you give us an idea of how much — what’s the percentage of the promotions on your side? I remember by the time of the IPO, the figures that were available is that roughly, we would have something around 55% of promotions. Sorry…
Rui Almeida
Yes, yes, on the — pretty much kept basically maintained at 55% in our company. And our leverage on the market are pretty much the same, 50%, slightly — or less than those figures, but we maintain those figures. We are maintaining those figures in terms of policy and in terms of proposal we are offering to our customers.
Artur Amaro
Okay. Thank you very much. That’s it for my side.
Rui Almeida
Thank you.
João Dolores
Thank you, Artur. I believe we have a question on the chat. And the question is from [indiscernible]. Is it possible to share the current levels of MC and Worten market shares and their recent evolution? So, I will maybe ask Rui and Paolo to briefly comment on the recent evolution of the market shares for both businesses. Rui, do you want to start with MC?
Rui Almeida
Sure, sure. As I mentioned in previous conference calls with the investors, it’s very difficult to give you a proper figure regarding the market share. There are several — there are no — well, there are several institutions that are offering some figures and we follow generally Nielsen figures to measure the evolution of our market share.
And in fact, in the first nine months of this year, we are raising — our market share is increasing by 30 basis points, compared to last year, which is fantastic. And we are increasing market share. In fact, all the figure that we are getting is even we are increasing market share in a like-for-like basis, which is — again, which is very positive.
To give you a proper figure about our market share, well, according to the internal research that we do, our market share is roughly above 24%. But again, there are, no institution that is providing us with a very scientific figures regarding the market share.
We have some figures, but it depends on the call or it depends on the sample that you are getting and the correct figure for our market share will be very difficult. We don’t have much accurate information from all competitors, all players in the Portuguese market.
Artur Amaro
Thank you.
João Dolores
All right. Paulo, do you want to touch upon the Worten Evolution in terms of market share?
Paulo Simões
Sure. So we have the same difficulty of who he was mentioning it’s very difficult to have a clear market share number. Anyway, as mentioned in the past, Worten is around 30% market share in Portugal and has been gaining market share consistently as far as our estimates are telling us.
So we usually follow the JFK panel, which is a subset of the market, that doesn’t cover the full market, then we try to estimate the full market is evolving. And the kind of market share in 2022 is around 0.4 percentage points.
And this follows, again, of around one percentage point last year, so, quite good performance of the company to the market share gain as I’ve mentioned before.
Artur Amaro
Okay. Thank you, Paulo.
Operator
The next question comes from the line of Jose Rito from CaixaBank. Please go ahead.
Jose Rito
Yes, Hi again. So you have three new questions. The first one on NAV for Bright Pixel, if you can provide any of the evolution excluding new investors, so I would like to have a sense of how much was the like-for-like evolution, if possible. Because as always, capital increases, the new investments, assets being sold. So if you can say how much was the NAV evolution excluding all these M&A activity.
And also related to this, what could be the impact on the NAV of Bright Pixel, related also with the rising interest rates, we have been seeing a decline in asset valuation start-ups with layoffs. So my question is, if this could also impact the NAV of like Bright Pixel that will be my first question.
Second on the FU TECH, [ph] this has been also a business that has been under pressure and the trading down is also affecting this kind of categories. If you can provide how that sales have been evolving.
And if you think that recent decline in valuations in the market could also be an opportunity to further increase Sonae’s role in this full packed business. And final one, on Sierra question on what is included in the business plan in terms of investments. So we saw the increase recently on the net debt. Just to know exactly how much could be the increase going forward in terms of new investments. Thank you.
João Dolores
Okay. Thank you, Jose. So I’ll maybe ask Cristina to answer a couple of questions on Bright Pixel first, and then we’ll take the other one afterwards.
Cristina Novais
Okay. Thank you. Well, the first one relating the NAV evolution in the quarter, we have increased more or less 31, and it’s nothing related with Maxive. Maxive was already adjusted in the last quarter with the acquisition that was already aligned. So it’s the – the goal was the same at the end of the quarter. And related to the second question from the market perspective and the secretary said of course, you know that our great uncertainty in the market. But up to now, our NAV hasn’t been affected by that.
As you know, we have a very conservative approach in our investments. We never played the game 2021 with high valuation and we like to course for that. We never played that game. We are very conservative, and we have a very quality portfolio. So up to now, we don’t have an impact in NAV.
On the contrary, of course, we have been investing recent rounds in our companies and our portfolio companies. And all of them were higher than the last one. So we are improving our NAV. But surface in the market is there, and we don’t know what the future will come. But up to now, we have this time, liquidity in the market is still very high. Our segments are very vast cybersecurity to digital, so up to now, we are confidents and we believe that, in fact, with this call down in the market, we will have great opportunities to act.
Jose Rito
Okay, okay, thank you.
Luís Mota Duarte
I would also add that — and I’m not sure if that was your question, but I would also add that the increase in NAV is driven by both new investments and also revaluation — revaluation of current assets. And so — and the revaluation of our existing assets played an important role in the evolution of the NAV in the last 12 months.
Hugo Martins
Okay. Regarding — maybe I’ll take the one on cost, and then I’ll ask Luís to cover the question on Sierra. So cost has been performing well. So what we have done since we’ve acquired the company as we have been executing a value creation plan to grow the company from the current level, or from the initial level of sales to a level of sales, which is significantly above the initial one, and we are trying to do that at this moment in time.
Early signs are good, so we are seeing sales increase month-by-month. We are getting new listings in new supermarket chains. We are getting access to new accounts in terms of food services. And so we are quite confident that the value creation plan that we designed or developed at the time of the acquisition will be — we will be able to achieve that.
Our goal is to grow in the UK mainly, although we have launched the product as well in Portugal, but our main market is the UK. So we will continue to invest significantly in the British market where we see the highest potential for growth. And we will probably, next year, have more news on this asset to share with you with a bit more granularity.
I will ask Luís to cover the Sierra question now.
Luís Mota Duarte
Sure. On Sonae Sierra and on your question around future investments. So a couple of context points to start with. First, I mean, we will and we are firmly self-funding, meaning that we are investing capital to the extent we have excess cash sitting on our balance sheet and to the extent we generate it. And we generate it through operations, through asset sales and through profits from the investments we make.
The types of investments that we make today with the strategy is obviously in development, as I mentioned and on these developments these typically are done with a degree of leverage standard for these types of investments, which tends to be in the order of, say, 50% to 60% LTCs. We invested on our balance sheet, and we invested typically in partnerships with other investors. But these are investments on our balance sheet. On the investment management side, we tend to either co-invest in the vehicles, but with small positions. Therefore, it’s not very cash — it doesn’t require significant cash investments.
And the third stream of CapEx investments tends to do with M&A, M&A to the extent that it adds to the growth and to the strengthening of our core competencies. And, of course, in our nature, we always keep an opportunistic eye for different opportunities that might arise, particularly in the market conditions as we expect them to be going forward. So our level of investment will really depend on the level of our capital recycling policy, but we are in a net investment position as we speak. We have a meaningful amount of cash that even our balance sheet, which we are investing as we speak but investing in growth initiatives and always conscious of the current market conditions that fit perfectly with our prudent and conservative path.
Jose Rito
Okay. Understood. But I would assume that no major asset sales are expected in 2023. So we should still be in the phase of ramp-up of this strategy in the sense that you’ll still, let’s say, consume net cash. You are saying that you’re self-funding, you have the cash, but net debt will continue to increase over the coming quarters, right?
A – João Dolores
That is exactly right, yes.
Jose Rito
Okay. Understood.
João Dolores
Thanks,
Operator
The next question comes from the line of Antonio Seladas from AS Research. Please go ahead.
António Seladas
Sorry, as a follow-up question related with capital spending, but I guess that you already answered it. So we should expect more of these figures of capital spending in the coming quarters is what I understood from your prior answer.
A – João Dolores
That is exactly, right because it’s perfectly in line with our strategy. Having said that, in the current volatile market conditions, we have to be prudent, and we will continue to be prudent. So on one hand, there might be opportunistic approaches to those investments. But on the other hand, we will also keep an eye on the evolution of those conditions. But the short answer to your question is, yes, we will continue to invest, and we will be net cash consumptive over the next 12, 18 months.
António Seladas
Okay. Thank you very much.
Operator
There are currently no questions in queue. [Operator Instructions] There are no questions on the phone lines. So I’ll hand the call back over to your host.
João Dolores
Thank you very much. Thanks, everyone, for all the questions and for attending our Q3 results call. Just as a final note, we are living in the turbulent conditions, but I believe the performance of the group has been quite resilient, and we are happy with the performance that we’ve had over the last few months, and we are confident as well in the next few months going up to the end of the year. And so we will speak again in the full year results conference call in March. And so I wish everyone a good end of the year as well. And with that peak, we are touching March. Bye-bye. Thanks.
Operator
Thank you for joining today’s call. You may now disconnect your lines.
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