Sonae, SGPS, S.A. (SON) Earnings Call Transcript & Summary

Hello, and welcome to Sonae's Full Year 2021 Results Conference Call. [Operator Instructions] I will now hand the conference over to Mr. João Dolores. Please go ahead, sir.

Thank you. Good afternoon, everyone, and welcome to Sonae's 2021 Results Conference Call. Besides myself and the Investor Relations team, as usual, we have here with me, Rui Almeida from MC; Paulo Simões from Worten; [indiscernible] from Zeitreel; Luís Mota Duarte from Sierra; and Cristina Novais from Bright Pixel. 2021 was a year still marked by the pandemic across the globe and in the regions in which we operate. But obviously, vaccination programs allowed for a significant recovery in activity, especially in the second half of the year. And it was also an important year for us, not only in terms of operational recovery in businesses which were more affected by the pandemic, but also a year marked by important portfolio changes. And I will start by touching upon the key transactions that we concluded during the year. In terms of asset disposals, as you know, Worten announced its restructuring plan in Spain with the sale of 17 stores to Media Markt, closing another 14 stores by then. Sonae concluded the sale of a 24.99% stake in MC to CDC Stratus for upfront cash proceeds of EUR 528 million. MC concluded the sale of its 50% stake in Maxmat to the BME Group for net proceeds of EUR 68 million. And Bright Pixel sold its stakes in Bizdirect, [indiscernible] and CB4 and also part of its stake in articles, generating important capital gains for Sonae. On the other hand, and in terms of investment, we also maintained a very intense M&A activity, and we made a number of important moves. First of all, the acquisition of another 10% participation in Sierra at the beginning of the year. Also, the acquisition of a 95% stake in Gosh, a U.K.-based player in the natural and plant-based food industry. ISRG made a number of acquisitions, 3 main acquisitions. First of all, it acquired 80% of Deporvillage, an online sports equipment retailer. It expanded into a new geography into the Netherlands by acquiring sports and limited retail, and also acquired a majority stake of Body Tone International Sports, a Spanish producer and distributor of fitness equipment. Worten acquired 2 small companies in the services area, [indiscernible] and Zeitreel. And Bright Pixel continued to invest in a number of new minority stakes, namely in retail tech and cybersecurity, and made also some follow-on investments in portfolio companies. So I will now move on to the operational performance of each of our sub holdings. And then at the end, I will cover the consolidated results of the group in 2021. And I will start with MC as usual. For MC, this was another, I would say, impressive year. Turnover grew 6.3%, with a like-for-like of 3.4%. And Q4 actually saw an acceleration of that growth. In Q4, MC grew 9% in total and 6.3% like-for-like. This strong performance in the context of very low inflation, which was above 1% in food, basically represented a strong increase in volumes, which clearly shows that MC's efforts to address changing consumer needs and preferences throughout the stages of the pandemic continue to pay off, with consumers recognizing the distinctiveness of the company's value proposition. In fact, and in the last 12 months, MC strengthened its role in the Portuguese food retail market and grew more than 16% in the last 2 years. With this level of growth, market share was reinforced. And so MC now is even more a leader in the Portuguese market. According to our estimates, our market share increased by 30 basis points in '21 and 90 basis points since 2019. And online also grew in terms of sales. Sales more than doubled in the last 2 years and represents already 3% of total turnover, which is, once again, a clear proof of the company's successful digital path. Regarding profitability, underlying EBITDA reached EUR 537 million and stood at 10% of turnover, driven by the company's ongoing focus on operational cost discipline that helped to offset some cost pressures, namely in energy costs, which had a strong impact in Q4, and also costs -- additional costs to deal with the pandemic, which were present throughout the year. Net profit reached to EUR 118 million, obviously benefiting from the solid operational performance that I referred to, but also from the one-off capital gain from the sale of our 50% stake in Maxmat. Free cash flow generation reached over EUR 240 million, 21% above last year, leading net debt to EUR 379 million after the dividend payment of EUR 140 million. And basically, led MC to a very comfortable ratio of total net debt to underlying EBITDA of 2.7x, down from last year's 3.1x. Moving on to Worten. For Worten, this was also a very good year overall after a very impressive response to the pandemic in 2020 and the restructuring process I referred to in Spain in the beginning of the year, the company delivered very solid results on the back of its leading omnichannel value proposition. Total sales reached EUR 1.2 billion in 2021, with an 8.8% like-for-like growth, a strong performance as it represents growth both versus 2020 and 2019 and particularly strong growth if we disregard the discontinued operations in Spain. Worten was able to, once again, reinforce its market leadership in Portugal and currently holds online and off-line market shares above 30% in the country. Online sales, in fact, already represented over EUR 200 million and were the key driver of growth during 2021. I would also like to highlight the company's journey in its marketplace strategy, with 3P sales growing by a factor of 4x since 2019, and also the growth of the Services business line, which reached 50% growth versus 2020. If you recall, Worten executed a number of important acquisitions in the services space recently, namely iServices already back in 2020, and also the ones I mentioned before, [indiscernible] and Zeitreel, which are important milestones to grow the company's Services business line. In terms of profitability, underlying EBITDA reached EUR 78 million in the year, with a margin improvement to 6.6%, a 26 basis point increase versus 2020. At Zeitreel, 2021 was a tough year for our Fashion banners given the strong restrictions that they faced at the beginning of the year. If you recall, we had a very long period of 11 weeks in which stores were closed in Portugal, which was, in fact, longer than in 2020. However, the performance was quite resilient. Total revenues for the year reached EUR 345 million, practically flat versus 2020, but actually 11% above 2020 if we exclude the sales of masks made by mall last year. This top-line improvement was felt across the company's channels and brands and show the focus of sales teams and maximizing sales and in using all available tools to maintain and improve the relationships with our customers. In terms of underlying EBITDA, the company was able to partially mitigate the impact of this level of sales with cost reduction, creating the basis for future sustainable profitability, and was able to deliver a solid underlying EBITDA of EUR 27 million, a EUR 14 million increase when compared to 2020. It's important to highlight that this profitability level was achieved in a very challenging context, namely with increases in relevant cost lines such as utilities and wages and with serious disruptions across the supply chain. So overall, a quite positive performance from Zeitreel and particularly impressive in the fourth quarter. For our sports businesses, ISRG. In ISRG, the year was particularly successful, not only in terms of operating results, but also regarding the execution of its growth strategy. I already mentioned the 3 acquisitions that were made during the year, which were important steps in the digitization and international expansion of the company. And if we look at the operational performance of these businesses during the year, it was quite impressive. So on a comparable basis, JDs, printer and Sports Zone together grew 25% year-on-year, with online sales growing more than 50%. And overall, including the acquisitions that were made during the year, top line increased 35% year-on-year to almost EUR 900 million. Actually, if we consider the company's business year, which ends at the end of January, the company already surpassed the EUR 1 billion mark in sale, which is a very important milestone for the business. In terms of profitability, ISRG also displayed a strong performance, with EBITDA already surpassing EUR 100 million. One of the group's medium-term targets announced back in 2018 and achieved well before our expectations. So all in all, the contribution towards Sonae's net results was EUR 17 million, clearly above last year's figure of EUR 2 million. Regarding Sierra, for Sierra, 2021 was another year -- another challenging year, but a year of recovery from the pandemic. We saw these lockdowns, as I mentioned at the beginning, and other restrictions throughout the year in most of the geographies in which the company operates. And we saw also an improvement in consumer confidence, which enabled Sierra's activity to start to recover, with a number of different initiatives also implemented by the company to bring back visitors to shopping centers. In terms of operational performance, the company saw tenant sales and footfall in shopping centers reached levels close to 2019 at the end of the year, and occupancy rates also maintained a high level of above 96% and almost 99% in the assets held in Portugal. On a proportional accounting basis, Sierra's net results reached a positive value of EUR 15 million in 2021, still below the level of 2019, but already significantly above 2020. This evolution in net results is evenly split between an improvement in direct results and also indirect results. As a result, Sierra's NAV stood by the -- at the end of 2021 at EUR 925 million, an increase of 3% when compared to the end of 2020. So an important stabilization of value when compared to the drop that we saw from '19 to '20. If one concerns the company's leverage profile, Sierra continues to show a very conservative level of debt, with a gross LTV of 46% and a net LTV of 22%. Regarding our financial services arm, which is now called Universo. '21 was a challenging, but important year as it marked -- it was marked by a change in our credit partner and also operating model. This structural change, together with the quite demanding context with the pandemic, namely in the first half of the year, marked the company's operational performance in the last 12 months. Overall, our production level increased 10% year-on-year, reaching EUR 1 billion, and total clients reached 965,000 in the credit card, an increase of almost 100,000 by the end of the year. So very positive signs and leading indicators that give us a lot of confidence for the future. At the same time, the digital footprint of these -- of this customer base increased and so the weight of digital clients is now 61% of the total customer base, which is also a very positive sign for the future success of the business. Regarding the company's financial performance. In Q4, Universo's turnover already surpassed last year's level by 28%, while total revenues for the year reached EUR 31 million, still EUR 4 million below 2020. Regarding profitability, and as you know, the ramp-up of the credit production continues, and we expect 2022 to already present much improved financials versus '21. Finally, a quick note to mention, as you know, that we announced the agreement to sell our 50% stake in MDS to the Ardena Group for EUR 100 million, with an estimated capital gain of EUR 74 million. The company actually had a very strong performance in '21, very strong growth both in turnover and also in profitability. And the conclusion of this deal is expected to happen before the end of the first semester of this year. Regarding Bright Pixel. Bright Pixel had another very strong year with an important impact, a very relevant impact in our consolidated accounts, as you will see in a minute. During 2021, and in a challenging investment context, Bright Pixel invested another EUR 32 million in a number of new minority stakes, namely in retail, tech and cybersecurity, as I mentioned at the beginning, and also some follow-on investments, but also made 3 exits and some partial sales while witnessing a third company in the portfolio reach a unicorn status. Cash invested in the active portfolio at the end of '21 stood at EUR 168 million, and the corresponding NAV reached $395 million, representing a strong improvement over the year, which reflects the new investments made, coupled with the impressive revaluations in minority stakes, namely articles, Feedzai and safety pay. Overall, the company generated a total value of more than EUR 100 million, considering both the capital gains on asset sales and the asset revaluations registered during the year. Regarding NOS. NOS already published its full year results in the beginning of March. The most important highlight is that in Q4, NOS was able to acquire the largest percentage of 5G spectrum released in Portugal. And so further reinforcing its position as a leader in this new technology. And we are very confident that NOS will be able to lead the 5G revolution in Portugal. Regarding the operational performance in the year. Turnover increased 4.6% year-on-year to EUR 1.4 billion, and EBITDA reached EUR 618 million in the year, representing a 2.5% year-on-year increase and a 43.2% margin. Net income totaled EUR 144 million in the full year, 57% above 2020, implying a higher equity method contribution to Sonae's results. Free cash flow was solid and allowed for the investments in the network, the investment also in consumer premises equipment and also in the 5G license, which I mentioned before. Regarding the company's capital structure, in 2021, net financial debt to EBITDA after lease payments was slightly below 2x and NOS continues to hold a conservative leverage profile. In addition and looking at the conservative leverage profile of the company, the company's Board of Directors approved the proposal for the next General Shareholders Meeting of a dividend payment of EUR 0.27 per share, which is in line with last year. So I will now move on to the consolidated results. So putting all this together, consolidated turnover for the group surpassed EUR 7 billion for the first time in our history, implying an increase of 5% year-on-year. And this increase was mainly fueled by the growth registered both by MC and Worten. Our digital path continued to accelerate. We are the largest e-commerce player in Portugal. And when we consider our aggregated online sales in all geographies, they reached EUR 640 million, which is a 33% year-on-year increase and a 3x increase versus 2019. In terms of profitability, underlying EBITDA surpassed EUR 600 million and total EBITDA reached $738 million, an increase of 18%, fueled by both the operational performance, but also a strong recovery of equity-accounted businesses and capital gains on asset sales. Indirect results stood at EUR 73 million in '21, mainly driven by the upward evolution in the value of Bright Pixel's portfolio, and Sonae's net results reached EUR 268 million above 2020 and also 2019. Free cash flow between -- before dividends paid in '21 stood at EUR 681 million, again, driven by the solid operational performance and also the portfolio management activity. And total net debt had a EUR 540 million decrease to EUR 563 million in total. At the end of the year, we held around EUR 1.4 billion of available liquidity between cash and available credit facilities, a solid debt maturity profile with an average maturity above 4 years, and also a low cost of debt of around 1%. For the next AGM, the Board of Directors will propose a 5% dividend increase to EUR 0.511 per share, which currently corresponds to a dividend yield of around 5%. Our total NAV amounted to EUR 4 billion, 4.5% above the value at the end of 2020, which reflects the improved operational results of our views, the revaluations of assets, namely at Bright Pixel and also the value-accretive portfolio management activity over the last 12 months. Finally, total shareholder return amounted to 61% in the year, with a share price increase of more than 50% in a year marked by uncertainty and volatility in capital markets. I would like to leave you with a final note to mention that we continue to make progress on our sustainability targets, namely the ones related with CO2 emissions, plastics and women in leadership positions. Sonae's businesses reduced by 16% versus 2018 their Scope 1 plus 2 GHG emissions, in line with our commitment to have carbon-neutral operations by 2040. And during the year, the group was recognized once again by CDP, the Carbon Disclosure Project, this time with an A minus rating for our environmental efforts. In terms of plastics, 74% of our packaging in 2021 was recyclable, one more step towards our commitment to have 100% reusable, recyclable or compostable plastic by 2025. And regarding women in leadership, we now have 37% of our leadership positions occupied by women, which puts us well on track to reach our target of 39% by 2023. For the second consecutive year, the Group was recognized with the Leading Together Index award, and already in '22, Sonae was included in the Bloomberg Gender Quality Index. Finally, I would like to mention that today, more than 60% of our long-term credit facilities are now linked to sustainable green or ESG performance, which clearly illustrates our commitment to sustainability. Final notes, when we look into 2022, as you know, we are quite prudent right now. The year started well for Sonae. But we are quite prudent because the year is, as you know, already marked by high uncertainty, particularly due to this war in Ukraine, which is already impacting the world, and we are taking a number of measures in some key dimensions. I will just name a few. First of all, obviously, the identification of all trade relations with Russia and Belarus as well as with organizations from these 2 countries are controlled by shareholders from these 2 countries. The exposure of our portfolio is insignificant. But in any case, we immediately suspended all current and potential direct relationships with entities from these countries. The second element has to do with, obviously, with the direct and indirect impacts of this crisis. As I said, the direct impact to Sonae is rather limited, but naturally, the indirect impacts are -- can be quite significant. And so we are monitoring these impacts, mostly the rising cost of energy, the rising cost of oil and also food prices that will place a growing pressure on an already visible inflationary trend, which we will obviously try to manage the best that we can to make sure that we offer the best prices for our consumers. A third note to mention, an initiative which we announced today to support Ukrainian refugees in Portugal. Sonae has set up a task force that brings together the whole portfolio of companies and all our capabilities and assets to quickly define and implement effective measures to help the integration of refugees when they arrive in Portugal. We will naturally cooperate with all national and international entities and also follow the principles and decisions made by international organizations that we are part of, and that's the same peace and democracy. 2022 will bring a lot of uncertainty and challenge, but we are confident that we are well prepared to face these challenges and face the future. So that's it for me for now. Thank you. You can open up the session to Q&A.

[Operator Instructions] Our first question today comes from José Rito of Caixabank.

Yes. Well, I have one question on Sonae MC, which is basically considering the key performance in terms of margin evolution. If you think it is possible to achieve an increase of EBITDA this year? So this will be my first question on Sonae MC. And then second question also on the food retail regarding Mercadona performance in Portugal. Obviously, you are not commenting what was the performance in Portugal, but the fact is that Mercadona has been gaining fast market share with very high sales density, can you comment anything if it's in line with your expectations for the evolution of market share of Mercadona? And if you think that Mercadona could be -- could bring, let's say, some pressure in 2022 already? And then final question on Sierra, which is basically what you think in terms of field evolution for this year? And in terms of Sonae's strategy, how do you expect to extract value from this operation? Sonae is already EUR 1 billion in invested capital in Sierra. How do you expect to extract value? And what is the expected annual dividend expected to be upstream to Sonae?

Thank you, Jose. I'll hand it over to Rui to take the initial 2 questions on MC, and then I will ask Luís to comment on the expected yield evolution. And also, maybe to comment a little bit on Sierra strategy, which is what Sonae as a shareholder believes will generate value for the company and for Sonae as well? Rui, do you want to start?

Sure, sure, sure. How are you? I'm fine. And with you, is everything okay?

Everything okay.

Well, starting by Mercadona. Well, we generally don't comment the performance of our competitors. And frankly, I try to not to follow the -- our policy not to comment on the Mercadona. As you know, we respect a lot Mercadona. They are doing U.K. In fact, they are growing in terms of market share, but they are increasing very similarly the number of stores they are having in Portugal. So we are -- it's according to our expectations looking to that performance and seeing the market share increasing -- decrease that they are presented. It's okay. Well, we are -- if we are expecting some -- well, we are -- each time that we see some competitors around us increasing number of stores in Portugal, we see some pressure in the market, but it's -- I would tend to say that it's normal. We feel very confident to maintain the -- our policy in terms of the prices, in terms of increasing number of stores in Portugal. In a nutshell, a few words I'm able to say that we are very confident to maintain our strategy going forward. In terms of margins, EBITDA margins, well, I think it's this João said a while ago, is to seem to give you any guidance in terms of margin. We are dealing with a very uncertain environment today. What will happen in terms of what happened -- what will happen in terms of energy costs, what will happen in terms of other resources that will go up -- probably go up probably in the future. Clearly, we don't know. But we'll try to, as always, to respond with efficiency programs and efficiency results in our operation in order to provide the company with the best results in terms of profitability.

Okay. Understood. Just on -- I understand well, I will assume that eventually some pressure in terms of margin should be felt in 2022. My question was more on EBITDA in euros, total EBITDA, if you think it could grow year-on-year in '22?

EBITDA in terms -- in terms of euros, right?

Exactly.

Well, I think so. At least we are fighting to get the best results as we continue to be very focused in trying to enlarge our footprint in Portugal with the proximity stores. And as they -- those stores are evolving quite well, we feel that is possible if everything maintains at the same level that with the same assumptions that we are having today, well, we think that we will probably continue to positively evolve in terms of in terms of EBITDA deliveries.

Our next question comes from...

Sorry, operator. We still have to answer another question that was posed by [indiscernible]. Luís, do you want to comment on that one?

Sure. Very happy to. Apologies for the background noise, but I'm just in my new place. But basically, in terms of the question. So we have seen actually the valuation appreciation in our European portfolio over the entire year of 2021, which has ever been offset by the Brazilian portfolio was whether variation was negative. Having said that, the yields -- we saw assets with yields going up and then some assets actually going down depending very much on the nature of the assets. In terms of actual yield evolution, obviously, that's a mattress crystal ball. But from our point of view, if you look at the spreads between shopping center yields today and the risk-free rate, but also shopping center yields and any other real estate asset class. The yield's is at historic highs, which should be able to accommodate any future meaningful interest rate increases. Having said that also, bear in mind that the shopping center business is technically inflation protective due to the annexation on the lease agreement. And in terms of our strategy and the rationale why Sonae is investing into Sonae Sierra. So as you might know, we have changed our strategy in the early part of this year from basically being a more shopping center developers and some service lines into a more fully vertically integrated real estate player, whereby we do -- continue to do development and invest in higher return development projects now basically based into mixed-use type ventures like office buildings with the retail -- residential and retail or any other type of different users that combined residential offices and retail, that's 1 of the key things where we are envisaging to invest significant amount of money over the next couple of years. The second one has to do with our investment management business. There is very material liquidity in the market currently in Portugal, but also in the other countries where we operate. And we try to kind of bring together that significant liquidity that exists in the market together with our know-how in the real estate sector, our specific origination and execution expertise and, thereby, create the sealed investment vehicles where we can generate returns adjusted to the investment risk profile. That, at the same time as we continue to grow our services business, I think we are world-class property management provider. We are also a very good asset manager and a very good development service provider. So therefore, we intend to continue to grow our business further through that segment to third parties. And last, but not least, we continue to prune and to nurture our shopping center portfolio, which is obviously core to whatever we do and to the future strategy and loss. And there, we are significantly investing into either refurbishment, extension where justified, but most importantly, into omnichannel initiatives, whereby we can make sure that our shopping center business is much more -- is a key link into the whole omnichannel experience that retailers and customers experience at the moment.

Thank you, Luís. I would just add to this, Jose, that we have reinforced our stake in Sonae Sierra recently at a 10% discount versus NAV as measured by external valuers at a low point in the real estate cycle in terms of valuations. And so we feel that investment at this value, which does not take into account many of the things that Luís just mentioned, particularly the services activity and the value that is being created there. And additional development opportunities that we are currently -- that we have identified and are currently pursuing, all of this is not factored into that valuation. And so that in itself, for us, represents a very significant opportunity to create value at Sonae Sierra. Regarding the questions on MC, and just to complement what Rui said, look, our expectation is obviously that we will increase EBITDA in absolute terms this year. And that expectation has to do with the growth level that we expect this year. Obviously, what we mentioned is very valid. There's a lot of uncertainty right now. We hope that the situation will stabilize. But even under a difficult backdrop, we will obviously do whatever it takes to continue to offer the best prices in the market and accommodate any increases in our cost lines through negotiation with suppliers, alternative sources of supply and also cost reductions and higher efficiency levels. And so we are very much working in all these fronts to ensure that we increase -- that we continue to grow in Portugal, continue to gain market share and also with higher levels of profitability.

Okay. Understood. Just on Sierra, just to -- with all these moving parts, if the company is planning to distribute dividends or not, if it has a defined dividend policy. I'm not sure if you can share a little bit more details on that?

Sure. The company has a defined dividend policy, which is related to its direct result, and it will continue to distribute the dividends based on its positive generation of direct result. And then whenever asset sales happen, and we expect asset sales to continue to happen in the next few years based on Sierra's active portfolio management, then extraordinary dividends might be in place. And so we do expect a significant dividend inflow to come from Sierra in the next 3 to 5 years.

Our next question today comes from João Pinto of JB Capital.

I have three on Sonae MC. The first one, could you give us some color on your exposure to energy prices in 2022? Do you have any type of agreements to fix prices? Or are you fully exposed to sports? Second question, you were able to gain market share in the past couple of years. Are you seeing other competitors being more aggressive to protect their share or no major changes to the competitive backdrop? My third question on expansion, how many supermarkets do you intend to open in 2022? And my final question on capital allocation. Do you think any attractive opportunity to invest outside your portfolio? Or given the current uncertainty, could you analyze opportunities to invest within your portfolio, namely in Sonaecom?

Okay. Rui, do you want to take the first ones on MC, and then I'll cover the last one.

Sure, sure. João, I hope you are okay. Well, starting by the very first question regarding energy. We -- our exposure today is high, although we have more than 20% of our consumption of energy protected by PPA, we are outside of PPAs that we are having in our company. The other question is related to the how we are basically seeing our competitors in order to protect their market share? So we don't see much -- the things much different from what happened in the last -- in the previous years. Competitors are performing naturally. And while in the last year, we gained market share as João said a while ago. Other retailers as [indiscernible], Lidl and Mercadona. They also gained market share as the other retailers lost some market share, but it's nothing new. It happened basically designed in the previous years, apart from what happened [indiscernible] in 2020. But the trend is pretty much similar to what happened in the previous years. So the other question is the number of supermarkets that we are planning to launch this year. We are planning to launch approximately 20 markets this year. We have the pipeline. We have the -- already the commitments to launch those stores, and we are very confident to be positive in launching those stores, where we will be focusing on proximity supermarkets where we are basically putting all the efforts in order to continue to gain market share in same spots that we feel that we could increase our market share without significant cannibalization in our stores.

Okay. Thank you, Rui. João, on the capital allocation question, I'm going to tell you probably the same I told you in previous conversations, right? So we are an active portfolio manager, as you saw by the number of transactions that we executed in the last couple of years. And this year, 2021, in particular, was a very active year in terms of transactions. And we do it by investing both in our portfolio of businesses and also outside of our portfolio of businesses in areas which we feel that we have a right to play in which we can create value. We -- what I can assure you is that we will always be very disciplined in looking at investment opportunities, and we will only execute them if we feel that they return superior levels of returns on the investment, and where we feel that we are a good shareholder to these companies. Regarding Sonaecom, in particular, to be honest, I have nothing to add to what we said before. I think we have some Sonaecom -- we have a number of minority shareholders, which are happy with the performance of Sonaecom and we have no pressing reason to change the current situation there.

Our next question today comes from Artur Amaro of CaixaBank.

I just have one question, if I may. I read that online sales on Sonae MC weighted 3% in full year '21. This compares with 1.6% in 2019, which is quite impressive, almost doubled. As far as I'm aware, by 2019, the operation of Sonae MC in online did not reach breakeven. My question is, have you already reached breakeven in the online operation? If not, how much of this share would you have to have in order to reach breakeven? And this is my question.

Thank you, Artur. Rui, do you want to take this one?

Sure. Artur, thank you for your question. It's a very difficult question because we -- as I said in the previous conference call, we need to understand that the online, it's sort of a channel to better -- to improve the level of services we are giving to our customers. And we, generally, according to the internal analysis that we do, the customers or at least the online could be analyzed by customer. And we see according to the online customers, we see that the best customers -- what is the customers that use the online are very profitable. But if we see online as itself, yes, this did not yet have sort of a breakeven at EBITDA level. But for instance, in the last quarter, we have almost -- well, in fact, we have -- we got breakeven in terms of EBITDA. It's very close to reach the level of EBITDA breakeven due to the fact that we are implementing several projects for -- to get efficiency improvement in our operation. We are doing several things in order to improve the all offer that we are giving to our customers. For instance, last year, we changed the platform to better serve our customers with very good results. We are improving quite dramatically the operation. And then in a few years, we will be very profitable in the -- at least, we will be breakeven in terms of EBITDA level. But again, as I said a while ago, it's very difficult to give you some...

Some precise figure.

This year -- precise figure. What will happen in our operations.

Just a follow-up. If it's possible on this issue. I remember by the time of the IPO of Sonae MC that the figure that was disclosed is that you were a market leader with 70% market share. Can you give us a little update on where this figure is right now?

Yes. Well, it's very difficult to give you this because, even for the market share as a whole, there isn't a sort of an independent institution that will give you -- could give us the exact figures for the market. For online, it will be much more difficult. According to several independent institutions, we think that the online accounts for 1.5% of the total market in 2021, meaning that we did okay. We -- for sure that we will have more than 60% or so. But the exact figure -- it is very difficult to provide...

It was just to have an idea if you are growing above the average [indiscernible] of the market or not and I think you are...

We are continuing exactly -- we believe that we will continue to grow above the market -- the online market, and we are basically gaining market share, what is maintaining our market share in that market.

Artur, I would just add a couple of remarks. So first of all, on the profitability of the online channel, as Rui we mentioned, so we have to look at food retail as a mix of different things, right? We have a mix of categories. We have a mix of store formats. We have a mix of channels. And obviously, all this put together, basically we reach a value proposition for our customers, which is all encompassing and which translates into customer profitability. And so I think, as Rui said, we are very disciplined. We look at each of the P&Ls of these different mixes in terms of categories, store formats, channels, et cetera, and we always try to optimize them. But actually, what's more important for us is to make sure that this mix is the ideal mix, which, at the end of the day, maximizes value for the entire company. And so that's what we try to do with the e-commerce channel as well.

And it's also worked as an anchor, right, for your clients?

Absolutely. Absolutely. So -- and as you can imagine, we have categories in our supermarkets that we sell at the very slim margins and others that very -- a bit higher margin and the mix together makes it a compelling value proposition for our customers and makes it a compelling proposition for us as well as retailers. And so we try to manage all these elements, which are quite complex to make sure that we maximize value at the end of the day. And regarding the performance of MC in the e-commerce space, I think it's quite impressive what Rui just described because in a couple of years where e-commerce really surged in Portugal in different categories with different players, new players coming into the market that have never operated in this space, the level of market share and dominance that MC has been able to show over the past 2 years in online, I think, is something that we are very proud of.

And our next question today comes from António Seladas of AS Independent Research.

Just three. The first one is regarding the Worten's performance in terms of margin was not so good over the fourth quarter, if you can explain? Zeitreel was exactly the opposite. It outperformed very well over the fourth quarter. You can explain -- provide some color on it. And the last 1 is related -- I'm sorry, to come to this issue again [indiscernible] margin -- and operating margin. So taking into consideration that some goods prices are increasing so fast and they are essential goods, should we be worried about the consumers starting to buy shipper goods at Sonae MC so to buy shipper -- well, shipper good instead of more expensive and that impacts your operating margin? I don't know if in the past, there was any situation similar to this one. Nevertheless, if we can provide some -- well, what you think about it? If we should be worried about it or not?

Very good. Thank you, António. Paulo, do you want to take the first 1 on Worten?

Sure. Thank you, João. António, thank you for your question. So regarding the EBITDA in the fourth quarter, in fact, the EBITDA was in line with our plans, expectations and targets. And it was more or less in line with pre-pandemic levels. The fourth quarter of last year was quite extraordinary in that respect. And along the year, we managed a promotional calendar. And in 2021, we decided to put more promotional pressure in the quarter than we did last year. As you remember, in 2020, we were in the middle of a pandemic with high uncertainty. So competitive pressure overall, while quite muted, which was not the case in 2021. It's returned to regular levels. So we returned to our regular promotional activity. The quarter was probably a bit heavier than the last -- the previous ones in promotional activity but not anything extraordinary. And on the full year, if you look at the year as a whole, EBITDA margin was totally under control and improved year-on-year. In fact, if you look at the full year, for the last year, 2019, Worten delivered EUR 54 million EBITDA, last year's, in 2020, EUR 73 million, and in 2021, EUR 77 million. So the overall EBITDA margin for the company on a yearly basis is quite controlled and growing healthily, and we don't see any reason for worries. As a result of this promotional activity, during the quarter, we gained market share, which is also one of our objectives to continue gaining market share in Worten year-over-year. That was the case in the fourth quarter, very important contribution for the market share gain in the year. So we consider that the promotional strategy implemented throughout 2021 was quite successful. So we are very, very pleased with the performance that we achieved in last year, including last quarter.

Thank you, Paulo. [indiscernible], do you want to take the question on Zeitreel?

So I think that the fourth quarter for Zeitreel was indeed a confirmation of our recovery in terms of performance. So the fourth quarter is usually where our businesses have the most productive season of the year. You make up a lot of your sales on top of key promotional periods like Black Friday, but also the seasons -- the Christmas season listing. I think that it was a combination of willingness -- renewed willingness to buy our products on top of the good work that we did in previous quarters. So the stronger value propositions with which we are reaching the market type with a very structured and more optimized promotional activity and the leaner cost base allows us, in these moments where actually sales ramp up to produce a lot of profitability. I believe this is also a good sign for the quarters to come in terms of where Zeitreel can reach -- what will Zeitreel can reach in terms of its performance.

Can I ask you if there were any brand that outperformed or were everything did well?

I think that in the fourth quarter, specifically, all of our brands were quite well. I would say that it's more in terms of products than brands. So we do see, or we did see a faster uptake in terms of kids wear. So that segment has been especially positive in terms of performance, but the performance was generally positive across all 3 brands.

Thank you, [indiscernible]. Rui, I think you left us talk for a bit. Did you have a chance to hear António's question or not?

Well, I...

I can repeat it.

Okay. Thank you, António.

Well, basically, it's related with the disposable income of the consumer. So there are some essential goods that goods prices are increasing very fast. So apparently, the risk is consumers starting to do trading down, so basically buying cheaper goods instead of more expensive and of course, that could impact negatively your margin. It's something that you are worried about. It's something that you saw in the past and similar situation how the consumer reacts if you can share with us?

Yes, very good question, António. And thank you for your question, and I hope everything is okay with you. Well, yes. We're -- up to now, we are not seeing that trading down phenomena in our stores. In effect, we don't -- well, we know that the situation is a little bit more -- we need to have some concerns about that situation. But, for instance, looking back when we were having a drug around with us in 2011, 2012, we faced the same situation. And the same situation with the disposable income shrinking a lot. And we -- yes, people were trading down, but the phenomenon was not so dramatic to be considered as they started a huge -- a significant point that we need to change our policy. In fact, what we did back in 2011 and 2012, we decided to invest a lot in enlarging in our range of private level. And giving to that range of private level, a huge level of quality of our products. And today, the customers are balancing that purchases with the private level and the suppliers brand as well. And up to now, we don't see much difference comparing to what we, for instance, would witnessing in that pre-pandemic situation or in the situation that, for instance, we were having in 2000 and before then. We see -- we are very comfortable to that situation. But again, if the crisis started to be more aggressive probably the change of consumer habits in our stores will be totally different. But up to now, we feel very confident to what -- with what we are seeing and we witness in our stores.

There are no further questions on the line. So I'll now turn the call back to Mr. João Dolores.

Okay. Thank you very much. Thanks, everyone, for attending and for asking your questions. We will see each other again or talk to each other again in May when we announce our Q1 results. Hopefully shedding some lights on some of the questions that were posted in this conference call as well. So see you soon. Bye-bye.

This concludes today's call. Thank you for joining us. You can now disconnect your lines.