Sonae - SGPS SA
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Earnings Call Analysis
Q4-2023 Analysis
Sonae - SGPS SA
The company reported a robust turnover growth of 9.2%, reaching EUR 8.4 billion, driven mainly by the retail division but also supported by positive contributions from electronics and real estate segments. The EBITDA almost hit the EUR 1 billion mark, growing by 7% compared to the previous year. This solid performance was underpinned by a combination of operational excellence and capital gains from strategic asset sales.
Profitability showed a marked improvement with a 30% increase in recurrent net results up to EUR 181 million, alongside enhanced EBITDA margins. The company also generated strong free cash flow due to a reduction in capital expenditures (CapEx). Reflecting this financial strength, management proposed a full payout of net income as dividends, which translates to EUR 0.35 per share, and plans a 5% increase in dividends per share for the next year, resulting in a yield of just above 6%.
The company has meticulously worked on strengthening its balance sheet, resulting in a decrease in financial net debt to just above EUR 500 million. Compared to previous years, the net debt to EBITDA ratio has significantly improved to 2.6x. This fiscal prudence is underscored by the company achieving a net cash position at the holding level for the first time, while main business units maintained conservative debt levels, with retail's net debt to EBITDA below 3x and telecommunications below 2x.
Environmental efforts of the company have been acknowledged through the awarding of the CDP A rating for both the retail division and the group at large – a testament to their strides in environmental stewardship. Additionally, the company's efforts have resulted in a 6% reduction in CO2 emissions for Scope 1 and 2, evidencing their commitment to reducing their carbon footprint.
In acknowledgment of ongoing global challenges such as geopolitical tensions, climate concerns, and rapid technological advances, the company emphasizes the need for a flexible and collaborative approach. For the upcoming year, the company will persist in promoting the growth of its core business segments, sustaining their market leadership positions despite these headwinds.
Bright Pixel, the company's investment arm, will continue its active portfolio management, looking for exits that may crystallize value and continuing to invest in new technology companies. The coming year will be marked by notable new additions to the portfolio, which aligns with the core strategy of nurturing promising technological ventures.
Good afternoon. We welcome you to Sonae's Full Year 2023 Results Conference Call. During the presentation hosted by Mr. Joao Dolores, Sonae's CFO. [Operator Instructions]
I now hand the conference over to Mr. Joao Dolores. Please go ahead, sir.
Thank you. Good afternoon, everyone, and welcome to Sonae's annual results conference call for 2023. Besides myself and the Investor Relations team, we have on the call, Fernando Van Zeller from MC; Luis Mota Duarte from Sierra; Paulo Simoes from Worten; and Cristina Novais from Bright Pixel. 2023 was a very positive year for Sonae. And our net asset value reached an all-time high of EUR 4.5 billion, an increase of 14% year-on-year. And although total shareholder return did not follow the same trend given the evolution of our share price. We are confident that our track record of value creation will ultimately be recognized by capital markets.
During the year, we performed several value-accretive moves in our portfolio that we will discuss in a minute. Our overall operational and financial performance was very solid in a demanding context. We ended the year with a very solid financial position and a record low leverage level and also give important steps regarding our sustainability commitments. Finally, the Board of Directors is proposing a 5% year-on-year growth in its dividend per share to the next AGM, in line with Sonae's dividend policy.
Let me start by giving a quick words on the overall macro context. As you know, the international landscape remains complex and uncertain during 2023 as it still does in 2024. The long-lasting conflict in Ukraine and the situation in the Middle East pose a significant threat to energy markets and to shipping routes, particularly in the Red Sea, but the impact on the global economy has so far been relatively limited in this regard.
Inflation continued to trend downwards, both in the Eurozone and in Portugal, as you can see. Labor market remained tight, but with an overall positive performance. And regarding GDP growth, it remains quite positive in Portugal, above the Eurozone level. In fact, the Portuguese economy showed quite significant resilience throughout the year.
I will now touch upon our portfolio management activity before going into our operational and financial results for the year. As you know, a significant part of our activity and underlying value creation relates to our portfolio management activity. I would like to remind you that in recent years, we have executed very important capital allocation movements. In terms of divestments, since 2020, we cashed in roughly EUR 1.4 billion with a number of important transactions, namely exits from a few of our assets in DIY, insurance brokerage, cybersecurity, also sports retail already in '23 and also some dilutions of our participations in some investments as we did at Sierra, namely with the prime asset transaction and also with the sale of a minority stake in MC to CVC Capital Partners.
And at the same time, we have been allocating capital to new businesses and to growth initiatives, both within our existing business units and also in new growth avenues, as is the case at Bright Pixel and also at Sparkfood, to which we have allocated roughly below EUR 300 million in the last few years. We have also taken the chance to reinforce our shareholdings at both Sierra and NOS, 2 core investments for Sonae, and we did so at attractive valuations that we believe are value accretive for the group.
This portfolio management activity, coupled with our business' operational performance, fueled NAV growth this year, as I mentioned before, 14% increase to EUR 4.5 billion at the end of the year. Our retail businesses currently account for roughly half of that value. And then we have, obviously, real estate and telco and telecommunications representing roughly 20% to 25% each. And these are the 3 main blocks in our portfolio. Currently, as we hold a number of other smaller investments where we also see potential for value creation in years to come.
I will now go into detail in each one of the main blocks that compose the portfolio of the group, starting with MC as usual. MC had a very strong year of 2023, a very strong operational and financial performance, even in the phase of a challenging macroeconomic backdrop and also highly intense competition in the grocery market. In '23, Continente was able to consolidate its leadership position in the Portuguese market. And as a market leader it continues to fulfill its mission to serve Portuguese customers with the best offerings and with the most convenient channels at the best prices.
Top line increased by 10.5% to EUR 6.6 billion with a like-for-like growth of roughly 9%. And this outcome was achieved in a dynamic operational context and a resilient performance in terms of volumes. And Continente saw strong growth across all banners and particularly in the Health and Wellness and Beauty segment as well where we saw positive growth, double-digit growth in both Arenal and Wells. Profitability improved on the back of this top line evolution and also lower energy costs combined with an ongoing focus on operational efficiency gains.
In fact, MC was able to offset the pressure of the strong price investment that it did throughout the year and also the impact of trading down on the part of consumers and was able to increase its underlying EBITDA margin to 9.7% and EUR 639 million. This operational performance coupled with a strong investment plan, both in expansion with the opening of a record 21 new proximity grocery stores and also important store optimizations and refurbishments resulted in a year-on-year reduction of cash flow generation, which nevertheless remains solid at EUR 136 million. After the dividend distribution that the company did this year, a total of EUR 214 million, MC continues to showcase a solid leverage of 2.8x net debt to EBITDA.
Moving on to Worten. Worten also had a very positive performance, as you can see, growing 5% year-on-year to EUR 1.3 billion. If you take into account the marketplace sales, the [ 3P ] sales from our sellers, we actually achieved EUR 1.4 billion in total sales and even higher level of growth. And this is becoming an integral part, an important part of the value proposition of the business. We saw the core segments maintaining a very solid performance in electronics. And if you add to the marketplace sales, which have accelerated also the services parts of the business, which is becoming more and more important. And this has made up a very strong growth profile for the company. And we continue to be bullish on what is yet to come in the near future.
Online sales continued to be a strong contributor to this growth. If you take GMV again, total online sales actually grew 12.5% in a more accelerated pace than physical store sales. And as a result of this performance, Worten consolidated its leadership position in Portugal and also in Canary Islands. In Portugal, we increased market share, again, both in the off-line channel and the online channel. I would like to highlight iServices that also delivered double-digit top line growth in a year, which was marked by the beginning of its expansion beyond the Iberian Peninsula with openings -- store openings in France and Belgium. The strong sales performance, coupled with the ongoing digital transformation efforts and some pressures on the cost base, led Worten's underlying EBITDA to stand at EUR 75 million, roughly stable versus last year. Worten continued to invest in its digital transformation and also expanding its physical footprint, namely with the store openings I mentioned of iServices into new geographies.
Going on to Sierra. Sierra delivered very strong results also in '23 across all its business segments. The year was positively impacted by the strong performance of the shopping center portfolio in terms of tenant sales, which impact our direct results. We continue to see a strong momentum in our prime assets with tenant sales achieving record levels and very high footfall. So we are clearly out of the pandemic impact on our shopping centers showing sales well above pre-pandemic levels with nearly full occupancy in all our shopping centers and maintaining strong collection rates.
We also saw important milestones in terms of the services business. We continue to scale the services business with Sierra, both internally and also externally. We saw a 14% increase in services turnover during 2023. And we continue also to explore development opportunities with 5 new projects in '23 ranging from mixed-use buildings to office and residential sectors.
In terms of investment management, we continue to add new vehicles, new funds to the portfolio, particularly a new real estate vehicle in the German market and also the management of CTT's real estate portfolio in Portugal, comprising more than 360 assets. So all in all, Sierra's performance across all business units resulted in a direct result increased to EUR 63 million and total net result increase of EUR 58 million, also impacted by indirect results and the revaluation of our real estate assets, which benefited in Europe from a strong operational performance and in Brazil from both the operational performance and also yield contraction. In total, the NAV of the company surpassed EUR 1 billion, increasing 9% versus the end of '22.
Regarding NOS. NOS, as you know, already published its results recently to the market, and NOS had a very strong performance in terms of growth, 5% growth to EUR 1.6 billion here with a very strong display in the telco segment, but also in the cinema's exhibition and audiovisuals segment, which showed a very strong recovery in '23. Obviously, this performance in terms of sales in the telco segment originated a very strong increase in market share in the Portuguese market. So the last figures that we have from the third quarter imply a 60 basis point increase in market share in terms of revenues in the telco market in the country.
And this is very much leveraging the strong investments the company has done in recent years to improve its network, both in fixed but particularly in the last few years in mobile where we have achieved the second market position in the country this year, which was an important milestone for the business. Profitability increased, both in terms of EBITDA margin and also in terms of recurrent net results, as you can see, so a 30% increase to EUR 181 million and a very strong free cash flow generation given the reduction in CapEx that we started to see this year versus the last 2 to 3 years of a more intense CapEx deployment.
And so given this strong financial performance, the company -- the Board of NOS has proposed to the General Assembly the payment of a dividend of [ EUR 0.35 per euro -- per share ], which equates basically to a payout of 100% of the company's net income.
So going on to the consolidated view of our performance. All in all, turnover grew 9.2% to EUR 8.4 billion, mainly driven by the performance of MC but also with positive contributions from Worten and Sierra. EBITDA practically reached EUR 1 billion, a 7% increase versus '22 with a very solid operational display being mostly driven by MC, but also with an important capital gain in the sale of our stake in ISRG, which we're able to offset the strong capital displays -- the capital gain that we displayed in '22 with the sale of MDS and Maxive, and end the year with a positive evolution of total EBITDA.
This positive operational performance was, however, more than offset by increased depreciations given our investment efforts in the expansion and digitalization of our main businesses, but also higher funding costs, given the increase in interest rates throughout the year, leading direct results slightly decreased to EUR 427 million in the year. And on the other hand, we had a very positive evolution of indirect results, which increased EUR 42 million due basically to the improved contribution from Sierra, as again the slight expansion and real estate yields in Europe was more than offset by Sierra's operational performance in its core assets.
All in all, net results increased EUR 22 million to EUR 357 million, a new record high level for Sonae. In what concerns free cash flow generation, we registered a total of EUR 187 million free cash flow before dividends paid, which is practically in line with last year. This cash flow was basically achieved on the back of strong operational profitability and EBITDA, also asset sales, namely the sale of our stake in ISRG and also dividends received from our subsidiaries, which more than offset the high levels of investment that we saw both operationally and also in M&A and also higher financing costs this year when compared to 2022. But all in all, a very solid display in terms of cash flow generation.
And this being said, our financial strength continues to be strengthened, reinforced our financial net debt continued to decrease and stood roughly just above EUR 500 million. Our total net debt to EBITDA totaled 2.6x, a significant decrease versus previous years. We ended the year for the first time at Sonae with a net cash position at the holding level and with a residual level of loan to value.
If you look at our main businesses, they also remained with conservative and prudent capital structures. MC, despite the strong dividend payments to its shareholders and all the investments it has been making in strengthening its value propositions, retains the net debt to EBITDA below 3x of 2.8x at the end of the year, NOS below 2x, 1.8x, and Sierra reduced its gross LTV from 22% to 23% to rough just above 38%.
In what concerns dividends, and as I mentioned before, we maintained our policy and so we maintained the proposal to increase 5% dividend per share this year. So we will propose to the next AGM a dividend per share of [ 5.639 euro cents ], implying a dividend yield at the current share price of just above 6%.
A final note to natural and social value creation. As you know, Sonae's mission is composed of economic but also social and environmental value creation. And I would just like to give you some highlights on some achievements this year on the natural and social front. In terms of natural value creation, this was an important year for Sonae as we were for the first time awarded the CDP A rating for the group. This was both achieved for MC but also for Sonae as a whole. This is an important landmark for us because it reflects the significant efforts that we have been putting in place to make sure that we make progress on our environmental goals.
As you can see, we continue to reduce our CO2 emissions, 6% this year Scope 1 and 2. And we have currently achieved 87% of recyclable, compostable or reusable plastic in the packaging of our own label products. And currently, 40% of our energy consumption comes from our own solar production and also green energy contracts. So very important milestones here as we continue to progress towards the difficult and challenging objectives and targets that we put forward to the market recently.
As for social value creation, we also made important steps, important developments. I would like to highlight gender parity this year with 40% of leadership positions held by women at the end of this year. So important progress towards the goal of having gender parity. And by gender parity, we mean to have the least represented gender have at least -- occupied at least 45% of leadership positions. And we continue to support our communities this year by increasing our donations and our community support to a total of EUR 33 million during the year.
So just a quick word on the outlook before we open up to Q&A. As you know, the global economy continues to face challenges and the same challenges it faced in '23 in terms of geopolitical tensions, climate concerns, technological advances. So going forward, we must remain flexible, collaborative and with a forward-looking approach to be able to navigate the uncertainties and see the opportunities that lie ahead. During '24, Sonae will continue to be focused on supporting the growth and leadership position of our main businesses and see will remain focused on consolidating its leadership position in the Portuguese grocery market. And in Health and Wellness and Beauty, the priority will obviously be the successful integration of Arenal and Druni, while positioning the company to maintain its attractive growth profile and capture the synergies from this combination.
Worten will continue to push its omnichannel strategy on both products and services, focusing on accelerating its digital transformation and defending its market leadership position. At Sierra, prime assets should continue to perform well, while the company continues to execute its strategy and the new growth avenues that it has been exploring in recent months. NOS will leverage the strong investments done in recent years in 5G and fiber networks to continue to attract new customers in both B2C and B2B and improve its market position in Portugal.
Bright Pixel will continue to actively manage its portfolio of investments in technological companies seeking exits that may crystallize value, while it continues to invest in new companies that reinforce investments in existing portfolio companies. And in addition, this will also be a year of important additions to the portfolio beyond Druni, which I already mentioned, mostly in retail is going to be obviously an important year to integrate Musti into the portfolio and support the company in achieving the value creation plan that we have for the company.
At Sparkfood, we will integrate BCF, which is the recent acquisition that we announced in France, the biggest one up until now in the portfolio, making sure that it serves as a platform for the company to continue to grow in this segment of innovative ingredients, and we will remain focused on making sure that we provide the best conditions for our fashion manner to succeed in their markets and also together with Bankinter make sure that Universo becomes the largest consumer credit operator in the Portuguese country.
So this being said, I would like now to open up the session to Q&A, and we would be more than happy to take all your questions. Thank you very much.
[Operator Instructions] Our first question comes from Joao Pinto from JB Capital.
I would like to start with Sonae MC. And Mercadona continues to increase sales densities at a quite impressive pace. I'm just trying to understand the potential impact. Your like-for-like remains strong overall. But can you update us on the like-for-like dynamics for stores located near Mercadona supermarkets? And if you are seeing price competition increasing given the success of -- sorry, Mercadona? And if this will lead you to accelerate the CapEx in any way to refurbish stores?
My second question also for Sonae MC. Can you guide us through the building blocks for the EBITDA margin in 2024? Specifically, do you see room to increase gross margin? What will be the sources of upside and downside for OpEx versus 2023? And what's your view for EBITDA margin overall? And finally, regarding Musti, can you provide -- or do you plan to provide new long-term targets for this asset?
Very good .Thank you, Joao. Thank you for your questions. So I'll hand it over to Fernando Van Zeller for the MC questions, and then I'll take the Musti one at the end.
Hi, Joao. I'm going to try to answer not the 2 questions, but the multiple questions you have posed. But -- going step by step. So in terms of the first question around Mercadona, as you know, we don't comment obviously on specific competitors, but I want to highlight a few things. As you know, the Portuguese market, the food retail market has been quite competitive for a long time now. We have been facing the competition on international players, domestic players, discounters, non-discounters. And so we are playing already in a very highly competitive environment for many years. And so we feel quite confident with our strategy and the way we have delivered it.
In terms of the dynamics of the like-for-like and as you rightly pointed out, we have been doing, I would say, a very good sale in '23. We have maintained -- consolidated our market share in the year. We have reinforced our leadership position. So we are quite focused on delivering the strategy for MC. And one last point on that specific question that I would like to emphasize. I think it's also important to mention that, although we are talking about food retail, there are different concepts and different formats within food retail.
And so all the comparisons between different players in terms of sales, productivity, profitability and also investment needs to be seen in that lens. And I'll give you a couple of examples. Obviously, the different formats of the different players have different dynamics. It's very different from being a player with hypers and play with supers, the discounter, non-discounter with private -- more private label, less private label. There is obviously an impact of new players opening stores without a large footprint, which doesn't impact [ cannibalization ].
So I think it's -- we need to bear in mind that all these comparisons need to be seen in this context. We obviously respect very much all the players. We continue to be focused on our strategy. And as I said, our goal is obviously to continue to consolidate our market position, obviously, respecting all the players and strengthening our value proposition.
In terms of the price competition sub-question you had, as you saw in the different statistics of [indiscernible] we are seeing a very competitive market. Inflation levels in the beginning of the year are quite low, as you know, with several categories already in deflation. And so I would say that we have been seeing this price competition for some time, obviously, now in the beginning of the year with a low inflation even at a stronger level. So that's in terms of the first answer.
In terms of EBITDA margin for 2024. As you know, we don't provide specific guidance. I would like to point a few aspects. In terms of competition, as I covered, we are in a very competitive market. In terms of macro, we are seeing, obviously, a lower level of inflation, which eases the trading down impact to a lower level. But still, we expect to see some trading down in the market as well as pressure on volumes, and we see players expanding more and more of their footprints and so many different players opening stores. And so we feel a very competitive and dynamic market, also in a lower inflation.
And so in terms of top line, obviously, it's going to be a very different dynamic compared to 2023. In terms of gross margin, we expect the gross margin to continue to be pressured. As I mentioned before, less so in terms of trading down with deceleration of trading down, given also the lower inflation level, but still some pressure there. And obviously, the continued investment in price, which, as you know, is at the core of our value proposition. And so I would say that in terms of gross margin, we'll continue to see some pressure.
In terms of the remaining costs, as you know, it's what we call a transition year, where lower inflation impact in the revenues, but a higher inflation impact on cost. And so we are going to see high inflation or high cost increases in energy, in salaries, in rents, which don't go into the IFRS 16 EBITDA, but still an important variable for us. And so overall, obviously, we feel that our EBITDA margin going to be pressured. That being said and as in this previous years, we continue very focused on efficiency measures. We have been delivering a very strong efficiency plan to ensure that we -- all the efficiencies we have are also allow us to invest more and more in price for our consumers to maintain our value proposition and obviously, to sustain and reinforce our market position.
So obviously, a challenging year from a margin standpoint, but quite confident on the plan and the strategy we have for the future. I'm not sure if I have answered all the questions, but I tried my best, but please let me know if I forgot something.
It was very detailed.
Okay. So I'll take the Musti question. Look, as you know, at Musti, our stated intention was to take the company private originally. We achieved an acceptance below 90%, but I must say that we are quite happy with the outcome that we got from the [indiscernible]. And so our goal was really to take control of the company and make sure that we have the right level of participation to put us in a position to help the company grow and succeed in years to come. And I think that was achieved with the 80% acceptance.
This being said, settlement hasn't even happened, and so we need -- it's still early days. We will obviously meet with management now. We will start discussing a number of important topics of integration and also about the value creation plan. And so -- and in that -- in those discussions, we will also discuss at the Board that the company what makes sense in terms of disclosure to capital markets going forward.
What I can tell you is that we have a strong ambition of growth for the company. And we want the company to accelerate its growth path and even beyond what the guidance was given to -- that was given to the market recently. So we have a strong ambition to grow both organically within the Nordics and also potentially going into new geographies. And this is what we are going to be working on with the team, and we will have more news for you in the next few months.
And our next question comes from Jose Rito from CaixaBank.
I have a question on CapEx for the Sonae MC business. So last year, we had more than EUR 300 million in CapEx step-up from the previous year. What level should we expect in 2024 and which should be the areas of investment if it is store expansion, remodeling? So this will be my first question.
Also related with MC. So if I understood correctly, so basically, with inflation, gross margin down, OpEx going up, even if you have efficiency, I think that you were saying that eventually the margin could be slightly pressured in 2024. My question is, if you still see EBITDA growing in euro terms? That would be my second question.
And finally, on the M&A activity. We have this acquisition of Musti, just taking Musti that was slightly below of initial expectations of taking the company private. So there were some savings, let's say, that were in terms of firepower. Do you still think that Sonae could look into other business to invest? Or for the time being, you are happy with the recent acquisitions?
Thank you, Jose. Maybe I can take this last one straight away, and then I'll hand it over to Fernando. And look, I think we are in a position -- in a very strong financial position at this point in time. So given the financial position that we have, our goal is to continue to invest significantly across all the business units in the portfolio and continue to make sure that the value propositions of our businesses are the best possible value propositions to address the market.
In terms of M&A, it's true that we reached 80%, another 100%. But I don't think that changes the way we look at the next few years in terms of capital allocation. We will continue to be on the lookout for interesting investment opportunities, both organic and inorganic. In terms of M&A, you know that we have an active investment strategy in Bright Pixel and Sparkfood, and we continue to be on the lookout for specific bolt-on acquisitions if we feel that they are value accretive for our businesses.
What I can tell you is that it's unlikely that we will be looking for opportunities of the magnitude of Musti. Obviously, Musti is an acquisition, which is quite significant for Sonae. And as you know, we like to be conservatively levered, we like to be prudent in our financial profile. And so it's unlikely that we will see another transaction of this order of magnitude in the next few years.
Very good. Jose, 2 questions on CapEx and margin. I'll start with the CapEx question. So as you asked, our view is that we'll probably maintain more or less the CapEx level in 2024 of 2023. And I would say, more or less with the same breakdown you have seen in 2023, just a couple of qualitative remarks on that. As you know, we have been opening stores, mainly proximity stores in the last few years. We'll continue to have this expansion plan to enforce our value proposition, and we are seeing very good results in terms of the economics of those openings. And so with that dynamic, our goal is obviously to continue to expand these smaller formats.
As you know -- and in terms of the maintenance and refurbishment, I will also say that we have been investing over the last couple of years more strongly in the refurbishment of our stores. The preliminary results we have on those refurbishments were quite attractive, and so we'll continue to roll out these refurbishments, which are obviously particularly important in the environment where we see more and more competition, and we need to make sure that our assets are prepared to deliver the value proposition that customers are expecting. And so we'll continue to have these 2 dynamics in terms of CapEx and expansion on our food retail business.
And obviously, on our health and wellness business, as you know, we continue more focus, obviously, on the expansion side because our stores are more recent and there is less need in terms of refurbishment CapEx. So that would be it. In terms of the EBITDA margin, as you -- to be very quickly on that, our expectation is obviously for EBITDA in euro terms to grow. Obviously, as I mentioned, we are seeing a pressure on the cost side, but we continue confidence with the same track record we have been doing to date to find the necessary initiatives and efficiency initiatives to maintain a very strong profitability level, and that's our key focus for the year.
Just a follow-up on the investments and the remarks that you made regarding the returns on the good results in terms of the proximity stores and the refurbishments. Good inflation over the last 2 years had a positive impact on these returns. And if so, if you are seeing lower returns, could you reduce again the CapEx level? Or do you think that intensity of CapEx will remain as you are mentioning...
As you know -- No, no, I was just saying, as you know, we have seen a lot of inflation obviously over last year in top line, but we have seen even more inflation on the cost side. So our -- as you know, our margins have been stable or declined a little bit in the last year. And so we are not expecting that a different dynamics in terms of inflations will change the economics of [ other ] refurbishment. And so all our analysis and all our assessments, obviously, for the future are based on our expectations of a lower inflation environment.
And so we are not expecting at all that these different dynamics in terms of inflation will impact the economics of our refurbishment and openings. But obviously, if things change materially, we will reassess that as we stand today, we feel quite confident on what we are doing.
Okay. Understood. But I think that, well, at least in 2023, the margin was slightly up and this inflation also affects the working capital. So from a cash perspective, working capital and the returns are also benefiting by this -- I think that -- I understood.
No, no, correct. But we -- look, we feel that even with the new assumption or the new projections in terms of macroeconomic, we feel that we are at very comfortable levels in terms of returns. We'll continue to have attractive returns and great value to our shareholders.
And we'll move on to our next question from Antonio Seladas from A|S Independent Research.
Most of the questions are already answered. I just have 2. One still related with Sonae MC. So from my understanding, you mentioned that in absolute terms, EBITDA should increase. However, you should see some pressure in terms of margins. So just to clarify, if I understood well. And the second question is regarding -- related with Bright Pixel. If you can share with us what do you think for the coming quarters? Should we see more acquisitions or more capital spending or disposals?
Thank you, Antonio. Fernando, do you want to start with the MC question?
Yes. I'll do just a confirmation answer, so what we're -- exactly, as you said, EBITDA in absolute terms to grow. In terms of the margin profile, we are in a very volatile environment, obviously, with some question marks. We are going to feel -- and we are feeling cost pressure in terms of the majority of the cost lines higher than the top line because of this dynamic. So it's difficult to really give you a guidance on margin profile. So what I have tried to do was really to walk line by line, which will lock it our views. And as the year progresses, we'll be able to give you a little more guide -- not guidance, but views on what we expect for the year.
Okay. Cristina, do you want to take the question on Bright Pixel please?
Yes, of course. Thank you, Antonio, for the question. So acquisitions themselves is our activity. So for the next years and now, we are expecting to do both. It's difficult to predict exactly when it will occur and which amount because it's -- it doesn't depend only from our side. So we need to find the right opportunities, the right moment to do it.
We don't have any pressure in terms of timing for the efforts. And as you know, IPO markets and M&A markets is still very close. But we are optimistic and we expect that at least for the end of the year, the things will get better. And we are here to embrace that opportunity whenever it happens. For the acquisitions, we have been keeping more or less the same level of investments at the last years, and we are expecting to maintain it. I don't know if I answered to the question, okay. Any additional?
Yes, I think so.
Thank you, Cristina. Thank you, Antonio, for your questions.
[Operator Instructions] We have a follow-up question. A follow-up from Antonio once again.
Can you provide -- can you explain why Druni -- the merger between Druni and Arenal is taking so long?
Sure. No, Antonio, very good question, and thank you because it's an important update. So as you know, we are going through the antitrust authorization. And so it doesn't depend really on us. We are waiting for the green light from the Antitrust Authority in Spain, and we hope that within the next few weeks, we will be able to have the green light and then complete the transaction, no really concerns. So it's not a question of really concerned. It's really a question of process and time, and we expect to have this close over the next week, so we can really work on the integration of Druni and Arenal.
So you are not expecting any kind of remedies or you don't need to sell stores or disposal?
I think it's difficult to predict what the authorities will do. But looking at -- looking all the assessments we have done and also the rationale of the transaction per se, the overlap of the store footprint between Arenal and Druni is very, very limited. So we are not expecting anything material at all. And so we are -- we have done a lot of work about it prior to the announcement obviously, and so we are quite confident that we'll have -- we'll not have an impact on the transaction.
There are no further questions in queue. I would now like to turn the call back to Mr. Joao Dolores for closing remarks.
Thank you very much. Thank you, everyone, for listening in and for asking questions. It was a pleasure to speak to you today. We will be back again in May to present our Q1 results for 2024. Talk to you soon. Thank you. Bye-bye.
Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.