Assai Sees Profit Drop Despite Revenue Growth in Q2

Brazilian food retailer Assai reported a 21.2% decline in its second-quarter net profit, attributed to higher tax benefits in the same period last year. However, the company's net revenue increased by 11.8%, supported by store conversions and an increase in adjusted EBITDA. Assai maintains guidance to reduce its financial leverage by the end of 2024.

Brazilian food retailer Assai reported a 21.2% decrease in its second-quarter net profit compared to the same period last year.

The company recorded a net profit of 123 million reais ($22 million) for the quarter ending in June. CFO Vitor Faga explained the profit slump was mainly due to increased tax benefits in the previous year's corresponding period.

Meanwhile, Assai's net revenue rose by 11.8% year-on-year to 17.9 billion reais, with same-store sales growing by 2.9% after adjustments for calendar effects. 'This quarter further solidifies our growth trajectory, particularly in hypermarket conversions,' Faga noted.

Over the past two years, Assai has converted almost 70 acquired Extra hypermarkets. Monthly sales in the 47 stores at a more advanced maturation stage surged by 5% from Q1 2023.

The company's adjusted EBITDA rose 15.7% to 1.29 billion reais, with margins up 0.2 percentage points to 7.2%. Assai continues to focus on reducing financial leverage, aiming to end 2024 with a net debt/adjusted EBITDA ratio below 3.2 times. It stood at 3.65 times in Q2, down from 3.75 in Q1. ($1 = 5.5585 reais)

(With inputs from agencies.)