May 14, 2020 / 12:44 AM / 3 months ago

UPDATE 1-Brazil's GPA posts Q1 loss as Latin America overhaul costs outweigh better sales

(Adds details, share performance)

By Gabriela Mello

SAO PAULO, May 13 (Reuters) - Brazilian food retailer GPA SA reported on Wednesday a quarterly net loss of 130 million reais ($22.09 million), as costs related to the acquisition of Colombia's Almacenes Exito SA outweighed higher sales driven by the coronavirus outbreak.

GPA is controlled by France's Casino Guichard Perrachon SA , which last year concluded a shareholding overhaul that allowed GPA to book revenues from operations in Argentina, Colombia and Uruguay.

Excluding depreciation and financial expenses triggered by the consolidation of Latin American's operations, GPA posted a first-quarter net income attributed to controlling shareholders of 65 million reais, down 60% from a year ago.

All regions saw a significant growth in sales as the new pandemic led customers to stockpile goods. As a result, total gross revenue grew by 14% in the quarter ended on March 31 to 21.6 billion reais, of which 15.9 billion reais came from Brazil.

The stronger sales allowed the company to partly offset a 51.6% rise in operating expenses amid the coronavirus outbreak. Still, GPA's gross margin declined to 21.1% from 22% in the first quarter of 2019.

"We continue to work so that our customers in Brazil and South America have access to the products they need, shopping safely, and first-quarter results give us confidence that we're on the right path," Chief Executive Peter Estermann said in a securities filing.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 13.3% to 918 million reais. In adjusted terms, Ebitda hit 1.19 billion reais, up 38.3% year-on-year.

Despite a more challenging scenario, GPA said it had a solid cash position of 6.1 billion reais, equivalent to 120% of its short-term maturities, and reaffirmed its expansion plans.

"However, due to the pandemic, some deadlines may change and possible delays may occur," the company added. In the first quarter, the retailer opened one Assaí wholesale store, one convenience store and one gas station in Brazil, as well as two stores in Colombia.

Shares in GPA have slid 2.6% so far in May, outperforming Brazil's benchmark index Ibovespa and also rival Carrefour Brasil.

On Monday night, Carrefour Brasil posted a lower net income in the first quarter, as taxes and financial expenses overshadowed double-digit sales growth partially driven by the coronavirus outbreak.

$1 = 5.8852 reais Reporting by Gabriela Mello; Editing by Sandra Maler and Peter Cooney

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