Sonae third-quarter profit, sales rise, beat expectations

Portugal's largest retailer, Sonae SGPS, posted on Wednesday a 35 percent rise in third-quarter net profit to beat expectations thanks to strong sales growth even as its profitability declined due to discounted prices in a near zero-inflation market.

Net profit rose to 61 million euros, by far exceeding the average forecast by analysts of 35 million euros. In the first nine months of the year, net profit was still down 3 percent at 138 million euros after the impact of mark-to-market valuation of its decreased stake in telecoms firm NOS (NOS.LS).

The conglomerate that operates Continente hypermarkets, consumer electronics stores Worten and SportZone outlets of sporting goods, among other brands, said that total sales rose nearly 11 percent in the quarter to 1.45 billion euros, while analysts expected 1.39 billion in sales.

The conglomerate's overall earnings before interest, taxes, depreciation and amortization (EBITDA) rose 10 percent to 111 million euros in the quarter. Still, the underlying EBITDA margin, which measures operating profitability mainly in retail, dropped to 6.8 percent from 7.2 percent a year ago.