Poland's Zabka posts 15% rise in 1st quarter core profit driven by growing store network

Polish convenience store chain Zabka ZAB reported a 15% year-on-year rise in its first-quarter core earnings late on Monday, driven by network expansion and solid sales growth.

Its adjusted operating earnings before depreciation and amortisation (EBITDA) grew to 596 million zlotys ($142 million), ahead of analysts' expectations of 593 million zlotys.

Zabka debuted on the Warsaw Stock Exchange in October 2024 with a 6.45 billion zloty initial public offering and recently joined Poland's blue-chip index GPW.

It invested 325 million zlotys in capital expenditures during the quarter, up nearly 20% year-on-year, focusing on network expansion in Poland and Romania and store upgrades.

Sales to end customers rose 14.8% to 6.62 billion zlotys, supported by like-for-like growth of 6% and the addition of 407 stores in Poland and 29 in Romania.

That brought Zabka's network to 11,460 stores, with a total of 1,201 new stores opened since March 2024, as the chain continues its expansion programme and store upgrades.

"Continuous robust EBITDA generation, supported by strong cash flow, allows for ongoing debt reduction and deleveraging," Zabka said in an earnings presentation.

Its net debt to adjusted EBITDA ratio post-rent improved to 1.6 times, down from 2.1 times in March 2024.

Despite growth in EBITDA and sales, the company reported a net loss of 125 million zlotys, widening by 27% from a loss of 99 million zlotys in the same period last year.

The increased loss was affected by non-cash expenses of 46 million zlotys related to share-based programs, it said.

($1 = 3.7645 zlotys)