Operating Results

Operating Results

Adjusted EBITDA decreased by 9.4% in 2017 to EUR568.6m, down by 8.9% ex-currency. The decline in adjusted EBITDA was reflected in a 65bps erosion of the adjusted EBITDA margin to 6.6% as a result of the pricing policy implemented in Spain during the second half of the year.

Depreciation and amortization rose by 2.3% to EUR232m (+2.3% ex-currency), slightly above local-currency sales growth, primarily due to the remodelling process carried out in recent years.

Adjusted EBIT fell by 16.1% in Euros to EUR336.6m, with a 15.2% decrease at constant currency. Other items excluded from the calculation of adjusted EBIT declined by 2.3% in 2017 to EUR89.5m. Other cash items rose by 14.4% to EUR59.8m in the year, impacted by the higher costs related to store closures. Accrued expenses related to the Long-Term Incentive Plans became EUR4.9m positive in the year due to the lower likelihood of meeting the Minimum Operating Performance targets described in the plan. With regards to ‘Other non-cash items’, it rose by 40% to EUR34.5m on the back of the higher volume of write-downs related to store closures and remodelling.

EBIT fell by 20.2% to EUR247.1m (-19.5% ex-currency).

The group’s net financial expenses went up by 20.6% in 2017 to EUR61m, with Emerging Markets behind most of the EUR10.4m increase in interest costs, as average financial costs in Euros declined by 12bps in 2017 to 1.26%. Total financial costs related to the company’s factoring activity amounted to EUR0.2m in 2017.