PG gears up for investment phase

During the 2024/25 financial year which came to an end on 30 April 2025, PG plc registered only a slight increase in revenue to just over €202 million. The company published its annual financial statements last week and reported that the supermarket outlets were negatively impacted by major roadworks adjacent to the Pama Shopping Village and the Pavi Shopping Complex which hindered access to the sites throughout most of the financial year. In fact, shareholders should be pleased to note that during the first quarter of the current financial year between 1st May and 31st July 2025, overall revenues resumed their strong growth trajectory with an increase of eight per cent.

Notwithstanding the disruptions caused by the roadworks, there was also the entry of a new major hard discounter to Malta in the supermarket retail segment highlighting the ever-intense competition in this sector.

As reported in the past, PG’s strategy has been to increase footfall to the two supermarkets and retail centres even at the expense of margins as it absorbed an element of the cost price increases in the supermarket segment to maintain its competitiveness. During the 2024/25 financial year, the operating profit (EBIT) decreased by 9.9 per cent to just under €18 million with the EBIT margin deteriorating to 8.9 per cent (2023/24: 10.1 per cent).

Given the challenging environment it is worth noting that the profit after tax of €12.4 million (8.6 per cent below last year’s record profit of €13.5 million) still translates into a healthy return on average equity of 17.4 per cent (FY2023/24: 20.6 per cent).

Moreover, it is also very positive to note that ‘net cash generated from operating activities’ grew strongly to €22.6 million. Apart from the unchanged total dividend of €7.25 million distributed to shareholders in July and December 2024, there were additional investments of just over €13.2 million in ‘property, plant and equipment’ as well as €13.5 million in ‘debt securities’. PG retained a very strong balance sheet with cash balances of €12.8 million and financial investments of over €18 million offsetting the short-term bank borrowings in place.

This positions the company strongly ahead of an important investment phase currently taking place.

In this respect, in January 2025 PG obtained approval for the change of use from industrial to commercial for the site of 8,000 square metres in close proximity to the PAVI Shopping Complex which was acquired in 2022. Excavations works had commenced a while ago for extensive storage capacity and additional parking facilities for the enhanced PAVI complex upon completion. This warehousing capacity will then release the site of the ex-Pasta factory that was also acquired by the group after its Initial Public Offering in 2017. In this respect, in May 2025, PG was granted a development permit for the demolition and construction of four levels of warehouses in this area which is also not far-off from the PAVI Shopping Complex.

It would be interesting to see the decision to be taken on the best use of this site given the overall development taking place in this area and the major expansion by PG of the PAVI Shopping Complex.

Apart from the PAVI complex extension and the ex-Pasta factory, another eventual project that is likely to take place is the redevelopment of the showroom previously occupied by S&S Bathrooms as well as the surrounding land which in all encompasses an area of circa 13,100 square metres. This was recently acquired by PG for €19 million. Once again, it would be interesting for shareholders to gauge the eventual benefits of this project once the company reveals the overall cost and plan of this major site in an important commercial district close to the PAMA Shopping Village.

Finally, the annual report published last week also revealed that earlier this year the Group obtained a 60 per cent shareholding in DB Gauci Shopping Mall Limited, which holds a promise-of-sale agreement for the temporary sub-emphyteusis of a property comprising a proposed shopping mall as well as car park spaces, which are all currently under construction on the site of the old Institute for Tourism Studies in St George’s Bay, St Julians which will also feature the Hard Rock Hotel and other various amenities.

While in the near-term, PG’s financial performance will continue to reflect the stiff competition in the supermarkets and retail sector from its three operating assets (PAMA, PAVI and the Zara® & Zara Home® outlets), the company is well-geared for its ambitious investment phase with sufficient financial capacity to expand its market presence. In the years ahead, it would be important for shareholders to gauge the overall impact from these four upcoming sizeable investments from a financial contribution perspective as these come on stream in due course.

Read more of Mr Rizzo’s insights at Rizzo Farrugia (Stockbrokers).

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