# Polish e-commerce firm Allegro eyes higher Q1 profit
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-30
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Allegro anticipates increased core earnings amidst economic
Meta Description: Poland's top e-commerce platform Allegro anticipates a boost in core earnings amidst economic uncertainty by focusing on cost control and adapting to
URL: https://financedigest.com/polish-e-commerce-firm-allegro-eyes-higher-q1-profithtml

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By Anna Pruchnicka

(Reuters) -Poland’s biggest e-commerce platform Allegro said on Thursday it expects core earnings to rise in the first quarter, as it focuses on cost control amid continuing economic uncertainty.

Allegro is looking to keep costs down as it integrates the Mall Group business it bought last year and adapts to consumers spending less.

There was what we call trading down starting to be more visible in the fourth quarter,” [finance chief](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks") Jon Eastick said in an interview. Category by category people are taking cheaper options because they [know they need](https://www.financedigest.com/4-things-you-need-to-know-about-mortgages.html "4 Things you Need to Know About Mortgages") money for their energy bills and fuel cost.

The company expects [consumers to feel](https://www.financedigest.com/consumer-durables-sector-still-feeling-the-effects-of-recession.html "Consumer durables sector still feeling the effects of recession") pressure this year, Eastick said.

[Inflation around central Europe has surged in the past year](https://www.financedigest.com/spains-inflation-to-be-lower-this-year-than-in-2022-minister.html "Spain’s inflation to be lower this year than in 2022 -minister"), more than elsewhere in the continent, as food prices have jumped alongside energy costs. In Poland, Allegro’s largest market, [inflation in February](https://www.financedigest.com/french-inflation-revised-upwards-in-february-to-7-3-final-figures.html "French inflation revised upwards in February to 7.3% – final figures") was 18.4% year on year, the highest in 26 years.

Allegro [forecast its adjusted earnings](https://www.financedigest.com/centrica-names-obrien-as-new-cfo-raises-earnings-forecast.html "Centrica names O’Brien as new CFO, raises earnings forecast") before interest, tax, depreciation and amortisation (EBITDA) to increase 20%-23% in its key Polish market.

Shares in the company were up 6.7% by 0748 GMT.

Gross merchandise value (GMV) — an industry [metric used to measure](https://www.financedigest.com/brand-metrics-bolsters-client-services-team-as-brand-lift-measurement-booms.html "Brand Metrics bolsters client services team as brand lift measurement booms") transaction volumes — is expected to rise 13%-14%, while revenue is likely to increase 20%-22%, the company said.

Monthly GMV [growth fluctuated between 12% and 15%](https://www.financedigest.com/russias-rosatom-sees-2022-exports-growth-at-15-report.html "Russia’s Rosatom sees 2022 exports growth at 15% – report") for its Polish operations during the first quarter, the company said.

Allegro is also targeting lifting its [margin in Poland](https://www.financedigest.com/inpost-sees-better-margin-in-poland-plans-no-job-cuts-this-year.html "InPost sees better margin in Poland, plans no job cuts this year") back towards 5% mid-term, it said, which Eastick specified meant in two to five years. Adjusted EBITDA/GMV margin rose by 0.94 percentage points to 4.90% in the [fourth quarter](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% in the fourth quarter").

Under its “fit to [grow” project](https://www.financedigest.com/electric-kick-scooter-market-is-projected-to-reach-6-5-billion-by-2031-and-estimated-to-grow-at-11-5-cagr-between-2021-and-2031.html "Electric Kick Scooter Market is Projected to Reach .5 billion by 2031, And estimated to grow at 11.5% CAGR between 2021 and 2031") Allegro plans to consolidate warehousing space and has made reductions in specific teams, including about 60 people in the technology team in the Czech Republic, Eastick said.

We’re hiring for specific roles that [need to be filled but generally speaking we are trying to control](https://www.financedigest.com/why-the-world-needs-more-women-controlling-the-money.html "Why the world needs more women controlling the money") the number of people downwards, for example by not replacing people who leave,” Eastick said.

Allegro declined to comment on layoffs in the wider group. It had 7,840 employees at end 2022.

The company’s [core earnings jumped 41.2% to 708 million](https://www.financedigest.com/hellofresh-sees-2023-core-profit-of-460-540-million-euros.html "HelloFresh sees 2023 core profit of 460-540 million euros") zlotys ($163.70 million) in the fourth quarter in Poland, topping average analysts’ expectations of 692 million zlotys in a company-compiled consensus. Including Mall, the figure rose 33.3% to 668 million zlotys.

($1 = 4.3250 zlotys)

(Reporting by Anna Pruchnicka; Editing by Matt Scuffham, Uttaresh Venkateshwaran and Jacqueline Wong)


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