FILE PHOTO: The Allegro logo is seen on the smartphone in this illustration taken October 12, 2020. REUTERS/Dado Ruvic/Illustration
(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 cutting costs amid economic uncertainty.
The company forecast its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to increase 20%-23% in its key Polish market.
Gross merchandise value (GMV) — an industry metric used to measure transaction volumes — is expected to rise 13%-14%, while revenue is likely to increase 20%-22%, the company said.
Allegro is looking to keep costs lower as it integrates the Mall business it bought last year and adapts to consumers spending less.
Monthly GMV growth fluctuated between 12% and 15% for its Polish operations during the first quarter, the company said, adding that consumers were spending less on discretionary items and buying cheaper products.
Allegro is also targeting lifting its margin in Poland back towards 5%, it said. Adjusted EBITDA/GMV margin rose by 0.94 percentage points to 4.90% in the fourth quarter.
The outlook comes after the company in November hiked fees for its annual subscription programme for the first time, mirroring similar moves by Amazon in Europe and the U.S. earlier that year.
The company's core earnings jumped 41.2% to 708 million 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.
Allegro added it was on track to launch a third-party marketplace in the Czech Republic this year while focusing on managing Mall's costs and improving inventory management.
($1 = 4.3250 zlotys)
(Reporting by Anna Pruchnicka; Editing by Matt Scuffham and Uttaresh Venkateshwaran)
