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Portugal: Jerónimo Martins sees inflation boost profits

Updated: Mar 27, 2023

Portugal's second-largest retailer, Jerónimo Martins (owner of discount retail chains Biedronka in Poland and Ara in Colombia), has reported a 23% jump in fourth-quarter net profit as soaring inflation boosted sales, especially in Poland, its key market, but also dented its margins.

The company, which netted €171 million from October to December, warned that food inflation remained high and only showed early signs of abating.

'Almost three months into 2023, inflation in the countries where we operate is more persistent than expected at the end of 2022, reducing consumer confidence and household purchasing power and continuing to put pressure on our margins and costs', it said in a statement.

Biedronka Performance

Consolidated sales in the last quarter of 2022 rose 23% to €7 billion, driven by the company's market-leading Polish supermarket chain Biedronka, which posted a sales increase of 24% to €4.9 billion.

Although Polish consumers have grown more cautious and price-sensitive, spending on food has outpaced food inflation, which rose throughout 2022 to reach an average of 15.4%.

At home, supermarket chain Pingo Doce posted a 13.7% rise in sales to €1.2 billion, while in Colombia, its Ara stores booked €477 million in sales, up 38.5% from a year earlier.

Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 14.8% to €506 million in the quarter. EBITDA margin fell to 7.2% from 7.8% a year earlier.

"Following the difficulties that we anticipated at the beginning of 2022, we were faithful to the commitment made at the time and did our part to limit food inflation," commented CEO Pedro Soares dos Santos. "We absorbed some of the increases in the prices charged by our suppliers, passing through to consumers only part of the increase in the costs of goods sold."

'Disinflation Scenario'

'Although a disinflation scenario is expected for this year, it is still difficult to anticipate the level of disinflation for the second half of the year,' the company said.

For the full-year 2022, Jerónimo Martins' profit rose 27.5% to €590 million, while EBITDA increased 17% to €1.85 billion. Sales grew 21.5% to €25.4 billion. The company added its capex programme is expected to be in line with 2022, with 45% of it in Poland.

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