Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jeronimo Martins SGPS SA (JRONF, Financial) achieved a 9.3% sales growth in 2024, driven by volume increases and store expansion.
- The company opened 385 new stores and remodeled around 350, contributing significantly to growth.
- HeBe, the health and beauty business, posted a 24.3% sales growth, with online sales representing 20% of total sales.
- Pingo Doce surpassed the EUR5 billion sales milestone, driven by its differentiated food concept and promotional campaigns.
- Ara improved its EBITDA margin by 150 basis points, returning to positive EBITDA on a pre-IFRS 16 basis.
Negative Points
- The company faced a challenging year with basket deflation and significant cost inflation, particularly in labor costs.
- EBITDA margin was pressured, falling to 6.7% from 7.1% due to operational deleverage and cost inflation.
- Net earnings per share, excluding nonrecurring items, fell by 14.5% due to the impact of basket deflation and cost pressures.
- Cash flow for the year before dividend payment was negative EUR62 million, impacted by slower sales growth and working capital dynamics.
- The competitive environment remains intense, particularly in Poland, with increased promotions and cautious consumer behavior.
Q & A Highlights
Q: Could you provide more detail about trading in Biedronka in January and February, and whether Q1 like-for-likes might be positive? Also, what like-for-like growth is needed to offset the increase in minimum wages in 2025?
A: We won't provide specific details on current trading until our May conference call. However, consumer demand remains cautious, and we are still dealing with deflation. The increase in minimum wages in Poland was over 9%, and we've already adjusted salaries accordingly, which is challenging given the current consumer context. Due to calendar effects, achieving a positive like-for-like in Q1 will be difficult.
Q: Despite a cautious consumer and high competition, your gross margin increased. Can you explain this? Also, why is there significant CapEx in Portugal's Pingo Doce compared to other regions?
A: The gross margin improvement was largely due to a positive mix effect in Colombia and Pingo Doce, not from price increases. In Portugal, we are investing heavily in Pingo Doce to refurbish stores and enhance the shopping experience, which is crucial for maintaining market relevance and profitability.
Q: Regarding Biedronka's EBITDA margin, are you expecting an increase this year, or just less of a decrease than in 2024? Also, what should we expect for cash flow in 2025?
A: We anticipate less of a decrease in EBITDA margins compared to 2024, depending on market dynamics. For cash flow, we don't expect working capital to be as challenging as last year, and we aim to manage it effectively to support our competitive pricing strategy.
Q: Are you seeing any signs of improvement in competition, and do you expect it to ease in the second half of the year? How does consumer confidence in Poland compare to last year?
A: Competition remains intense, especially in Poland, and we don't foresee it easing in the first half of the year. Consumer confidence is still cautious, with increased savings and no significant pickup in food spending.
Q: Regarding Biedronka's margin and competition, do you expect the margin decline to be concentrated in the first half of the year? Also, can you elaborate on your productivity efficiency program?
A: We expect more margin pressure in the first half due to calendar effects and competition. Our productivity efficiency program focuses on increasing productivity and using technology to manage labor costs, aiming for sustainable growth across all businesses.
Q: Would you consider acquiring a portfolio of supermarkets or hypermarkets in Poland if available?
A: We are open to growth opportunities, but given Biedronka's significant market share, large acquisitions are unlikely. We focus on strategic locations rather than national chains.
Q: What type of investments should we expect for Slovakia in terms of EBITDA and CapEx in 2025?
A: The investment in Slovakia will be minor relative to the overall group results. It will not significantly impact our CapEx plans, which are primarily focused on Polish Biedronka.
Q: Can you provide more details on the Colombian acquisition and interest cost expectations for next year?
A: The Colombian acquisition involved taking over lease agreements from a social welfare entity. We continue to finance our Colombian operations in local currency to avoid exchange risk, so we expect interest costs to remain stable.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
