Jeronimo Martins’ profit rises, food deflation a challenge

LISBON, March 6 (Reuters) – Portuguese retailer Jeronimo Martins on Wednesday posted a 16% jump in fourth-quarter net profit, driven by a sales increase at its Polish market-leading chain, Biedronka, but said food deflation would likely shrink its margins.

The company made a net 198 million euros ($216 million) in the quarter, slightly exceeding the 193.6 million average forecast by analysts polled by LSEG.

In a statement, Chief Executive Pedro Soares dos Santos said “as we enter 2024, we know that the food deflation expected for the first half of the year will be our biggest challenge”.

The company also expected its costs to increase, adding that “this combination will further pressure our margins”.

Even as consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 14% to 578 million euros, its EBITDA margin – a measure of profitability – slipped to 7.1% at end-2023 from 7.2% a year earlier.

Consolidated sales rose 16.7% to 8.16 billion euros in the quarter, fuelled by a 17.2% rise at Biedronka, where sales reached 5.7 billion euros.

At home, supermarket chain Pingo Doce posted a 5.4% rise in sales to 1.3 billion euros, while the company’s growing Colombian network Ara booked 685 million euros in sales, up 43.8% from a year earlier.

Jeronimo Martins plans to keep investment in 2024 at last year’s levels of around 1.2 billion euros, opening 130-150 stores in Poland and remodelling 300 others, adding 150 locations in Colombia and 10 Pingo Doce stores in Portugal.

It also expects to open its first few stores in Slovakia by year-end.

For the full-year 2023, profit rose 28% to 756 million euros as sales grew 21% to a record 30.6 billion euros. The board will propose a dividend payment of 0.655 euros per share, which represents an increase of 19.1% from the previous year. ($1 = 0.9171 euros) (Reporting by Patrícia Vicente Rua; Editing by Andrei Khalip and Barbara Lewis)

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