Jerónimo Martins Group increases sales by 3,9% in the first nine months of 2020, to 14,2 billion euros

Between January and September this year, the group led by Alexandre Soares dos Santos made profits of 219 million euros.

Jerónimo Martins chairman and chief executive officer | Cristina Bernardo

Jerónimo Martins Group's sales grew 3,9% in the first nine months of 2020, to 14,2 billion euros.

Between January and September this year, the group led by Pedro Soares dos Santos made profits of 219 million euros.

In turn, Jerónimo Martins' EBITDA amounted to 1.029 million euros.

According to the managers of the Jerónimo Martins Group, "the performance recorded in the first nine months of the year reflects the effects of more than six months operating in a pandemic context, with all the resulting impacts".

In this way, the consolidated sales of the national retail group amounted to 14,2 billion euros, an increase of 3,9% over the previous year. EBITDA amounted to 1.029 million euros, 1,9% below that recorded in the same period in 2019.

“Between March and September, the additional costs incurred with the effort required by the health crisis exceeded 32
millions of euros. This figure includes the extraordinary premiums paid to the operational teams, expenses with equipment and individual and collective protective materials and the financing of multiple social support initiatives in the three countries. Direct aid to communities and contribution to scientific efforts to stop the pandemic and manage its effects are also included in this value ”, the statement said.

Jerónimo Martins' management points out that, during the period under review, the investment totaled 258 million euros, with about half of the total to be allocated to Biedronka, in Poland.

The net result of the national distribution group stood at 219 million euros in the period under analysis (EPS - [earnings per share] of 0,35 euros per share).

“These nine months of 2020 are marked by more than six months under the effects of the Covid-19 pandemic. During this period, the determined work of our teams and the flexibility of our operations have allowed us to be agile and creative in adapting the necessary value propositions of our brands under particularly complex market conditions. We have thus reinforced its relevance and assertiveness for the consumer ”, assume the responsibles of Jerónomio Martins.

According to the management of this group, “throughout these months, the strength of our balance sheet made it possible for us not to lose, in the short-term urgency, the long-term perspective and for us to stick to the defined strategic priorities”.

“Despite the harsh times we live in, I believe that today we are better prepared than six months ago to deal with the demands of the reality of each market and to continue to grow in a sustainable manner. I am aware that uncertainty remains very high and that Christmas, which is traditionally the strongest time for the food business, may be conditioned this year by restrictions on mobility and the lack of confidence and purchasing power of a consumer increasingly sensitive to price. , derived from the unique moment in the world ”, confesses Pedro Soares dos Santos, in a statement sent to CMVM - Securities Market Commission.

According to the CEO of Jerónimo Martins, “at the beginning of the pandemic, given the then very low visibility of the potential impact of the crisis on the year's activity, the 'payout' of 2019 results was reduced, from 50% initially proposed, to 30% ”.

“At this stage, our companies have shown their resilience and determination. Thus, given the strength of the group's performance in times of adversity, in light of the cash position we have at the end of September and the level of financial flexibility that we consider necessary in the future, the board of directors decided to propose in an extraordinary general meeting, the distribution of the remaining amount for the 50% payout, in line with the group's dividend policy ”, reveals Pedro Soares dos Santos.

Jerónimo Martins' management points out that “in all companies, there was an increase, in the nine months, of 32 million euros in terms of relative operating costs”, related to extraordinary premiums paid to the operational teams; expenses with individual and collective protective equipment and materials; and financing multiple social support initiatives in the three countries.

“This support includes direct aid to communities and contribution to scientific efforts to stop the pandemic and manage its effects. In addition to these costs, in terms of 'Other Losses and Gains', three million euros
concern the reinforcement of provisions for receivables whose risk of non-realization increased
substantially due to the pandemic, ”the statement said.

According to this document, “all the companies in the group started a rigorous review of processes that made it possible to mitigate the impact of this cost increase on their profitability”, adding that, “in each country, the measures considered necessary by the respective governments and health authorities, having our banners prepared specific responses according to the different realities ”.

The Jerónimo Martins statement states that, in Poland, measures to restrict the movement of people were gradually lifted over the second quarter and, from June to the end of September, no specific measures were applied for the food retail sector.

“However, there was still less movement of people in a context where many companies favor teleworking and where there is less intensity of social activities. Biedronka maintained, in the third quarter, the flexibility of schedules to which it had resorted in the second quarter, now adjusted to the location of the stores and the expected traffic. The commercial dynamics and the organization of the flow of operations have also been adjusted to the fact that there is less frequency of visits ”, guarantees the management of Jerónimo Martins.

For its part, Hebe, “which was greatly impacted in the second quarter by the closure of shopping centers,
during the third quarter there was an improvement in operational performance resulting largely from the lifting of restrictions on circulation, although the potential for growth is still limited by the new habits of frequency of consumers in the current pandemic context ”.

In Portugal, the national distribution group recalls that in the third quarter the retail restriction of a maximum of five people per 100 square meters remained.

“The low circulation of people was accompanied by a sharp drop in the flow of tourists, with an impact on the activity of commerce in general, and of restaurants and hotels, in particular. As a complementary measure, in mid-September the prohibition on selling alcoholic beverages from 20 pm was implemented ”, stresses Jerónimo Martins.

“Pingo Doce, whose stores have a particularly high history of sales density, experienced the pressure of fewer visits, as well as the impact of the health crisis on the activity of its restaurants, take-away and cafes. Recheio continued to suffer from the significant drop in activity of the HoReCa channel [Hotelaria, Restauração, Cafetaria] ”, summarizes the group led by Pedro Saores dos Santos.

However, in Colombia, “the containment measures remained very restrictive until the end of August”.

“In conjunction with the strong limitations on the movement of people, the rules on curfew and the compulsory closure of commercial activity continued on certain days of the week, which, in the third quarter, represented a reduction of around 16% for Ara hours of operation of the stores ”, advances the same communiqué.

With regard to the investment plan, “and benefiting from a less restrictive management of the health crisis in Poland, Biedronka was the Company that most quickly resumed the original plan, trying to impress a pace of execution compatible with the recovery of delays in expansion ”.

"If conditions in the construction sector do not change, we expect that, in the year, Biedronka will add to its chain of stores another hundred locations", while the Pingo Doce chain expects to open around 13 stores and Ara around 50 .

“The estimated value of 'capex' [investment] for the group, in 2020, should be around 450 million euros”, concludes the statement of the Jerónimo Martins Group.

Updated at 19h05m

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