Jerónimo Martins’ H1 profits fall 36%

  • ECO News
  • 29 July 2020

Jerónimo Martins' profits fell 36.2% year-on-year to 104 million euros in the first half of this year. The operation in Poland offset the falls in other geographies.

Jerónimo Martins’ profits fell 36.2% to 104 million euros in the first half of this year, compared with 163 million euros in profit in the first half of 2019. The information was provided by the company in a statement sent this Wednesday to the Securities Market Commission (CMVM).

“The first six months of the year are mainly marked by the effects of the disruption caused by the pandemic in the second quarter,” admits Pedro Soares dos Santos in the communiqué, stating that “maintaining business continuity and the stability of the supply chains in a context of prolonged crisis and still without end in sight has demanded from the teams, at various levels of the organisation and particularly from those in our stores and distribution centres, truly extraordinary resilience, determination and commitment.”

Contributing to the deterioration of the profits of the Portuguese retailer are the increased costs that the pandemic brought, which in total, between January and June, reached 32 million euros. At stake is the “introduction of new and more frequent cleaning procedures in stores and distribution centres, as well as personal protective equipment for our teams”. To this must be added “the reinforcement of provisions for receivables and for stock depreciation.”

According to the company’s CEO, the operation in Portugal shows “signs of recovery due to the easing of containment measures”. However, “the economy is suffering from its over-exposure to the tourism sector and the consequences of the strong restrictions imposed on retail activity”, which had an “immediate impact on profitability” of Jerónimo Martins. At Pingo Doce, sales fell 2.9% in the first half and at Recheio the drop in sales was 14.4%.

Better news comes from Poland, with Biedronka delivering “a strong performance with solid sales and EBITDA growth”. Jerónimo Martins’ Polish brand “responded to the challenges with great assertiveness, combining speed, flexibility and a spirit of the initiative,” says Pedro Soares dos Santos, revealing that profitability was protected and there were even gains in market share.

The worst news comes from Colombia – although sales have grown – with “Ara strongly impacted by restrictions still in place” in the country. “The containment measures and restrictions on economic activity are still being felt throughout the country, making it difficult to see the impact on the economy of a pandemic that presents very different behaviours from region to region,” explains the CEO, noting that the management of the operation is thus more complex.

Overall, consolidated sales of the Group grew 4.6% to 9.3 billion euros, while EBITDA fell 4.9% to 635 million euros. “Biedronka’s strong performance more than compensated for the drop in sales in Portugal and the pressure of the devaluation of the zloty and the Colombian peso”, explains the group.

In terms of debt, public debt closed the first half at 2,150 million euros. “Excluding capitalized operating lease liabilities, the Group closed June with a net cash position of 100 million euros,” reads the statement.