‘Still too early’ to grasp impact of Ukraine war – Jerónimo Martins

Jerónimo Martins, a Portugal-based food retailer with stores in Poland, has said that it is “still too early” to understand “all the consequences” for the region and for the world of Russia’s invasion of Ukraine, but for now, plans estimated investment of around €850 million this year.

In a statement sent to Portugal’s Securities Markets Commission (CMVM), the owner of the Pingo Doce supermarkets in Portugal points out that, “adding to the uncertainty associated with the evolution of the Covid-19 pandemic, the situation in Ukraine intensifies the challenges ahead.”

In the second week after the invasion of Ukraine by the military forces of the Russian Federation, it said, “it is still too early to understand all the consequences on the region, on Europe and on the world.

“The rapid increase in inflation of food products, energy and transport, is intensified by the military conflict and by growing constraints felt in international supply chains” and, in addition, “there is a visible depreciation of Eastern European currencies, particularly the zloty” – Poland’s currency.

Therefore, it adds, “flexibility and agility in response to particularly demanding circumstances will continue to characterise the attitude of our teams who have shown a remarkable mobilisation to help the refugees.”

Jerónimo Martins points out that in the context of higher food inflation, “price competitiveness and the creation of savings opportunities for the consumer through promotional activity become even more critical on the agenda” of all the group’s companies.

“The strength of our balance sheet is fundamental, especially in times of uncertainty [and] although the current circumstances do not advise accelerating decisions regarding future growth paths, we maintain the necessary financial flexibility to do so, without compromising the execution of the investment plan for the year (around €850 million) and the dividend payment proposed to the general meeting,” it states.

Its supermarket chain in Poland, Biedronka, it says, “is aware of the added difficulties of managing the balance between sales growth and profitability protection [and] in the current circumstances, its main priority is to stand by Polish consumers and do justice to the brand promise at a time of decreasing disposable family income.”

Although the full impact of Russia’s invasion of Ukraine is yet to be seen, “particularly in the scope of cost inflation, Biedronka is, it states, “prepared to strengthen its investment in price and ensure its competitiveness, which will increase pressure on margins.”

Currently, Biedronka expects to “be able to maintain its expansion plan” for this year and open around 130 shops and a new distribution centre, as well as refurbishing around 350 locations.

“However, the current situation requires even closer monitoring and greater adaptability” so “we will, on an ongoing basis, reassess needs and priorities, ensuring that our first objective in Poland is achieved: working with our suppliers to overcome likely supply chain constraints and remain the preferred food shop for Poles, while supporting the Polish effort to help the Ukrainian people,” the company says.

Its health and wellness chain in Poland, Hebe, “alongside the consolidation of the shop network (opening around 30 shops in 2022)” will continue to focus “on the growth of its online operation,” it adds.

In Portugal, Pingo Doce “will leverage its growth strategy in the fresh food categories, with particular emphasis on ready meal solutions where it has clear competitive advantages and the support of two central kitchens and dedicated professional teams,” the statement said. It is planned to inaugurate around 10 new shops and refurbish around 30 locations this year.

Cash-and-carry chain Recheio “will continue to benefit from the recovery of the HoReCa channel [Hotels, Restaurants and Cafés] which is expected to gain momentum with some recovery in tourism, with the opening of a flagship shop in Cascais planned.”

In Colombia, the Ara chain “begins the year in a position of price leadership” and this year “the focus will be on working to be the consumer’s favourite shop, by investing in a policy of competitive prices and timely and well-designed promotions,” it says, adding that Ara hopes to end the year “with a network of more than 1,000 shops and leveraging on good sales performance to improve its profitability.”

Jerónimo Martins announced a 2021 net profit of €463 million, up 48.3% on 2020.

In the early hours of 24 February Russia launched a military offensive in Ukraine that has so far left at least 516 people dead and more than 900 injured among the civilian population and caused the flight of more than 2.1 million to neighbouring countries, according to the latest United Nations figures.

The Russian invasion has been condemned by the international community in general, which has responded by sending arms to Ukraine and strengthening economic sanctions against Moscow.