JERÓNIMO MARTINS SGPS, S.A FY Results

Transcription

1 JERÓNIMO MARTINS SGPS, S.A FY Results Lisbon, 6 th March was a milestone in the strategic development of Jerónimo Martins. The Company delivered twelve months of strong sales growth, leveraged in the quality of the formats and in the execution of four major projects which marked the year the integration of the Plus stores in Portugal and in Poland, the conversion of the compact stores into Pingo Doce and the execution of the Group s organic growth programme. The growing dimension of the Group s retail chains, as well as an increased concentration in the food retail area, took the Group s operations to a new level of scale of operation, with very positive effects on earnings growth. The focus of the investment plan in the food area and the solid evolution of results have led to the maintenance of a robust balance sheet and the continuity of the dividend policy. (Million ) Δ% Net Sales 6, , EBITDA Mg EBITDA 6.9% 6.6% Net Results JM EPS ( ) The Board of Directors will propose the distribution of a gross dividend of Euro0.11 per share, an increase of 14.6% against the previous year. Financial Calendar 2009: Shareholders Meeting: 7 April Results Q1: 6 May Results Q2: 27 July Results Q3: 29 October Investor Relations Office: Cláudia Falcão claudia.falcao@jeronimo martins.pt Hugo Fernandes hugo.fernandes@jeronimo martins.pr ( ) investor.relations@jeronimo martins.pt Jerónimo Martins, SGPS, SA Public Company Corporate Address: Rua Tierno Galvan, Torre 3, 9º Piso, Letra J Lisboa Share Capital: Eur 629,293, Registered at the Commercial Registry Office of Lisbon and Tax Number:

2 2008 Performance Analysis Key figures +28.9% growth in Consolidated Sales which reached Euro6,893.7 mn +34.6% growth in Consolidated EBITDA which reached Euro473.0 mn +24.3% growth in Net Profit attributable to JM which reached Euro163.2 mn Gearing reached 90.8%, lower than initially expected. Net Debt of Euro845.9 mn Jerónimo Martins Group has been affirming its positioning as a food operator, consistently investing in the competitive advantages of its main formats both in Portugal and Poland was the third year in a strategic stage that the Group started in 2006, in which it made growth an essential pillar for building larger scale of operations, as a way of reaching high levels of efficiency, ensuring the future competitiveness of the formats was a milestone in this scale building cycle with the solidity of the business models represented by strong LFL sales growths (+11.2% at Pingo Doce, +20.2% at Biedronka and +4.5% at Recheio) along with the execution of four essential projects in the Group s strategy: Integration of the Plus stores in Portugal. In May 2008, the integration of the 77 stores acquired from the Tengelmann Group in Portugal began. Of this network, 16 stores were totally remodelled into Pingo Doce, while the remainder underwent a lighter revamping process and one store was closed before the end of the year. The integrated stores contributed with Euro131 mn to the sales of this business area and, as a result of the normal demands of an integration process, diluted the EBITDA margin of the retail area in Portugal by around 40b.p. Conversion of the compact Feira Nova stores into Pingo Doce. Following a repositioning process of the compact Feira Nova stores, which brought them closer to the Pingo Doce format, in 2007 a decision was made to integrate the 37 compact Feira Nova stores into Pingo Doce. This project began with an internal reorganization process, with a view to creating One Company/One Brand, with the merger of the head offices of Pingo Doce and Feira Nova, leading to the creation of a more integrated and efficient structure. After the internal reorganisation, in March 2008 steps were taken to adapt the former mini hypermarkets to the Pingo Doce format. Five stores were totally converted into Pingo Doce, while the remaining, more recent stores, underwent a lighter change in layout and image. Even considering the demanding integration processes which involved the retail area in Portugal, the EBITDA of the business area grew 14.4%, reaching a margin of 6.7% of sales. Integration of the Plus stores in Poland. In October 2008, Biedronka began the integration of the 205 stores that had been acquired from the Tengelmann Group. The Company carried out an ambitious conversion plan of the stores which permitted to 193 stores (12 stores closed before the end of the year) to be operating under the Biedronka standards within two months. The stores were closed for an average period of 16 days, during which they were remodelled and the Biedronka assortment was introduced. These stores contributed with Euro103 mn of sales into total Biedronka net sales (an average of 75 days of sales). The scale of the Polish operation has been allowing Biedronka to obtain significant efficiency gains that enabled it to carry out this integration process in 2008, while the EBITDA margin increased 100b.p. to 6.9%, leading the EBITDA generated in Euros to increase 72.4% (+60.8% in Zloty) FY Results 2 / 10

3 Organic expansion plan. Jerónimo Martins Group continued its plan for opening stores, which was clearly focused on its main food retail formats. Throughout 2008, Pingo Doce opened 17 new stores, while Biedronka went ahead with the Plus stores acquisition plan at the same time as its normal opening plan, inaugurating 154 new locations. In November 2008, Recheio, consolidating its leadership in Portugal, integrated a store it had acquired from a local operator and, in the middle of the year, opened a store in the centre of Lisbon, geared towards the HoReCa channel. So 2008 was marked by the success in carrying out these projects which added 403 stores to the Group s chains (+29.5% of selling area), but was also the first year in a new cycle for creating value, when the benefits of the scale started to be clearly reflected in the results evolution. Consolidated EBITDA grew 34.6%, above the sales growth, representing a margin of 6.9% (6.6% in 2007). In 2008, the Group s investment plan, reached Euro874.2 mn, including the acquisition of the Plus operations and reflecting the priorities established for the year. In line with the defined strategy, expansion was still the priority, accounting for 78.4% of the total investment. Biedronka was responsible for the allocation of 58.2% of the total invested by the Group. Consolidated net debt, at the end of the year, reached Euro845.9 mn, placing gearing at 90.8%, lower than that initially anticipated by the Management, reflecting the control over of the investment and working capital management. The increase in the gearing, which according to the Management's expectations will decrease over the coming years, is linked essentially to the acquisition of the Plus operations in Portugal and Poland. Dividend Distribution Proposal Taking into consideration the solidity of the year s results and following the Group s dividend policy, at the next Shareholders Meeting, the Board of Directors of Jerónimo Martins, SGPS, S.A. will propose the distribution of a gross dividend of Euro0.11 per share, an increase of 14.6% against the previous year. Outlook The sales and profits achieved in 2008 are the proof of the strength of the main business formats, as well as the sustainability of their competitive advantages. Although a prudent approach is maintained in view of the macro economic environment of the countries in which the Group operates, it is expected that the permanent focus on the efficiency of the business models will be boosted by the new scale of the operations. In Poland, trading of the recent two months, in line with expectations, is viewed as a sign that the company is well prepared to accomplish its goals in a year that could bring some challenges. The volatility of the exchange rate may have impact on the results when converted into Euros. With regard to Portugal, considering the uncertainty dominating the macro economic panorama, it is still expected that Pingo Doce will continue to perform above the sector, benefiting from the integration of Plus throughout the year FY Results 3 / 10

4 Sales and Results Analysis CONSOLIDATED RESULTS 2008 FY 2007 FY Q4 08 Q4 07 Tho. Euro % Tho. Euro % Δ% Tho. Euro % Tho. Euro % Δ% Net Sales & Services 6,893,737 5,349, % 1,867,999 1,541, % Total Margin 1,582, % 1,224, % 29.2% 440, % 352, % 24.7% Operating Costs 1,109, % 873, % 27.0% 299, % 243, % 22.7% EBITDA 472, % 351, % 34.6% 141, % 109, % 29.2% Depreciation 157, % 126, % 24.4% 42, % 35, % 22.0% EBIT 315, % 224, % 40.4% 98, % 74, % 32.6% Net Financial Results 85, % 59, % 44.1% 23, % 16, % 38.8% Non Recurrent Items 7, % 22, % 135.6% 15, % 5, % 373.1% EBT 222, % 187, % 18.3% 58, % 62, % 6.3% Taxes 46, % 36, % 25.2% 8, % 11, % 27.7% Net Profit 175, % 150, % 16.6% 50, % 51, % 1.6% Minority Interests 12, % 19, % 35.0% 8, % 8, % 8.5% Net Profit attr. to JM 163, % 131, % 24.3% 41, % 43, % 3.5% EPS (euro) % % Cash Flow per share (euro) % % Consolidated Sales (Euro Million) 6,894 Consolidated EBITDA (Euro Million) 473 Biedronka 5, % +47.2% 51.2% Biedronka % +72.4% 51.2% Pingo Doce & Feira Nova 36.2% +19.2% 33.5% Retail Portugal 38.4% +14.4% 32.7% Recheio Manuf. & Others 11.7% 9.5% +4.5% 7.4% +3.7% 5.9% Recheio Manuf. & Others 10.8% +5,8% 8.5% 10.9% 4.5% 7.7% LFL Sales Growth LFL 2007 LFL % 20.2% 11.2% 8.7% FN Hypers 0.7% 1.0% 3.6% 4.5% Pingo Doce FN Compacts Recheio Biedronka 4.3% 3.7% 2008 FY Results 4 / 10

5 Sales Analysis NET SALES AND SERVICES Δ % Q4 08 Q4 07 Δ % Eur Tho. % total Eur Tho. % total Pln Euro Eur Tho. % total Eur Tho. % total Pln Euro Retail Mainland 2,503, % 2,111, % 18.6% 693, % 607, % 14.1% Cash & Carry Mainland 654, % 626, % 4.5% 163, % 158, % 3.0% Madeira 128, % 123, % 4.2% 33, % 34, % 1.6% Poland Biedronka 3,520, % 2,392, % 37.3% 47.2% 962, % 724, % 37.5% 32.9% Manufacturing 253, % 246, % 3.1% 55, % 54, % 1.2% Mkt. Repr. and Rest. Serv. 81, % 75, % 7.8% 25, % 20, % 19.7% Consolidation Adjustments 249, % 225, % 10.4% 65, % 58, % 10.8% Total JM 6,893, % 5,349, % 28.9% 1,867, % 1,541, % 21.2% p.m. Retail Mainland 2,310, % 1,937, % 19.2% 642, % 562, % 14.2% (store sales) In 2008, the consolidated net sales of Jerónimo Martins reached Euro6,893.7 mn, a growth of 28.9% (+24.4%, excluding the exchange rate effect) relative to This performance is the result of the combination of the execution of an ambitious organic growth plan in the main retail formats, with the success of the integration of the acquired Plus stores in Portugal and Poland, and the strong LFL sales increase by Pingo Doce and Biedronka, reflecting the strength of their well defined value propositions. In the food retail sectors of Portugal and Poland, 2008 was marked by significant food inflation up to September, which slowed down significantly in the fourth quarter of the year. SALES GROWTH Total Sales Growth LFL Sales Growth Q1 08 Q2 08 H1 08 Q3 08 9M 08 Q FY Q1 08 Q2 08 H1 08 Q3 08 9M 08 Q FY Pingo Doce 29.7% 30.8% 30.3% 37.4% 32.9% 45.1% 36.3% 14.8% 12.5% 13.6% 10.7% 12.5% 7.8% 11.2% Hypers 2.8% 4.4% 0.9% 2.8% 1.6% 8.5% 3.7% 2.8% 4.4% 0.9% 2.8% 1.6% 8.5% 3.7% Compacts 22.9% 8.3% 15.2% 0.6% 9.6% 41.8% 5.9% 9.1% 0.2% 4.5% 0.1% 2.8% 2.7% 1.0% Recheio 5.0% 2.3% 3.6% 7.6% 5.1% 3.0% 4.5% 5.0% 4.2% 4.6% 6.8% 5.4% 1.7% 4.5% Madeira 14.6% 2.0% 7.9% 3.8% 6.4% 1.6% 4.2% 9.1% 3.0% 6.0% 1.2% 3.1% 2.8% 1.4% Biedronka Euro 53.3% 51.0% 52.0% 55.7% 53.4% 32.8% 47.2% PLN 40.9% 35.3% 37.9% 35.9% 37.2% 37.5% 37.3% 26.5% 22.4% 24.3% 22.5% 23.7% 11.7% 20.2% Manufacturing 3.8% 1.2% 1.1% 8.0% 3.6% 1.2% 3.1% 3.8% 1.2% 1.1% 8.0% 3.6% 1.3% 3.1% Mkt. Repr. and Rest. Serv. 2.1% 3.4% 2.7% 15.4% 3.2% 19.7% 7.8% 0.5% 0.8% 0.2% 3.8% 1.4% 1.8% 1.6% * Q4 Total sales growth considering the conversion of the compacts to Pingo Doce along the quarter The Group s Retail activities in Portugal registered 19.2% growth in store sales, as a result of the 6.0% growth in LFL and the increase in the selling area (+21.7% at the end of the year). The growth in Pingo Doce sales, apart from LFL (+11.2%), also reflects: i) the implementation of the organic growth plan with 17 openings; ii) the adaptation to the Pingo Doce business model of Feira Nova's compact stores, of which five were profoundly remodelled; and iii) the integration of 77 former Plus stores acquired in May 2008, that contributed with Euro131 mn to the sales of the Company. Of these stores, 16 were fully converted to Pingo Doce, with the remaining being lightly remodelled FY Results 5 / 10

6 The assortment reduction in the non food area was reflected in the LFL sales of the Group s hypermarkets and compact stores. In Poland in 2008, Biedronka registered a total growth in sales of 37.3% in local currency as a result of the 20.2% growth in LFL sales and the continued increase in the sales area. In the fourth quarter the slowing of Biedronka s LFL sales growth, which reached 11.7%, reflects the very significant softening of inflation over the last few months of the year. Biedronka opened 154 new stores during the year, to which 205 Plus stores (acquired in October 2008) were added, contributing with Euro103 mn (an average of 75 days of sales) to the sales of the Company. Recheio registered a very solid performance at the LFL sales level over the year (+4.5%), based on dynamic growth of activity in the HoReCa channel, as well as its gaining of market share in the traditional channel. The Company proceeded consolidating its leading position in the market through the LFL but also with the integration, in November, of a new store that had been recently acquired. In Madeira, as of the third quarter, LFL performance reflected the impact of different operators opening stores in a small market. In Manufacturing, sales for the year grew 3.1%, reflecting the adjustment of pricing policies of some categories. Also contributing to this performance was the strong response from the Company's production units in supplying Unilever units in other regions. Unilever Jerónimo Martins continued to be equally attentive in its defence of its market share in key categories. In Marketing, Representation and Restaurants, during the year, sales grew 7.8%, accelerating significantly in the last months of the year, mainly reflecting the entry of three new represented brands during 2008, and the opening of eight new stores. Results Analysis The net result attributable to Jerónimo Martins reached Euro163.2 mn, a growth of 24.3% relative to the previous year, corresponding to earnings per share of Euro0.26. This growth is the result of the strong sales growth, gains in operational efficiency and an ambitious investment plan. EBITDA MARGIN Sales & Services (Tho. Euro) EBITDA Margin Δ % 2008 % total 2007 % total Retail Mainland store sales 2,310,199 1,937, % 6.7% 32.7% 7.0% 38.4% Cash & Carry Mainland 654, , % 6.1% 8.5% 6.0% 10.8% Madeira 128, , % 3.6% 1.0% 4.6% 1.6% Poland Biedronka 3,520,934 2,392, % 6.9% 51.2% 5.9% 40.0% Mkt, Repr. and Rest. Services 81,809 75, % 1.3% 0.2% 2.4% 0.5% Manufacturing 253, , % 14.3% 7.7% 14.1% 9.9% Consolidation Adjustments 55,944 51, % n.a. 1.2% n.a 1.2% JM Consolidated 6,893,737 5,349, % 6.9% 100.0% 6.6% 100.0% 2008 FY Results 6 / 10

7 Consolidated EBITDA reached Euro473.0 mn, a growth of 34.6% compared to the same period of the previous year, as a consequence of the very positive evolution in the majority of the Group s business areas, which enabled the EBITDA margin to increase from 6.6% in 2007, to 6.9% in This performance was especially notable at Biedronka, where EBITDA increased 72.4% to Euro242.1 mn (+60.8% in local currency), leading to an increase in the EBITDA margin of 100b.p., which reached 6.9% of sales, reflecting the benefits in sourcing and costs dilution from the strong LFL sales growth and the scale obtained through an operation which ended the year with 314 more stores than the previous year. Biedronka was responsible for 51.2% of the EBITDA generated by the Group. Food Retail operations in Portugal registered solid operating performance, especially considering the demanding integration processes in which it was involved. EBITDA generated by this business area reached Euro154.5 mn, a growth of 14.4% over the same period of the previous year. The evolution of the EBITDA margin from 7.0% of sales in 2007 to 6.7% in 2008, essentially reflects the impact of the integration of the Plus stores as of 1 st May 2008, which diluted the margin in that business area by nearly 40b.p. during the year. At Recheio, EBITDA grew 5.8%, a margin of 6.1% of sales, as a result of a very efficient business structure, capitalised on the sourcing power of the distribution operations in Portugal, which allowed Recheio to continue strengthening its market share, reaffirming more clearly its leadership of the format in Portugal. In Madeira, the impact on sales of other operators opening stores in a very small market, combined with the Company's decision to increase the competitiveness of its operations in the local market, led to a decrease in the EBITDA margin in this business area from 4.6% in 2007, to 3.6% in In 2008, Unilever Jerónimo Martins adjusted its pricing policies, reflecting the increases registered in 2007 in raw materials fundamental to its activities. Measures to streamline costs were also implemented during the year, contributing to the Company's increased competitiveness. The increase in the EBITDA margin from 14.1% in 2007 to 14.3% in 2008, also reflects the disposal of part of the "Lipton ready to drink tea" business at the beginning of 2008, which represented a reduction in the Company's EBITDA margin of 50 basis points. The consolidated financial results of Euro85.3 mn reflect the increase in average debt due to the organic growth programme and acquisition of the Plus operations in Portugal and Poland, the increase in the average cost of debt by 90b.p. (to 5.7%) in relation to the previous year, as well as the costs of interest rate hedging operations, mainly incurred during the first quarter of Non recurrent results, to the value of Euro 7.9 mn include, amongst others, capital gains relative to the sale of part of the "Lipton ready to drink" business and some real estate in Portugal, as well as provisions for an incentive plan related to employee seniority. Also included in this value are the costs related to the integration of Plus in Portugal and Poland of Euro17.7 mn, and the gains relative to the coverage of the acquisition of Plus in Poland FY Results 7 / 10

8 Appendix Income Statement by Functions INCOME STATEMENT BY FUNCTIONS Eur Thousand Sales and services rendered 6,893,737 5,349,678 Cost of sales 5,595,128 4,331,264 Supplementary income and costs 283, ,340 Gross Profit 1,582, ,224,754 Distribution costs 1,108, ,769 Administrative costs 158, ,277 Excepcional operating losses 12, Operating Profit 302, ,180 Net financial costs 78,728 59,469 Gains/Losses in other investments 2,294 21,824 Profit in associated companies Profit before taxes 222, ,766 Income taxes 46,131 36,857 Profit before minority interests 175, ,909 Minority interests 12,764 19,648 JM Profit 163, ,261 Consolidated Balance Sheet BALANCE SHEET (Eur Thousand) 2008 YE 2007 YE Net Goodwill 734, ,290 Net Fixed Assets 1,967,459 1,750,509 Net Working Capital 1,065, ,967 Others 140, ,639 Invested Capital 1,776,975 1,443,471 Debt 946, ,730 Leasings 101,659 79,426 Accrued interest 21,811 51,447 Marketable sec. & Bank deposits 223, ,337 Net Debt 845, ,266 Minority Interests 281, ,326 Share Capital 629, ,293 Reserves and Retained Earnings 20,525 52,414 Shareholders Funds 931, ,205 Gearing 90.8% 67.0% 2008 FY Results 8 / 10

9 Capex CAPEX (Million Euro) 2008 Weight Distribution Portugal % Distribution Poland % Manufacturing & Others % Total CAPEX % Working Capital WORKING CAPITAL (Eur Thousand) 2008 YE 2007 YE Inventories 385, ,571 in days of sales Customers 70,109 73,863 in days of sales 4 5 Suppliers 1,273,131 1,057,874 in days of sales Working Capital Trade 817, ,441 in days of sales Others 247, ,527 Total Working Capital 1,065, ,967 in days of sales Store Network NUMBER OF STORES Openings Closings Network 07 YE Q1 08 Q2 08 Q3 08 Q FY Q1 08 H1 08 9M FY Pingo Doce* Feira Nova Hypers Compacts Recheio Madeira Biedronka ** 1, ,061 1,090 1,118 1,359 * including the acquisition of 77 ex Plus stores of which 1 was closed before de year end and the conversion of compact stores to Pingo Doce ** including the acquisition of 205 ex Plus stores of which 12 were closed before the year end SALES AREA (sqm) Openings Closings* Network 07 YE Q1 08 Q2 08 Q3 08 Q FY Q1 08 H1 08 9M FY Pingo Doce 183,770 4,298 65,775 10,504 89,302 3, , , , ,396 Feira Nova 172, , , , ,930 82,653 Hypers 82, ,653 82,653 82,653 82,653 Compacts 89, ,386 89,386 87,387 84,277 0 Recheio 109, , , , , ,724 Madeira 14, ,626 14,626 14,626 14,626 Biedronka 536,729 10,696 20,326 17, ,485 20, , , , ,531 * including changes of sales area due to remodellings 2008 FY Results 9 / 10

10 Reconciliation of the Consolidated Net Results with the table Income Statement by Functions The EBIT shown in the table Consolidated Net Results does not include non recurrent operational items which appear itemised in the Statement by Functions in Exceptional Operating Profit/Loss and are included in the Operating Profit shown there. The Financial Results shown in the table Consolidated Net Results include the Profit in Associated Companies as shown in the Income Statement by Functions. The Non Recurrent Items shown in the table Consolidated Net Results include the Exceptional Operating Profit/Loss and the Gains/Losses in Other Investments as shown in the Income Statement by Functions, as well as the gains regarding the coverage of the operation of the Plus acquisition in Poland which are included in the Income Statement by Functions under Net Financial Costs. Definitions Like For Like (LFL) sales: sales made by stores that operated under the same conditions in the two periods. Excludes stores opened or closed in one of the two periods. Sales of stores that underwent profound remodelling are excluded for the remodelling period (store closure). Cash Flow per share: (Net Profit + Depreciation Deferred tax Non recurrent items) / Number of Shares Gearing: Net Debt / Shareholder Funds 2008 FY Results 10 / 10