Jerónimo Martins SGPS, S.A. First Half 2010 Results

Transcription

1 Jerónimo Martins SGPS, S.A. First Half 2010 Results Lisbon, 28 July 2010 Consolidated sales grew 19.6% (+12.7% at a constant exchange rate) and EBITDA posted a solid performance, increasing 20.1%, representing a margin of 6.5% of sales. Cash flow per share, following the good operational performance, increased by 22.2%. Net debt decreased by Euro189.9 mn in comparison with the first half 2009, reaching Euro752.0 mn. Consolidated net results reached Euro101.7 mn, an increase of 39.4% compared to the first half of the previous year. Message from the CEO Pedro Soares dos Santos The Group s brands began 2010 well prepared and earning consumer preference. This strength was reflected in the good sales performance posted in the first six months of the year and certified the strategic focus that all our banners are placing on increasing market share. The positive signs received from the first half results allow us to anticipate a continued solid performance, boosted by a greater sales density for the second semester, that should enable to reach the objectives set by the Group for the full year. (Million Euros) H1 10 H1 09 Δ% (Euro) Δ% (w/o F/X) Net Sales 4, , EBITDA EBITDA Mg (%) Net Results JM w/o non recurrent EPS ( ) Net Debt Gearing (%) FINANCIAL CALENDAR: 9M 10 Results: 28 October 2010 Investor s Day: Gdansk, 9 & 10 November 2010 Investor Relations Office: investor.relations@jeronimo martins.pt Cláudia Falcão Hugo Fernandes claudia.falcao@jeronimo martins.pt hugo.fernandes@jeronimo martins.pt 1

2 \ Key Figures of Performance CONSOLIDATED NET RESULTS Cash flow per share increased 22.2% in the period. (Million Euro) H1 10 H1 09 Δ Q2 10 Q2 09 Δ Net Sales & Services 4, , % 2, , % Total Margin % % 18.9% % % 19.0% Operating Costs % % 18.5% % % 17.7% EBITDA % % 20.1% % % 22.4% Depreciation % % 12.8% % % 14.0% EBIT % % 24.5% % % 26.8% Net Financial Results % % 1.2% % % 5.2% Non Recurrent Items % % n.a % % n.a. EBT % % 37.0% % % 46.3% Taxes % % 46.8% % % 48.9% Net Profit % % 34.5% % % 45.5% Non Controlling Interest % % 29.6% % % 20.4% Net Profit attr. to JM % % 39.4% % % 46.9% EPS ( ) % % Cash Flow per share ( ) % % SALES EVOLUTION (Million Euro) 3, , , % +4.8% +12.7% +7.0% +19.6% H1 09 LFL New Stores H1 10 w/o F/X F/X H1 10 EBITDA EVOLUTION (Million Euro) CONTRIBUTION FROM THE BUSINESS AREAS % +0.6% +14.0% 1.3% +12.3% +7.8% +20.1% H1 09 Retail Mainland Recheio Biedronka Manuf. & Others H1 10 w/o F/X F/X H1 10 2

3 Performance Analysis CONSOLIDATED SALES Sales (Million Euro) LFL Growth (H1 10/H1 09) H1 09 H1 10 Performance reflects strategy for increasing market share. +9.3% 1,180 1, % % 2,221 1, % , % 4, % 3.1% 10.5% 8.2% Retail Portugal store sales Recheio Biedronka Manuf.&Others.JM Cons. Supers Hipers Recheio Biedronka JM Cons. 5.9% Consolidated sales reached Euro4,043.3 mn, a growth of 19.6% compared with the same period last year. This performance was the result of the strong LFL growth of the Group (+8.2%), of the contribution of the new stores and also of the 11.8% appreciation of the zloty against the euro. BIEDRONKA SALES Maintaining strong LFL growth trend. In Poland, Biedronka s LFL sales grew 8.0% in the second quarter and reflected: i) the effect of the stores closure for three days, due to the national mourning for the Smolensk plane accident, as well as ii) a negative calendar comparison due to the fact that Easter in 2010 benefited the first quarter of the year, whereas in 2009, Easter was mostly reflected in the second quarter. In June this year, with the beginning of the good weather having an influence on categories such as drinks, the Polish Company s LFL returned to double digit growth. It should also be noted that food inflation in the country slowed down and in H1 10, the Biedronka basket included a deflation of 0.3%. Biedronka s total sales in H1 10 posted an 18.1% growth in local currency, as a result of the LFL (+10.5%) and the store opening programme, which led to 10.8% sales area increase in H1 10 compared to H1 09. In Portugal, the competitive environment continued to be dynamic, especially concerning communication campaigns. The relative pricing positions remained stable and the sector s growth in sales area was moderate (c.+1.2% since the beginning of the year). It should be noted that, in Portugal, with regard to food inflation, there was still negative inflation compared to the first half of the previous year, which, for the average Pingo Doce basket reached 2.3% for the period under review. 3

4 The business models in Portugal Pingo Doce and Recheio posted a remarkable sales performance in contrast with the macro economic environment. DISTRIBUTION PORTUGAL SALES Strong evolution of volumes. Performance above the sector. Pingo Doce s 8.8% LFL growth reflected a dynamic evolution in volume of c.11%. This performance was the result of the strength of its business model, supported by a strategy focused on increasing market share, which has been helped by communication over the last nine months with an advertising campaign that began at the end of It should be mentioned that for this LFL performance the increase in the consumers visits played the main role. Recheio, which operates in two segments tradition retail and HoReCa which are under a lot of pressure from the macro economic environment, posted a LFL sales growth of 3.1% in the first half (c.4% in volume) helped by a very competitive value proposition and also a remarkable commercial capacity for sales campaigns aimed at its customers. In Madeira, although total sales increased, sales were affected by the closure of two of the Company s main stores on the island in February 2010, due to the storm that devastated the region. These two stores were re opened once the recovery work was concluded at the beginning of June. In Manufacturing, sales in volume continued and accelerated the previous months' positive trend and some categories like olive oil and ice tea performed particularly well. In value terms, in H1 10, the business area s sales posted a reduction of 0.7%, reflecting the price repositioning and promotional campaigns in key categories. In the area of Marketing, Representations and Restaurant Services, the LFL sales performance ( 4.8%) in H1 10 reflected the pressure felt by some categories as a consequence of increased competitiveness in the market. The new represented brands that entered the Company's portfolio in 2009 contributed towards the total sales performance (+5.4%). EBITDA The competitiveness of the business models has permitted a solid operating performance. Retail in Portugal reflects investment in awareness. EBITDA H1 09 H1 10 (Euro Million) % 5.2% 5.5% 5.7% Mg EBITDA Mg 6.7% 7.2% 10.3% 8.8% % Sales 12% 10% 6.5% 6.5% 8% 6% 4% 2% 0 Retail Portugal Recheio Biedronka Manuf. & Others JM Cons. 0% Consolidated EBITDA showed a solid performance in the first six months of the year, reaching Euro263.8 mn, 20.1% higher than the same period in the previous year and a margin of 6.5% of sales. 4

5 In Poland, the EBITDA generated by Biedronka grew 27.6% in local currency and represented 7.2% of sales (6.7% in H1 09). The positive EBITDA evolution is due to the dilution of fixed costs as a result of the increasing scale of operations. It should be noted that in H1 10, EBITDA benefited from the easiest comparison in the year. At Retail in Portugal, the EBITDA margin reached 5.2% of sales. Compared to the same period in the previous year, the evolution is the reflex of two fundamental effects, the most visible being the new communication campaign. This campaign plays an essential role in the strategy for the sustained increase in Pingo Doce's market share, but in the quarters with less sales densities, it gains substantial weight within the Company s cost structure. Secondly, the sales deflation didn t allow costs to be diluted, especially those that depend on volume evolution or that had a positive inflation. Although in the first four months of the year, the negative price evolution in the economy was felt more strongly than expected, in May, it began to slow down and in June, prices evolution were already positive in comparison to the same month the previous year. At Recheio, the good sales response to the commercial campaigns, especially the commercial campaign related to the World Cup, had a positive impact on the EBITDA evolution, which increased by 6.8% in the first six months of 2010, posting a margin of 5.7% of sales (5.5% in H1 09). In Manufacturing, the EBITDA margin reached 14.8% of sales (16,4% in H1 09) and this evolution essentially reflected the communication support given to the main brands in the portfolio as a means of increasing competitiveness and also the price re positioning of certain products. Net profit attributable to Jerónimo Martins grew 39.4%, reaching Euro101.7 mn, +34.1% when excluding non recurrent items. CAPEX AND DEBT Capex reaches Euro185.8 mn in the first half of Net debt reduced by Euro189.9 mn vs H1 09. With regard to the Group s investment programme, the main priority was still the expansion of the number of stores in Poland, and Biedronka absorbed 65.9% of the total of Euro185.8 mn invested in the first six months of the year. The Polish company opened 67 stores during H1 10 and in line with the normal seasonality of the opening programme, the largest number of new stores for the year will be concentrated in H2 10. Biedronka also carried out 47 refurbishments. Pingo Doce opened three stores in the first six months of 2010 and refurbished 12 stores, five of which were former Plus stores and two were conversions of hypermarkets into Pingo Doce stores. In April 2010, Recheio acquired a new store in the centre of the country with 1,020 sqm. and another store in May in the south of the country, with 3,200 sqm. Both locations now reinforce the company's offering to the HoReCa channel. Consolidated net debt reached Euro752.0 mn and gearing 71.1%, maintaining the strengthening of the balance sheet as one of the Group s priorities. 5

6 Outlook Since 2009, the Group has been highly focused on increasing market share, especially through LFL performance, considering it to be the sustainable strategy for this more negative phase of the economic cycle, which will enable it not only to outperform the sector but, mainly, to come through it with a stronger market position. From the results for the first half of the year, with a strong sales performance and solid earnings evolution, we can reinforce our confidence that the banners are entering the second half of the year, which is the most relevant period for Group s operations, well prepared for continuing to strengthen the Group s performance in its sales and earnings evolution. In Poland, the positive performance trend posted in the first six months is expected to be maintained in the second half of the year, although the evolution of the EBITDA margin in the third and fourth quarters of this year is limited by the extremely strong performance posted in the same periods of 2009 and the subsequent tougher comparison. Biedronka will remain focused on its store opening plan and until the end of the year, apart from a another 70 refurbishments, a further 100 new stores are expected to open, absorbing the largest portion of the Group s investment for this year, which is estimated to reach around Euro400 mn. In the second half of the year, volumes in Portugal should continue their robust evolution, however reflecting the more demanding comparison for Q3 and Q4. The greater sales concentration associated with the second half of the year, together with the anticipation of a positive inflation evolution, should make it possible to recover the level of cost dilution, thereby contributing towards the improvement of the EBITDA margin. 6

7 Appendix INCOME STATEMENT BY FUNCTIONS (Million Euro) H1 10 H1 09 Q2 10 Q2 09 Sales and services rendered 4, , , ,775.4 Cost of sales 3, , , ,431.6 Supplementary income and costs Gross Profit Distribution costs Administrative costs Excepcional operating losses Operating Profit Net financial costs Gains/Losses in other investments Profit in associated companies Profit before taxes Income taxes Profit before minority interests Non controlling interests JM Profit SALES BREAKDOWN (Million Euro) H1 10 H1 09 Δ Q2 10 Q2 09 Δ % total % total Pln Euro % total % total Pln Euro Retail Mainland 1, % 1, % 9.7% % % 9.9% Recheio % % 3.5% % % 4.8% Madeira % % 1.8% % % 0.9% Biedronka 2, % 1, % 18.1% 32.0% 1, % % 15.3% 27.8% Manufacturing % % 0.7% % % 0.1% Mkt. Repr. and Rest. Serv % % 5.4% % % 6.6% Consolidation Adjustments % % 11.5% % % 14.3% Total JM 4, % 3, % 19.6% 2, % 1, % 17.6% p.m. Retail Mainland 1, , % % (store sales) SALES GROWTH Total Sales Growth LFL Sales Growth Q1 10 Q2 10 H1 10 Q1 10 Q2 10 H1 10 Retail Portugal 9.4% 9.3% 9.3% 7.9% 6.8% 7.3% Supermarkets 13.0% 11.1% 12.0% 9.7% 7.9% 8.8% Hypermarkets 14.2% 5.0% 9.6% 7.3% * 4,5% * 5,9% * Recheio 2.1% 4.8% 3.5% 2.2% 4.0% 3.1% Madeira 4.8% 0.9% 1.8% 16.4% 16.3% 16.4% Biedronka Euro 36.7% 27.8% 32.0% PLN 21.2% 15.3% 18.1% 13.3% 8.0% 10.5% Manufacturing 1.4% 0.1% 0.7% 1.4% 0.1% 0.7% Mkt. Repr. and Rest. Serv. 4.0% 6.6% 5.4% 2.0% 7.2% 4.8% * excluding two store under revamping 7

8 STORE NETWORK Number of Stores Openings Closings * Network 09 YE Q1 10 Q2 10 H1 10 H1 10 H1 09 Retail Portugal Supermarkets Hypermarkets Recheio Madeira Biedronka 1, ,527 1,408 Sales Area (sqm) Openings Closings * Network 09 YE Q1 10 Q2 10 H1 10 H1 10 H1 09 Retail Portugal 434,744 1,605 1,756 4, , ,850 Supermarkets 352,276 1,605 1, , ,382 Hypermarkets 82, ,187 78,281 82,468 Recheio 114, , , ,724 Madeira 14, ,253 14,626 Biedronka 814,493 26,951 13, , ,353 * including changes of sales area due to remodellings EBITDA MARGIN BREAKDOWN H1 10 % total H1 09 % total Retail Mainland (store sales) 5,2% 25,6% 5,9% 31,8% Recheio 5,7% 7,2% 5,5% 8,1% Madeira 3,7% 0,9% 4,3% 1,2% Biedronka 7,2% 60,6% 6,7% 51,0% Manufacturing 14,8% 6,6% 16,4% 8,8% Mkt, Repr. and Rest. Services 0,1% 0,0% 1,8% 0,3% JM Consolidated 6,5% 100,0% 6,5% 100,0% 8

9 BALANCE SHEET (Million Euro) H YE H1 09 Net Goodwill Net Fixed Assets 2, , ,942.5 Net Working Capital 1, , Others Invested Capital 1, , ,848.4 Financial Debt Leasings Accrued interest Marketable sec. & Bank deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1, , Gearing 71.1% 64.9% 103.9% WORKING CAPITAL (Million Euro) H YE H1 09 Inventories in days of sales Customers in days of sales Suppliers 1, , ,150.5 in days of sales Working Capital Trade in days of sales Others Total Working Capital 1, , in days of sales CAPEX (Million Euro) H1 10 Weight Distribution Portugal % Distribution Poland % Manufacturing & Others % Total CAPEX % 9

10 NET DEBT (Million Euro) H1 10 Long Term Debt 655,8 as % of Financial Debt 77,3% Maturity 2,8 Bond Loans 375,0 Private Placement 80,5 Fair Value Adjustment 7,4 Commercial Paper 70,0 Other Debt 122,9 Short Term Debt 192,3 as % of Financial Debt 22,7% Financial Debt 848,1 Maturity 2,4 Leasings 82,3 Accrued Interest & Hedging 13,0 Marketable Securities & Bank Deposits 191,4 Net Debt 752,0 % Debt in Euros (Financial Debt + Leasings) 86,3% % Debt in Zlotys (Financial Debt + Leasings) 13,7% 10

11 Reconciliation of the Consolidated Results with the table Income Statement by Functions The EBIT shown in the table Consolidated 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 Results include the Profit in Associated Companies as shown in the Income Statement by Functions. The non recurrent Items shown in the table Consolidated Results include the Exceptional Operating Profit/Loss and the Gains/Losses in Other Investments as shown in the "Income Statement by Functions". 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 11