Jerónimo Martins SGPS, S.A. Nine Months 2013 Results

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1 Jerónimo Martins SGPS, S.A. Nine Months 2013 In the third quarter, we reinforced our leadership positions both in Poland and Portugal, gaining market share and posting strong like-for-like growth in all businesses. At the same time, we are investing in our start-up businesses - Hebe and Ara - that are progressing well. Consolidated Sales increased by 11.5% to 8.7bn in the nine months Like-for-like growth of 4.8% in Biedronka and 3.6% in Pingo Doce (4.0% and 5.0%, respectively in the third quarter) Group EBITDA grew 7.8% to 573m Net Profit attributable to Jerónimo Martins increased to 281m Excluding investments in our new businesses, Net Profit grew by 11.8% Message from the CEO - Pedro Soares dos Santos (Million Euro) 9M 13 9M 12 Δ% (Euro) Δ% (w/o F/X) Consolidated Sales 8, , EBITDA EBITDA Mg (%) Net Profit JM w/o non-recurrent EPS ( ) Net Debt Gearing (%) FINANCIAL CALENDAR Investor Day: 28 November 2013 Investor Relations Office investor.relations@jeronimo-martins.pt Cláudia Falcão Hugo Fernandes claudia.falcao@jeronimo-martins.pt hugo.fernandes@jeronimo-martins.pt Jerónimo Martins, SGPS, S.A. Public Company Head office: Largo Monterroio Mascarenhas, nº 1, 9º andar Lisboa Share Capital: Euro 629,293, Registered at the C.R.C. of Lisbon and Tax Number:

2 Key Performance Figures NET CONSOLIDATED PROFIT SALES EVOLUTION EBITDA EVOLUTION mo 2

3 Sales & Profit Analysis In the first nine months of the year, consolidated sales grew strongly, reaching 8,699 million (+11.5%), with a LFL growth of 3.8% in an environment of increased competitiveness. In Poland, the food retail market increased 2.9% in the nine months, with a growth of 4.7% in Q3 including food inflation of 2.5% in Q3 and 2.1% in the nine months. Since the end of the second quarter the food retail market has become much more competitive with a high level of promotions throughout the quarter. For the consumer, in a weaker economic environment, price and convenience remain the key factors to choose where to shop, with attractive promotions now becoming more relevant to consumers. As such, Biedronka decided to complement its Everyday Low Price position with strong promotions in order to further reinforce its price leadership. Biedronka s strategic focus on sustainable and profitable growth remains unchanged and the Company is well positioned to continue to outperform in the market, based on its scale, price leadership, proximity and quality. In the third quarter total sales of the Company increased by 15.5% in local currency (+12.5% in Euro), and by 15.9% in the nine months. In the third quarter Biedronka achieved a LFL growth of 4.0%, with basket inflation slowing to 0.8% mainly due to the investment in promotions. Both basket and number of visits contributed to this LFL performance, with the number of visits increasing by 2.8%. In the period, Biedronka s market share has increased. Expansion remains a priority for us in Poland and Biedronka has opened 128 new stores in the 9 months, and remains on track to open 290 new stores by the end of the year. In September, another important step in support of our growth strategy was taken with the inauguration of two new distribution centres, and Biedronka now operates through 12 logistics regions in the country. In Portugal the environment remains tough although there are some signs of stabilization in the food retail market. Food retail sales in the country increased by 1.9% in Q3, +1.0% in the nine months, with food inflation of around 2.4% in both periods. Pingo Doce has maintained the strong and effective promotional activity initiated last year. The Company achieved a very strong LFL sales growth of 5.0% (excluding fuel) in the quarter, with total sales increasing 4.1%. In the nine months LFL growth was 3.6% (excluding fuel) and total sales grew by 3.8% with Pingo Doce increasing its market share. Recheio s sales increased by 3.6% on the prior year, with a LFL sales growth of 2.1% in the third quarter. Both Traditional Retail and HoReCa markets are still declining but Recheio has outperformed in both segments and gained market share. 3

4 A brief update on our two start-up businesses. In Colombia Ara opened 14 stores between July and September and ended the quarter with 28 stores. We are very enthusiastic about the market s potential and the Colombian consumers response to our propositions. In Poland, Hebe added 9 new stores to its network during the quarter ending the period with a total of 86 stores including pharmacies. Our start-up businesses are developing well and performing in line with our expectations. In the nine months the Group EBITDA grew by 41million (+7.8%) to 573 million and the EBITDA margin was 6.6%. The EBITDA of the established businesses grew 11.4%, in line with sales. The start-up losses related to these new businesses impacted the Group s EBITDA margin by 20bps in the period. Biedronka s EBITDA increased 13.3% to 451 million in the nine months with a margin of 8.0%, 20 bps down on the previous year due to higher investments in price since July and the set-up costs related to the two new logistics regions opened in September. The Distribution companies in Portugal delivered an EBITDA of 168 million in the nine months, corresponding to a 30 bps increase in margin versus the same period of 2012, mainly driven by the strong sales performance of Pingo Doce and the cost rationalization programme. Financial costs for the Group were 30 million, the increase on the same period last year mainly due to the higher net debt after the extraordinary dividend paid at the end of Net Profit attributable to Jerónimo Martins grew by 3.3% to 281 million in the 9 months, with the established businesses net earnings growing by 11.8%. In the first nine months of the year, the Group Capex reached 376 million, of which 291 million were invested in Biedronka. The Cash Flow from Operations increased by 28% to 203 million, benefiting from the solid EBITDA growth and the working capital improvement in the third quarter. Net consolidated Debt decreased to 308 million as a result of the strong cash flow and Gearing was 19.5% at the end of September

5 Outlook for 2013 In Poland and Portugal we remain committed to long-term profitable growth through strong leadership positions. In Biedronka the reinforcement of the commercial strategy together with the continued focus on fresh and perishables will support robust LFL growth versus the market, in addition to the strong growth coming from the execution of the expansion plan. Pingo Doce will continue to focus on market share and efficiency gains in order to gradually improve profitability. For the full year we expect the consolidated sales to grow double-digit (in constant currency). The Group s EBITDA will increase slightly below sales (EBITDA margin around 20-30bps below 2012) due to higher price investment in Poland and to the impact of the investments in the start-up businesses. The EBITDA and Net Earnings for the established businesses are expected to grow strongly in the year. Biedronka will fully execute its expansion plan for the year with 290 stores opened in In Portugal a new distribution centre will be completed by the end of the year, in line with our expectations. In Colombia, Ara will end the year with stores. Capex for 2013 is planned to be between 600 million and 650 million, of which 70% is expected to be invested in Biedronka and around 50m in Colombia. Disclaimer Statements in this release that are forward-looking statements are based on current expectations of future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties relate to factors that are beyond Jerónimo Martins ability to control or estimate precisely, such as general economic conditions, credit markets, foreign exchange fluctuations and regulatory developments. Except as required by any applicable law or regulation, Jerónimo Martins assumes no obligation to update the information contained in this release or to notify a reader in the event that any matter stated herein changes or becomes inaccurate. 5

6 Appendix INCOME STATEMENT BY FUNCTIONS SALES BREAKDOWN SALES GROWTH 6

7 STORE NETWORK EBITDA MARGIN BREAKDOWN BALANCE SHEET CASH FLOW 7

8 FINANCIAL COSTS BREAKDOWN NOTES 1. Working Capital Adjustment An adjustment was made in Working Capital eliminating the value of long-term assets that are not allocated to the operating units. In the Balance Sheet, these values are included in the line Others, keeping unchanged the Invested Capital value. The calculation of profitability ratios and the Operational Invested Capital (OIC) also reflects this adjustment. 2. Change in Accounting Policies and Basis for Presentation New standards, amendments and interpretations adopted by the Group in 2013 In 2012 the European Commission adopted several changes to International Accounting Standards issued by the IASB and Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).. In the new standard IFRS 11 Joint arrangements, joint ventures are accounted for using the equity method, in accordance with IAS 28. The existing policy choice of proportional consolidation for jointly controlled entities has been eliminated. As consequence, the Group has adopted this standard and consolidate its interest in Unilever Jerónimo Martins and Gallo Worldwide using the equity method from 1 January, If the Group had adopted this revised standard in the preparation of the consolidated financial statements for the year 2012, the financial statements would be as presented below: Net Consolidated Profit (Million Euro) Q1 12 Q2 12 H1 12 Q3 12 9M 12 Q Consolidated Sales 2,398 2,614 5,011 2,788 7,800 2,883 10,683 Total Margin , , ,346 Operating Costs , ,606 EBITDA Depreciation EBIT Financial Profit in Associated Companies Non-Recurrent Items EBT Taxes Net Profit Non Controlling Interests Net Profit attributable to JM EPS ( )

9 Balance Sheet (Million Euro) Q1 12 H1 12 9M Net Goodwill Net Fixed Assets 2,498 2,520 2,637 2,711 Total Working Capital * -1,698-1,547-1,612-1,615 Others * Invested Capital 1,546 1,735 1,791 1,823 Total Borrowings Leasings Accrued Interest Marketable Sec. & Bank Deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1,364 1,424 1,574 1,502 Gearing 13.3% 21.8% 13.8% 21.4% * Restated values values - see - see note details 1. in Appendix. Income Statement by Functions (Million Euro) Q1 12 Q2 12 H1 12 Q3 12 9M 12 Q Sales and services rendered 2,398 2,614 5,011 2,788 7,800 2,883 10,683 Cost of sales -1,864-2,054-3,918-2,171-6,089-2,248-8,337 Gross Profit , , ,346 Distribution costs , ,643 Administrative costs Exceptional Operating Profit/Loss Operating Profit Net financial costs Gains/Losses in other investments Profit in associated companies Profit before taxes Income taxes Profit before Non controlling interests Non controlling interests Net Profit attributable to JM 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). Gearing: Net Debt / Shareholder Funds 9