Jerónimo Martins SGPS, S.A. First Half 2011 Results

Transcription

1 Jerónimo Martins SGPS, S.A. First Half 2011 Results The excellent performance in the first half confirms our best expectations regarding the growth of Biedronka in Poland Lisbon, 27 July 2011 Jerónimo Martins net profit increased 41.4%, a particularly remarkable evolution when considering the unstable economic situation seen in Europe and in the World. The Group's performance reflects Biedronka's remarkable evolution which LFL growth (+16.0% in H1, +20.0% in Q2) and scale benefits drove the Polish Company's EBITDA to grow by 42.2% in the first six months of the year. Consolidated sales, in H1 11, grew 17.5% to Euro4,752 mn and EBITDA increased by 24.4% to Euro311 mn, reaching 6.5% of sales (6.2% in H1 10). The Group's net debt was reduced by Euro248 mn compared to the same period of the previous year. Gearing decreased to 39.5% (71.1% in H1 10). Message from the CEO Pedro Soares dos Santos The excellent performance in the first half confirms our best expectations regarding the growth of Biedronka in Poland. Also our formats in Portugal, despite a difficult macroeconomic environment, proved to be highly resilient, and delivered sales and EBITDA growth, positively contributing to the Group's performance. The performance registered in the first semester reinforces our view that Biedronka will keep driving the strong growth of the Group in 2011, and contributing to the strengthening of our cash flow generation and balance sheet. We will continue to explore new ways to grow while maintaining under control the risk profile of our Group. (Million Euros) H1 11 H1 10 Δ% (Euro) FINANCIAL CALENDAR: 9M 2011 Results: 27 October 2011 Investor Relations: investor.relations@jeronimo martins.pt Cláudia Falcão Hugo Fernandes Δ% (w/o F/X) Consolidated Sales 4, , EBITDA Mg EBITDA (%) Net Profit JM W/o non recurrent EPS ( ) Cash Flow per Share ( ) Net Debt Gearing (%) claudia.falcao@jeronimo martins.pt hugo.fernandes@jeronimo martins.pt 1

2 Key Performance Figures NET CONSOLIDATED PROFIT (Million Euro) H1 11 H1 10 Δ Q2 11 Q2 10 Δ Consolidated Sales 4,752 4, % 2,510 2, % Total Margin 1, % % 15.4% % % 16.7% Operating Costs % % 12.0% % % 13.8% EBITDA % % 24.4% % % 23.9% Depreciation % % 12.9% % % 12.1% EBIT % % 31.1% % % 29.8% Net Financial Results % % 29.0% 7 0.3% % 37.1% Non Recurrent Items 6 0.1% 1 0.0% n.a % 0 0.0% n.a. EBT % % 37.6% % % 37.7% Taxes % % 35.9% % % 28.1% Net Profit % % 38.1% % % 40.6% Non Controlling Interest 2 0.0% 4 0.1% 47.0% 0 0.0% 3 0.1% 96.8% Net Profit attr. to JM % % 41.4% % % 47.0% EPS ( ) % % Cash Flow per share ( ) % % Note: EBITDA margin reclassified detail in Appendix note nr. 3 SALES EVOLUTION Sales (Million Euro) +28.1% +17.5% 4,752 4,043 LFL Growth (H1 11/H1 10) 16.0% 2,845 2, % 9.0% 1,2911, % +6.0% % 3.0% 2.0% Biedronka Retail P ortugal (store sales) Recheio Manuf.&Others JM Consolidated Biedronka Supers Hypers Recheio JM Cons. EBITDA EVOLUTION EBITDA (Million Euro) +42.2% % % % -35.5% Biedronka Retail Portugal (store sales) Recheio M anuf.&others JM Consolidated Note: Group and Biedronka EBITDA margin reclassified detail in Appendix Note nr.3 2

3 Performance Analysis SALES 4,752 4, % EBITDA % NET RESULTS % DEBT AND GEARING % 39% Consolidated sales reached Euro4,751.5 mn, +17.5% than in the first six months of the previous year, as a result of the LFL performance of +9.0% of the Group's sales and of the +7.9% contribution from the new stores. Towards this growth in the Group's top line, Biedronka made an essential contribution with a sales growth of 26.6% (in local currency in H1 11), as a result of the strong LFL (+16.0% in H1 11) and of the increase of 14.3% in sales area compared to H1 10. This LFL sales performance was helped by an increase of c.6% in the average basket together with a growth of c.10% in the number of visits. Apart from the Company's competitiveness, the significant growth in Biedronka's LFL sales in Q2 (+20.0%) was also the result of a more favourable comparison with Q1 10 (calendar effect of Easter's, Smolensk accident and bad weather at the beginning of Summer 2010) together with a slight acceleration in food inflation which, for the basket, reached 4.6% in Q2 11 (+4.4% in H1 11). At Pingo Doce, sales grew 4.3% in H1 11. The trading down trend continued in the market and in the case of Pingo Doce there was also an increase in the penetration of private brand in the total sales. These effects mitigated the visibility of volumes growth and took LFL sales in value to reach +0.9% in H1 11 ( 0.4% excluding the sale of fuel). It should be mentioned that, on a comparative basis, the number of visits continued to progress positively (+2.5% in H1 11). At Recheio, sales grew 5.2% to Euro353.6 mn as a result of the LFL growth and of 2 new stores compared to the same period of the previous year. Recheio's strong competitive position continued to enable the Company to post a healthy LFL growth which reached +2.0% in the first half (+3.3% in Q2) driven by the increase in the number of clients (c.+2%); a remarkable performance when taking into consideration the negative evolution recorded in the HoReCa and Traditional Retail markets. In Madeira, sales in H1 11 recorded a strong growth of 20.3%, influenced by the closure of two of the Company's stores in February 2010, due to a storm, which were only re opened in June In Manufacturing, the Q2 sales performance ( 0.4%), which is an improvement on the trend seen in Q1, reflected the positive impact of Easter and the stabilization of stocks in the wholesale market, which affected sales in Q1 of this year. It is worth mentioning the strong olive oil sales driven by stronger exports and also the ice cream category, which began the Summer season in a positive way. In the area of Marketing, Representations and Restaurant Services, sales decreased by 4.2%, reflecting the impact of the economic environment on some of the categories. Consolidated EBITDA posted a 24.4% growth, reaching 6.5% of sales (6.2% in the same period of the previous year). In Poland, in H1 11, EBITDA grew 42.2% to Euro207.9 mn. The evolution of Biedronka's margin, which reached 7.3% of sales (6.6% in H1 11), maintained the Q1 11 trend, supported by the increasing benefits of scale recorded throughout the previous year and which, in the first two quarters of this year, had a more favourable comparison, but also by the strong LFL posted in Q2 11. In Pingo Doce, EBITDA was up by 4.6%, the respective margin remaining at 5.4% of sales. Two aspects should be mentioned when analysing Pingo Doce's margin, the stability of which, compared to the previous year, reflects an increase in the Company's productivity as i) the growth 3

4 in costs remained in line with the evolution of sales in value, although the volumes sold by Pingo Doce increased by 6% and ii) the increase in fuel sales in H1 11 had the effect of diluting the EBITDA margin. Recheio's strong competitive position enabled the Company to post a growth of 8.3% of the EBITDA generated which margin went from 5.7% in H1 10 to 5.8% in H1 11, driven by the good sales performance. In Manufacturing, there was a reduction in margin in H1 11, following the Company s decision of maintaining its competitiveness in a situation of rising costs of several raw materials which affected some important products. The Group's financial expenses reached Euro15.4 mn (submitted to reclassification as detailed in appendix, note nr.3), a reduction of 29.0% which reflected the significant decrease in consolidated debt and the maintenance of the average cost of debt. Net profit attributable to Jerónimo Martins grew 41.4%, reaching Euro143.8 mn (+43.2% when excluding non recurring items). With regard to the Group's investment programme, the first six months of the year represented a total of Euro127.2 mn. The expansion of the store network in Poland remained a main priority and Biedronka carried out 63 openings together with 24 refurbishments, the Company's investment plan having reached c.70% of total Group s Capex. Pingo Doce carried out 4 openings, 2 closures and also advanced with 3 refurbishments during the first half. In June this year, Recheio opened a food service platform in the Algarve, thereby reinforcing its commercial proposition in a part of the country that is essential for the HoReCa market, and in the same month, in the Azores, a franchised store was opened under the Recheio banner. Consolidated net debt was Euro504.3 mn, a reduction of Euro247.8 mn compared to H1 10, and gearing reduced to 39.5% (71.1% in H1 10). Outlook for 2011 It is expected that 2011 will be another year of solid growth for the Group. This growth will be driven by the leadership of Biedronka along with the scale benefits showed at the EBITDA margin. Although, Biedronka LFL and EBITDA will keep strong in the second half of the year, it should be noted that the performance of the Company faces a more demanding comparison against the prior year. For 2011 Biedronka is forecasting an increase, in net terms, of its store network by around 200 locations, absorbing approximately 75% of the Group's total investments planned for the year, which is estimated at c.euro450 mn. In Portugal, the Group believes that Pingo Doce and Recheio will record growth in volumes despite the structural changes in consumer patterns, which are showing a trend of a reduction in the average purchase. Gains in productivity should soften this trend and the EBITDA margin is expected to remain stable. In 2011, we expect that the Group's sales will continue their double digit growth and that EBITDA will grow above sales. The trend for strengthening the Group's gearing should be maintained. 4

5 Other Information The judicial claims presented by the Group taxed under Group's Special Tax Regime (RETGS), lead by JMR Gestão de Empresas de Retalho, SGPS, S.A., against the assessments made by the Portuguese tax authorities concerning Corporate Income Tax (CIT), of the tax years 1993, 2003 and 2004, amounting to, approximately, Euro14.7 mn, Euro4.8 mn and Euro11.2 mn, respectively (as already reported by the Group in the past), were ruled in favour of the Portuguese tax authorities. Jerónimo Martins still believing the reason is on its side and considering that those decisions suffer from judgment errors and several other flaws, with the support of its lawyers and tax advisors, has and will appeal them. Hence, no changes have been taken in the Group s financial statements. Meanwhile, Feira Nova Hipermercados, S.A. (merged into Pingo Doce Distribuição Alimentar, S.A.) was notified by the Lisbon Tax Court that the judicial claim filed against the Portuguese tax authorities assessment, regarding Value Added Tax (VAT), for the tax year 2002, amounting to, approximately, Euro1.2 mn, was ruled in favour of the company. Since the tax authorities did not appeal, this Court decision is final. 5

6 Appendix INCOME STATEMENT BY FUNCTIONS (Million Euro) H1 11 H1 10 Q2 11 Q2 10 Sales and services rendered 4,752 4,043 2,510 2,088 Cost of sales 3,911 3,279 2,065 1,691 Supplementary income and costs Gross Profit 1, 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 non controlling interests Non controlling interests JM Profit SALES BREAKDOWN (Million Euro) H1 11 H1 10 Δ % Q2 11 Q2 10 Δ % % total % total Pln Euro % total % total Pln Euro Biedronka 2, % 2, % 26.6% 28.1% 1, % 1, % 31.4% 33.1% Retail Mainland 1, % 1, % 5.6% % % 5.3% Recheio % % 5.2% % % 6.5% Madeira % % 20.3% % % 24.4% Manufacturing % % 2.3% % % 0.4% Mkt. Repr. and Rest. Serv % % 4.2% % % 3.8% Consolidation Adjustments % % 14.3% % % 13.8% Total JM 4, % 4, % 17.5% 2, % 2, % 20.2% p.m. Retail Mainland 1,346 1, % % (store sales) SALES GROWTH Total Sales Growth LFL Sales Growth Q1 11 Q2 11 H1 11 Q1 11 Q2 11 H1 11 Biedronka Euro 22.8% 33.1% 28.1% PLN 21.7% 31.4% 26.6% 11.7% 20.0% 16.0% Retail Portugal 4.6% 4.0% 4.3% 1.8% * 0.1% * 0.9% * Supermarkets 5.6% 4.1% 4.8% 1.7% 0.2% 0.7% Hypermarkets 4.2% 3.5% 0.2% 3.2% 2.9% 3.0% Recheio 3.7% 6.4% 5.2% 0.4% 3.3% 2.0% Madeira 15.9% 24.4% 20.3% 3.7% 5.3% 4.5% Manufacturing 4.6% 0.4% 2.3% 4.6% 0.4% 2.3% Mkt. Repr. and Rest. Serv. 4.8% 3.8% 4.2% 7.9% 7.3% 7.6% * Ex petrol LFL 0.1% 0.9% 0.4% 6

7 EBITDA MARGIN BREAKDOWN H1 11 % total H1 10 % total Biedronka 7.3% 66.8% 6.6% 58.5% Retail Mainland (store sales) 5.4% 23.4% 5.4% 27.8% Recheio 5.8% 6.6% 5.7% 7.6% Madeira 3.1% 0.7% 3.7% 0.9% Manufaturing 12.0% 4.4% 14.8% 7.0% Mkt, Repr. and Rest. Services 0.3% 0.0% 0.1% 0.0% JM Consolidated 6.5% 100% 6.2% 100% STORE NETWORK Number of Stores 2010 Openings Closings Network Q1 11 Q2 11 H1 11 H1 11 H1 10 Biedronka 1, ,707 1,527 Retail Portugal Supermarkets Hypermarkets Recheio Madeira Sales Area (sqm) 2010 Openings Closings * Network Q1 11 Q2 11 H1 11 H1 11 H1 10 Biedronka 938,218 11,989 29,017 1, , ,400 Retail Portugal 437, ,488 3, , ,113 Supermarkets 359, , , ,832 Hypermarkets 78, ,513 75,768 78,281 Recheio 123, , , ,901 Madeira 14, ,253 14,253 * including changes of sales area due to remodellings BALANCE SHEET (Million Euro) H H1 10 Net Goodwill Net Fixed Assets 2,319 2,309 2,179 Net Working Capital 1,350 1,425 1,204 Others Invested Capital 1,782 1,709 1,809 Financial Debt Leasings Accrued interest Marketable sec. & Bank deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1,278 1,132 1,057 Gearing 39.5% 51.0% 71.1% 7

8 CAPEX (Million Euro) H1 11 Weight Distribution Poland 87 68% Distribution Portugal 38 30% Manufacturing & Others 3 2% Total CAPEX % WORKING CAPITAL (Million Euro) H H1 10 Inventories in days of sales Customers in days of sales Suppliers 1,539 1,527 1,329 in days of sales Working Capital Trade 1,018 1, in days of sales Others Total Working Capital 1,350 1,425 1,204 in days of sales DEBT DETAIL (Million Euro) H1 11 Long Term Debt 517 as % of Financial Debt 75% Maturity 1.8 Bond Loans 340 Private Placement 81 Fair Value Adjustment 7 Other Debt 104 Short Term Debt 171 as % of Financial Debt 25% Financial Debt 688 Maturity 1.6 Leasings 54 Accrued Interest & Hedging 17 Marketable Securities & Bank Deposits 254 Net Debt 504 % Debt in Euros (Financial Debt + Leasings) 88% % Debt in Zlotys (Financial Debt + Leasings) 12% 8

9 NOTES 1. 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". 2. EBITDA Retail Margin in Portugal Reclassification of Fees to Shareholders Since 2010FY results disclosure, Retail Portugal's EBITDA margin was subject to reclassification, having excluded from the EBITDA, the costs with services from Shareholders. This allows a more accurate analysis of business area performance aligning the information provided to the market with that used internally for assessing the business area's performance. The part of these costs not eliminated in the consolidation process is now included in the Group's Holdings and continue to affect the consolidated EBITDA. 3. Reclassification of expenses with payments to suppliers Throughout its fifteen years in Poland, Biedronka has privileged the establishment of long term relationships with its suppliers. Contracts for these relationships cover prices, volumes, packages and payment terms, among others. Biedronka has agreed with the majority of its suppliers, to extend payment terms, bearing, in compensation, financial expenses, thereby obtaining greater flexibility in the management of its working capital. Respecting their accounting nature, these financial expenses have been, until now, classified in the Financial Results line. However, this value has been gaining relevance with the growth of Biedronka's operations and the company sees this flow as part of its cash flow generation and dependent on the evolution of its activity and, as such, has decided to classify this amount in the operating results included in the total margin. On a consolidated level, the Group's Financial Results will now essentially reflect the expenses incurred with purely financial debt, thereby also improving the quality of the reading of the financial report. For comparative purposes, for Biedronka's EBITDA and for Consolidated accounts (Total Margin, EBITDA, EBITDA margin and Financial Results), the abovementioned restatement is shown for the periods Q1 10, Q2 10, H1 10, Q3 10, 9M10, Q4 10, 2010FY, Q1 11, Q2 11 and H

10 EBITDA MARGIN Biedronka Q1 Q2 H1 Q1 Q2 H1 Q3 9M Q4 FY EBITDA Mg Restated 6.6% 8.0% 7.3% 5.8% 7.3% 6.6% 8.2% 7.2% 8.5% 7.6% EBITDA Mg Released 7.1% n.a. n.a. 6.5% 7.9% 7.3% 8.8% 7.8% 9.1% 8.1% EBITDA MARGIN JM Consolidated Q1 Q2 H1 Q1 Q2 H1 Q3 9M Q4 FY Total Margin Restated , , ,014 % Sales 22.3% 22.5% 22.4% 22.5% 23.1% 22.8% 23.6% 23.1% 23.3% 23.2% Total Margin Released 508 n.a. n.a , ,042 % Sales 22.7% n.a. n.a. 22.9% 23.5% 23.2% 23.9% 23.4% 23.7% 23.5% EBITDA Restated Mg EBITDA 6.2% 6.8% 6.5% 5.7% 6.6% 6.2% 8.3% 7.0% 7.8% 7.2% EBITDA Released 147 n.a. n.a Mg EBITDA 6.5% n.a. n.a. 6.0% 7.0% 6.5% 8.6% 7.3% 8.1% 7.5% Financial Results Restated Financial Results Released 16 n.a. n.a 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 10