Jerónimo Martins SGPS, S.A. First Half 2014 Results

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1 Jerónimo Martins SGPS, S.A. First Half 2014 In the first six months of the year, Group sales increased by 7% reaching 6bn in a very challenging deflationary environment Biedronka sales grew 9.1% in local currency (+12.3% in Q2) Pingo Doce continued to perform strongly with sales (ex-fuel) growing 3.1% (+3.5% in Q2) Market shares increased in both Poland and Portugal Ara in Colombia progressed well with encouraging results in sales and clients per store and we continued to invest in our new businesses Operating profits were also impacted by stronger than expected food deflation Lisbon, 29 July 2014 Message from the Chairman and CEO Pedro Soares dos Santos (Million Euro) H1 14 H1 13 Δ% (Euro) Δ% (w/o F/X) Consolidated Sales 6, , The performance of Biedronka in the first half of the year was below my expectations and impacted the Group s profits. EBITDA EBITDA Mg (%) Net Profit JM w/o non-recurrent We have taken steps within the Company in order to regain like-for-like sales momentum and take full advantage of our present strong market leadership position for the future. Although these actions will impact the current year s earnings, I remain fully confident of the competitive strength and growth potential of Biedronka. In Portugal, Pingo Doce had a good performance in the half year, growing well above the market. I am particularly satisfied with the recent development of Ara, our Colombian operation. EPS ( ) Net Debt Gearing (%) FINANCIAL CALENDAR 9M 2014 : 29 October 2014 Biedronka s Day: 13 November 2014 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: Rua Actor António Silva, n. º7, Lisbon Share Capital: Euro 629,293, Registered at the C.R.C. of Lisbon and Tax Number:

2 Key Performance Figures NET CONSOLIDATED PROFIT (Million Euro) Net Sales and Services H1 14 6,052 H1 13 5, % Q2 14 3,139 Q2 13 2, % Total Margin 1, % 1, % 6.6% % % 8.4% Operating Costs % % 10.2% % % 11.9% EBITDA % % -2.3% % % 0.3% Depreciation % % 10.7% % % 10.8% EBIT % % -9.3% % % -5.1% Financial % % -12.9% % % -7.0% Profit in Associated Companies 8 0.1% 6 0.1% 43.1% 5 0.2% 3 0.1% 56.8% Non-Recurrent Items 0 0.0% 1 0.0% n.a % 2 0.1% n.a. EBT % % -8.1% % % -4.6% Taxes % % -0.6% % % 0.0% Net Profit % % -10.1% % % -5.9% Non Controlling Interests % % n.a % % n.a. Net Profit attributable to JM % % -12.4% % % -8.4% EPS ( ) % % SALES EVOLUTION EBITDA EVOLUTION 2

3 Sales & Profit Analysis Consolidated sales reached 6,052m, a growth of 7.2% on the first half of the previous year. In both Poland and Portugal there has been a significant decline in food prices during the first six months of the year. Poland registered a food inflation of 0.5% and in Portugal deflation was -1.0%. In the second quarter food deflation was -0.5% and -1.9% respectively. In Poland, the food retail environment has remained highly competitive with strong promotional activities by all main players in the market. In the six months Biedronka LFL was -1.2%, impacted by negative basket inflation. In the second quarter of the year, LFL sales grew by 0.3%, with the positive calendar Easter effect being offset by deflation in the basket. Biedronka s total sales in H1 grew by 9.1% to 4,029m (+12.3% in Q2) and the Company continued to gain market share, reinforcing its leading position in the Polish market. The stores expansion advanced as planned and 92 new stores were opened in the six months. In mid June we started to roll-out the acceptance of card payments in the stores. At the end of June 1,400 stores were accepting this payment method. In Portugal, the food retail sector remained strongly promotion-driven and Pingo Doce continued to offer immediate savings through weekly promotional campaigns. Despite a strong increase of deflation, LFL sales (excluding fuel) increased by 2.7% in Q2 and by +2.4% in H1. Pingo Doce reinforced its market share with sales growing by 2.6% (excluding fuel, sales increased by 3.1%) to reach 1,556m. Three new stores were opened in the first six months. Recheio's sales were in line with the same period last year, which is a solid performance in a depressed market environment for both Retail and HoReCa segments, and with the increase of deflation in the second quarter. The new businesses of Ara and Hebe generated sales of 63m in the first half of the year. Sales in the Ara stores are performing above plan with a strong growth of the number of clients. Consolidated EBITDA declined 2.3% to 341m. The EBITDA margin was 5.6%, 60bps below the previous year, impacted by strong basket deflation in both Poland and Portugal, the price investments in all food distribution businesses, and 6m of incremental start-up costs in Ara and Hebe. Biedronka's EBITDA margin declined by 80bps to 7.0%, impacted by price investments, a weak LFL sales performance, and the effect of deflation. 3

4 Pingo Doce s EBITDA margin at 4.9% was in line with previous year, with strong volume growth compensating the impact of food deflation. Recheio s EBITDA margin declined 50bps to 4.9% due to intensified commercial actions and strong basket deflation. Financial charges for the Group were 18m, 2.6m below 2013 coming mainly from a lower negative exchange rate effect. Net Profit attributable to Jerónimo Martins was 145m, 12.4% below prior year. The Group Capex was 172m in the first six months, of which 82% was invested in Biedronka. The Free Cash Flow in the period was - 50m, after Capex payments of 233m. The negative working capital movement is a consequence of the increased promotional activity which led to higher inventories at the end of this first half of the year. Net Debt increased to 607m, following the Dividend payments in May of 205m, and Gearing was 38.1%. Outlook for 2014 The very competitive environment that requires us to maintain our price investments together with the strong food deflation will impact profitability for the year. We therefore expect the EBITDA margin evolution for 2014, versus the previous year, to be broadly in line with the development in the first half of this year. 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. 4

5 Appendix INCOME STATEMENT BY FUNCTIONS (Million Euro) H1 14 H1 13 Net Sales and Services 6,052 5,643 Cost of Sales -4,766-4,436 Gross Profit 1,286 1,207 Distribution Costs Administrative Costs Exceptional Operating Profit/Loss 0 1 Operating Profit Net Financial Costs Gains/Losses in other Investments 0 0 Profit in Associated Companies 8 6 Profit Before Taxes Income Taxes Profit Before Non Controlling Interests Non Controlling Interests -7-4 Net Profit attributable to JM Note: Non Recurrent Items in the Net Consolidated Profit table in page 2 of this report include the values in Exceptional Operating Profit/Loss and in Gains/Losses in other investments shown in the table above. SALES BREAKDOWN (Million Euro) H1 14 H1 13 Q2 14 Q2 13 % total % total Pln Euro % total % total Pln Euro Biedronka 4, % 3, % 9.1% 9.1% 2, % 1, % 11.5% 12.3% Pingo Doce 1, % 1, % 2.6% % % 2.9% Recheio % % -0.3% % % -0.4% Mkt. Repr. and Rest. Serv % % -2.2% % % 0.9% Others & Cons. Adjustments % % n.a % % n.a. Total JM 6, % 5, % 7.2% 3, % 2, % 9.3% SALES GROWTH Total Sales Growth LFL Sales Growth Q1 14 Q2 14 H1 14 Q1 14 Q2 14 H1 14 Biedronka Euro 5.9% 12.3% 9.1% PLN 6.6% 11.5% 9.1% -2.7% 0.3% -1.2% Pingo Doce 2.3% 2.9% 2.6% 1.1% 1.9% 1.5% Ex-Fuel 2.7% 3.5% 3.1% 2.0% 2.7% 2.4% Recheio -0.1% -0.4% -0.3% -0.4%* -0.4% -0.4% * Corrected number - see note on page 8. 5

6 STORE NETWORK Number of Stores 2013 Openings Closings Network Q1 14 Q2 14 H1 14 H1 14 H1 13 Biedronka 2, ,473 2,184 Pingo Doce Recheio Sales Area (sqm) 2013 Openings Closings/ Remodellings Network Q1 14 Q2 14 H1 14 H1 14 H1 13 Biedronka 1,500,038 13,212 50,492-3,642 1,567,382 1,346,154 Pingo Doce 457,171 2, , , ,175 Recheio 129, , ,295 EBITDA MARGIN BREAKDOWN H1 14 % total H1 13 % total Biedronka 7.0% 82.2% 7.8% 82.2% Pingo Doce (store sales) 4.9% 22.5% 4.9% 21.3% Recheio 4.9% 5.4% 5.4% 5.8% Others & Cons. Adjustments n.a % n.a. -9.2% JM Consolidated 5.6% 100% 6.2% 100% BALANCE SHEET (Million Euro) H H1 13 Net Goodwill Net Fixed Assets 2,976 2,940 2,721 Total Working Capital -1,519-1,686-1,541 Others Invested Capital 2,200 1,995 1,901 Total Borrowings Leasings Accrued Interest Marketable Sec. & Bank Deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1,594 1,649 1,440 Gearing 38.1% 21.0% 32.0% CASH FLOW (Million Euro) H1 14 H1 13 EBITDA Interest Payment Other Financial Items Income Tax Funds From Operations Capex Payment Working Capital Movement Others 1 0 Free Cash Flow

7 FINANCIAL COSTS BREAKDOWN (Million Euro) H1 14 H1 13 Net Interest Exchange Differences 0-2 Others -2-4 Financial CAPEX (Million Euro) H1 14 Biedronka % Distribution Portugal 16 9% Others 15 9% Total CAPEX % WORKING CAPITAL (Million Euro) H H1 13 Inventories in days of sales Customers in days of sales Suppliers -1,961-2,035-1,791 in days of sales Trade Working Capital -1,307-1,410-1,278 in days of sales Others Total Working Capital -1,519-1,686-1,541 in days of sales DEBT BREAKDOWN (Million Euro) H1 14 Long Term Debt 609 as % of Total Borrowings 67.4% Average Maturity (years) 2.1 Bond Loans 225 Other Debt 384 Short Term Debt 295 as % of Total Borrowings 32.6% Total Borrowings 904 Average Maturity (years) 1.6 Leasings 3 Accrued Interest & Hedging 8 Marketable Securities & Bank Deposits -308 Net Debt 607 % Debt in Euros (Financial Debt + Leasings) 36.0% % Debt in Zlotys (Financial Debt + Leasings) 57.5% % Debt in Pesos (Financial Debt + Leasings) 6.5% 7

8 NOTES 1. Recheio LFL Adjustment A Recheio store that was remodelled between January and May 2014, with a negative impact on sales, was incorrectly included in the Q1 LFL calculation. The Q LFL of -0.4% in this report is the corrected number. 2. 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 8