Jerónimo Martins SGPS, S.A. First Half 2015 Results

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1 Jerónimo Martins SGPS, S.A. First Half 2015 In the first six months of 2015, Group sales increased by 9.8% to 6.6 billion euro. All banners posted good LFL performance and market share gains. EBITDA grew 6.3% to 363 million euro. Biedronka sales increased 10.6% (local currency), with LFL growth at 2.6% despite the strong basket deflation in the period (-3.3%) Pingo Doce and Recheio registered a particularly good first half of the year with both banners posting LFL sales growth above 4% Net Profit to JM increased 3.2% to 150 million euro, including start-up losses in Ara and Hebe Lisbon, 29 July 2015 (Million Euro) H1 15 H1 14 Δ% (Euro) Δ% (w/o F/X) Message from the Chairman and CEO Pedro Soares dos Santos As we expected, the first half year results show the positive effects of the strategy being executed in Biedronka. The Company s performance in the period validates the effectiveness of the measures being implemented, its capacity to reinforce the leadership in the market and its relevance for consumers, even in a context of uncertainty regarding food deflation. Both Pingo Doce and Recheio continued to outperform the market in Portugal. In Colombia, a new distribution centre is being finalised and we will start operations in the second region in the third quarter of this year. Reassured by the performance of our established businesses, we will continue implementing our plan and we will deliver our targets for the year. Consolidated Sales 6, , EBITDA EBITDA Mg (%) Net Profit JM w/o non-recurrent FINANCIAL CALENDAR 9M 2015 : 5 November 2015 Investor Relations Office investor.relations@jeronimo-martins.pt Cláudia Falcão Hugo Fernandes EPS ( ) Net Debt Gearing (%) 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) H1 15 H1 14 D Q2 15 Q2 14 D Net Sales and Services 6,644 6, % 3,457 3, % Total Margin 1, % 1, % 9.7% % % 10.8% Operating Costs -1, % % 11.0% % % 12.0% EBITDA % % 6.3% % % 7.7% Depreciation % % 8.8% % % 8.9% EBIT % % 4.7% % % 7.1% Financial % % -27.5% % % -14.7% Profit in Associated Companies 8 0.1% 8 0.1% -2.1% 4 0.1% 5 0.2% -11.7% Non-Recurrent Items % 0 0.0% n.a % 0 0.0% n.a. EBT % % 5.2% % % 4.0% Taxes % % 10.4% % % 9.5% Net Profit % % 3.7% % % 2.5% Non Controlling Interests % % 14.8% % % -1.7% Net Profit attributable to JM % % 3.2% % % 2.6% EPS ( ) % % SALES EVOLUTION EBITDA EVOLUTION 2

3 Sales & Profit Analysis In the first half of the year, consolidated sales increased 9.8% to 6,644m (+9.1% excluding the positive currency impact). The performance in the period reflects the good sales progression in all banners driving Group LFL growth to reach 3.1%. In Poland, the competitive landscape maintained a strong focus on promotional activities and food deflation prevailed in the market, despite softening from -3.7% in Q1 15 to -2.1% in Q2 15. In the first half of the year Biedronka total sales grew 11.7% to 4,499m supported by the 2.6% LFL sales increase and by the store expansion programme. In Q2, LFL growth was +2.4%, already incorporating the Easter negative calendar impact. As a result of the measures being executed by the Company, internal deflation was more than offset by strong volume progression in the period. In the first six months of the year, the Company opened 83 stores (68 net additions). In Portugal, the market maintained a high level of promotional intensity while food inflation was positive, increasing from +0.1% in Q1 15 to an average of +1.7% in Q2 15. With a consistent performance across the six months, Pingo Doce delivered strong sales growth with LFL, excluding fuel, reaching 4.5% in H1 15 (+4.7% in Q2 15). Pingo Doce continued to benefit from the consumer recognition driven by its promotional strategy, along with the reinforcement of its private brand offer and the improvement of the shopping experience. The Company s refurbishment programme continued, with 15 stores remodelled in H1 15. Recheio maintained in the second quarter the very strong performance seen since the start of the year, and LFL in the first six months was 4.4% (+4.1% in Q2 15). The Company continues to benefit from the increase in the number of clients. In the first half of the year Ara and Hebe contributed with combined sales of 103m. Both chains continued developing their respective businesses models and value propositions. At June 30, Ara had 89 stores in the Coffee Growing area, providing a good coverage in its first region. The Company has built up a stores pipeline for its second region, where it will open its new distribution centre in Q3 15. At the Group level, consolidated EBITDA grew 6.3% to 363m. The respective margin was 5.5%, 10bps below the same period in

4 Biedronka s EBITDA, in the first six months, reached 305m, a growth of 8.6% on previous year (+8.6% in Q2 15). EBITDA margin stood at 6.8%, 20bps down on H1 14. The margin evolution reflected the strong food deflation together with the marketing investments made in the business. Pingo Doce delivered EBITDA of 77m, broadly in line with previous year. EBITDA margin was 20bps down on previous year, as the company focused in maintaining strong top line performance. To support its strong LFL growth, Recheio posted an EBITDA margin 10bps below previous year and delivered an EBITDA of 19m. Financial charges for the Group were 13m, 5m below the same period last year due to lower average net debt and lower cost of debt. As a result of the solid operating performance, Net Profit attributable to Jerónimo Martins was 150m, 3.2% higher than in the prior year, already incorporating the start-up losses in Ara and Hebe of 29m at the EBITDA level, in the six months. The Group Capex was 177m in the first six months of the year, 55% of which was invested in Biedronka. The Free Cash Flow in the period, after capex payments, was 61m, 112m above the same period in After the dividend payment of 154m in May, Net Debt for the Group was 386m and Gearing stood at 24%. Outlook for 2015 The solid performance in the first six months of the year reinforces our confidence that the chosen strategic paths will lead our banners to deliver on their targets. Our commitment to top line performance across the markets where we operate remains unchanged. We confirm our full year guidance as previously disclosed for

5 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 (Million Euro) H1 15 H1 14 Net Sales and Services 6,644 6,052 Cost of Sales -5,233-4,766 Total Margin 1,411 1,286 Distribution Costs -1, Administrative Costs Exceptional Operating Profit/Loss -5 0 Operating Profit Net Financial Costs Gains/Losses in other Investments 0 0 Profit in Associated Companies 8 8 Profit Before Taxes Income Taxes Profit Before Non Controlling Interests Non Controlling Interests -8-7 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 15 H1 14 D % Q2 15 Q2 14 D % % total % total Pln Euro % total % total Pln Euro Biedronka 4, % 4, % 10.6% 11.7% 2, % 2, % 9.8% 12.1% Pingo Doce 1, % 1, % 4.3% % % 4.7% Recheio % % 5.0% % % 5.8% Mkt. Repr. and Rest. Serv % % 1.3% % % -1.0% Others & Cons. Adjustments % % n.a % % n.a. Total JM 6, % 6, % 9.8% 3, % 3, % 10.1% SALES GROWTH Total Sales Growth LFL Sales Growth Q1 15 Q2 15 H1 15 Q1 15 Q2 15 H1 15 Biedronka Euro 11.2% 12.1% 11.7% PLN 11.4% 9.8% 10.6% 2.9% 2.4% 2.6% Pingo Doce 3.9% 4.7% 4.3% 3.4% 4.2% 3.8% Ex-Fuel 4.7% 5.2% 4.9% 4.2% 4.7% 4.5% Recheio 4.1% 5.8% 5.0% 4.7% 4.1% 4.4% 6

7 STORE NETWORK Number of Stores 2014 Openings Closings Network Q1 15 Q2 15 H1 15 H1 15 H1 14 Biedronka 2, ,655 2,473 Pingo Doce Recheio Sales Area (sqm) 2014 Openings Closings/ Remodellings Network Q1 15 Q2 15 H1 15 H1 15 H1 14 Biedronka 1,649,889 40,870 17,991 1,214 1,707,535 1,567,382 Pingo Doce 460,863 1,252 4, , ,113 Recheio 128, , ,665 EBITDA MARGIN BREAKDOWN H1 15 % total H1 14 % total Biedronka 6.8% 84.0% 7.0% 82.2% Pingo Doce 4.7% 21.1% 4.9% 22.5% Recheio 4.8% 5.2% 4.9% 5.4% Others & Cons. Adjustments n.a % n.a % JM Consolidated 5.5% 100% 5.6% 100% BALANCE SHEET (Million Euro) H H1 14 * Net Goodwill Net Fixed Assets 3,002 2,940 2,846 Total Working Capital -1,732-1,778-1,519 Others Invested Capital 2,026 1,912 2,091 Total Borrowings Leasings Accrued Interest Marketable Sec. & Bank Deposits Net Debt Non Controlling Interests Share Capital Reserves and Retained Earnings Shareholders Funds 1,640 1,639 1,484 Gearing 23.5% 16.7% 40.9% * Restated values - see note 1 on page 9. CASH FLOW (Million Euro) H1 15 H1 14 EBITDA Interest Payment Other Financial Items Income Tax Funds From Operations Capex Payment Working Capital Movement Others -4 1 Free Cash Flow

8 FINANCIAL COSTS BREAKDOWN (Million Euro) H1 15 H1 14 Net Interest Exchange Differences 1 0 Others -2-2 Financial CAPEX (Million Euro) H1 15 Weight Biedronka 98 55% Distribution Portugal 54 30% Others 25 14% Total CAPEX % WORKING CAPITAL (Million Euro) H H1 14 Inventories in days of sales Customers in days of sales Suppliers -2,088-2,134-1,961 in days of sales Trade Working Capital -1,384-1,507-1,307 in days of sales Others Total Working Capital -1,732-1,778-1,519 in days of sales DEBT BREAKDOWN (Million Euro) H1 15 Long Term Debt 334 as % of Total Borrowings 45.0% Average Maturity (years) 3.0 Bond Loans 0 Other Debt 334 Short Term Debt 409 as % of Total Borrowings 55.0% Total Borrowings 743 Average Maturity (years) 1.7 Leasings 0 Accrued Interest & Hedging 6 Marketable Securities & Bank Deposits -364 Net Debt 386 % Debt in Euros (Total Borrowings + Leasings) 30.3% % Debt in Zlotys (Total Borrowings + Leasings) 58.5% % Debt in Pesos (Total Borrowings + Leasings) 11.2% 8

9 NOTES 1. Change of accounting policies The Group changed the previous accounting policy for Land (classified as Tangible Assets) and adopted the historical cost for Land in the financial statements prepared as at December 31, 2014, as explained in the 2014 Full Year release. The Balance Sheet presented for June 2014 was restated in line with the new accounting policy. 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 9