GROWTH A STRONG COMMITMENT
INDEX 1. THE GROUP TODAY INDEX 2. STRATEGY OVERVIEW 3. OUTLOOK 2.1. Strategic Pillars 2.2. Strategic Paths 2
1. THE GROUP TODAY 3
1. THE GROUP TODAY PORTUGAL POLAND Supermarkets 34.5% Sales 28.6% EBITDA 55.7% Inv. Cap. Wholesale 8.3% Sales 6.8% EBITDA 6.2% Inv. Cap. Discount Stores 55.3% Sales 60.0% EBITDA 28.8% Inv. Cap. JV Unilever 2.7% Sales 5.2% EBITDA 4
1. THE GROUP TODAY Discount in Poland Leader in its segment in Poland c. 11% 12% of market share 1,665 stores in Q1 2011 Average selling area = 570 sqm Proximity locations EDLP Exclusive brands representing c.57% of sales Non food c.6% of sales Perishables c.15% of sales 5
1. THE GROUP TODAY Supermarkets in Portugal Leader in the supermarket segment in Portugal (c.19% market share in Total Retail Market) 348 Stores; average selling area c. 1,200 sqm Assortment c. 6 thousand SKUs Prime proximity locations EDLP Key differentiating factors The leading operator of perishables in the Portuguese market (c.40% of sales) Private brands c.40% of total sales (excl. perishables) 6
1. THE GROUP TODAY Wholesale in Portugal Leader in the C&C market c.38% market share 38 stores Average sales area = 3,300 sqm Serving HoReCa (42% of sales) and Traditional Retailers (40% of sales) Private brands c.17% of sales Perishables c.15% of sales Non Food c.7% of sales 7
1. THE GROUP TODAY Three years ago The Group focused on protecting cash flow with a list of priorities: Poland the growth engine our priority regarding capital allocation Optimization of all Company s praxis operating (costs & wc) and financing Reinforcing Balance Sheet In the last three years ( 08 10) The Group achievements: c.euro1 bn Capex in Biedronka 604 new stores and 2 new DCs Sales CAGR c.29% (in PLN) Inventories from 21 to 15 days of sales Gearing currently below 50% and Net Debt/EBITDA below 1x Today The strategy lead the Group to reach a relevant increase in its size, an increased capacity to execute and deliver and a stronger financial situation 8
2. STRATEGY OVERVIEW 2.1. Strategic Pillars 2.2. Strategic Paths 9
2. STRATEGY OVERVIEW 2.1. Strategic Pillars OUR APPROACH TO VALUE FOOD RETAIL 2. LCO 3. Proximity Strong Value Approach Value and Mass Market: 1. Food Solutions Strong differentiation: 4. Fresh Products 5. Private Brand 6. Quality: Products, Packaging, Store Environment and Private Brand Leadership Dynamics The success of our formats is leveraged on leadership 1. Trust / Awareness / Reliability 2. Scale Matters Sourcing, Costs, Presence Capacity to anticipate market needs: our clients can expect more and pay less 3. Total Attention to consumer s feedback and business details 10
2. STRATEGY OVERVIEW 2.2. Strategic Paths The Starting Point Strong leading positions in Poland and Portugal Growing cash flow generation to fund expansion and debt reduction Targeting profitable growth and high return businesses Strategic Paths Our Priorities 1 Maximize the Polish Opportunity Extract the maximum potential from Group s leading positioning in Poland: Sales efficiency LFL Organic growth program Testing new opportunities 2 Consolidate the Portuguese Positioning Consolidate leadership through: Full coverage of the proximity market Optimising cash flow generation and returns 3 Pursue New Growth Leverage on our strengths to: Search for new growth opportunities Define the appropriate entry point and entry strategy 11
2. STRATEGY OVERVIEW 2.2. Strategic Paths Maximize Polish Opportunity The Starting Point Biedronka now goes through a Key Stage in its Consolidation LFL growth solid and stable Benefits of scale massively emerging clear leadership in productivity Increasing Pre Tax ROIC Price leadership to be maintained LFL Sales Growth EBITDA Mg Price Index 115 8.1% 20.2% 8% Supermarkets 20% 6.9% 7.3% 110 6% Hypermarkets 105 10% 8.3% 11.6% 4% Discounts 2% 100 Biedronka 0% 0% 95 '08 '09 '10 '08 '09 '10 Q1 10 Q2 10 Q3 10 Q4 10 The Way to Go Two Main Growth Sources: BASKET and NEW STORES 12
2. STRATEGY OVERVIEW 2.2. Strategic Paths Maximize Polish Opportunity Basket increase requires an improving commercial proposition Assortment progressively targeting more units of need Critical criteria to comply with new additions to Biedronka s assortment: High rotation only fast moving goods No increases in store costs from improvements in commercial offer Packaging as an extra differentiation tool 07 08 09 10 Avg basket (PLN) 18.1 20.8 22.2 24.0 This dynamic will drive basket growth LFL ambitioning double digit in the next 3 years 13
2. STRATEGY OVERVIEW 2.2. Strategic Paths Maximize Polish Opportunity Expansion Potential requires full Company commitment Biedronka has 9 Regions, each one with a DC serving a target of 150 200 stores Each Region, has a resident expansion team prospecting the local market for new locations Regional approach increases Biedronka s organic growth potential Nr. Stores 2,000 1,600 1,200 800 400 Nr. DCs 8 6 4 2 0 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 0 14
2. STRATEGY OVERVIEW 2.2. Strategic Paths Maximize Polish Opportunity Accelerating Biedronka Expansion Given Group s current financial strength and our perception of the Polish retail market, we see as one key strategic target to accelerate the expansion of Biedronka, not compromising the quality of the locations or the expected returns 15
2. STRATEGY OVERVIEW 2.2. Strategic Paths Maximize Polish Opportunity Accelerating Biedronka Expansion A network > 2,300 stores 2013 (YE) 14 Regions Expansion capacity at 280 300 stores per annum (c.270 net additions) By progressively strengthening our regional expansion capacity with an increased number on Regions we will advance as fast as we can towards our medium term vision: 3,000 Biedronka stores in Poland by 2015 16
2. STRATEGY OVERVIEW 2.2. Strategic Paths Consolidate Portuguese Position JM s Distribution Formats in Portugal General Overview Environment expected to get tougher following the austerity plan approved in April 2011 Capex limited to revamping program and openings in key proximity locations Group formats expected to continue to outperform the market, benefiting from business models awareness and leadership Priority continues to be the strengthening of market share through LFL sales growth 17
2. STRATEGY OVERVIEW 2.2. Strategic Paths Pursue New Growth Know how and execution: drivers for new growth Avenues Corporate Approach Strong Commitment to identify new sources of growth Defining the Market Sizable + Economic and institutional framework + Basic suppliers infrastructures Defining the Format Food + Price Competitive + Mass Market + Local Approach 18
3. OUTLOOK Outlook 2011 2013 In Poland, expand the business as much as we can backed by the market potential and Biedronka s strengths We remain cautious about the Portuguese economy but confident that our business models will outperform their sectors Double digit annual sales growth for the Group over the period Group EBITDA expected to grow at least in line with sales Group Capex for the 3Y period c.euro1.7 bn, more than 3/4 to be invested in Poland 19
Disclaimer This presentation includes forward looking statements that involve risks and uncertainties. Actual results may differ materially from those stated in any forwardlooking statement based on a number of factors. Jerónimo Martins assumes no obligation to update the information contained in this presentation or to notify a reader in the event that any matter stated herein changes or becomes inaccurate. 20
APPENDIX 21
Q1 2011 RESULTS Key Figures (Million Euro) Q1 10 Q1 11 Net Sales 1,955.1 +14.7% 2,241.6 EBITDA 118.3 +24.0% 146.7 EBITDA Mg. 6.0% 6.5% Net attr. Results 42.3 +33.5% 56.4 EPS (Euro) 0.07 0.09 Net Debt 735.2 601.8 Gearing 65.4% 50.6% 22
Q1 2011 RESULTS Store Network Number of Stores 2010 Openings Closings Network Q1 11 Q1 11 Q1 11 Q1 10 Biedronka 1,649 19 3 1,665 1,504 Retail Portugal 349 0 0 349 343 Supermarkets 340 0 0 340 334 Hypermarkets 9 0 0 9 9 Recheio 38 0 0 38 35 Madeira 15 0 0 15 15 Sales Area (sqm) 2010 Openings Closings* Network Q1 11 Q1 11 Q1 11 Q1 10 Biedronka 938,218 11,989 919 949,288 840,068 Retail Portugal 437,317 0 0 437,317 432,354 Supermarkets 359,036 0 0 359,036 353,076 Hypermarkets 78,281 0 0 78,281 79,278 Recheio 123,532 0 0 123,532 114,681 Madeira 14,253 0 0 14,253 14,253 * including changes of sales area due to remodellings 23
Q1 2011 RESULTS Sales Breakdown (Million Euro) Q1 11 Q1 10 % total % total Pln Euro Biedronka 1,336 59.6% 1,088 55.6% 21.7% 22.8% Retail Mainland 710 31.7% 670 34.3% 6.0% Recheio 163 7.3% 157 8.0% 3.7% Madeira 35 1.5% 30 1.5% 15.9% Manufacturing 51 2.3% 53 2.7% 4.6% Mkt. Repr. and Rest. Serv. 19 0.8% 19 1.0% 4.8% Consolidation Adjustments 72 3.2% 63 3.2% 14.8% Total JM 2,242 100.0% 1,955 100.0% 14.7% p.m. Retail Mainland 649 620 4.6% (store sales) 24
Q1 2011 RESULTS Sales Growth Total Sales Growth LFL Sales Growth Q1 11 Q1 11 Biedronka Euro 22.8% PLN 21.7% 11.7% Retail Portugal 4.6% 1.8% * Supermarkets 5.6% 1.7% Hypermarkets 4.2% 3.2% Recheio 3.7% 0.4% Madeira 15.9% 3.7% Manufacturing 4.6% 4.6% Mkt. Repr. and Rest. Serv. 4.8% 7.9% * Ex petrol LFL was +0.1% 25
Q1 2011 RESULTS EBITDA EBITDA Evolution (Million Euro) 200 6.0% 6.5% % Sales 7% 146 118 100 +24.0% EBITDA Breakdown 10.3% 0 Q1 10 Q1 11 0% 6.5% 7.1% 5.7% 5.9% 8.6% 6.0% 6.5% Distribution Poland Distribution Portugal Manufacturing & Services JM Consolidated Q1 10 Q1 11 26
Q1 2011 RESULTS P&L (Million Euro) Q1 11 Q1 10 Consolidated Sales 2,242 1,955 14.7% Total Margin 508 22.7% 447 22.9% 13.8% Operating Costs 362 16.1% 329 16.8% 10.1% EBITDA 147 6.5% 118 6.0% 24.0% Depreciation 52 2.3% 46 2.3% 13.8% EBIT 95 4.2% 73 3.7% 30.4% Net Financial Results 16 0.7% 17 0.9% 8.5% Non Recurrent Items 5 0.2% 2 0.1% EBT 74 3.3% 54 2.8% 37.5% Taxes 16 0.7% 10 0.5% 49.7% Net Profit 58 2.6% 43 2.2% 34.6% Non Controlling Interest 2 0.1% 1 0.1% 77.2% Net Profit attr. to JM 56 2.5% 42 2.2% 33.5% EPS ( ) 0.09 0.07 33.5% Cash Flow per share ( ) 0.19 0.15 30.8% 27
Q1 2011 RESULTS Balance Sheet (Million Euro) Q1 11 Q1 10 Net Goodwill 744 756 Net Fixed Assets 2,289 2,178 Net Working Capital 1,320 1,186 Others 79 112 Invested Capital 1,792 1,860 Financial Debt 775 824 Leasings 62 84 Accrued interest 27 38 Marketable sec. & Bank deposits 262 211 Net Debt 602 735 Shareholders Funds 1,190 1,125 Gearing 50.6% 65.4% 28
Investor Relations +351 21 752 61 05 investor.relations@jeronimo martins.pt Cláudia Falcão claudia.falcao@jeronimo martins.pt Hugo Fernandes hugo.fernandes@jeronimo martins.pt 29