Portuguese retailer Jerónimo Martins has reported a bigger than expected drop in first-quarter net profit as a hit to its margins from food price deflation more than offset higher sales at its market-leading Polish chain, Biedronka.
The company booked a consolidated net profit of €97 million ($104 million), down 31% from €140 million in the same quarter last year and below analysts' average forecast of €118.3 million, according to LSEG.
Chief executive Pedro Soares dos Santos said the company had known a "combination of food deflation and cost inflation would further increase competition, particularly in Poland."
Therefore the company had maintained an "unwavering focus on price leadership to continue to raise volumes," he said.
Quarterly Highlights
Consolidated sales rose 18.6% to around €8.1 billion in the quarter, slightly more than analysts' €7.9 billion estimate, fuelled by a 18.8% increase at Biedronka, where sales reached €5.8 billion.
In Portugal, sales at the Pingo Doce supermarket chain rose 8.3% to €1.2 billion.
Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 14% to €508 million, but the company's EBITDA margin - a key measure of profitability - slipped to 6.3% at the end of March from 6.6% a year earlier.
The margin at Biedronka fell to 7.7% from 8.1% a year ago.
Elsewhere, the Ara supermarket chain saw like-for-like sales growth of 5.8% to €711 million, while EBITDA increased 24.3% year on year to €18 million.
Health and beauty retail chain, Hebe saw a 18.2% increase in like-for-like sales during the quarter to €130 million, driven by its value proposition and investments in the online channel, which accounted for 20% of its sales.
News by Reuters, additional reporting by ESM.
