Portuguese retailer Jerónimo Martins has posted a 16% jump in fourth-quarter net profit, driven by a sales increase at its Polish market-leading chain, Biedronka, but said food deflation would likely shrink its margins.
The company made a net profit of €198 million in the quarter, slightly exceeding the €193.6 million average forecast by analysts polled by LSEG.
Food Deflation
In a statement, chief executive Pedro Soares dos Santos said "as we enter 2024, we know that the food deflation expected for the first half of the year will be our biggest challenge".
The company also expected its costs to increase, adding that 'this combination will further pressure our margins'.
Even as consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 14% to €578 million, its EBITDA margin – a measure of profitability – slipped to 7.1% at end-2023 from 7.2% a year earlier.
Divisional Performance
Consolidated sales rose 16.7% to €8.16 billion in the quarter, fuelled by a 17.2% rise at Biedronka, where sales reached €5.7 billion.
At home, supermarket chain Pingo Doce posted a 5.4% rise in sales to €1.3 billion, while the company's growing Colombian network Ara booked €685 million in sales, up 43.8% from a year earlier.
Jerónimo Martins plans to keep investment in 2024 at last year's levels of around €1.2 billion, opening 130 to 150 stores in Poland and remodelling 300 others, adding 150 locations in Colombia and 10 Pingo Doce stores in Portugal.
It also expects to open its first few stores in Slovakia by year-end.
For the full-year 2023, profit rose 28% to €756 million as sales grew 21% to a record €30.6 billion. The board will propose a dividend payment of 0.655 euros per share, which represents an increase of 19.1% from the previous year.
