Portugal's Jerónimo Martins has posted a net profit increase of 15% to €172 million in the first half of the year, the company has reported.
The group said that its consolidated sales grew 5% to €7 billion in the period, while EBITDA amounted to €388 million, a 7% rise.
The group made an investment of €180 million in new store developments and refurbishments in the period, of which 43% was allocated to its Polish retailer Biedronka.
“The first half 2016 performance reflects our focus on top line growth and our commitment to cost efficiency in a food deflationary context," said chairman and CEO Pedro Soares dos Santos.
"In Poland, the reinforced competitiveness of Biedronka is allowing the banner to maximize the benefits from a stimulant consumer demand. In Portugal, Pingo Doce and Recheio continued to increase market shares in a highly competitive landscape and a consumption slowdown."
The company added that its Ara business in Colombia performed 'according to plan, and is now preparing to enter its third operating region while speeding up expansion in the market'.
Commenting on its performance, Barclays European Food Retail Equity Research said, "Although it reaffirmed its priority to focus on its top-line growth, Jerónimo Martins cautiously mentioned that its cost structure (namely its labour costs) will likely remain under pressure. Although we question the sustainability of the aforementioned government's measures on Polish consumption, we believe that their impact on Jerónimo Martins' cost structure is set to remain in the future.
"Overall, we believe that Jeronimo Martins' margins will likely remain under pressure while the Polish retail tax is expected to come into force in September."
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
