LISBON (Reuters) – Portuguese retailer Jeronimo Martins posted a larger-than-expected 28% drop in second-quarter net profit on Wednesday, as a decline in margins from food price deflation offset higher sales at Polish market leader Biedronka.
The company said in a statement that its consolidated net profit fell to 156 million euros ($169 million) in the quarter, while analysts polled by LSEG had expected, on average, a profit of 167.6 million euros.
Chief Executive Pedro Soares dos Santos said “2024 has been marked, after an inflationary cycle, by the harsh effects resulting from a sharp correction in food prices and a significant cost increase” and that he expected this to continue in the second half of the year.
“In this context of uncertainty…we will stick to our priorities: …grow sales in volume, as pivotal for preserving our competitiveness, increasing our customer bases, and expanding market shares,” he said in a statement.
Consolidated sales rose 6.8% to around 8.2 billion euros in the quarter fueled by a 5.7% increase at the Polish market leader Biedronka, where sales reached around 5.8 billion euros.
However, Biedronka’s like-for-like sales in Polish zlotys fell by 4.6% in the quarter after rising 4.6% in the previous three months.
At home, sales at the Pingo Doce supermarket chain rose 3.7% to 1.2 billion euros, while in Colombia its Ara stores booked 721 million euros in sales, up 22% from a year earlier.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) dropped 4.8% to 532 million euros, below the average of 557.5 million euros expected by analysts.
The company’s EBITDA margin – a key measure of profitability – slipped to 6.4% at the end of June from 6.9% a year earlier.
The margin at Biedronka fell to 7.6% from 8.5% a year ago.
($1 = 0.9214 euros)
(Reporting by Sergio Goncalves; editing by Charlie Devereux and Diane Craft)
