Jeronimo Martins, Sgps ((JRONY)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Jeronimo Martins, Sgps painted a picture of mixed outcomes, highlighting both achievements and challenges faced by the company. The sentiment was cautiously optimistic, with positive sales and EBITDA growth driven by market share gains and strong performances from HeBe and Ara. However, the company also grappled with significant cost pressures, particularly from labor, and negative calendar effects. Concerns were raised over the like-for-like sales decline in key segments such as Biedronka and Recheio, alongside working capital outflows.
Sales Growth
Sales for Jeronimo Martins grew by 3.8% or 1.9% at constant exchange rates, reaching €8.4 billion. This growth was achieved despite facing negative calendar effects, which posed a challenge to the overall sales performance.
EBITDA Performance
The company reported a 3.8% increase in EBITDA, or 1.2% at constant exchange rates, with the margin remaining stable at 6.3%. This indicates a resilient operational performance despite external pressures.
Positive Cash Position
Jeronimo Martins ended March with a positive cash position of €332 million, showcasing strong financial management and liquidity.
Market Share Gain
Biedronka, a key segment for the company, achieved a 0.3 percentage point market share gain, reflecting its competitive strength in the market.
HeBe Sales Growth
HeBe’s sales surged by 11.9% or 8.5% in local currency, with the online channel contributing 21% to the total turnover, highlighting the growing importance of digital sales.
Ara’s Robust Performance
Ara demonstrated robust performance with a 9.1% sales growth or 13% in local currency, opening nine stores and one distribution center in the first quarter.
Cost Pressure from Labor
Higher labor costs exerted pressure on EBITDA margins across all business segments, posing a challenge to maintaining profitability.
Negative Calendar Impact
The quarter’s sales growth was adversely affected by a calendar effect, which ranged from 3 to 4 percentage points, impacting overall performance.
Working Capital Outflow
The company experienced a cash flow outflow of €398 million, attributed to business seasonality and the timing of Easter, impacting liquidity.
Biedronka Like-for-Like Decline
Biedronka faced a like-for-like sales decline of 3.5%, influenced by calendar effects and a challenging comparison with the previous year.
Recheio Sales Decline
Recheio’s sales slightly declined by 0.4% to €302 million, with like-for-like sales standing at minus 0.5%, indicating a need for strategic adjustments.
HeBe Margin Pressure
HeBe encountered significant margin pressure due to price investments and deflation, which impacted its EBITDA margin.
Forward-Looking Guidance
Looking ahead, Jeronimo Martins remains focused on maintaining price competitiveness and managing margin pressures in a volatile consumer environment with high cost pressures. The company anticipates continued challenges but is committed to strategic initiatives to sustain growth. The approval of a dividend of €0.59 per share, totaling €370.8 million, reflects confidence in future performance.
In summary, Jeronimo Martins’ earnings call highlighted a mixed performance with both positive achievements and notable challenges. The company demonstrated resilience with sales and EBITDA growth, but faced pressures from labor costs and calendar effects. Moving forward, the focus will be on maintaining competitiveness and managing margins in a challenging market environment.