Jeronimo Martins, Sgps ((JRONY)) has held its Q2 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 resilience and strategic growth amidst a challenging operating environment. The company reported solid sales growth and an improvement in EBITDA, maintaining its market leadership in several regions. However, concerns were raised about rising labor costs and cash flow outflow. Despite these hurdles, Jeronimo Martins managed to improve its margins and sustain a strong cash position.
Sales Growth and Market Share
Consolidated sales for Jeronimo Martins grew by 6.7%, reaching EUR 17.4 billion, with all banners performing well. Notably, Biedronka maintained its price leadership in Poland, contributing to a market share increase of 0.2 percentage points. This growth underscores the company’s robust market presence and strategic pricing.
EBITDA and Margin Improvement
The company’s EBITDA saw a significant increase of 10.3%, with the EBITDA margin rising by 21 basis points to 6.6% compared to the previous year. This improvement highlights Jeronimo Martins’ effective cost management and operational efficiency.
Expansion and Investment
In the first half of 2025, Jeronimo Martins opened 196 new stores and remodeled 71 locations. This expansion included the launch of Biedronka operations in Slovakia and the successful integration of 58 Ara stores in Colombia, demonstrating the company’s commitment to growth and market diversification.
Cash Position and Dividend Payment
Despite a EUR 371 million dividend payment, Jeronimo Martins maintained a positive cash position of EUR 213 million. This financial stability is a testament to the company’s prudent financial management and strategic planning.
Challenging Operating Context
The company faced a challenging environment characterized by muted food consumption, low basket inflation, and rising wages, which intensified market competition. These factors posed significant challenges to maintaining profitability.
Cash Flow Outflow
The first half of 2025 saw a cash flow outflow of EUR 157 million, reflecting the seasonal nature of the business and supplier payments following the peak Christmas season. This outflow highlights the need for careful cash flow management in the face of seasonal fluctuations.
Pressure from Rising Labor Costs
Rising labor costs, particularly in Poland where they increased by more than 9%, exerted pressure on margins despite the sales growth. This issue underscores the ongoing challenge of balancing cost pressures with competitive pricing strategies.
Forward-Looking Guidance
Looking ahead, Jeronimo Martins anticipates a CapEx slightly above EUR 1 billion for 2025, with a minor revision to Biedronka’s remodeling plan, reducing it to 200 stores. The company remains focused on maintaining competitive pricing and market share growth, particularly in Poland, where Biedronka’s sales are expected to continue their upward trajectory.
In summary, Jeronimo Martins’ earnings call reflected a positive sentiment with strong sales growth and strategic expansion efforts. Despite the challenges posed by rising labor costs and cash flow outflows, the company demonstrated resilience and effective management strategies. Investors and market watchers will be keen to see how Jeronimo Martins navigates these challenges while capitalizing on growth opportunities in the coming months.