Jeronimo Martins Q1 2025 slides: sales up 3.8% amid challenging market conditions

Introduction & Market Context

Jeronimo Martins SGPS SA (OTC:JRONY) (LISBON:JMT) reported its Q1 2025 results on May 8, showcasing a 3.8% increase in sales to €8.4 billion despite operating in markets characterized by cautious consumer behavior and intense competition. The company’s stock surged 8.9% following the earnings announcement, as investors responded positively to the stable EBITDA margin and significant 31.4% increase in net profit.

The Portuguese retail group maintained its focus on price competitiveness while implementing tight cost controls to navigate an environment combining low food inflation with rising labor costs. This strategy helped the company deliver results that exceeded analyst expectations, with reported earnings per share of €0.22 surpassing the forecast of €0.1782.

As shown in the following snapshot of Q1 2025 performance, Jeronimo Martins achieved balanced growth across most of its banners while maintaining profitability:

Quarterly Performance Highlights

Jeronimo Martins reported EBITDA of €528 million, representing a 3.8% increase year-over-year and maintaining a stable EBITDA margin of 6.3%. Net profit attributable to JM reached €127 million, a substantial 31.4% increase compared to Q1 2024. The company’s performance was achieved despite a negative like-for-like (LFL) sales growth of -2.2%, which management attributed to significant calendar effects.

The detailed income statement reveals the company’s ability to improve gross profit margin while managing operating costs in a challenging environment:

Performance varied significantly across the company’s retail banners:

• Biedronka (Poland): Sales increased by 3.4% to €5.95 billion, despite a -3.5% LFL, with EBITDA margin maintained at 7.7%
• Hebe (Poland): Sales grew 11.9% to €145 million with a 1.9% LFL, but EBITDA margin declined sharply from 5.4% to 2.0%
• Pingo Doce (Portugal): Sales rose 2.8% to €1.2 billion with a 1.1% LFL, with EBITDA margin slightly down to 5.2%
• Recheio (Portugal): Sales decreased by 0.4% to €302 million with a -0.5% LFL
• Ara (Colombia): Sales increased by 9.1% to €775 million with a 3.0% LFL, and EBITDA margin improved from 2.5% to 3.5%

The following chart illustrates the contribution of each banner to the group’s overall sales growth:

Detailed Financial Analysis

Biedronka, the group’s largest banner operating in Poland, faced challenging market conditions with cautious consumer behavior and intense competition. Despite these headwinds, the banner maintained its EBITDA margin through strict cost discipline and favorable margin mix:

The company’s EBITDA performance showed resilience across most banners, with Ara in Colombia demonstrating significant margin improvement as a result of efforts to protect gross margin and control costs. Conversely, Hebe experienced substantial margin pressure due to price investments that drove basket deflation:

From a cash flow perspective, Jeronimo Martins reported negative cash flow of €398 million for Q1 2025, primarily due to capital expenditures of €319 million and a negative change in working capital of €366 million. The company maintained a solid balance sheet with a net cash position of €332 million excluding capitalized operating lease liabilities.

Strategic Initiatives

Expansion remained a key strategic priority for Jeronimo Martins in Q1 2025, with 71 new stores opened across its banners. Notably, Biedronka expanded into Slovakia with three new stores and its first distribution center in the country, marking an important step in the group’s international growth strategy. By the end of 2026, the company expects to have at least 50 Biedronka stores operating in Slovakia.

The following chart shows how each banner contributed to the group’s EBITDA growth:

Ara continued its expansion in Colombia with nine new stores and one new distribution center opened during the quarter. The banner maintained its assertive commercial strategy to respond to Colombian consumers’ saving needs in a challenging consumption environment.

In Portugal, Pingo Doce opened one store and remodeled 13 locations, while maintaining intense promotional activity to offset negative calendar effects on sales. The banner continues to operate in a highly promotion-driven consumer environment.

Forward-Looking Statements

In its final remarks, Jeronimo Martins acknowledged the increased uncertainty regarding geopolitical developments and socio-economic dynamics, which exacerbates the lack of visibility concerning consumer behavior. Despite these challenges, the company maintained its priorities:

For 2025, Jeronimo Martins expects to invest approximately €1.1 billion in its capex program, which remains the top priority for capital allocation. The company plans to open 130-150 net new Biedronka stores in Poland, around 30 new Hebe locations, approximately 10 new Pingo Doce stores, and more than 150 new Ara stores in Colombia.

The company also reaffirmed its commitment to sustainability, with targets including reducing the Group’s scope 1 and 2 emissions by at least 10% by 2026 compared to 2021, and limiting annual food waste to 2.5% of total food sales.

In conclusion, Jeronimo Martins delivered a solid performance in Q1 2025 despite challenging market conditions, demonstrating its ability to balance sales growth with profitability through price competitiveness and cost discipline. The company’s continued expansion, particularly into Slovakia, provides a foundation for future growth while its focus on sustainability addresses long-term environmental and social considerations.

Full presentation:

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