Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Jeronimo Martins (ELI:JMT) shares dropped more than 5% Friday after the company warned that competitive market conditions would persist in the second half of the year despite second-quarter results ahead of expectations.
The Portuguese food retailer posted Q2 revenue of €9.02 billion, exceeding the consensus estimate of €8.99 billion.
EBITDA rose to €620 million, above the forecast of €598 million, while earnings per share reached €0.31, slightly ahead of the €0.30 estimate.
The performance was lifted by stronger margins and like-for-like (LFL) sales in Colombia and Portugal.
Ara, the company’s Colombian discount chain, delivered 7.7% LFL sales growth, beating the 4.0% consensus. Its EBITDA margin expanded by 130 basis points to 4.4%, topping expectations of 3.8%.
In Portugal, Pingo Doce reported 6.5% LFL growth versus 5.4% forecast, while Recheio posted 3.5% growth compared with 2.9% expected.
The combined performance raised the Portuguese EBITDA margin to 5.7%, a 33-basis-point improvement and ahead of the 5.4% consensus.
Biedronka, Jeronimo Martins’ Polish discount banner and largest contributor to group sales, reported 5.3% LFL growth, including an estimated 200-basis-point Easter timing benefit.
Adjusted for calendar effects, underlying growth rose from about 1% in the first quarter to roughly 3.3% in the second.
Total (EPA:TTEF) sales at Biedronka reached €6.41 billion, narrowly above the €6.39 billion estimate. EBITDA margin rose by 22 basis points to 7.7%, in line with expectations.
Jefferies analysts noted that some had anticipated a larger margin expansion at Biedronka, given favorable base effects and improved trading conditions. However, the report cited higher promotional activity as a limiting factor.
Jeronimo Martins revised its outlook language, stating that “market competitive dynamics will stay fierce,” replacing earlier guidance that described such pressures as concentrated in the first half.
The company also trimmed its full-year capital expenditure guidance from about €1.1 billion to “slightly above €1 billion,” which Jefferies linked to fewer planned store renovations at Biedronka.
Financial net cash declined by €181 million in the quarter, leaving a balance of €213 million.
“We believe that some of the elevated expectations for Q2 margin expansion have come down in recent weeks, as per the P/E premium vs European food retailers falling from 60% in early Jul to 41% now (and vs a 10yr avg of c.60%),” said analysts at Jefferies in a note.