Jeronimo Martins shares tumble on weaker core margins (updated)

Jeronimo Martins SGPS SA

25/07/2024 09:03

(Recasts with share price move, adds analyst view)
       LISBON, July 25 (Reuters) - Shares in Portuguese
retailer Jeronimo Martins  JMT.LS  fell more than 13% on
Thursday after it reported first-half margin weakness and warned
that this could worsen in the coming months.
    The group said its margin on earnings before interest, tax,
depreciation and amortisation (EBITDA) over the period decreased
to 6.4% from 6.9% a year earlier.
    The margin at its market-leading Polish chain Biedronka fell
to 7.6% from 8.5%.
    "The lack of consumer dynamism has also contributed to the
noticeable intensification of competition in the food market,"
the company said, referring to its Polish business.
    Chief Executive Pedro Soares dos Santos said that "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.
    J.P.Morgan analysts said they were "cautious" on the outlook
for the second half.
     Jeronimo Martins' net profit dropped 28% year on year in
second quarter to 156 million euros ($169 million) as a decline
in margins from food price deflation offset higher sales at
Biedronka.
    Consolidated second-quarter sales rose 6.8% to about 8.2
billion euros, helped by a 5.7% increase at Biedronka, where
sales reached around 5.8 billion euros.
    However, Biedronka's like-for-like sales in Polish zlotys
fell by 4.6%, having risen by 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.

($1 = 0.9214 euros)

 (Reporting by Sergio Goncalves and Matteo Allievi
Editing by Charlie Devereux, Diane Craft and David Goodman)
 ((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters
Messaging: sergio.goncalves.reuters.com@reuters.net))