LISBON (Reuters) – Portugal’s second-largest retailer Jeronimo Martins on Wednesday posted a 23% jump in fourth-quarter net profit as soaring inflation boosted sales – especially in Poland, its key market – but also dented its margins.
The company, which netted 171 million euros ($185.65 million) from October to December, warned that food inflation remained high and only showed early signs of abating.
“Almost three months into 2023, inflation in the countries where we operate is more persistent than expected at the end of 2022, reducing consumer confidence and household purchasing power and continuing to put pressure on our margins and costs,” it said in a statement.
Consolidated sales in the last quarter of 2022 rose 23% to 7 billion euros, driven by the company’s market-leading Polish supermarket chain Biedronka, which posted a sales increase of 24% to 4.9 billion euros.
Although Polish consumers have grown more cautious and price-sensitive, spending on food has outpaced food inflation, which rose throughout 2022 to reach an average of 15.4%.
At home, supermarket chain Pingo Doce posted a 13.7% rise in sales to 1.2 billion euros, while in Colombia, its Ara stores booked 477 million euros in sales, up 38.5% from a year earlier.
Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 14.8% to 506 million euros in the quarter. The EBITDA margin fell to 7.2% from 7.8% a year earlier.
“Although a disinflation scenario is expected for this year, it is still difficult to anticipate the level of disinflation for the second half of the year,” the company said.
For the full-year 2022, Jeronimo Martins’ profit rose 27.5% to 590 million euros, while EBITDA increased 17% to 1.85 billion euros. Sales grew 21.5% to 25.4 billion euros.
The company added its capex programme is expected to be in line with 2022, with 45% of it in Poland.
($1 = 0.9211 euros)
(Reporting by Patricia Vicente Rua; Editing by David Latona and Richard Chang)