Jeronimo Martins, Sgps ((JRONY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Jerónimo Martins, Sgps, showcased a resilient performance in their latest earnings call, highlighting strong sales growth and expansion efforts despite facing significant market challenges. The company expressed a commitment to social and environmental initiatives, although pressures on EBITDA margins and cash flow presented operational hurdles.
Sales Growth Despite Challenges
Jerónimo Martins reported a commendable 9.3% sales growth in 2024, achieving a 4.9% increase at constant exchange rates. This growth was accomplished despite facing market adversities such as basket deflation and heightened competition, underscoring the company’s robust market strategies.
Successful Expansion Program
The company’s expansion strategy proved fruitful, with the opening of 385 new stores and the remodeling of 350 existing ones, significantly boosting market share, particularly in Poland and Colombia.
Pingo Doce and Ara Performance
Pingo Doce achieved a significant milestone by crossing the €5 billion sales mark, while Ara’s sales surged by 17%, surpassing €2.7 billion, marking substantial achievements in their respective markets.
Social and Environmental Initiatives
Jerónimo Martins demonstrated its commitment to social and environmental goals through the establishment of the Jerónimo Martins Foundation with a €40 million endowment and initiatives aimed at achieving carbon neutrality by 2050.
Pressure on EBITDA Margins
The group faced a decline in EBITDA margins, which fell to 6.7% from 7.1% in 2023. This was primarily due to the challenges of basket deflation and significant cost inflation.
Negative Cash Flow
The company reported a negative cash flow of €62 million before dividend payments, attributed to substantial investments and operational challenges.
Labor Costs and Market Competition
Increased labor costs and intense market competition, especially in Poland, pressured margins and necessitated significant investment to maintain market positions.
Challenging Consumer Environment
Consumer demand remained weak, with cautious spending patterns observed in key markets, impacting overall sales dynamics.
Forward-Looking Guidance
Looking ahead, Jerónimo Martins plans to invest around €1.1 billion in 2025 to support further expansion and reinforce market positions. The company aims to maintain competitive pricing and operational efficiency amidst challenging market conditions. The Board has proposed a €370.8 million dividend distribution and a €40 million endowment to the Jerónimo Martins Foundation.
In summary, Jerónimo Martins, Sgps, demonstrated resilience and strategic foresight during their earnings call, with strong sales growth and expansion efforts. Despite facing operational challenges, the company’s commitment to social and environmental initiatives and future investment plans highlight its proactive approach to maintaining market leadership.