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Operator: Good day, and welcome to the Jerónimo Martins First 9 Months 2025 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Ana Luisa Virginia , Chief Financial Officer of Jerónimo Martins Group. Please go ahead, madam.
Ana Virgínia: Thank you, Sharon. Good morning, ladies and gentlemen, and thank you for joining this call dedicated to our first 9 months results. As usual, in our corporate website, you can find the results release, a slide presentation and a fact sheet for the period. The first 9 months of 2025 continue to be defined by the ongoing global geopolitical uncertainty that is also shaping consumer sentiment and fostering a more cautious value-driven approach among shoppers. Against this challenging context, price remains at the heart of our strategy across all banners. Every team worked hard to uphold our promise of price leadership and to create an attractive quality assortment, securing customer preference and driving sales growth. The reinforced commitment to cost discipline, operational efficiency and productivity paid off and ensure that EBITDA margins remained robust despite the tough combination of low basket inflation with high cost inflation in extremely competitive backdrops. Meanwhile, our ambitious CapEx program is being executed as planned, reaching EUR 816 million in the period with the opening of 274 new stores and the renovation of 170 locations. The balance sheet kept its robustness, closing September with a net cash position, excluding capitalized leases of EUR 467 million. All in all, our 9 months results are solid and show that our banners' business models are agile and prepared to adjust and respond to the current circumstances. Looking now at the P&L, I'm going to focus on the 9 months figures and flag a couple of things. On sales, our banners delivered well overall, driving the group's top line to grow by 7.1% or 6.6% at constant exchange rates to EUR 26.5 billion. EBITDA reached EUR 1.8 billion, 10.9% up on the same period of the previous year or a 9.9% growth at constant exchange rates. EBITDA margin was 23 basis points up versus the 9 months of 2024, reaching 6.8%. This performance is the result of good sales delivery combined with cost management and productivity measures, which more than compensated for price investment and cost inflation. The execution of the investment program is reflected in the evolution of both depreciation and net financial costs as the later also includes the interest expense of capitalized leases. The other profit and losses heading incorporates indemnities, write-offs and provisions as well as the allocation of EUR 40 million from the 2024 results to the Jerónimo Martins Foundation. Cash flow for the period, excluding the dividends paid in May, was at EUR 128 million. The 2 most important things to highlight here are the improved funds from operations following the solid sales and EBITDA delivery and enhanced working capital flows, which reflect the different growth dynamics compared with the same period of prior year and stricter stock management. As already mentioned, by the end of these first 9 months, thanks to the good sales performance and despite the execution of our ambitious CapEx plan, the balance sheet remains solid, including a positive cash position of EUR 467 million. Looking now into the detail of the performance, I will start with the top line. Group sales grew by 7.1%, 6.6% at constant exchange rates to EUR 26.5 billion, including a like-for-like of 2.4% and a solid contribution from expansion. All banners did well with Biedronka in particular, adding EUR 1 billion of sales at constant exchange rate in the 9-month period. In Poland, the market context continued to be highly competitive and consumer behavior remained cautious, focusing on low prices and promotional offers. Throughout its 30 years history in the country and in a meaningful way also this year, Biedronka has kept Polish families' needs and expectations at the heart of its offering. The banner maintained its price leadership and continue to offer the best savings opportunities while working to constantly evolve its assortment and improve its store network, having opened 111 new stores and remodeled 110 in the 9 months. Sales grew by 7.4% to EUR 18.8 billion, or 5.8% in local currency, with like-for-like at 1.8% despite the challenging comps. The like-for-like growth and the expansion of the store network resulted once again in market share gains. HeBe operated in a context that became increasingly price competitive, which combined with muted consumer demand strongly pressured like-for-like growth. Sales increased by 6.9% or 5.3% in local currency to reach EUR 451 million. Over the period, HeBe opened 13 stores in Poland, net -- 10 net additions and 2 in the Czech Republic. The banner is focused on reinforcing its offer differentiation and competitiveness while protecting its price positioning in the current context. In Portugal, consumers remain promotion oriented. Pingo Doce kept its intense commercial strategy, guaranteeing its leading price positioning. This dynamic, together with the contribution from the All About Food stores drove solid like-for-like growth. The banner opened 5 stores and steadily advanced in its remodeling program, having renovated 38 stores throughout the 9 months. The renewed store concept enhances the differentiation and uniqueness of the assortment, particularly in perishables and ready-to-eat meals. Sales grew by 5.4% to EUR 3.9 billion and like-for-like, excluding fuel, was up 4.1%. Recheio enlarged its client base and benefited from the competitiveness of the offer designed for the HoReCa channel, which combines price with quality of the assortment and a special emphasis on fresh and on the service provided to clients, particularly the Amanhecer partners. Against the difficult comparison with the same period in the prior years, our wholesale banner grew sales by 2.6% to reach EUR 1 billion with like-for-like at 2.4%. In Colombia, despite some improvement in consumer demand, Ara continued to face a difficult backdrop and maintained an intense commercial dynamic, offering the best saving opportunities for the Colombian families. With like-for-like growth at a solid 5.6% and a strong contribution from store network expansion, sales in local currency increased by 16.9%. In euros, sales reached EUR 2.3 billion, 9.6% up on the 9 months of 2024. This performance reflects our Colombian company's strong focus on growth that fueled its top line through intense promotional dynamics on one hand and the delivery on its expansion ambition on the other. This expansion included the opening of 135 stores over the period, of which 70 resulted from the integration of stores previously operated by Colsubsidio. Consolidated EBITDA grew by 10.9% or 9.9% at constant exchange rates to reach EUR 1.8 billion. This solid performance was driven by increased sales and effective cost and productivity management. All companies managed extremely well the challenging combination of price investment and cost inflation, particularly in wages. Never losing sight of our growth ambition and working efficiently and productively, all banners delivered good margin performance despite the muted consumer context, particularly in Poland. Group EBITDA margin was at 6.8%, up from the 6.6% registered in the 9 months of 2024. At Biedronka, EBITDA margin performance was driven by an assertive combination of sales growth, cost control and efficiency gains. At HeBe, while like-for-like was impacted by the market context, the focus on tightening cost discipline and working to shield product mix allowed for EBITDA margin protection. In Portugal, an effective promotional strategy drove sales growth, which together with reinforced productivity measures also preserved EBITDA margin. In Colombia, Ara's good performance benefited both from sales growth and the work initiated in 2024 to protect gross margin and mitigate the impact of inflation on costs. Wrapping up, amidst a backdrop of global geopolitical uncertainty, consumer behavior remains somehow restrained and predominantly price focused, contributing to intense competitiveness in food retail. During this period, we also continued to face cost inflation, particularly in wages. Despite these challenging conditions, we achieved solid sales growth. On top of the positive contribution of like-for-like, a recognition of our unwavering commitment to offer leading prices, the strategic expansion of our store network also played a decisive role. The combination of robust sales, cost discipline and operational efficiency translated into strong EBITDA delivery. With the Christmas and New Year season approaching, we will stay focused on offering the best saving opportunities and ensuring an agile responsiveness to the needs and wants of our customers so that they keep choosing our stores every time. Thank you for your attention. Operator, I am now ready to take questions.
Operator: [Operator Instructions] And your first question today comes from the line of William Woods from Bernstein.
William Woods: When we look shorter term, why do you think you can't pass on basket inflation in a normalized way just yet? And I suppose, have you seen any improvement in that basket inflation over the last few months? And also, when you look at your market share gains, are you able to give us any idea in Poland, how much market share you've been gaining either over the last year or 2 or something like that? And then when you look longer term in Poland, in particular, how confident are you that you can see margin recovery in that midterm view? Is there any reason why you don't think you could get back to 8.5%, 9% like you were achieving a couple of years ago?
Ana Virgínia: So on basket inflation, of course, we are not alone in the market. The Polish market continues to be very, very competitive. And this -- it's true that this comes a long way but we know that considering the context and the fact that we are and we keep operating in a low basket inflation versus a still high cost inflation. This means that all players are more pressured, and this tends to intensify really the competition in the market. So I think that's what Biedronka intends to do is to keep its price leadership, as we said. This is really relevant in the current context. So currently, what we have to work for really is to make sure that we are and we continue to be the leaders in price. This being said, of course, it's a different situation, as I've been saying this year, it's a completely different situation to work even with low inflation than to work in deflation, which was the case last year. And of course, this really drives the performance, not only on the margins but particularly and also on the balance sheet, considering our business model, the way that it is crafted. So I think that we are not so keen in passing the whole inflation. The idea here is to really become or continue to be the most competitive to maintain the preference of consumers to make sure that through sales, we are able to dilute the costs and of course, to protect our profitability because growth is also important, as I said, for the return on invested capital as a whole. On market share gains, according to JFK, so it's the base and the source that we have, we continue to gain market share. Up to August, we gained 0.2 percentage points of market share. And I believe that in September, we even gained a little bit more than that but the numbers are not still out. So I think this -- and I have to say, it's an incredible performance by Biedronka's team, considering that we are growing on top of growth. And it's true that EUR 1 billion is not the same percentage when you are delivering EUR 25 billion in sales than when you were delivering billion EUR 20 million but it's really a terrific performance by our Polish banner. On the margin recovery, of course, this, as I said, I think that we are -- we know that we are becoming more leveraged from the P&L point of view when we work with lower margins. But the fact is that we had to prepare to work with high cost inflation and of course, still being in a collection move considering the low inflation of 2022 and 2023. So what -- if it's possible, this will really depend on the whole market. And what we are seeing, as I flagged, is still a consumer that is cautious, a consumer that doesn't see reasons to trade up in food. And of course, it's possible, but I don't think at this point will be our main priority. The main priority is really to protect profitability considering the whole business model and the -- as I said, the return on invested capital more than just the EBITDA margin or EBIT margin.
Operator: And the next question comes from the line of Jose Rito from CaixaBank.
José Rito: Sorry if I didn't get if you comment anything related with weather. We had some other players calling attention to the weather impact in Q3. Can you quantify how much was this impact for Jerónimo in Poland, please? That will be the first question. And then the second question I have is related to this OpEx evolution. OpEx as percentage of sales has been evolving well. What has been the main contributors to this? So what has been the cost lines that have been evolving below sales?
Ana Virgínia: Thank you, Jose. So on the weather, we do not quantify, of course, the impact as we also don't quantify when the weather is good. So it's a circumstances that affects all players. And of course, we have to deal with that. It's true that affects some categories that usually are margin driven. But this being said, we don't isolate the effect in our performance. It's something that we have to deal with. On OpEx, so this has 2 main reasons, of course. One was all the measures in terms of cost control that were taken. And this a little bit in anticipation of what we were seeing in the market. So as you know, and having as a proxy, the minimum wage increase that has happened in our main markets, which was basically a very high single digits and knowing that it would be almost impossible to grow at that pace, all the banners started to implement a series of different initiatives to increase productivity and to make sure that regardless of the sales growth, they would somehow protect the profitability without losing, as I said, the competitiveness and losing the consumers' preference. And of course, the fact that we performed, in my opinion, well at the top line also helped to dilute and this was across, in fact, all banners, even in HeBe that had a more difficult context and is still operating with a high deflation, in fact, even -- he took some measures but that were already being prepared because of the context that we knew we would face this year.
José Rito: Okay. Understood. So on the weather and I understand your answer on -- there is always positives and negatives. But can you at least say if now what we are seeing is more neutral relative to the weather in October? That will be the first. And the second one as a follow-up on the efficiency gains and be remind how much was the minimum wage increase this year. So the minimum wages next year will be much lower than this year if the efficiencies are there. So I would say that if top line momentum remains, so operating leverage could be even more in 2026, right?
Ana Virgínia: Okay, Jose. So still on the weather. So what I know is that it continues to be challenging but it's now the season of bad weather. So I think that we should not depend very much on the weather to assess our full year results, to be honest. On the -- still on the OpEx. So it's true that the announcement, at least in Poland, because in Portugal, it's a little bit higher than that. And probably in Colombia, where there will be elections, we will see also an increase in salaries that is higher than the 3%. But this being said, we have to notice that it's not just a question of the increase in the minimum wage. We are facing very tight labor markets. We know that the immigration is also a question to see how we will deal with some constraints or some restraints in the different countries. So I think that we face still a very challenging backdrop in terms of wage increases or not. So if it's going to be 3%, this will also depend on the market dynamic and on making sure that we have the proper teams in place to continue to deliver our value propositions to our customers. The rest, of course, growing -- even growing in Poland at 3%, which would be -- and usually, you do that relation with the increase in costs. The question is that this will depend a lot as we are -- first of all, we have a very challenging base to grow from. And on the other hand, this will also depend on the consumer background and on how things evolved. And we continue to see a lot of volatility and still a lot of, let's say, muted consumer demand all across. So I wouldn't say that, yes, we are facing a more or less challenging context because the minimum wage increase or just because the minimum wage increase is lower this year than it was last year. In fact, we are growing from a much higher base than it used to be.
Operator: [Operator Instructions] We will now take the next question and your next question today comes from the line of António Seladas from A|S Independent Research.
António Seladas: Just a quick question in terms of working capital. It seems that figures are now stabilizing. So should we expect a more normal pattern from now on in terms of working capital? Or do you think that pressure that we saw in the recent quarters will continue?
Ana Virgínia: Thank you, António. So on working capital, of course, as I mentioned, we are highly leveraged from the operational point of view. It is the nature of our business model. And of course, when we have growth and particularly when there is no deflation, the working capital goes or works in favor of us as a tailwind. And so I think that the correction move that there was in the market last year was penalized the working capital. At this point, what we are seeing, of course, is a different situation. So as I said, the growth dynamic is different and the working capital is better in this sense. This being said, I have to say that there was also a very significant work, particularly by the teams in Portugal and in Poland at the stock levels to make sure that overall, our profitability model works also on the working capital. So I think that's we can consider stabilized but it will depend again on the level of growth to continue to have the working capital being positive. And at this point, I wouldn't see that there wouldn't be working for us in the last quarter of the year.
Operator: [Operator Instructions] There are currently no further questions. I will hand the call back to Anna Luisa. Please go ahead.
Ana Virgínia: These 9 months results translate our banner's commitment and hard work to deliver against a very volatile geopolitical context whose impacts on the economic agents, including consumers are still far from being totally visible. Entering now the last quarter of the year and the crucial Christmas and New Year's period, we remain focused in responding to our customers' needs while continuing the key investment projects that are still to be concluded before the year-end. Thank you for your questions and for attending this conference call. I wish you all a nice day.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.