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UPDATE 1-J.Martins Q2 profit dips 4 pct, sales up
July 25, 2012 / 7:18 AM / 5 years ago

UPDATE 1-J.Martins Q2 profit dips 4 pct, sales up

* Net profit 84 mln euros vs 90 mln euros fcast

* Sales up 6 percent at 2.67 bln euros

* Polish slowdown weighs on sales growth (Adds quotes, details)

LISBON, July 25 (Reuters) - Portuguese retailer Jeronimo Martins on Wednesday posted a 4 percent drop in second-quarter net profit, hit by an economic slowdown in its key market Poland and a recession at home.

Net profit of 84 million euros ($101.5 million) missed an average forecast of 90 million euros in a Reuters poll of analysts. For the first six months of the year, net profit was still nearly 6 percent higher at 152 million euros.

Jeronimo Martins, which is the second-largest retailer in Portugal and Poland’s largest food retail firm via its Biedronka discount chain, said total sales rose over 6 percent in the quarter from a year ago to 2.67 billion euros, compared with 2.69 billion expected by analysts.

Earnings before interest, taxes, depreciation and amortization (EBITDA) edged up 1.5 percent in the quarter to 174 million euros. Analysts had forecast, on average, EBITDA of 177 million euros.

Biedronka’s like-for-like sales rose 4.7 percent compared with over 20 percent a year earlier.

“The recent slowdown of the Polish economy has also caused a slowdown of food retail sales ... with an impact on Biedronka’s quarterly performance,” Jeronimo Martins said in a statement.

But it said Biedronka’s business model and market leadership in Poland were key for success even amid a slowdown.

“As for the whole group, the strong performance in Poland allows us to confirm positive prospects for 2012 in terms of sales growth and results,” the company said.

Like-for-like sales at Jeronimo Martins’ main Portuguese unit Pingo Doce rose 2.4 percent despite a shrinking overall market as the company embarked on a discount campaign, which brought a 14 percent drop in the unit’s EBITDA for the first six months. The campaign will continue in the second half.

Portugal is taking painful austerity measures to slash its budget deficit under a 78-billion euro EU/IMF bailout plan. The economy is expected to contract 3 percent this year after shrinking 1.6 percent last year.

$1 = 0.8275 euros Reporting By Andrei Khalip

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