May 13, 2020 / 5:43 PM / 16 days ago

Jeronimo Martins posts sales growth during pandemic, future uncertain

LISBON (Reuters) - Portuguese retailer Jeronimo Martins on Wednesday reported an 11% rise in sales in the first quarter from a year ago but said it was too early to evaluate the impact of the coronavirus outbreak and suspended its investment in new stores.

Chief executive Pedro Soares dos Santos said in a statement the firm ended the first quarter of the year with a “remarkable sales growth (...) even when tested by an unprecedented threat: the COVID-19 pandemic”.

In Poland, where the company’s unit Biedronka is the largest food retailer, sales rose 12.6% to 3.3 billion euros despite the Sunday ban regulation which resulted in three fewer trading days during the first three months of the year.

However, Soares dos Santos said it was still “hard to predict the scale and depth of the ultimate effects of the pandemic” on Jeronimo Martins, which also withdrew its results guidance for 2020 due to the uncertainty.

Overall net profit dropped 44% to 35 million euros during the first quarter compared to the same period last year, a result “strongly impacted by exchange rate differences”, the company it said in the statement.

Jeronimo Martins recorded an EBITDA of 309 million euros, a 0.4% decrease over the same period last year, reflecting the initial effects of the pandemic on operating costs, it said.

Its overall EBITDA margin fell to 6.6% compared with 7.3% in the first quarter of 2019. Biedronka’s EBITDA margin dropped to 8.5% from 9%, also due to the impact of the coronavirus.

Given the current situation, the company’s board of directors decided to reduce the dividend payout to 30% of consolidated profits instead of the 50% initially proposed, it said.

If the impact of the pandemic is not as severe as feared, the board of directors could pay the remaining 20% throughout the year, it added.

Reporting by Catarina Demony and Sergio Goncalves, Editing by Andrei Khalip and Hugh Lawson

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