Jeronimo Martins Pe

Good morning, ladies and gentlemen, and thank you for joining this call to present our first quarter results. As a reminder, in our corporate website, you can find the results release, a slide presentation, and a fact sheet for the period. I would also like to highlight that in the appendix of this presentation, we have included the next three years' targets for each of our ESG pillars, promoting good health through food, respecting the environment, sourcing responsibly, being a benchmark employer, and supporting surrounding communities. Our banner started 2024 with strong market positions and prepared to operate against the backdrop of declining food inflation and high-cost inflation. We were aware that this combination would further increase competition in the markets, as all peers would need to fight for sales in a scenario of fading inflation. This was particularly visible in Poland, where competition has intensified with a heightened focus on price communication. Determined to maintain price competitiveness, all our banners grew like-for-like sales volume in the quarter, despite having operated with basket deflation, in the case of Biedronka and Tingo2, or with inflation close to zero, as it happened in Recheio and Ara. The very good sales performance allowed EBTA to grow in value. Nonetheless, as anticipated, EBTA margin was pressured and declined 26 basis points at consolidated levels. We ended March preserving a solid balance sheet, including a net cash position of 1 billion euros when excluding capitalized leases. I would like to remind you that the performance in the quarter was further supported by a positive calendar effect created by the leap year and the earlier Easter season, and by a favorable foreign exchange when translated in euros. Given the continuing decline of food inflation and the uplift of the minimum wages in the three countries, 17.8% in Poland, 7.9% in Portugal, and 12.1% in Colombia, the imbalance between the evolution of food prices and the evolution of costs was a common challenge in our three geographies. In Poland, household spending does not yet reflect the rise in real income, with consumers remaining extremely sensitive to price and promotions driven. As a result, the market has turned more competitive than ever. In Portugal, consumers remain strongly receptive to promotional activities, and in Colombia, the pressure on families is visible. Despite the fast recent fall in food inflation, prices continue to be high and there are no signs of improvements in the volume of food baskets. The results mirror the execution of our strategy and also the market context. Price investments drove pressure on gross margin. The impact of cost increases was mitigated by sales growth with the support of the calendar effect. All in all, Despite EBITDA margin pressure, EBITDA in value grew 13.9% or 5.1% at constant exchange rates. On the items below the EBITDA line, a couple of comments. The growth in financial costs that will persist throughout the year reflects, on top of the lease's capitalization effect, the increase in added debt financing that is denominated in Colombian pesos as established by the Group's Financing Risk Policy. This policy establishes that, as much as possible, businesses are to be financed in the currency in which they invest and generate cash flow. Other losses that were at 49 million euros include an initial endowment of 40 million euros to the Jerónimo Martins Foundation, which was created mid-March this year. This foundation intends to develop its mission among the group's employees and their families, and in addition, the community in general, especially in response to situations of socioeconomic vulnerability. All in all, net earnings, excluding other profits and losses of non-recurrent nature, were broadly in line with the same quarter of the prior year. Cash flow generated in the period was minus 168 million euros, with the negative effects over the working capital, with both the usual post-Christmas seasonal outflow and deflation register. The positive effect of Easter by the end of the quarter allowed for some mitigation. We ended March with a positive cash position of 1 billion euros. To remind you that the dividends in the total amount of 411.6 million euros were approved at our AGM last week, and will be paid on the 15th of May. I will now guide you through our sales performance. All banners contributed to group sales growth, leading to a 5.5% like-for-like in the period, primarily driven by the increasing number of clients attracted by very competitive prices as our main banners operated with basket deflation. As already mentioned, this performance was also supported by a positive calendar effect. Total sales grew by 18.6% or 9.9% at constant exchange rates. Biedronka kept a relentless commercial dynamic to fuel its intense promotional activity and delivered sound like-for-like despite having operated with a relevant negative inflation in its basket over the period. In fact, Sales volume growth was the key driver of the performance. Our main banner continued to register a relevant gap versus the country's food inflation. Sales growth came also from expansion and from remodeled stores. Over the three months, the banner opened 28 stores, 27 net additions, and refurbished 62 locations. All in all, This remarkable performance led Viadronka to once again gain market share, plus 0.7 percentage points year-to-date February, according to GFK. Hebe grew total sales in local currency by 28%, 18.2% like-for-like. The solid sales performance reflected the strength of the banner's value proposition and its investment in growing in the online channel, which represented 20% of total sales in the quarter. Our health and beauty banner opened seven new stores and in March with 350 locations in Poland and two flagship stores in Prague. In Portugal, consumer demand remains subdued with a cautious consumer favoring promotions and saving opportunities. Pingu2 posted an 8.3% sales growth and a 9.5% like for like excluding fuel. despite having operated with deflation over the quarter. The continuous promotional activity and the increased contribution of meal solutions drove this robust performance. Investment was focused on rolling out the all-about food store concept, and 19 stores were remodeled in Q1. The banner opened one store in the period. Recheio delivered a solid performance against a very demanding comparison versus Q1 2023, also considering some pressure felt on the Oreca segment that had been growing significantly since the pandemic period. Our cash and carry business remodeled one of its stores in the south of Portugal, continuing to reinforce its overall value proposition. In Colombia, the recent inflationary period was more accentuated and lasted longer than in Portugal or Poland. As a result, food prices remained quite high, particularly for the vast majority of the Colombian families that lost significant income in the last four years. ARA maintained an intense commercial activity offering the best value for consumers. The underlying strategy, together with a renewed promotional dynamic, delivered well in Q1, with like-for-like reaching 5.8%. The company continued to invest in its infrastructure and opened 27 stores in the first three months of the year and one new distribution center in January. The clear focus on key priorities and effective execution of our strategy led ABTA to grow 13.9%, 5.1% at constant exchange rates driven by sales. As expected, the investments made to keep prices low and the inflation registered on costs put pressure on ABTA margins despite the positive calendar effects. Group ABTA margin fell to 6.3% from 6.6% in Q1 2023. At Piedronca, the margin pressure was driven by increased price investment together with higher labor costs. Hebe margin increased driven by sales performance. In Portugal, execution of the intense promotional dynamics pressured margin. And finally, in Colombia, ADA is working in all fronts to protect margin in year. However, against the difficult comparison with the prior year, price investments pressure the BTA margin for the quarter. Summing up, as anticipated, we faced in this first quarter full deflation, high cost inflation, subdued consumer demand, and more intense competition. In light of this context, we remained firm in our commitment to offer low prices and good promotions. The consistency of this strategy and the quality of the value propositions delivered solid volume growth that helped to limit the pressure on margin, and to reinforce our market positions. We acknowledge that Q1 numbers also benefited from a positive calendar that will somewhat reverse in Q2 and will impact sales growth and put further pressure on margin. Notwithstanding, as we look ahead and against an extremely challenging backdrop, our strategic priorities are kept unchanged. To guarantee consumer preference, pursuing growth by investing in price, in the quality of value propositions, and in our store network expansion, and to work on all fronts to reinforce efficiency and protect profitability. Thank you for your attention. Operator, I am now ready to take questions.

Thank you. To ask a question during the session, you will need to press star 1, 1 on your telephone keypad and wait for your name to be announced. To withdraw a question, you will need to press star 1, 1 again. Please stand by while we compile the Q&A roster.

You will take our first question. Please stand by.