Jeronimo Martins Pe

Good morning, ladies and gentlemen, and thank you for joining this call. Before I take you through the Jerónimo Martins 2024 full year results, I will give the floor to our chairman and CEO, Mr. Pedro Soares dos Santos. Mr. Pedro Santos, the floor is yours.

Thank you, Ana. Good morning, ladies and gentlemen. One year ago, on the occasion of the 2023 results disclosure, I told you we expected nothing to be easy for us in 2024. Why? Because we were seeing since the end of 2023 a very dangerous combination of cost inflation, mostly in labor, and sharp decrease of food inflation. And indeed, last year was a very tough one in all countries where we operated, and particularly in Poland. I'm glad we were prepared to work hard and invest to fight for volumes and reinforce our market position. Contrary to 2023, when we recognized the help from inflation to our sales growth in 2024, our banners operated with basket deflation. This translated into a relevant slowdown in sales growth, which nevertheless had it with the help of the currency effect nearly 3 billion euros to be to the 2023 consolidated turnover. Expansion and remodeling played an important role in feeding growth and has the group in the year we opened 385 new stores in average more than one store per day and remodeled around 350. Biedronka that represents 70% of the group's sales, face very strong competition for volumes and invest to secure price leadership and volumes growth in a food retail market that decrease volumes. I am proud of the performance of the Polish Biedronka team that on top of the outperforming weak market, Phil managed to help shape the launch of the new operation in Slovakia that took place in the first week of this current month. Regarding our health and beauty business, Heather posed very positive sales growth, counting both on expansion with 39 openings of each tree outside of Poland and a very healthy life for life. I confess that in the future, I expect more contribution from the e-commerce channel that represents now 20% of the total site. Profiting also from the group's 1 billion euros CapEx program in the year, Pingodos continues to roll out its All About Food concept, which highlights the balance differentiation factors, meal solution and fresh, and contributes to the improvement of the margin mix. Also, ARA has been working on its mix while being very assertive regarding competitiveness. Total sales grew at two digits and surpassed 2.7 billion euros in the year. Despite the fact that poverty levels have not improved the social and social economic environment remains very difficult our colombian operations evolution give us reason to believe that the potential we saw in the country is all there we are deeply committed to colombia and i'm proud also of the social investments we are making in the country to support the most vulnerable children and families an investment which was recognized by the portfolio newspaper with its Social Responsibility Award. The destiny of companies is totally dependent on the destiny of the society that we belong. Based on this belief and our solid net cash position at the year-end, the Board will propose to the shareholders meeting the payment from the net earnings of 40 million euros as an endowment to Jerónimo Martins Foundation. I propose to pay dividends in line with our definite policy will also be made. Leading up to our responsibilities towards our stakeholders implies safeguarding our ability to deliver profit and sustainable growth. In a very tough such as the ones where our business are facing, that means keep pushing hard for sales and market share, while ensuring costs are under control to the maximum possible extent. We are aware that labor costs will continue to rise, and we will need to try to compensate for that, both by growing sales and by increasing efficiency. We will keep investing in our business and securing the necessary conditions for the future growth. It is my belief that in the business, what does not grow starts dying. And this is why we cannot afford entering into a replication mode. We need to protect and reinforce our leadership positions by behaving like challengers that never take anything for granted. We need always bear in mind the reasons why we exist as a business, to serve consumers better than our competition, to offer the best value for money in a shopping environment that reflects our respect for those who choose us. To do that is not a small thing, but we can do it. We did it before and we will do it again even if know that 2025 will certainly not be a walking in the park the teams are ready focused and motivated and the game is on i know we will take you through the full year results thank you for that thank you chairman as a reminder in our corporate website you can find the results release a slide presentation and a media presentation for the year

In 2024, all the risks and market dynamics that we've anticipated one year ago materialized. Food inflation fell rapidly, driving our banners to operate with basket deflation. Labor costs rose significantly, and adding to this already very challenging combination, consumer demand was weak, particularly in Poland, and competition amongst players was more intense. We remain focused on serving our consumers ensuring price competitiveness and enhancing our value propositions. As a result of the investments made, we delivered 9.3% sales growth, 4.9% at constant exchange rates, driven by volumes and a significant contribution from our store expansion program. As expected, a BTA margin was pressured by the operational deleverage generated by the combination of basket deflation and significant cost inflation. Consolidated pre-tax ROIC was pressured, was strong at 20%, even if down on the exceptional levels registered in the past couple of years. And despite the 1 billion euros of CAPEX, we ended the year with a solid balance sheet and a net cash position, excluding IFRS 16, standing at 726 million euros. Despite all the challenges and hard work to deliver growth, we also made good progress on our sustainability agenda. Later this month, we will publish our annual report, which will provide detailed information on what the team delivered on all fronts of our corporate sustainability agenda, as well as our targets going forward. For now, I would highlight a couple of achievements. On the social front, I would mention the newly established Jerónimo Martins Foundation with an initial endowment of 40 million euros. This foundation will, from 2025, broaden the reach of the group's social initiatives. Its mission is to contribute to the work done among the group's employees, their families, and the community in general, especially in response to situations of socioeconomic vulnerability. Second, I also highlight the efforts made to get approval by the Science-Based Targets Initiative of our short-term and long-term targets to achieve carbon neutrality by 2050. Although our work in this area has begun years ago, much remains still to be done, and we are making steady progress to achieve this important goal. One of the key challenges we faced in 2024 was the decline in food inflation. a sharp correction following the extraordinary price hikes of the previous two years. However, food prices stood relatively high, and despite increases in households' real disposable income, consumers remained cautious and promotions-oriented. Sales growth was driven by increases in volumes and in number of clients, as well as by expansion that limited the impact of basket deflation. Gross margins were supported by positive mix in Colombia and Pingudos, as all banners invested to maintain their price competitiveness. The impact of basket deflation, coupled with significant wage increases, brought greater EBTA margin pressure and operational deleveraging. In total, Group EBTA reached 2.2 billion euros, an increase of 2.9%, or a decline of 1.7%, at constant exchange rates, with the respective margin 41 basis points lower than in 2023. Execution of our CAPEX program resulted in higher depreciation charges, while net financial costs increased due to the capitalization of leases. The financial costs also include the impact of a higher average debt level with increased interest rates in Colombian pesos. Our losses and gains amounted to €119 million, including the initial endowment of €40 million of the Jerónimo Martins Foundation, write-offs resulting from refurbishment, and restructuring costs. It also incorporates the payment of €27 million in bonuses awarded on an exceptional basis to our operation team in recognition of their high level of commitment in an incredibly demanding year and their tireless work to increase sales volumes and contain the impact of deflation also on the company's profitability. Net earnings per share, excluding other losses and gains of a non-recurrent nature, fell by 14.5%. Overcoming the impacts of the slowdown in sales resulting from basket deflation across all our different banners, cash flow for the year before dividend payments was minus 62 million euros. As already stated, despite having increased more than 1 billion euros, the group ended the year with a strong balance sheet and a positive cash position of 726 million euros when excluding IFRS 16. Considering the solid financial position and the consolidated and individual net earnings for 2024, the Board of Directors will propose to the General Shareholders Meeting the distribution of €370.8 million of dividends in line with the defined policy. Flexibility to pursue our expansion plans and to take advantage of potential non-organic growth opportunities are therefore safeguarded. In accordance with the company's articles of association, the Board of Directors also proposes allocating an endowment of €40 million to the Geronimo Martins Foundation from the 2024 net earnings. In 2024, of the €1 billion investment program, expansion accounted for 40%, with the opening of a total of 385 new stores, or 352 net additions. Biedronka continued to strengthen its market presence, having opened 186 new stores and refurbished 280 locations. benefiting from its flexibility and know-how to adjust the format in order to deliver the best performance in a given location. Hebe opened 36 new stores in the Polish market, 33 net additions, and also two stores in Slovakia and another one in Czech Republic. PINGDOS continued to roll out its differentiated all-about food concept, refurbishing 64 stores. Our food retail banner in Portugal also opened 10 new locations, corresponding to seven net additions. ARRA successfully implemented its expansion program, opening 150 new stores and ending the year with 1,438 locations. To support our Colombian banners expansion, a new distribution center opened in early 2024 and further investments in logistic facilities were made, notably in another DC that already started operating at the beginning of 2025. I will now guide you through the detail of the performance, starting with sales, which grew by 9.3%, 4.9% at constant exchange rates, to reach €33.5 billion. The basket deflation at Piedronka and Pingo 2 slowed growth. However, Good volumes and the ambitious expansion of our networks more than offset the deflation and drove market outperformance. Group like-for-like was at 0.6%, with volume growth compensating for basket deflation in Biedronka and Pingdós as referred. Biedronka worked relentlessly to offer Polish families the best saving opportunities and maintain the stronger commercial dynamics securing its price leadership and once again earning the preference of consumers. The basket deflation throughout the year pressured like-for-like growth, which was minus 0.3% in 2024. However, Biazronca drove sales volume growth amidst negative volumes in the food retail market overall and against its strong performance in 2023. It also increased its market share by 0.3 percentage points in the year. Total sales grew by 9.6% plus 4.1% in local currency to reach 23.6 billion euros with a solid contribution from expansion. In a context that became increasingly competitive, Hebe recorded a successful year. It leveraged its competitive commercial strategy and quality assortment with many exclusive products, posting 24.3% sales growth 18.1% excluding foreign exchange, including a like-for-like of 8.5%. Online sales also drove growth and represented around 20% of total sales. PING2 maintained an intense commercial dynamic and enhanced its popular promotional campaigns. The banner continued to expand its store concept, reinforcing its unique offer in meal solution and fresh products, and delivered strong sales growth of 4.5%, surpassing the €5 billion milestone when including fuel. Like-to-like excluding fuel was at a healthy 4%, despite the deflation registered in the basket. Against the difficult comparable versus prior years and a fairly weaker consumption in the ORECA channel, notably in restaurants, Shell leveraged its customized value propositions and maintained a strong momentum, gaining new customers in all its segments. Sales grew 1.9%, with a like-for-like of 2.1%. ADA executed its commercial strategy, offering good saving opportunities to Colombian families and strengthened its market position. Sales grew 17%, or 11.1% in local currency, to reach 2.9 billion euros. like for life reflected the shy consumer demand together with falling basket inflation i would like to highlight the strong contribution from expansion to growth consolidated the bta grew 2.9 to 2.2 billion euros while at constant exchange rates it reduced 1.7 percent at the bta at Piedronca, the EBITDA evolution reflects the impacts of a very challenging combination of significant basket deflation, price investments, and cost inflation. On the other hand, ADA did extremely well despite the context that significantly limited like-for-like growth. The others heading in the graph includes the central costs that in 2024 benefited from some one-off savings and the contribution of agribusiness, which also improved considering the valuation of its biological assets. It also incorporates the initial investment in our Slovakian business. Group EBITDA margin fell to 6.7% from 7.1%. At Piedronka, the pressure on margin was mainly driven by lower sales growth due to basket deflation and by increased waste of costs essentially coming from the deliberate decision to significantly raise the wages of its operational teams. Hebe's margin improved as a result of good sales performance and strict cost controls. PING2, despite price investments, was able to protect margin due to positive mix and different initiatives to increase efficiency and productivity. In the case of Shea, the investment to drive volumes and increase customer base in a context of weak out-of-home consumption coupled with cost inflation pressured a BTA margin. And finally, Ada, as planned, improved the BTA margin by 150 basis points. The banner is back to positive BTA on a pre-IFRS 16 basis and will work to continue improving earnings. I will now wrap up on 2024. It was as expected extremely challenging after years of consecutive outperformance, particularly at Piedronka. Nevertheless, we kept a clear strategic focus on serving our customers with competitive prices and good value propositions. All banners executed accordingly. In fact, against muted markets and intense competition, on top of the exceptional performance of prior years, And with no help from inflation at top line, our banners were able to increase their customer base, grow volumes, execute ambitious expansion and renovation programs, and gain share. All in all, we closed the year with enhanced value propositions, stronger market positions, and a solid balance sheet. As we started 2025, uncertainty about geopolitics, socioeconomic dynamics, and consumer behavior in our three main countries remains very high. In light of this volatile context, we foresee that consumers will continue to be prudent and restrained, and competition will keep being more intense, at least in the first half of the year. As always, in times of low visibility, we will stick to our priorities, deliver the most competitive prices, a differentiated high-quality offer, and a good store infrastructure to the customers that choose our banners to shop. Once again, we are increasing salaries, following the rise in national minimum wages in each one of our markets. We will hence work to reinforce efficiency and cost discipline to manage this pressure. Our investment program has been the top priority for capital allocation, and in 2025, we expect to invest around 1.1 billion euros to continue expanding and improving our operations. Supported by the proven success of its different store formats, Biedronka will open another NAS 130 to 150 stores and remodel 250 to 275 locations. A new distribution center will also be inaugurated in the year. As you know, we have just started Biedronka's operation in Slovakia, having today three stores on the ground and one distribution center. By the end of 2026, we expect to have at least 50 stores in the country. Our initial priority is to properly assess consumer reaction before sharing more on the plans for this market. Hebe will continue to strengthen its presence in Poland with the opening of 30 stores and to grow internationally by leveraging its e-commerce operation. Pingu Dose's remodeling program will remain at the center of its investment priorities and should cover 50 stores in 2025, while Cheiu, will focus on improving its offer to the ORECA channel and on expanding the immense partnership network that already comprises more than 700 stores. Finally, for ARA, expanding the logistics infrastructure and store network remains the key priority. In addition to opening more than 150 new stores, the banner will also integrate more than 70 locations previously operated by call-subsidio throughout the first half of the year, The local authorities have just cleared the transaction and we are happy to complement our expansion strategy with these high-quality locations, particularly in Bogota. 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 your question, please press star 1-1 again. We will now take our first question. Please stand by. And the first question comes from the line of Frederick Wild from Jefferies. Please go ahead. Your line is now open.

Good morning, Ana Luisa. Thank you, Anteem, and thank you for taking my questions. First, could you give us a little bit more detail about trading in Be A Drunker in January and February and whether we can see potentially Q1 like-for-likes in that banner being positive? Second, on the full year 25 margins in Beardronca, could you give us a sense of the scale of the moving parts you've identified? And sort of more broadly, what sort of life-like would you need to achieve at Beardronca to offset the growth in minimum wages in 2025?

Thank you. Good morning, Fred. As you can imagine, we will not give details on current trading. That will be for our May conference calls. The only thing that I can share is that, as we mentioned also, the consumer continues to be very cautious. We are not still seeing a pickup in food retail consumer demand, and we keep working for this deflation. Of course, nothing compares with 2024, but still a very challenging context because, as we mentioned, all this dynamic in the market pushes also for a different level of competition and, of course, that has an impact also on the trading. As for margins, of course, as always, there is a lot of moving parts and Biedronka, of course, will do, as always, its best to deliver the best margin possible. As you know, salaries or the minimum wages in Poland increased more than 9%. We are working in a very tight labor market. We have already done also our salary revisions, and that was higher than 9%, which is, of course, as you can imagine, very challenging considering the current consumer context. This being said, of course, this can all change, particularly if consumer picks up. We can, of course, have a much more solid like-for-like. Nonetheless, I call your attention that in Q4, we have very tough calendar effects. So, sorry, in Q1, will have a very tough calendar effect in all our banners, but particularly in Biedronka. So you have no Easter effects. Easter will take place on 20th April, which means that it will be very difficult to attain any like-for-like positive in Q1. Also, you will not have a leap year. And that has also an impact. And you have also the effects or some effects with the weekends and the Sundays. So all in all, we expect to have for all other banners a three percentage point impact and for Biadronka at least 4.5%. So I think it's hard to say that we will post a positive like for like in Q1, taking that into consideration. So just to wrap up, On margins, yes, we'll have a tough time. It's not, of course, the same level that we saw in 2024 when we increased salaries on the double digits, so on a 20% basis according to the minimum wage progression. But it's going to be, of course, we don't hide also a very tough time. But we expect that the market dynamics will also help and that we will be able to somehow ease the pressure on the margin. And as always, we will keep fighting for sales and to, regardless of the pressure on margins, at least to protect our return on invested capitals with an increased productivity of our infrastructure and invested capital.

Perfect. Thank you so much. Thank you, Fred.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Michal Poitier from UBS. Please go ahead. Your line is now open.

Hi, morning, everyone. Thank you for taking my questions. I have three questions, please. I want to challenge you a little bit on your statements. So you mentioned very cautious consumer, very high level of competition. and yet your growth margin increased very nicely. So I'd like to comment on that. So that's the first question. The second is about the deflation in your basket. So I understand where you're coming from, but kind of the market data, both the statistical office and some of the external trackers are showing a pretty big increase in food inflation in Poland. I'd like you to also comment on that. And the last question is about the capital allocation. Just looking at your CapEx breakdown, if you could maybe help us understand why you keep on spending so much in Portugal, in PingoDOS. It's in excess of 5% of sales, so kind of all your EVDA goes into CapEx. that corresponds to less than 2% in Poland and only slightly more in Colombia. So I'm just wondering what sort of return profile you expect from Portugal from these investments and why wouldn't you allocate more to the more growing or profitable markets? Thank you.

Thank you, Michal. And thank you for challenging me. But on the gross margins, I flagged a little bit because you have different dynamics. In fact, what really contributed to the increase in gross margin at consolidated level was really a big contribution from the improvement in Colombia. And this has all to do with mix. So we have a different dynamic in the business there. And we increased the weight of all categories, diluting a little bit the commodities category, which was dilutive on the margin, on the gross margin. So, in fact, the biggest contribution comes from Colombia without losing any price competitiveness, but really from a margin mix effect. The same happens in Portugal, in fact. and particularly impingdose, as Rishayu also has a pressure on the gross margin, and has to do, again, with mix. So we are selling more fresh and more milk solutions, and these categories, although having also its contribution to cost, in fact have higher gross margin, and that brings... or adds a little bit to the improvement in percentage points without, of course, meaning that we are not investing in prices. And so the dynamic is really on that and on that contribution, particularly from those two businesses. On the deflation in the basket in Poland, in fact, It's true that we have also some difficulties in understanding the difference that has increased quite significantly, so the gap of Biedronka deflation and the country inflation. Nonetheless, what we can tell is that, of course, we compute this in a very thorough way, and we have to take into consideration several effects. One is that In the case of our internal inflation, we do not take into consideration VAT. So, we have to give VAT to the tax authorities in the country. So, for the consumer, there is an increase in prices versus VAT, but for the company, we do not consider that recorded in our inflation. Because, of course, it's not something that we appropriate. It's something that we collect to deliver. And so when we say that we had a 4.4% deflation, which was the case in Biedronka for the year 2024, and this is very significant and very challenging, this really means and is excluding the VAT. Secondly, from what we were informed by GOES, and we checked with them, apparently what they take is the shelf prices, and they do not take into consideration the promotional that is done, let's say, it's not really just on an individual basis, but for instance, they do not consider the loyalty programs of the several operators. And as you can, and you probably are aware of that, in Poland, the most of the promotions are done through the loyalty card. It's the case of the Moia card, but it's the case with all the other players that have these kind of apps or loyalty programs. And this of course has an impact also on the computed inflation. And finally, on capital allocation. PINGDOS is getting a big important part of our CAPEX allocation, and this was a strategy approved by the board two and a half years ago, when we decided that it was time not only on a defensive move, but also as an offensive move in Portugal, that we should not let the network to have an aging, which was quite extensive, with more than 15 years on the rollout of refurbishments, because this was really hampering the sales potential and hence putting in danger the profitability of the company. So we decided to put all the stores up to standards, and with the standards where meal solutions and fresh products have a higher importance, for the stores. So you had different shopping experiences when you went to Pingudos with very old stores. And then you had, you know, marvelous shopping experience in some others. And this was very disappointing for the consumers. With capacity increasing by all players, we thought it was time really to invest, not to let the company lose relevance in the market. And with that, losing even more its return on invested capital. Now with the sales that we are having, yes, we are strongly investing and this pressures the invested capital. But from the numbers that we have and excluding the cycle of COVID and the higher inflation, we are still posting a return on invested capital with all this investment higher than in 2019. So I think that's This choice was really, because if we didn't invest, we would let, of course, the company die, and this legacy is something that we are not willing to give up. On the percentage of investment, of course, Poland gets and continues to invest quite significantly with the level of sales and with the level of productivity. Of course, the percentage is different, but we continue to invest and to open, as you know, quite relevant number of source so I think that all in all we are investing in all our businesses to really take the most out of them and as we used to say to really get sustainable growth for the future because it's the only way to be profitable thank you for the very comprehensive answers just just one follow-up because I want to have clarity on the gross margin on the first question right so

Would you say there was, let's say, zero improvement in the gross margin? Because Colombia is just 8% of sales, right? PingoDOS is 15% from the top of my head. So they would need to see like 100 bps or more to lift the total group by 30. So I just want to understand that part.

Thank you. Well, usually we don't disclose gross margins. Claudia doesn't like it, but I can let you know that in Colombia we had more than 100 bps. bits of margin, gross margin improvements.

Okay, thank you.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Rob Joyce from BNP Paribas. Please go ahead, your line is now open.

Hi, good morning. Thanks very much for taking the questions. So I'll start with a couple of clarifications. Thanks for your answers before on the EBITDA margins. I just want to clarify, when you talk about easing the pressure on be a drunker EBITDA margins, is that pointing to an increase in EBITDA margins potentially this year, or are you saying less of a decrease than we had in 2024 is a good sort of starting point? In terms of the questions, I know you don't want to comment too much on one queue, but I guess the market got pretty excited about that kind of 6% food retail sales growth in January. I just wanted to understand what your view of the market is materially different to that and maybe give us an indication of the sort of levels of deflation we're seeing right now. And then the final one is just thinking about cash flow. A bit of a swing there this year from a sort of traditionally positive free cash flow balance to a negative free cash flow balance. Just wondering what we should be expecting for this year. Maybe you can help us in terms of what sort of working capital we should think about for 2025. Thank you very much.

Thank you, Rob. So on EBTA, what I meant really is, I would meant, although, of course, as I usually say, that the company will do all its best to take part of that pressure, including increasing its efficiency, what I was saying was less of a decrease than mentioning really a high probability of an increase. I think that, of course, this will depend on the market dynamic, as I mentioned, not only for growth, but also for this pressure. Because, of course, if the market picks up and sales here are going to be key the level of margin that we will attain in all our businesses and particularly in via dronka so if the market picks up and it's true that in January the number that we had was the six percent but of course this is one month and and as I mentioned we are seeing levels of a very slight deflation only in this beginning of the year and that of course is also helping because the As you can imagine, in this business, working with deflation is really tough on the teams and on the businesses.

Okay. Sorry. No, you go ahead, please. Sorry.

Okay. Sorry. On the cash flow, yes, it was negative this year, and this had a lot to do with all the dynamics and particularly had to do with the slowdown in growth. that hit us not only at the level of cash generation at the EBITDA level, but particularly and also at the working capital level. And there you have several effects, not only the different dynamics and construction even of the margin, but also the fact that when you have a slowdown in inflation and even when you work in deflation, Of course, the working capital that was very high at a certain point, even the invoices from the suppliers with inflation also have a higher amount. And then, of course, in the first year, when you have that inflection point in the growth of prices, that also has an impact on the working capital. Meanwhile, we also corrected some payment terms because we mentioned the pressure on our suppliers. And that has an impact that we do not foresee, at least with the same level or in the same amount in 2025. So I do not expect to have the working capital playing against us this year. Of course, we will use the working capital also if we need to in our negotiations with suppliers, because we really want to have alternatives in our supply chain. to get the best conditions possible to deliver the competitive prices to our clients.

Okay, very clear. I'm not sure I missed the first bit. On EBITDA, you said less of a decrease was what you were thinking.

I said less of a decrease, yes.

Thank you very much. Appreciate it.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of William Woods from Bernstein. Please go ahead, Joe, and open.

Hi, good morning. Two questions for me. Obviously, you've highlighted that competition will remain tough in H1 at least. Are you seeing any concrete signs of any improvement? And I suppose is your base case that that competition improves in H2? And I suppose, why do you think that is? And then the second one is just on consumer confidence in Poland. Obviously, you've said that the consumer remains prudent and cautious. I suppose when you look versus last year, do you think the consumer is more cautious than last year, or do you think there is some underlying improvement? Thanks.

So on competition, William, I think that, of course, we cannot... As I mentioned, as the market dynamics haven't changed, of course, competition cannot ease because, of course, everybody is fighting for sales, and this is everywhere, but particularly in Poland where the market, it may seem to have picked up, but in fact, and I will just remember that the 6% growth in general was in line with inflation. In fact, from an underlying point of view, we still didn't see the pickup. As I mentioned, that will be very important, not only to the market. Sales performance will be very important, not only to set the level of like-to-like that we will have, as also the level of margin. So for now, as I mentioned, We think that competition, in principle, at least in this first half of the year, where we'll have a very tough comparison with last year, even in terms of volume, it's going to be or continue to be tough. On the consumer sentiment or behavior, for the moment, we do not see really a pickup or a trade-up or... So people continue to be quite cautious. And from the numbers, we don't still have the numbers totally for these couple of months in 2025. But from what we see, the consumer is spending a little bit on durables, but not really on food. And the main impact is really that it continues to increase the level of savings. So that for us, it's a sign of caution. I think it's a little bit to wait and see with this turmoil from a geopolitics, but also the economies that are on the border with Poland, I think that influences. So I was saying that in terms of consumer confidence, we didn't have still signs of it. So we thought that it continues to be cautious. From the two first months of the year, we continue to see at least consumer demands not picking up and a higher increase in savings. So for us, it's a sign that the consumer continues to be cautious. And I mentioned that, in fact, there is a turmoil still on the geopolitical front and on the economic front, particularly in Germany. Let's see what happens after now the elections, because this is very important for the Polish economy. being one of the countries with which Poland has more economic relationships. And, of course, also what will happen in Ukraine can also make a more positive sentiment with Polish consumers. For now, all the disposable income that's increased has gone mainly to savings.

Understood. And can I just clarify on the competitive environment? I suppose when you look at the level of promotion or the number of promotions in the market now versus Q2 last year, do you think there are fewer promotions in the market or do you think it's the same? Thanks.

I think, to be honest, that there are more promotions in the market because, of course, not only now you continue to have the pressure on the cost side, but you have also the comparative effect versus the prior year. And that makes it quite tough, particularly, as I mentioned, in Q1, when you will have a very tough comparison with the calendar effect. And as I mentioned, in Poland, the calendar is more than 4.5 percentage points in terms of growth, which, of course, leads all the competitors to even be more aggressive. quite a very tough market still in Poland.

Understood. Thank you.

Thank you, William. And again, sorry for this technical issue.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Isabel Dobrova from Morgan Stanley. Please go ahead. Your line is now open.

Hello, good morning. I hope you can hear me well. I have a couple of questions. So the first one is just coming back on the drunken margin and your comments of competition. So are we to understand that you expect the decline in the EBITDA margin, which is going to be less than last year, to be concentrated in one age and then sort of a flattening? Or are you guiding for a potential slight decrease in the EBITDA margin for the full year as a whole? I just wasn't sure, based on your comments on competition, whether you were referring to one age or the year as a whole. Then my second question is on the productivity and the efficiency programs. If you could comment a little bit on what the sources of these are and how should we think about the divisional allocation. And the context of the question is that we have observed a very strong level of improvement in ARRA and also the group costs. So could you comment a little bit on whether we should expect another level of productivity gains in those two businesses and continued improvements in the margin there? And then my final question is again on Poland. Of course, you are adding stores organically, but would you be open in buying a portfolio of supermarkets, or hypermarkets if one became available? So would you be open to buying an external portfolio of assets in Poland?

Hi, Isabel. So I would probably start by the last question. Of course, we are always open to grow and we still see some white space in some areas and in some particularly in smaller villages. I think for us, as I usually say, of course, we would look to all the opportunities, but I think it's going to be very difficult to have an acquisition in Poland, considering, of course, that Fiat already has a quite relevant market share. But nonetheless, of course, we do not exclude looking at any opportunities. but it would be very difficult to be, of course, to be on a location base more than really having a change that would have, for instance, a national presence. On the margins, so, of course, with all that I mentioned, of course, the raises in salaries, and the raises in salaries is not just in Biadron, because, of course, all the service providers having a very tight labor market in Poland, the pressure is on other headings that depend on labor. But it's going to pressure the whole year. But what we think is that the first half, of course, not only the calendar effect that, of course, will make sales grow more difficult, We think that, of course, the pressure may be higher in the first half. We mentioned this in our release. Then probably in the second half. Of course, this will depend, as I mentioned, and the level of pressure, because we may post a different margin, but that will depend really on the market dynamics and on the market picking up. So if we continue to have a market that doesn't grow in volume, as we had in the last couple of years. In Poland, of course, this becomes more difficult, regardless, of course, of all the effort that we will continue to do to be more efficient on the cost front. Picking up now on the efficiency programs, this is being done in all the businesses, and this is a continuous task by all the teams, of course. We may use not only, of course, all different levers that we have. And one thing is increasing productivity. Another thing is, of course, using technology or using to try to not having to rely so much on labor, which we know that unavoidably will have to be linked somehow to the minimum wage increases. It's not that we pay the minimum wage, it's that that affects, of course, all the salaries of the country and the levels that we have to consider. So for all the businesses, we will be pushing, of course, for productivity gains and for more efficiency, and that goes for the energy with the solar panels and even the targets that we have on carbon emission reduction. So all moving parts on the logistics also to be focused the most efficient possible. But this being said, more important than this, because we never had our costs out of control. I mentioned that several times during the year. So one thing is we did a deliberate increase in our salaries. We didn't increase, so we did really a lot of savings in terms of the consumptions on energy, on the different headings. But of course, this wasn't able to compensate for the price increases at cost level. So it's not that we are not doing all the best already. So what will be paramount to really deliver our return on invested capital, which is our main TPI here, it's really on the top line. And this is where we are going to push to continue to be competitive. to, of course, have the best performance possible, considering still very challenging circumstances. On ARA, in terms of improvement, of course, we will be opening stores and we will be integrating also some stores, so we are adding capacity to the markets. Of course, presumably, if we are now on the positive, excluding IFRS 16, on positive ground with margin, of course, this will bring, as always, and this is the most important for us, we will keep growing our ABTA in absolute terms. So not looking so much at the percentages. I'm not saying that the increases will come. It will depend on the dilutions, but in principle, yes. Definitely, in absolute terms, we will improve our EDTA margins. On others, of course, we will report here not only the corporate costs at the heading, but as you know, also the Slovakian Biedronka business will be reported here. We expect it to be dilutive during the first years. So it's probably that increases a little bit, but we do not expect it to grow much also. So it will depend on the number of projects. I think that we are quite efficient still on our corporate structure. But of course, this will depend on the number of projects and on how dilutive the Slovakian venture will be. We expect, of course, that at least in the beginning, with the opening of so many stores that we want in the country, that will pressure, but not something completely different from what it was.

Thank you very much. Could I ask a quick follow-up? Out of your solar openings for the year, how many of those or what percentage do you plan to be in the smaller areas and the smaller villages?

We will keep more or less 50-50 allocations, Isabel. So we still have some white spaces also in more urban areas. Thank you.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Rob Joyce from BNP Paribas. Please go ahead. Your line is now open.

Sorry, I have one last quick one. Just in terms of Slovakia, I'm just thinking what type of investment should we be thinking in terms of EBITDA and CAPEX in 2025 for that one? Thank you.

Rob, I will not disclose that. Okay. So we'll have some dilution and investment, of course, as a startup for the business, but nothing really material on the overall group results. On the CapEx, I think that we can assume that it will not wait on the 1.1 billion that we are expecting to spend, of course, More than 50% will continue to be in Polish Biedronka, not really in Slovakia. So we are talking about some stores. So it's minor. Even if we say that we will be opening half of what we say, that we will open until the end of 2026, so it's the 50 openings, this will not wait on our CapEx for the year also.

Okay.

Thank you.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Matthew Clements from Barclays. Please go ahead, John. It's not open.

Good morning. Thanks for taking my question. Quick question on Columbia. Very significant expansion in the network plan for next year with the over 150 stores plus those 70 required. Interested just in any color on that acquisition. Are we expecting more opportunities like that to come up? And any details on that acquisition would be useful. And also just any color on what you've budgeted for interest costs next year. Very significant because over 50% increase in interest expense last year, partly related to the financing of the Colombian business. So just any color on what you might expect on that line would be appreciated. Thank you.

Good morning, Matt. So on Colombia, yes, as the chairman mentioned, we think that the opportunity for the Colombian market is still there despite some challenges and some setbacks. We got this opportunity. So we think that there aren't many opportunities in Colombia. Fortunately for us, this co-subsidio is not a normal player. So they are kind of a social welfare entity in Colombia. So they decided to really close the location. Then they offered the locations to us. So it was really an assignment of the lease agreements that we got. I don't think that there will be much opportunities as this one. But, of course, we will keep looking at any opportunity in the market that it may exist. So you have also, as you may remember, the Rússia Bueno left the market a couple of years ago, and there was now this opportunity. But we will keep expanding, and we were expecting and had already identified the locations to keep expanding for the next years, and in principle that's what we will keep doing. On the interest costs. we took really a decision to not take any exchange risk for the Colombian venture. So it's true that we are paying a high price for interest in Colombia, but we will keep financing the Colombian venture whose receipts are in pesos with Colombian peso loans. And this means that, in principle, the interest costs will not decrease, or we do not expect it to decrease this year, because although we'll be having a positive EBITDA, and we count on the positive effect of the working capital, we also have a heavy investment program for Colombia. And so on that, we expect it not to decrease. So I think that's a stable estimates can be a good proxy.

That's very helpful. Thank you very much.

Thank you, Mark.

Thank you. As there are no further questions, I would like to now hand back to Miss Anna Virginia for any closing remarks.

So I would like to conclude here by reiterating that the set of results presented today required a lot of determination to protect market share and grow volumes. overcoming the challenge of once again outperforming the markets in which we operate. We are already two and a half months into 2025, still facing relatively staking consumer context despite minimum wage increases and a more intense competition. Therefore, we are prepared to continue working with discipline and efficiency to ensure competitiveness and consumer preference as the only way to deliver profitable growth while addressing the environmental and social challenges that come with the business. Thank you for your questions and for attending this conference call. I wish you all a nice day.