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.