Jeronimo Martins Pe

Good day and thank you for standing by. Welcome to the Geronimo Martin's first half 2025 results webcast and conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone keypad. You will hear an automatic message advising your hand is raised. To withdraw a question, please press star 1 1 again. Please be advised that this conference has been recorded. I would now like to hand the conference over to our speaker today, Ana Luisa Virginia. Please go ahead.

Thank you, Nadia. Good morning, ladies and gentlemen, and thank you for joining this call dedicated to our first half results. As usual, in our corporate website, you can find the results release, a slide presentation, and a fact sheet for the period. As anticipated, in the first six months of 2025, we faced a challenging operating context that combined muted food consumption, low basket inflation, and rising wages. Despite the increase in salaries across the countries where we operate, families have in general kept cautious spending habits and a clear preference for value opportunities, particularly in what food is concerned. Against this backdrop, market competitive dynamics continue to be intense. Prioritizing sales growth, we maintained our focus on providing the best prices and the best saving opportunities, which enabled us to retain consumer preference, increase the top line, and gain further share. This sales growth, coupled with stricter cost management and additional productivity measures, more than offset margin pressure. In the period, we also registered good progress in our CapEx program, which is our first priority for capital allocation. And notably, despite the ambitious target set, if excluding IFRS 16, the group maintained a cash position of €213 million at the end of June after the payment of €371 million in dividends to its shareholders. Looking now at the P&Ls, I'm going to focus on the six months' figures rather than the individual quarters, as the timing of Easter this year skewed performance in Q1 and Q2 and doesn't allow for a fair reading. I would like to flag a couple of things here. On sales, all banners delivered well, driving the group's top line to grow by 6.7% or 6% at constant exchange rates. A DTA was supported by sales growth and a balanced management of gross margin, costs, and productivity. All in all, EBITDA grew 10.3%, or 9% at constant exchange rates, and EBITDA margin was 21 basis points up versus the same period in 2024, reaching 6.6%. The execution of the ambitious investment program is reflected in the evolution of both depreciation and net financial costs, as the latter also includes the interest expense of capitalized leases. And finally, a word on the other profit and losses heading. That includes indemnities, write-offs and provisions, as well as the allocation of €40 million from the 2024 results to the Jerónimo Martins Foundation. Cash flow for the period was an outflow of €157 million. This reflects the normal seasonality of the business, as the first months of each year are strongly impacted by supplier payments following the peak Christmas season, To confirm, Q2 cash flow was positive. I would like to make two additional comments. The first one regarding paid income tax, which in H1-25 was substantially lower than in H1-24. This is because in Poland, advanced tax payments are usually based on results from two years prior, with adjustments made after closing the fiscal year. This implied higher cash outflow in 2024, having in mind the strong results of 2022 and 2023. The second comment is on working capital flows, which reflect mainly the healthier growth dynamics of 2025 compared with 2024. The group ended the quarter with a strong financial position and a positive cash position of €213 million. Consistent with our long-term vision of sustainable growth, and as I said earlier, the primary capital priority is executing our investment program, which focuses on expanding operations and guaranteeing the quality of the infrastructure. In the first six months of 2025, our van combined opened 196 stores and remodeled 71 locations. I highlight here the launch of the Biedronka operation in Slovakia, with one DC and six stores open so far, and a successful integration in ARA until the end of the period of 58 stores formally operated by cost-subsidio that are a great match to our expansion strategy. Looking now into the details of the performance, I will start with sales. All banners delivered solid sales performance that resulted in €1 billion more being added to the group's total revenue over six months. Consolidated sales grew by 6.7%, 6% at constant exchange rates, to reach 17.4 billion euros, including a life-for-life of 1.6% and a contribution from expansion. Amid a refrained consumer backdrop and strong competition, Diadronka maintained its price leadership in Poland, delivering on its 30-year promise to the Polish families. In addition to its relentless promotional dynamic, the banner continues to work on the quality of its offer, with its perishables and private label assortments standing out, and on the standards of its infrastructure, having opened 81 new stores, 72 net additions, and remodeled 34. All in all, sales grew by 7.1% to 12.4 billion euros, or 5% in local currency, and our main banner kept increasing its market share. Like for like was of 0.9%, against the outstanding volume growth delivered in H1-24. In Q2, the like-for-like stood at a solid 5.3%, also supported by Easter. Hebe operates in a context that turned more price competitive, driving the banner to register substantial deflation in the baskets. Sales increased by 9.4%, or 7.3% in local currency, to reach 297 million euros. Over the period, Nine habit stores were opened in Poland, six net additions, and one in Czech Republic. Driven by the consistent execution of its well-recognized promotional campaigns and the conversion of its stores to the all-about-foods concept, Pingdós grew sales by 5.7% to 2.5 billion euros, and like-for-like, excluding fuel, was of 3.9%. In the six months, our supermarket banner opened three stores and 24 additional locations were converted to the all-about food concept. RCEI, that continues to operate in a challenging context, is investing to perform and has done well in the period, particularly in the ORECA segment, where the quality and assertiveness of its offer stands out. It is worth mentioning, with respect to the comps, that a year ago, the ORECA sector started showing signs of slowdown. Against this backdrop that has been felt since then, Recheio managed to increase its client base and to grow sales by 1.9% to €657 million, with Like for Like standing at 1.6%. In Colombia, ARA remains committed to its promotional agenda on top of its everyday low prices. The banner is successfully building its presence in the neighborhoods, gaining consumer preference and outperforming the markets. Sales grew by 7%, or 15.6%, in local currency to reach 1.5 billion euros. Like-to-like was at 5.3%. Expansion is a strategic priority, and in the six months, Ada opened 96 new stores, of which 58 are part of a group of 70 locations formerly operated by call-subsidians. By the end of July, all these locations were already operating under the ARA banner. I highlight here that together with store expansion, ARA opened one new distribution center in the beginning of the year. Consolidated EBITDA grew by 10.3% or 9% at constant exchange rates to reach 1.1 billion euros. Overall, businesses delivered solid sales growth and ensured cost efficiency and higher productivity to compensate for the cost inflation. As we started 2025, we knew we would face margin pressure from the combination of persisting low basket inflation with salary hikes. Adding to this, we anticipated a sluggish consumer context, driving more intense competition, which proved to be the case in the first six months of the year. Facing tough conditions while firmly committed to price competitiveness, all our banners increased their focus on efficiency and productivity. Following this strategy, we delivered strongly, and group EBTA margin was at 6.6%, up from the 6.4% registered in H1-24. At Biadonka, EBTA margin was slightly up in the six months, driven by cost control and efficiency gains, and also benefiting from easier gross margin comps through the first four months of the year. due to the campaigns executed in 2024. At Hebe, price investment and a low like-for-like, impacted by strong basket deflation, significantly pressured the VK margin in the half-year. In recent months, the company refocused its commercial strategy and tightened cost discipline, having been able to recover part of its margin. An effective promotional strategy drove sales growth, which together with reinforced productivity measures, protected the BTA margin. RCEI, that in the same period as 2024, was heavily impacted by the deterioration of the ORECA segments, benefited this year from the mixed comp, which coupled with sales growth, allowed for a BTA margin to recover in the period. Finally, in Colombia, ARA benefited from sound sales growth, and from the work done in 2024 to recover margin using a mixed effect. We expected a challenging first half. As such, we took necessary steps to keep growing and protect profitability, having succeeded despite the tough comps. We also maintained our long-term focus by consistently executing our investment program, expanding our market, expanding our market presence and enhancing our networks through remodeling initiatives and investment in logistics. Our market positionings were reinforced and we closed the period with a solid balance sheet. All things considered, we are proud of the work done by the teams in H1 2025. Looking ahead, we continue to see a highly uncertain context and subdue food consumption. Therefore, We will keep our strategy of pushing for price competitiveness while working to protect margins from the pressure of higher personal costs and intense competition. All in all, we confirmed the outlook for 2025 provided in March with a minor revision to the Biadronka's remodeling plan, which was reduced to 100 stores. As a result, CapEx is now anticipated to be slightly above 1 billion euros. Thank you for your attention. Operator, I am now ready to take questions.

Thank you so much, dear participants. As a reminder, if you wish to ask a question, please press star 1 1 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 1 1 again. We will take a few moments. And now we're going to take our first question. And it comes from William Woods from Bernstein. Your line is open. Please ask your question.