Jeronimo Martins Unsp/Adr

Good day and welcome to the Geronimo Martins first nine months 2026 results conference call. Today's call is being recorded. At this time, I would like to turn the conference over to Miss Ana Luisa Virginia, Chief Financial Officer of Geronimo Martins Group. Please go ahead, Matt.

Many thanks, Evan. Good morning, ladies and gentlemen, and thank you for joining this call to present our results for the first nine months of 2026. As a reminder, on our corporate website you can find the results release, this slide presentation and a fact sheet for the period. Gerard and Martins' performance in the first nine months of 2026 was solid and resilient against the very demanding backdrop across all our markets, particularly in Poland. The period was marked by heightened geopolitical uncertainty, continued food disinflation that turned to deflation in Poland, highly selective and promotion-driven consumers, intense competition, and rising costs, mainly fuel-related. To meet consumer needs and wants, All Our Banners reinforced their multidimensional efforts to combine competitive prices and relevant promotions Quality and attractiveness of the assortment with a strong dynamic of private brand launches and the continuous improvement of the shopping experience. This commitment strengthened our market positions and supported good volume growth. Group sales reached 27.8 billion euros, an increase of 4.8% or 3.8% at constant exchange rates and like-for-like growth was 0.8%. Reflecting both a relentless commercial activity that also drove a better sales mix and a disciplined operational execution, EBITDA increased by 7.6%, ahead of sales growth, to 1.9 billion euros, with the respective margin rising by 18 basis points to 7%. In Poland, Biedronka grew volumes by an impressive 5%. This cushioned the impact of significant basket deflation and drove our main banner to post solid sales and margin performance. ARA maintained a strong momentum while Pink Doce, Recheio and Rebe continued to grow in demanding markets. During the period, the group opened 172 stores. At the end of September and excluding IFRS 16, the group had a net cash position of 118 million euros. I will now turn to the income statement. Sales growth was driven by volumes given the low or negative basket inflation across all banners. Gross margin developed ahead of sales, supported by mixed management and increasing scale of the operation. Operating costs remained tightly managed in the face of wage inflation and higher fuel-related expenses. As a result, EBITDA grew faster than sales. Higher net financial costs reflect The execution of the expansion program with an impact on interest of capitalized operating leases and also foreign exchange fluctuations. Under IFRS 16, exchange differences on capitalized euro denominated leases in Poland resulted in an accounting loss of 12.5 million euros in the first nine months, compared with a gain of one million euro in the same period of 2025. The strong appreciation of the Colombian peso also increased interest charges. Other profits and losses totaled minus 135 million euros, reflecting items not directly linked to Banner's operating performance. These included write-offs related to refurbishment works, restructuring costs, and provisions or compensations associated with legal proceedings. This heading also comprised the allocation from the 2025 results of 40 million euros to the Gerónimo Martins Foundation and the additional one-off contribution also of 40 million euros to broaden the scale and reach of the response to social and humanitarian emergencies as the ones that were caused by Storm Cristin in central Portugal earlier this year and by the earthquake recorded in Colombia on the 10th August. Cash flow before dividends was negative at €183 million. The main pressure came from working capital movements. Basket deflation limited sales growth in value and together with the promotional dynamics also affected working capital, namely stocks and net trade payables. This performance should therefore be viewed in the context of deflation and normal business seasonality. Despite all the challenges, the group maintained a solid balance sheet. At the end of September, excluding IFRS 16, the consolidated net cash position stood at €118 million. This financial solidity preserves the Group's capacity to invest in its strategic priorities while maintaining a prudent capital structure. Focusing now on sales performance, I will start with the Group. All banners contributed to growth, despite operating with low or negative basket inflation. I highlight Ada's strong delivery in the nine months and its impressive contribution to Group's top-line growth. Turning to Biedronka. In Poland, muted consumer demand and very intense competition induced further food disinflation. That turned to a 0.6% deflation in the third quarter. Biedronka continued to offer its customers the best saving opportunities, reinforcing its value proposition through price and promotional leadership, while evolving the assortment and improving its store infrastructure. To compensate for the extreme pressure of a significant basket deflation, Biadonca's team fought for volumes that grew 5% in the period. As such, total sales increased by 1.3% in local currency, or 0.7% in euros, and market share stood strong at 30.8% year-to-date August, despite the nine months 0.4% decline on like-for-like. During the period, Biedronca opened one distribution center and 54 stores corresponding to 25 net additions and remodeled 155 locations. Moving to Hebe. Hebe operated in a significantly more competitive environment, which drove substantial basket deflation and places extra pressure on sales growth. The banner continues to refine its assortments, reinforcing differentiation across the store and online channels. Sales increased by 4% in euros and by 4.7% in local currency, reaching 469 million euros. Hebe opened 25 new stores in Poland during the period, continuing its selective expansion. Turning now to PINGDOS, with households' income facing increased pressure from rising fuel prices and interest rates, demand for low prices and promotions gained further traction. Pink Doze leveraged its remodeled stores, innovative food solutions and high-impact promotional campaigns to drive top-line growth. Sales increased by 4.1% to 4.1 billion euros, supported by volume performance against the backdrop of very low basket inflation. Like-for-like, excluding fuel, was 2.4% in the nine months, slowing down to flat in Q3 as basket inflation moderated further. Over the period, Pink Dose remodeled 25 stores to the All About Food concept and opened two new locations. At Recheio, the operating context has been challenging, reflecting the impacts from the aftermath of strong pristine, which continues to affect communities, particularly in the center of Portugal, and by an oreca channel further pressured by a particularly demanding comparison base during the summer periods. Despite this context, RCHEI preserved the competitiveness of its offer across both ORECA and traditional retail segments and protected its market position. Sales increased by 1.5% to 1.1 billion euros. Third quarter like-for-like sales declined by 1.6%, reflecting the challenging comparison base and softer market conditions. Finally, ARA. Following the devastating earthquake impact on some regions of the country, our colleagues in Colombia demonstrated remarkable resilience, commitment, and solidarity. Their determination and engagement were paramount to support our affected employees and for Ada to continue serving customers during an exceptionally difficult time as households remained highly price-conscious amid continued pressure on consumer spending. As a result, Also of this impressive collective effort, impact on the company's performance was minimal. Moreover, the banner's discipline expansion and competitive offer tailored to local needs continue to strengthen its relevance in the Colombian food retail market. Sales maintained strong momentum throughout the period, increasing by 37.9% in euros, 20.6% in local currency, to reach 3.2 billion. Like-for-like growth accelerated to 11% in the third quarter. During the nine months, Ada opened 85 stores, net 68, and one distribution center. Let us now look at profitability. Group EBTA increased by 7.6% to 1.9 billion euros, or by 7.2% at constant exchange rates. This performance was supported by better sales and margin mix, by disciplined cost management, as well as by continuous efficiency improvements across all business areas. Volume growth and increasing scale also contributed particularly at ARA. Importantly, the banners maintain their price competitiveness and value to customers while protecting profitability. Looking at margin performance by business areas, Every banner improved its EBTA margin over the first nine months. At Piedronca, margin expansion came as a result of the combination of the positive mix effects of the ongoing work on the assortment and store layouts, the more efficient store processes and strict cost management. At Hebe, profitability benefited from a stronger sales mix and increased productivity against the deflationary and highly competitive environments. In Portugal, Solid sales performance and operating discipline at Pingdós and Recheio also helped protect margins, despite mounting fuel-related costs. At ARA, margin expansion translated strong life-for-life growth, the increasing scale of the business, and disciplined cost control. Overall, the Group EBITDA margin increased from 6.8% to 7%, an improvement of 18 basis points. I'll conclude now with some final remarks. The market context remained extremely challenging throughout the period, particularly in Poland, where Biedronka faced sharp basket deflation, allowing Polish families to buy more for less money. Across markets, consumers remained focused on prices and promotions, competition was intense, and fuel-related costs increased. Our priorities were clear. We aim to drive sales growth through price and promotional leadership, assortment innovation, and a better shopping experience. At the same time, we work to protect margins through volume growth, mix management, cost discipline, and efficiency. This relentless work of our teams delivered solid volume growth across all our banners, stronger market positions, and improved EBTA margins, Thank you for your attention. I'm now ready to take questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by as we compile a Q&A roster. Our first question comes from the line of Frederick Wilde of Jefferies. Please go ahead. Your line is open.