In Portugal, Food Retail remained extremely competitive and promotional, with consumers reacting positively to the campaigns carried out.
In line with previous years, Pingo Doce reinforced its market position, leveraging its promotional capacity in an innovative way in one of its strategic differentiation pillars – Perishables. This new dynamic introduced a monthly instead of weekly promotion scheme, encompassing a huge variety of products. The momentum of the theme-based initiatives was also maintained throughout the year.
As a result, total sales grew by 4.6% to 3.8 billion euros, showing a remarkable LFL growth performance of 3.5% (excluding fuel), together with the opening of 10 new stores, eight of which under the Pingo Doce & Go convenience concept.
The Wholesale market on the other hand was once again boosted by the tourism sector. In this context, the strength of Recheio’s commercial proposition enabled it to also benefit from a favourable consumption environment, thereby helping the Hotel, Restaurant and Coffee Shop segment. Sales increased by 4% to 980 million euros, with a like-for-like of 4.4%. The Company closed the year with one less store, ending December with 42 locations.
The Food Service segment once again proved to be one of the Company’s growth drivers, having posted a growth of more than 15%. The Amanhecer project achieved organic growth, reaching 329 partner stores, while the Export segment managed to broaden its scope of activity, by entering new markets.
With regard to the Group’s not yet profitable businesses, despite the significant impact of the ban on sales on Sundays and stronger presence of the Health & Beauty categories in the supermarkets and discounters in Poland, Hebe saw a 25% rise in its sales in 2018. When converted into euros, sales increased by 24.7% to 207 million euros, a performance that confirms that it has the right value proposition for the Polish market and has the potential to deliver value in the near future.
So, Hebe once again managed to reinforce its market share, having opened 51 new stores (48 net additions) and ended the year with a total network of 230 locations, standing as the chain with the largest growth in the Polish Health & Beauty and Personal Care sector.
In Colombia, where presidential elections took place that elected Iván Duque as the successor to Juan Manuel Santos, there were continued signs of stability. The new Government aims to continue with receptiveness and encouragement vis-à-vis private investment and with a series of social programmes initiated by the previous Government.
Throughout the year, Ara focused on gaining dimension which enables it not only to maximise its effect of scale but also to win increasing relevance in the Colombian market.
These steps have proven to be essential for the growth in sales density, with the offer of better, higher added-value products, which also contribute to the development of a more interesting margin mix, which is fundamental for attaining profitability.
As such, our Colombian chain of proximity stores opened 143 stores in 2018, at a pace of one new location every 2 and a half days – with an investment totalling 118 million euros – having closed the year with 532 stores.
Ara inaugurated another Distribution Centre in the Greater Bogotá region, so that it now has four logistics units in Colombia. Its sales stood at 599 million euros, 47.9% up on 2017. At a constant exchange rate, sales grew by 53.9%.
In conjunction, Ara and Hebe recorded combined losses in EBITDA of 80 million euros, an amount that compares with the losses of 85 million euros the previous year. Ara was responsible for around 90% of the losses generated, having stabilised that amount, in local currency, compared to the previous year.
As expected, Hebe recorded a decrease in losses generated in EBITDA, although the performance was impacted in 2018 by the law restricting stores from opening on Sundays.
Consolidated EBITDA for the Group as a whole grew by 4.1% to 960 million euros, the respective margin standing at 5.5%, whilst the solidity of the Group’s balance sheet remained undeniable, with net debt reaching 80 million euros, which is reflected in gearing of just 3.9%.
These results take on particular relevance if we consider that the Group continued to make an upward review of its employees’ salary packages and compensation policies in the three countries.
Based on this financial position, at the General Shareholders’ Meeting, the Board of Directors of Jerónimo Martins will propose the payment of a dividend of around 204 million euros related to the profits for the 2018 financial year. This proposal is the equivalent of a payout of 50%, which is in line with the dividends policy in force.
At the Jerónimo Martins Group, we continue to believe that our primary responsibility is to be profitable, as that alone enables us to create value on all fronts. We believe that profitability must go hand-in-hand with responsibility, and that is why we conduct our businesses so as to be a force for positive transformation in the societies and communities where we operate.
In 2018, in recognition of its performance in over 300 social, environmental and governance indicators, the Group not only remained part of the Euronext Vigeo-Eiris Eurozone 120 index, but for the first time, was also included in the Euronext Vigeo-Eiris Europe 120 index, being the only Portuguese retailer to do so.