Focus on profitable growth

Group Sales grew 20.6% to 30.6 billion euros, up 18.1% at constant exchange rates. The investments made by the different banners to strengthen their competitiveness were the driving forces behind the Group’s LFL, which improved 12.8% in the year.

Contribution to consolidated sales growth

(€ Million)

In Poland, food inflation, although falling consistently throughout 2023, remained high, leading consumers to become increasingly more price sensitive and promotions’ driven.

Biedronka maintained a strong commercial dynamic throughout the period and, in a market where volumes were under continuous pressure, consistently delivered significant growth in value and volume, increasing its market share.

Hebe, with a competitive and well-designed assortment and a booming e-commerce operation, recorded strong sales performance, with the online channel gaining remarkable momentum in Poland and supporting the growth strategy in Czechia and Slovakia.

In Portugal, food inflation also decelerated substantially over the course of 2023, while consumption remained weak, with real household income under pressure from persistently high prices and rising interest rates.

Increased tourism in Portugal, especially during the first half of the year, was the main driver of growth in the cash & carry segment.

Pingo Doce recorded solid sales growth, largely as a result of its aggressive pricing and promotions policy, the contribution of meal solutions, and an attractive store layout resulting from the refurbishment programme.

At Recheio, the good performance reflects the banner’s strong value proposition, carefully designed for each of the customer segments, and the dynamics in the HoReCa channel in Portugal.

In Colombia, persistent and very high inflation put pressure on household income. The deterioration in consumption in the year was notable, with families barely able to react to price opportunities and limiting the food basket to basic needs. This environment led a drop in volumes on the market and additional trading down effects.

Ara reinforced its price positioning and asserted the strength of its brand, investing in increasing Colombian families’ access to essential foodstuffs.

Group EBITDA amounted to 2.2 billion euros, 17% higher than in 2022 (up 13.7% at constant exchange rates). The respective margin stood at 7.1% compared to 7.3% in 2022.

Contribution to consolidated EBITDA growth

(€ Million)

At Biedronka, the significant growth in sales led to a considerable increase in EBITDA. Investment in price, combined with cost inflation, pressured EBITDA margin to decrease 21 b.p..

At Hebe, good sales performance, which in the first half of the year still reflected the recovery from a 2022 impacted by the Covid-19 pandemic, led to a substantial increase in EBITDA, with the respective margin increasing slightly year-on-year.

At Pingo Doce, the solid sales performance and initiatives to increase operational efficiency helped offset cost increases and protect the EBITDA margin, leading to healthy EBITDA growth compared to the previous year.

At Recheio, the first half of the year reflected a recovery from the impacts of the pandemic that spilled over to 2022. Driven by sales, EBITDA saw solid performance in the year, with the respective margin increasing 38 b.p., continuing its recovery trajectory compared to the pre-pandemic period.

Ara remained focused on its competitiveness in a market where consumption was under pressure. The Company’s margin reflected the effects of the significant investment in price, the deterioration of the margin mix due to trading down, and the low maturity of a significant portion of the store network.

The investment programme, which continues to be a top priority in the allocation of capital, was rigorously implemented by each of the banners.

The expansion and refurbishment of stores played a central role in the investment programme, enabling the banners to seize opportunities identified in the market, while also helping to improve the quality of the network and operational efficiency.

stores

TOTAL
OPENINGS*

452

TOTAL REMODELLINGS**

444

BIEDRONKA

203***

OPENINGS
(174 net)

375

REMODELLINGS

Pingo doce

11

OPENINGS
(10 net)

60

REMODELLINGS

recheio

-

OPENINGS

3

REMODELLINGS

Ara

200

OPENINGS
(197 net)

3

REMODELLINGS

Hebe

34

OPENINGS
(30 net)

1

REMODELLING

*Includes the remodelling of three Jeronymo stores and one Hussel

**Includes the remodelling of two Hussel stores

***Excluding Micro Fulfillment Centres (MFC) to supply Biek's operation (ultra-fast delivery)

Investment by business area

In 2023, the investment programme totalled 1.2 billion euros. The increase compared to 2022 was due to the greater number of Biedronka store openings, the acceleration of Pingo Doce’s refurbishment programme, investment in innovation in the agrifood area, and the impact of increases in the price of materials, equipment and labour.

Expansion accounted for 40% of Capex in the year, with the opening of a total of 452 new stores (413 net additions).

Biedronka, faced with the opportunities provided by its value proposition, with store models tailored to the locations, kept a strong focus on implementing its expansion programme and opened 203 new stores (174 net additions), more than that planned for the year, and also refurbished a total of 375 locations.

The banner went from 15 to 18 Micro-Fulfilment Centres (MFC) to support its Biek operation (q-commerce operation of ultra-fast deliveries).

Hebe opened 34 new locations, including two in Prague, to put a face to the brand’s presence in Czechia. The e-commerce operation remained the cornerstone of the business’s growth.

Pingo Doce accelerated the roll-out of the new store concept, in which perishables and meal solutions are given greater prominence, playing a key role in the brand’s differentiation alongside the Private Brand.

Recheio invested in the refurbishment of two stores and the expansion of the Recheio Masterchef platform in Lisbon.

Ara maintained a good level of implementation of its expansion plan and opened 200 locations, ending the year with 1,290 stores. The quality and scale of its logistics operation remain essential to the implementation of the banner’s long-term vision. In this respect, the banner invested in the construction and preparation of the distribution centres planned for opening in 2024 and 2025.

Also worthy of note is the investment in the agrifood business in Portugal, in particular the acquisition of more c.15% of Andfjord Salmon, a Norwegian company that has developed an innovative and highly sustainable salmon breeding concept, raising the financial stake to c.25%.

Consistent with the Groups’ responsible posture in all areas of intervention, the compliance with tax obligations deserves a special highlight since in the different countries in which it operates, the Group is subject to different types of taxes, contributions and fees, resulting of the activities carried out by its subsidiaries.

In 2023, the Group borne 1,016 million euros in relation to income taxes of the year, contributions borne by the companies for social protection systems, taxes and fees on sales and property and non-deductible VAT in certain countries. In addition to these taxes and contributions, the Group is also subject to a significant set of other fees and taxes arising from the type of activities it carries out in each country, which are often incorporated into the cost of the products or services acquired.

Effective income tax rate¹ in 2023 was 25.2% (25.3% in 2022).

(€ Million)

Return on invested capital, calculated on a Pre-Tax ROIC basis, was 26.8% (27.0% in 2022). Good sales performance, as a result of the focus on price competitiveness, mitigated the impact of the reduction in the EBIT margin resulting from price investment and cost inflation, thus protecting the strong return recorded at Group level.

¹ Effective income tax rate determined based on estimated income tax of the year, without corrections of prior year estimates and deferred taxes.