Annual Report 2023

Message from the chairman

Pedro Soares dos Santos, Chairman and CEO of the Jerónimo Martins Group (portrait)
Pedro Soares dos Santos
Chairman and CEO of the Jerónimo Martins Group

“Given the challenging international climate, the fact that we exceeded 30 billion euros in sales, 5.2 billion more than in 2022, is even more rewarding.”

The year 2023 was marked by even greater global instability and uncertainty than in 2022. After two years, the war between Russia and Ukraine continues to rage, with the Ukrainian counteroffensive having little to no effect on the ground. The already shaky global environment was again jolted towards the end of the year by conflict in the Middle East, sparked by the Hamas attack on Israel, which has since spilled over into other countries – in 2024, tensions in the Gulf of Aden between the Houthis and US and British forces have disrupted shipping routes in the Red Sea, complicating an already difficult situation for trade and global supply chains.

In economic terms, inflation remained very high, the highest in the last 30 years, despite the sharp drop in food inflation, especially in the second half of the year. As a result, central banks remained cautious, that is, they have kept interest rates high. This has led to a global economic slowdown, with Europe, where our major markets are located, suffering the most. Indeed, it was the continent with the worst economic growth and Germany, the economic engine of Europe, went into recession.

Given the challenging international climate, the fact that we exceeded 30 billion euros in sales, 5.2 billion more than in 2022, is even more rewarding. In the space of two years, we increased our consolidated sales by 10 billion euros, confirming the assertiveness and importance of the value proposition of our Companies and the strength of their leadership. While it is true that in 2023 inflation and exchange rates were contributing factors to performance, it makes me proud to see that Jerónimo Martins is one of the few retailers in the world that posted real growth.

The results we have achieved and the continuous improvement of the assortment and of the shopping experience our stores offer to those who visit us, in an increasingly competitive environment, are only possible thanks to the extraordinary commitment of our teams and because we haven’t slowed down the investment in our businesses and in strengthening our presence in the respective markets.

Our growth momentum, along with the competitive positioning of our banners, is and always will be very important to get through the dangerous times ahead. Amidst sharp drops in inflation and rising costs, the challenge is compounded by increased competition for volume grow, which inevitably puts even greater pressure on margins. Moreover, knowing that interest rates will remain high and that consumers have limited purchasing power, we will need to be creative and innovative to find solutions to continue growing, and also show agility and determination to convert all opportunities that come our way.

Biedronka had another exceptional year in 2023, increasing total sales to 21.5 billion euros, corresponding to an 18.2% growth in local currency (with a like-for-like of 14.2%) and accounting for 70% of the Group’s sales volume, growing its market share month after month. This performance reflects the banner’s spirit of innovation and continuous improvement of the assortment translated into 222 new Private Brand product launches (593 when including in&out). Systematic investment in price and in strengthening leadership of promotional activity on the Polish market (202 leaflets and 579 television ads), resulted in a basket inflation rate always below food inflation in the country. This assertiveness, combined with rising costs, led to a 21-basis point decrease in Biedronka’s EBITDA, to 8.5%.

Shopfront of a Biedronka store (photo)

In a year in which it opened 203 stores (174 net additions) and refurbished 375, bringing the network to 3,569 locations by year-end, the Company continued to be our primary destination for investment, which it also channelled towards enhancing the differentiation of its value proposition, for instance, by opening meat counters, which were available in over 1,000 stores – nearly a third of the chain. As to the ultra-fast delivery service Biek, growth has been remarkable and very promising, confirming Polish consumers’ strong preference for convenience.

I take this opportunity to express my special gratitude to the Biedronka teams for their commitment in preparing the banner’s expansion to Slovakia. On top of the outstanding management of what is the Group’s most valuable business, they have shown their commitment to the future by creating conditions for a successful entry into the neighbouring market. A step forward that we had already announced and which will be embodied by the opening of the first stores and a distribution centre in late 2024, adding another country to our portfolio of operations.

At the end of 2023 Hebe, which since 2022 has had an online presence in Slovakia and Czechia, opened two flagship stores in Prague to boost confidence in the brand and increase consumer engagement, in a complementary logic to its digital first strategy.

E-commerce has been – and will continue to be – the Company’s main driver of growth. In 2023, online sales grew by 47.6% and now account for 17% of the 469 million euros of total sales. Compared to 2022, Hebe increased its turnover by 30.9% and EBITDA by 31.5%, with the margin rising to 9.1%. The expansion strategy in Poland continues to be supported by a very selective approach, with 32 openings in the year and the shuttering of four stores.

Among the countries in which we do business, Portugal was the economy that grew the most. However, this did not relieve the burden on household budgets. Private consumption remained weak in the year, as economic growth was driven mostly by the rise in tourism and investment of European RRP funds, mostly directed to the public sector. Inflation in Portugal slowed, standing at 10% in the year, but the cost of living for families (and companies) remained very high and interest rates on loans continued to soar.

Against this backdrop, Pingo Doce continued its strong promotional dynamic throughout the year, publishing 150 leaflets and running 79 campaigns, with significant saving opportunities for consumers, which led to a 7.9% growth in sales, to 4.9 billion euros, and an EBITDA margin of 5.8%. And because a positioning based on price competitiveness alone is not enough to secure the future of the business, the Company showed remarkable team spirit and commitment in preparing and carrying out the major store refurbishments planned for the year (60). By focusing on food solutions, perishables and service, the new store concept is already allowing Pingo Doce to capitalise on its key differentiators. In addition, with around 200 Comida Fresca restaurants now open, Pingo Doce is challenging for leadership in this segment in Portugal, in terms of number of establishments. It is also, proudly, the first retailer in Portugal, and one of the few in the world, to have eliminated all flavour enhancers and artificial colouring from the totally of its Private Brand products.

Restaurant self service counter in a Pingo Doce store (photo)

Also of note in the past year is the unforgettable way in which Pingo Doce responded to the call from World Youth Day, becoming the official food partner of an event that brought together 1.5 million pilgrims, and which involved an unprecedented logistics operation.

Recheio was very incisive in the way it was able to seize the opportunities that presented themselves in 2023. Sales grew 15.1% to 1.3 billion euros, and EBITDA improved significantly, with the Company’s margin standing at 5.4%, a strong rebound from the 5.1% posted in 2022. Tourism recovered strongly in the year in Portugal, contributing to the positive performance in the cash & carry segment and rewarding Recheio’s investment in its HoReCa offer, in particular in the expansion of the MasterChef platform in Lisbon. Recheio’s ties to traditional retail are also growing stronger and the Amanhecer partner network now has over 600 stores.

Check-out counters at a Recheio store (photo)

In Colombia, the economic situation deteriorated rapidly, and the year was marked by a sharp drop in volumes. Despite food inflation falling in the year, standing at a rate of 14.8%, food prices remained very high and families continued to struggle. With this in mind, Ara was very assertive in its response to the crisis, creating ongoing savings opportunities with promotions and consistently low prices on its basket of basic products. Driven by the 45 nationwide campaigns held and the 81 promotional leaflets published in the year, sales grew 42.7% in local currency, with a like-for-like of 10.9%. Strong investment in price and the decision to continue its assertive pace of expansion contributed to reduce the Company’s EBITDA, the respective margin standing at 1.9%. In the year in which it celebrated its 10th anniversary, Ara opened 200 stores and ended the year with a chain of 1,290 locations.

Shopfront of an Ara store (photo)

Our agrifood business, which will celebrate its 10th anniversary in 2024, continues its path of growth and differentiation. The growth of aquaculture, the increase in dairy and meat production, and the launch of our very own brand of organic seedless grapes are just some of the major developments in the year. For us, this is a no-way-back path we will continue to walk following good environmental and social practices.

Our sustainability commitments also extend across the Group, and we are now listed on more than 130 sustainability indices. I am very pleased to report that, for the fourth consecutive year, we are the food retailer with the highest CDP score in the world. Many initiatives and activities have contributed to our performance and the consistent reduction of our ecological footprint. From investing in renewable energies – with the installation of photovoltaic panels in around 780 stores and distribution centres –, to using natural refrigeration gases, from fighting food waste, pollution and deforestation to promoting sustainable agriculture and investing in logistical efficiency, our Companies have made great and multi-dimensional efforts to do their part in tackling the challenges humanity and the planet face.

One issue that I care deeply about is inclusion, which we are committed to as an employer. In Portugal, Pingo Doce, Recheio and the holding company have been awarded the Inclusive Employer Brand seal in recognition of the work we have been doing to create training and employment opportunities for people with disabilities and those in situations of social vulnerability. The diversity of our workforce, which goes far beyond mere inclusion, is an increasingly precious resource. We have employees from more than 70 nationalities, making us a truly multinational Group, that ensures equal opportunity and gender equality.

My heartfelt thanks to all our teams, in particular those working on operational areas, for their valuable contribution to our success. The hard work, commitment and dedication shown in 2023 were a decisive and driving force behind the results disclosed in this report. The 312 million euros allocated to recognition awards and bonuses paid to our employees in Portugal, Poland and Colombia are, therefore, more than deserved.

I would also like to thank the Jerónimo Martins shareholders, including the family I represent, for the unwavering confidence they have shown in the management teams under my leadership. Finally, thank you to those who work closely with me, on the Group’s Executive Management Committee and the Board of Directors, for your contribution to the performance described in the pages that follow.

Pedro Soares dos Santos
Chairman and CEO of the Jerónimo Martins Group


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