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Research Tree provides access to ongoing research coverage, media content and regulatory news on JERONIMO MARTINS. We currently have 9 research reports from 1 professional analysts.
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Roughly in line with our expectations
23 Feb 17
JM announced FY 16 net result of €593m, of which €232m related to the Moterrorio disposal as exceptional items. The EBITDA margin increased to 5.9%, boosted by the good resilience of Biedronka’s profitability. The cash flow situation improved, leading to a negative net debt. Thanks to stronger cash flow generation, the company proposed a €0.60 dividend per share (flat compared to last year, including the distribution of free reserves of €0.375 per share).
Biedronka delivers a strong Q4
17 Jan 17
Jeronimo Martins’ sales experienced a 6.5% increase over the year, backed by a good performance in the last quarter. Biedronka, the Polish business, remains the group’s key growth driver. In fact, Polish sales came in at €9,781m following 10.5% growth over Q4. Sales in the Portuguese operations through Pingo Doce and Recheio increased by 3.7% and 7.1%, respectively, accounting for c.30% of the group’s top-line.
Lower than expected margin
24 Oct 16
Jeronimo Martins released strong Q3 sales growth leading to a 5.5% rise over the last nine months. Total sales reached €10,738m and EBITDA stood at €626,9m, i.e. an EBITDA margin at 5.8%, flat compared to 2015. The 9M net result came in at €501.6m, including gains from the Monterroio disposal for €224m. Adjusted net profit amounted to €266m, 5.6% yoy, boosted by a lower cost of debt. Biedronka remains the main driver for both the group’s top-line and profitability which offset a slight decrease in the Polish business margin (10bp). The underperformance of Ara and Hebe is more pronounced this year due to Ara’s network expansion (expected to be above 2015’s level). Despite the substantial capex, JM continues to enjoy a solid balance sheet with a lower debt burden (reaching €326m vs. €658m in 2015).
Worries about new tax dampened
21 Sep 16
Yesterday, the European Commission announced through a press release that it has opened an in-depth investigation into Poland’s tax on the retail sector. The European Commission has also issued an injunction, requiring Poland to suspend the application of the tax until the Commission has concluded its assessment. It is worth noting that Poland adopted, in July 2016, a new tax to be applied to retail companies operating in Poland. The tax entered into force on 1 September 2016, and no payments are due yet.
Successful focus on the top-line
29 Jul 16
H1 sales reached €6,958m backed by the performance of all banners despite deflation in Poland and flat food inflation in Portugal. Biedronka experienced strong lfl growth of 8.8% and sales came in at €4,678m. The network expansion sustained this performance as 40 stores were opened while 94 locations were refurbished. In Portugal, Pingo Doce’s sales increased by 3.9% and 0.3% on a lfl basis, reflecting the still negative basket inflation. In the first six months of this year, Pingo Doce opened five new stores bringing the total number of stores to 404.
Worries on the new Portuguese tax
03 May 16
A good first quarter for JM in which sales experienced a 5.9% increase to €3.4bn. The group’s EBITDA progressed well following the good sales performance, strict cost management and with Easter falling in Q1 16. The net result stood at €77m (vs. €65m in Q1 15) due to lower cost of debt (sound financial profile with gearing at 12.7%). The group continued to spend on capex, €83.4m in the quarter, i.e. 14% of planning capex for FY 16.
Argos and broader non-food offer to defend market share
28 Sep 16
Q2 total sales fell by 0.4% and by 1.1% on a lfl basis. The retail business (excluding Argos) generated almost flat sales compared to Q2 15 but was still experiencing a negative trend on a lfl basis. The good news came from Argos’s recovering business, where revenues impressed with 2.8% growth in H1 following a promising Q2. Sainsbury strengthened its network by opening nine new convenience stores and one supermarket. Sales of groceries online showed an 8% increase (in line with last quarter’s) despite the decrease in both customer orders and basket size. The stock lost 3.27% this morning.
Reaching new terms with Ocado
10 Aug 16
Morrisons agrees new terms with Ocado that will enable it to reach customers nationwide. Under the new terms, Morrisons will be released from a profit-sharing agreement (between ¼ and ½) of earnings. Also, it would not share fees for research and development (£4m). The deal states that Morrisons rents 30% of Ocado’s new warehouse. According to management, the new terms would lift the company’s profit by £50-100m per year in the mid-term. Ocado will still be prohibited from serving Tesco, Sainsbury, Asda and the German discounters. Wm Morrison’s share climbed by 1.86% yesterday, boosting its performance over the last week to 6.92%.
On the right track
05 Oct 16
THe Q2 figures witnessed a third consecutive lfl positive growth leading to a H1 16 sales improvement of 1.0% on a lfl basis. H1 sales stood at £24.4bn (£27,338m including fuel) following a promising Q2 (0.9% in the UK and 2.1% for international markets). Tesco’s sales have benefited from the increase in both volume and transactions in all markets. All formats – including the largest and the Extra formats – saw an improving trend in lfl sales performance throughout the half. H1 operating profit came in at £596m, i.e. a 2.2% operating margin and management expects £1.2bn for the whole year. This positive trend in the margin will continue according to management and reach 3.5-4.0% by 2019/20. Net debt decreased to £4,352m but total indebtedness surged by £3,400m with a ballooning pension deficit due to low UK bond yields, in the aftermath of Brexit.
Upside Potential Outweighs Downside Risk
29 Mar 17
After Tesco PLC (TSCO.L) announced on 27 January that it proposed to merge with Booker Group, all has gone quiet and Tesco’s share price has dropped back sharply. Despite quoted annual deal synergies of £200m per annum in the third year post completion of the deal, some of Tesco’s major shareholders believe that the deal premium is too rich and that Tesco is buying Booker on ‘peak’ margins. This could well be true. Looking at stand alone Tesco, its valuation now looks attractive at 7.4x FY-18E EV/EBITDA given the improving cash flow profile, so if the deal is blocked entirely, the stock should rally. If the deal is adjusted, the terms are likely to be better for Tesco we believe. Overall the upside potential outweighs downside risk for the share price. We upgrade our recommendation to Buy.