Light at the end of the tunnel for Jeronimo Martins
troubled Portuguese retailer Jeronimo Martins on the road to
recovery. But with a high debt level still in need of reduction,
the company still has a way to go before it returns to the black.
After a difficult few years involving the wholesale restructuring of the business, Portuguese supermarket retailer Jeronimo Martins appears to be on the road to recovery.
The group reported like-for-like sales up 2.4 per cent for 2002, with operating profits ahead 18.8 per cent. The company was particularly proud of its final quarter performance, which it said reflected the completion of its restructuring plan and a new focus on core operations.
With the disposal of all the company's least profitable operations, Jeronimo Martins reduced its debt levels by €375 million and saw a marked improvement in profitability from all its remaining operations.
In Portugal, the company has repositioned its Pingo Doce supermarket chain and posted a 5.8 per cent improvement in sales in the final quarter as a result. The increase came from both an increase in the average amount spent in the stores and also from a rise in the number of customers. But a poor performance from the chain in the first half of the year meant that full-year sales were down 1.7 per cent overall.
Sales by the Feira Nova chain also recovered well during the last months of the year, despite the decision to end wholesale sales. The Recheio division closed the year with turnover growth of 4.8 per cent, the result of an improvement in the chain's competitiveness. The major driver of this growth was the horeca channel, which, despite an unfavourable economic situation, was up by 9.4 per cent year-on-year. The traditional retail channel also performed above expectations.
The group's specialised confectionery and chocolate retail arm, Hussel, posted sales growth of 20 per cent during the year, or 8.9 per cent on a like-for-like basis, as a result of opening two new stores.
Outside Portugal, the Biedronka chain in Poland showed double digit growth in like-for-like sales (17.1 per cent) for the year, while total sales, including the contribution of 20 new stores, were up 20.8 per cent in local currency terms.
But while the restructuring of the group appears to have set it on the right path, there is still a long journey ahead of it. Net losses for the year were €204 million, of which €201 million came from one-off items relating to the various disposals during the year. Sales for the year were down 7.3 per cent to €3.9 billion.
After the sale of its loss-making units, Jeronimo Martins is now confident of strengthening its balance sheet in 2003 by further reducing its debts and improving profits in 2003.
