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Retail

Portugal's Jeronimo warns of tough times ahead after net profit drops 36% in the first-half

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LISBON (Reuters) - Portuguese retailer Jeronimo Martins JMT.LS said on Wednesday its net profit slid by more than a third in the first half, and warned of tough times ahead as the full impact of the coronavirus pandemic became apparent.

Net profit fell 36.2% to 104 million euros ($122.4 million) in the period, it said, while earnings before interest, tax, depreciation and amortisation eased 4.9% to 635 million euros as the pandemic and related lockdown measures drove up operating costs.

“In Portugal, the economy is suffering from its overexposure to the tourism sector and the consequences of severe restrictions imposed on retail activity,” Chief Executive Pedro Soares dos Santos said.

“These factors had an immediate impact on the profitability of our business models.”

Sales in the period rose 4.6% to 9.3 billion euros, with a 7.8% rise in revenues in Poland - where the company’s Biedronka unit is the largest food retailer - offsetting a 2.9% drop at its domestic Pingo Doce supermarket chain.

The company said in a statement that uncertainty about the development of the pandemic remains very high, and it is too early to estimate the real impact it will have over the year as a whole.

“I’m aware the coming months will continue to be tough,” Soares dos Santos said.

Jeronimo’s overall EBITDA margin fell to 6.8% compared with 7.5% in the first half of 2019, while Biedronka’s EBITDA margin eased to 9% from 9.2%.

During the first six months of the year, the company made investments worth 142 million euros, a drop compared to the 238 million euros invested over the same period in 2019.

Reporting by Sérgio Gonçalves and Catarina Demony; Editing by David Goodman and Jan Harvey

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