The attributable profit of Jerónimo Martins will have had an annual increase of 31% in the fourth quarter of 2015 with a robust operational improvement despite the deflationary environment, with the focus on the profitability of Polish Biedronka, according to analysts polled by Reuters.
the average estimate of nine analysts suggests that the net income number two national retail and leader in food retail in Poland has been set at 85 million euros between October and December 2015, against 65 million achieved a year ago
EBITDA. – earnings before interest, taxes, depreciation and amortization – will have increased 9.1% to 203 million euros and EBITDA margin accelerated to up to 6% , compared to 5.5% reported in the fourth quarter of 2014.
in the full year 2015, income is seen to grow 11.7% to 337.5 million euros and EBITDA up 7.8% to 790.5 million euros.
“the data on the 2015 preliminary sales confirmed the positive momentum of the company in terms of revenue growth in Portugal and Poland, in this case even with a significant level of domestic deflation, which should continue to support the recovery of the company’s profitability, particularly through the Biedronka “explained Caixa BI.
preliminary sales, announced last January , had an annual increase of 6.1% to 3,553 million euros, an increase of 8.3% to 13,727 million euros in 2015 year as a whole, supported a growth in volumes in Poland, which more than offset the deflation basket.
Focus on Biedronka
the attention of analysts will focus mainly on the performance of the Polish subsidiary Biedronka, which is expected to show a growth in operating profit, driven by changes made to the commercial offer to combat food deflation in the country.
“following the sales above expectations reported by Jerónimo Martins in Poland, we expect the operating margin has improved, with an increase of 50 basis points to 6.8% in the fourth quarter, “highlights Barclays, in an investment note. Said that “This solid performance reflects volume growth and the slow food deflation in Poland”.
The food deflation and the strong competition on the Polish market began to deteriorate the profitability of retail in the last years and led the company to slow the expansion plan and make changes to business strategy, introducing a greater product range and differentiating the stores, especially in urban areas, which contributed to an increase in sales volume.
“the focus is once again in Poland, representing more than 80% of the profits of the group. we expect the fourth quarter results confirm the positive momentum in Poland and the importance of the strategy implemented in Biedronka 18 months ago,” he said HSBC.
the current growth plan Biedronka involves an investment of between 700 and 800 million euros in the opening of 300 stores with a new format by 2017, when sales have reached 11,000 million euros.
rate in Poland
the new tax revenues from retail companies operating in Poland, which is being discussed by the Polish Government , remains the main factor of pressure and uncertainty about the Jerónimo Martins.
January 25, the Polish Executive announced the adoption of two rates that would focus progressively on revenues of retailers and still an additional rate applicable to income earned on weekends, weekends and holidays.
on the sales between 1.5 and 300 million monthly zlotys, would apply a rate of 0.7% and on sales above 300 million zlotys, which is the case of Biedronka, a rate of 1.3% would be applied. In addition it would be adopted a rate of 1.9% for sales made on Saturdays, Sundays and holidays.
However, the decision to introduce a progressive tax has been criticized by the European Commission, at the Polish government continues negotiations with operators in the sector and has not yet arrived at a final decision.
“Although the government has not given further details of the new proposal, we maintain our view that you will find a mechanism for taxing retailers, one way or another, “said Barclays.
for Santander,” there has been some uncertainty surrounding the proposals for tax revenues from retailers, but we see the Biedronka better positioned than peers to deal with this tax, given the higher margins, volume growth and low exposure to sales in the end-of-week. “
the actions of the owner of the Pingo Doce follow supermarkets to value 0.15% to 13.395 euros.
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