Portuguese retailer Jerónimo Martins has posted a 25% drop in fourth-quarter net profit compared a year ago, despite a gentle rise in overall sales driven by its key market, Poland, as costs increased due to the impact of the COVID-19 pandemic.
As net profit fell to €93 million, Portugal's second-largest retailer warned 'there is still uncertainty about the possible implementation of further confinement measures, at least in the first half of the year'.
It said it planned to increase investment this year to €700 million from €470 million in 2020, mostly in Poland where its Biedronka unit is the largest food retailer, 'if restrictions implemented in our markets do not impact execution'.
For the full year, net profit fell 20% to €320 million, while sales rose 3.5% to €19.3 billion.
Sales in the October-December period rose 2.4% to €5.1 billion, with a 5.1% rise in Poland offsetting a 0.8% drop at its domestic supermarket chain Pingo Doce.
EBITDA grew 1.6% to €394 million in the period. Its EBITDA margin - a key measure of profitability - slipped to 7.7% from 7.8% a year earlier.
"We entered 2021 with a renewed confidence in the ability of each of our banners to better anticipate the impacts of the pandemic on our operations. These impacts will continue, to affect the operational context, at least in the first half of 2021," commented Pedro Soares dos Santos, Jerónimo Martins chief executive.
"Looking ahead, despite ongoing challenges, we expect to continue to grow in a profitable, sustainable way. The strength of our balance sheet allows us to remain true to our long-term vision, while taking the necessary actions to guarantee our competitiveness and consumer preference and protect the profitability of all our banners.’
Portugal and Poland both imposed lockdowns in 2020 to contain the spread of the pandemic. Portugal ordered a night-time curfew and partial weekend lockdown in early November and tightened curbs in mid-January as the pandemic worsened, before subsiding in the past few weeks.