Portugal's second-largest retailer, Jerónimo Martins, reported a 49% jump in fourth-quarter net income as its key Polish market led a rise in consolidated sales, but warned on the impact of rising inflation and the conflict in Ukraine.
The company booked a net profit of €139 million between October and December, up from €93 million a year earlier, after Portugal and its top market Poland lifted most restrictions to control the COVID-19 pandemic.
However, the strong growth may give way to harder times as the war in Ukraine and rising inflation, made worse by persistent supply chain bottlenecks, will weigh on the business, chief executive Pedro Soares dos Santos said.
Also, the Polish zloty, like other eastern European currencies, has been weakening.
"We know that the road ahead is full of challenges and uncertainty that the military crisis only reinforces," dos Santos said. "As we go forward, we will rely on our balance sheet strength, on Biedronka’s resilience and capacity to overcome adversity, on Ara's youth and expansion capabilities, and on the deep business know-how of our companies in Portugal."
The company's consolidated sales in the fourth quarter rose 11.5% to €5.7 billion, driven by its market leading Polish chain Biedronka, whose sales increased 10% to €3.9 billion.
In Portugal, sales at the Pingo Doce supermarket chain rose 6.4% to €1.1 billion.
Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 12% to €441 million in the quarter. The EBITDA margin was 7.8%, from 7.7% a year earlier.
Given the Ukraine crisis and rising inflation, Biedronka could do more discounts "to maintain competitiveness, which will increase pressure on margins," the company said. Biedronka is among the retailers ramping up its support for humanitarian aid in Ukraine in recent days.
For the whole of 2021, Jerónimo Martins' profit rose 48% to €463 million, while EBITDA increased 11% to €1.58 billion.
"Although in the light of the recent events in Ukraine 2021 seems already very far away, it is fair to recognise that our teams surpassed once again the challenges posed by the difficult circumstances," dos Santos said. "Still in a pandemic context, new sales records were set and the value and relevance for the consumer of our banners' proposals were confirmed."