Jerónimo Martins SGPS S A : 9M 2022 Report

CONSOLIDATED REPORT

AND ACCOUNTS

FIRST NINE MONTHS

2022

U

Unaudited

Jerónimo Martins | R&A First 9 Months 2022

INDEX

Message from the Chairman and CEO - Pedro Soares dos Santos	3
I - CONSOLIDATED MANAGEMENT REPORT
1. Performance Overview & Key Drivers	4
2. Performance Analysis by Banner	5
3.	Consolidated Financial Information Analysis	7
4. Outlook for 2022	8
5. Management Report Appendix	9
5.1. The Impact of IFRS 16 on Financial Statements	9
5.2. Sales Detail	10
5.3. Stores Network	11
5.4. Definitions	11
6. Reconciliation Notes	12
7.	Information Regarding Individual Financial Statements	14
II - CONSOLIDATED FINANCIAL STATEMENTS
1.	Consolidated Financial Statements	16
2.	Notes to the Financial Statements	20

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Jerónimo Martins | R&A First 9 Months 2022

Message from the Chairman and CEO

Pedro Soares dos Santos

''Food inflation, which we detected as early as last year, increased substantially with the Ukraine war, which also contributed to an energy crisis.

With sharp rises in food and energy prices reducing households' purchasing power, we decided, across all Group's Companies, to contain, as much as possible, the rise in prices in our stores, accepting a reduction in margins as a percentage of sales.

The nine months' results reflect this decision and the agility and assertiveness of our banners that ended the period with stronger market positions and heavy store traffic. In Poland, where the impact of the Ukraine war is acutely felt, we recognized the effectiveness and productivity of our operational teams with an extraordinary award of 22 million euros.

With two months until year-end, the geopolitical instability and the supply-chain constraints resulting from the pandemic make the outlook on food, energy, and fuel prices very uncertain. These prices will have a large impact on consumption in a winter that is expected to be one of the hardest of the last decades.

In this context, supported by the Group's strong financial position, our banners' priorities remain clear and firm: to guarantee price leadership and to continue to deserve the trust of our consumers and business partners.'

Message from the Chairman

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Jerónimo Martins | R&A First 9 Months 2022

I - CONSOLIDATED MANAGEMENT REPORT

Price Investment Drives Sales and Limits Impact of Cost Inflation on Results

1. Performance Overview & Key Drivers

Generalised price increases associated with food and energy crisis continued to impact the international landscape and the three countries where we operate.

Aware of the negative impact of inflation on households' living standards, all our banners reinforced their commercial dynamics. They absorbed part of the increases in purchase prices paid to suppliers, investing in creating savings opportunities for consumers and strengthening competitiveness. This strategy resulted in solid sales growth that

protected profitability.

9M | KEY FIGURES

+21.0% SALES

TO €18.4 BN

(+23.1% excl. FX)

+17.8% EBITDA

TO €1.3 BN

(+20.5% excl. FX)

+29.3% NET

PROFIT

TO €419 MN

EPS AT €0.67

CASH FLOW

AT €275 M

NET DEBT

AT

€1.7 BN

In Poland, food consumption remained resilient throughout the period. Biedronka strengthened its price leadership and continued to earn the recognition of consumers, leading sales to grow, in local currency, 23.0% in the 9M (+26.4% in Q3).

Hebe recovered strongly from previous years when the pandemic impacted performance. Our Health and Beauty banner recorded, in the 9M, 33.6% sales growth in local currency (+31.6% in Q3). Online sales represented c.14% of the total.

In Portugal, operating in an increasingly challenging context for families, Pingo Doce kept its promotional assertiveness and grew sales by 10.3% (+13.4% in Q3). Recheio worked to make the most of the upturn in tourism and recorded sales growth of 28.8% (+28.6% in Q3).

In Colombia, consumption was heavily impacted by food inflation which remained above 20%. Ara consistently invested in price, responding to a clear need for families to have access to value opportunities, and grew local currency sales by 66.2% (+60.0% in Q3). Given the strong sales growth, Ara decided to accelerate its expansion and increase the number of stores it seeks to open in the current year from 180 to 230-250.

Our banners' focus on volume growth resulted in a Group EBITDA increase of 17.8%, with the respective margin at 7.3% vs. 7.5% in 9M 21. In Q3, the EBITDA margin was 7.6%, lower than the 8.1% in Q3 21 due to further price investments and higher cost inflation.

The strength of the Group's Balance Sheet is particularly relevant in times of high uncertainty like the ones we are living. At the end of the period, the net cash position (excluding capitalized operating lease liabilities) was 763 million euros.

Management Report

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Jerónimo Martins | R&A First 9 Months 2022

2. Performance Analysis by Banner

POLAND

In Poland, food inflation increased progressively over the nine months, reaching an average of 13.2% (+17.4% in Q3).

Despite Poland's increasingly cautious and price-sensitive consumer, food consumption expenditures recorded a solid evolution, growing above food inflation.

The effect of the number of Ukrainian refugees remaining in Poland together with the support package implemented by the Polish government contributed to this performance. This package sought to limit the impact on consumption, of increases in food and energy prices and rises in interest rates.

Biedronka LFL					Biedronka has focused on containing food inflation,
				ensuring the competitiveness of shelf prices, and
					23.3%
				22.5%	implementing relevant campaigns for the consumers.
						In the first nine months of the year, sales in local currency, grew by 23.0%,
			12.2%			with LFL of 19.5%. In euros, sales reached 12.7 billion, 19.7% above 9M 21.
					The performance recorded in the period also reflects higher inflation in the
		9.8%
8.8%	8.1%				basket.
6.5%
						In Q3 22, sales in local currency grew by 26.4%, with LFL of 23.3%. In euros,
						sales reached 4.4 billion, 21.6% higher than in Q3 21.

Q1	Q2	Q3	Q4	Q1	Q2	Q3	The solid sales delivery resulted in EBITDA growth of 15.1% (+18.3% in local
	2021			2022					currency), with the respective margin standing at 8.8% (9.1% in 9M 21). The
									reduction in the EBITDA margin that in Q3 was at c.50b.p., reflects price

investments in a context of progressive and significant cost increases, particularly in electricity and fuel.

In line with its investment programme, Biedronka opened 65 stores in the period (54 net additions), remodelled 252 locations, and inaugurated a new distribution centre.

Hebe LFL

	38.2%
					32.2%
			25.1%			25.7%
				20.8%
		9.0%
0.1%
Q1	Q2	Q3	Q4	Q1	Q2	Q3
	2021	2022

Hebe recorded strong sales growth that benefitted from the previous year's low base, still affected by restrictions related to the pandemic.

In local currency, the banner grew sales by 33.6%, with LFL at 26.4%. In euros, sales reached 252 million, 29.9% above 9M 21.

In Q3 22, sales grew by 31.6% (+26.7% in euros) with LFL at 25.7%.

The good sales performance improved operating leverage, boosting EBITDA to reach 20 million euros (11 million euros in 9M 21) and the respective margin to increase from 5.7% in 9M 21 to 8.0% in 9M 22.

Hebe opened 13 stores in the period (9 net additions).

PORTUGAL

In Portugal, food inflation increased significantly, reaching 10.8% in the 9M (15.2% in Q3).

The pressure of generalized price increases on households' disposable income led to negative volume performance in retail food sales and an increased trading down.

On the other hand, the strong recovery of tourism was consistent throughout the 9M, underpinning a solid performance of the HoReCa sector.

Management Report

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