Jeronimo Martins — Earnings Release 2016

Jul 27, 2016

Jerónimo Martins SGPS, S.A.

First Half 2016 Results

Higher sales growth in Biedronka resulted in another very strong quarter for the Group. Consolidated sales in H1 16 grew 4.7% to 7.0 billion euro (+9.1% at constant exchange rates). Group EBITDA increased 6.8% (+10.3% at constant exchange rates) to 387.8 million euro.

• Biedronka sales, in local currency, increased 9.8% (+10.2% in Q2), with LFL growth at 8.8% (+9.9% in Q2)
• Pingo Doce sales (excluding fuel) grew 4.3% (+2.5% in Q2), with LFL at 0.3% (-1.4% in Q2)
• Recheio sales increased by 4.2% (+4.1% in Q2), with a healthy LFL performance of 3.6% (+3.4% in Q2)
• Net Profit to JM increased 15.1% to 172.0 million euro
• Net Debt as at end of June stood at 274.3 million euro after the dividend payment of 166.5 million euro in May

Lisbon, 27 July 2016

Message from the Chairman and CEO Pedro Soares dos Santos

'The first half 2016 performance reflects our focus on top line growth and our commitment to cost efficiency in a food deflationary context.

In Poland, the reinforced competitiveness of Biedronka is allowing the banner to maximize the benefits from a stimulant consumer demand.

In Portugal, Pingo Doce and Recheio continued to increase market shares in a highly competitive landscape and a consumption slowdown.

In Colombia, Ara performed according to plan and is now preparing to enter its third operating region while speeding up expansion in the market.

The first half results confirm our strong belief in the ability of our banners to overcome the challenges in the markets where they operate and to deliver against their targets for the year.'

(Million Euro)	H1 16	H1 15	Δ% (Euro)	Δ% (w/o F/X)
Consolidated Sales	6,958.5	6,644.0	+4.7	+9.1
EBITDA EBITDA Mg (%)	387.8 5.6	363.1 5.5	+6.8	+10.3
Net Profit JM w/o non-recurrent	172.0 173.7	149.5 152.9	+15.1 +13.6	+17.2 +15.7
EPS (€)	0.27	0.24	+15.1
Net Debt Gearing (%)	274.3 17.6	386.0 23.5

FINANCIAL CALENDAR

9M 2016 Results: 24 November 2016

Investor Relations Office

• +351 21 752 61 05
• investor.relations@jeronimo-martins.pt

Cláudia Falcão claudia.falcao@jeronimo-martins.pt Hugo Fernandes hugo.fernandes@jeronimo-martins.pt

Key Performance Figures

NET CONSOLIDATED PROFIT

(Million Euro)	H1 16		H1 15		D	Q2 16		Q2 15		D
Net Sales and Services	6,959		6,644		4.7%	3,583		3,457		3.6%
Gross Profit	1,469	21.1%	1,411	21.2%	4.1%	758	21.2%	735	21.3%	3.1%
Operating Costs		-1,081 -15.5%		-1,048 -15.8%	3.1%		-553 -15.4%		-538 -15.6%	3.0%
EBITDA	388	5.6%	363	5.5%	6.8%	204	5.7%	197	5.7%	3.5%
Depreciation	-146	-2.1%	-147	-2.2%	-0.7%	-73	-2.0%	-74	-2.1%	-2.1%
EBIT	242	3.5%	216		3.3% 11.9%	132	3.7%	123	3.6%	6.9%
Net financial costs	-11	-0.2%	-13		-0.2% -18.7%	-6	-0.2%	-8		-0.2% -17.3%
Gains in joint ventures and associates	8	0.1%	8	0.1%	-4.5%	5	0.1%	4	0.1%	6.3%
Non-Recurrent Items	-3	0.0%	-5	-0.1%	n.a.	-2	-0.1%	-5	-0.1%	n.a.
EBT	236	3.4%	207		3.1% 14.2%	128	3.6%	115		3.3% 10.9%
Income tax	-54	-0.8%	-49	-0.7%	9.6%	-29	-0.8%	-27	-0.8%	6.5%
Net Profit	182	2.6%	158		2.4% 15.6%	9 9	2.8%	8 8		2.6% 12.3%
Non Controlling Interests	-10	-0.1%	-8		-0.1% 25.6%	-5	-0.1%	-4		-0.1% 23.1%
Net Profit attributable to JM	172	2.5%	150		2.3% 15.1%	9 5	2.6%	8 5		2.5% 11.8%
EPS (€)	0.27		0.24		15.1%	0.15		0.13		11.8%

SALES EVOLUTION

EBITDA EVOLUTION

Sales & Profit Analysis

Consolidated sales reached €6,958.5m, a growth of 4.7% versus the same period last year (+9.1% at constant exchange rates).

All banners maintained sales performance as its main focus, leading Group LFL growth to reach 6.3% in H1 16 (+6.6% in Q2 16).

In Poland, the recent increase in disposable income has supported the positive trend in food consumption. That said, the operating environment continued to be dominated by promotional campaigns.

Food inflation in the country was marginally positive, reaching 0.6% in the first six months.

Biedronka total sales grew 9.8% (in local currency), fuelled by the remarkable 8.8% LFL sales increase. In Euro, sales reached €4,678.3m, 4.0% higher than in the previous year.

In the second quarter of this year, Biedronka's LFL sales growth registered a significant increase to 9.9% that reflected the interest generated by the improved offer (implemented in H1 15) and the renewed promotional dynamics carried out by the Company this year. The favourable consumer environment in Poland due to the increase in the families' available income, together with a strong month of June, have also contributed positively to the performance of the Company.

In the first six months of the year, Biedronka opened 40 stores (26 net additions) and refurbished 94 locations.

In Portugal, a high level of promotional intensity persisted, and food inflation was flat in H1 16.

Pingo Doce sales grew by 3.9% to reach €1,686.5m. The LFL (excl. fuel) at 0.3% reflected the still negative basket inflation and the tough comparison against previous year's performance. The banner continued reinforcing its market share¹ .

In Q2 16, the LFL of -1.4% was also impacted by the negative calendar effect related to Easter.

In the first six months of this year, Pingo Doce opened five new stores.

Recheio benefited from an improving HoReCa sector and leveraged on its commercial strength. The result was a healthy sales performance in the second quarter that contributed to the 3.6% LFL growth registered in the first six months. Total sales were at €407.0m, 4.2% more than in H1 15. The Company opened one new store in June.

3

¹ Source: TSR | Nielsen Total Store Read

Ara reached sales of €101.5m in the first six months of the year. The Company, in line with the plan, opened 19 stores while preparing the opening of its third operating region.

At the Group level, consolidated EBITDA reached €387.8m, 6.8% more than in the previous year (+10.3% at constant exchange rates). The respective margin was 5.6% (5.5% in H1 15), reflecting the strong sales performance and strict cost management.

Biedronka's EBITDA, in the first six months, grew 7.3% (+13.3% in local currency) to reach €327.3m with the respective margin at 7.0% (6.8% in H1 15). In the second quarter, Biedronka's EBITDA, in local currency, increased 12.0% and 4.8% in euro terms.

Pingo Doce delivered EBITDA of €79.1m, registering a growth of 3.1% on H1 15. EBITDA margin, in line with the same period last year, was at 4.7% in H1 16.

Recheio posted EBITDA of €20.4m with its margin increasing to 5.0% (4.8% in H1 15).

Losses generated by Ara and Hebe, at EBITDA level, came in at €28.0m in the first six months of the year.

Financial charges for the Group were €10.5m, €2.4m below the same period last year due to a reduction in average net debt and a lower cost of debt.

The strong operational performance led Net Profit attributable to Jerónimo Martins to grow 15.1% to €172.0m despite the devaluation of the zloty, which had a particularly strong effect in Q2 16.

The Group Capex was €179.6m in the first six months of the year, 42.6% of which invested in Biedronka.

The Free Cash Flow in the period was €99.0m, €37.6m above the same period in 2015.

After the dividend payment of €166.5m in May 2016, Net Debt for the Group at end June was €274.3m and Gearing stood at 17.6%.

Outlook for 2016

In Poland, growth in consumption demand is still expected. However, in an environment of low food inflation, competition will remain fierce.

Biedronka is focused on capturing growth opportunities while preserving the strong price and cost positioning in the Polish market.

In Portugal, food inflation is also very low and the market remains promotionally driven. Pingo Doce's priority is to consolidate its competitive positioning whilst improving shopping experience.

In Colombia, Ara will open, in H2, its third distribution centre (Bogota) and will focus on its store opening programme for this year.

Losses in Ara and Hebe, at the EBITDA level, are expected not to surpass their 2015 level (€55.5m), at constant exchange rate.

Some socio-economic and political uncertainty, intensified by measures implemented by the Governments, is expected to put pressure on the Companies' cost structures, namely in labour costs.

Notwithstanding, the first half results validate our expectations that, focusing on top line growth, our businesses will deliver their targets. As such, in 2016, the Group expects to invest €550-650m, with Biedronka absorbing c.45% of this value.

Disclaimer

Statements in this release that are forward-looking statements are based on current expectations of future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties relate to factors that are beyond Jerónimo Martins' ability to control or estimate precisely, such as general economic conditions, credit markets, foreign exchange fluctuations and regulatory developments.

Except as required by any applicable law or regulation, Jerónimo Martins assumes no obligation to update the information contained in this release or to notify a reader in the event that any matter stated herein changes or becomes inaccurate.

INCOME STATEMENT BY FUNCTIONS

Appendix

(Million Euro)	H1 16	H1 15
Net sales and services	6,959	6,644
Cost of sales	-5,490	-5,233
Gross profit	1,469	1,411
Distribution costs	-1,111	-1,086
Administrative costs	-115	-109
Exceptional operating profits/losses	-2	-5
Operating profit	240	212
Net financial costs	-11	-13
Gains/losses in other investments	-1	0
Gains in joint ventures and associates	8	8
Profit before taxes	236	207
Income tax	-54	-49
Profit before non controlling Interests	182	158
Non controlling interests	-10	-8
Net profit attributable to JM	172	150

SALES BREAKDOWN

(Million Euro)	H1 16			H1 15	D %		Q2 16			Q2 15	D %
		% total		% total	Pln	Euro		% total		% total	Pln	Euro
Biedronka		4,678 67.2%		4,499 67.7%	9.8%	4.0%		2,397 66.9%		2,327 67.3% 10.2%		3.0%
Pingo Doce		1,687 24.2%		1,623 24.4%		3.9%		870 24.3%		850 24.6%		2.2%
* Recheio	407	5.8%	390	5.9%		4.2%	219	6.1%	211	6.1%		4.1%
Ara	102	1.5%	5 6	0.8%		83.0%	5 4	1.5%	2 9	0.8%		83.9%
Hebe	5 5	0.8%	4 8	0.7%		15.4%	2 8	0.8%	2 4	0.7%		15.1%
Mkt. Repr. and Rest. Serv.	3 9	0.6%	3 7	0.5%		8.1%	2 0	0.6%	1 8	0.5%		9.3%
Others & Cons. Adjustments *	-9	-0.1%	-8	-0.1%		n.a.	-5	-0.1%	-4	-0.1%		n.a.
Total JM	6,959	100%	6,644	100%		4.7%	3,583	100%	3,457	100%		3.6%

* Restated figures for Q2 15 and H1 15, see note 2.2.

SALES
GROWTH

	Total Sales Growth			LFL Sales Growth
	Q1 16	Q2 16	H1 16	Q1 16	Q2 16	H1 16
Biedronka
Euro	5.1%	3.0%	4.0%
PLN	9.3%	10.2%	9.8%	7.6%	9.9%	8.8%
Pingo Doce	5.8%	2.2%	3.9%	1.9%	-1.5%	0.1%
Ex-Fuel	6.3%	2.5%	4.3%	2.1%	-1.4%	0.3%
Recheio *	4.4%	4.1%	4.2%	3.8%	3.4%	3.6%

* Restated figure for Q1 16, see note 2.3.

H1 2016 Results

STORE NETWORK

Number of Stores	2015		Openings	Closings	H1 16	H1 15
		Q1 16	Q2 16	H1 16
Biedronka	2,667	2 6	1 4	1 4	2,693	2,655
Pingo Doce	399	3	2	0	404	385
Recheio	4 1	0	1	0	4 2	4 1
Ara	142	8	1 1	0	161	4 4
Hebe	134	1	5	5	135	109

Sales Area (sqm)	2015		Openings	Closings/ Remodellings	Network
		Q1 16	Q2 16	H1 16	H1 16	H1 15
Biedronka	* 1,721,897	19,329	10,743	5,421	1,746,547	1,707,535
Pingo Doce	479,113	3,500	1,850	-376	484,839	466,155
Recheio	128,141	0	2,696	0	130,837	128,665
Ara	43,891	2,732	3,683	0	50,306	28,639
Hebe	30,955	225	1,282	1,311	31,150	27,709

* Restated figure from 1,717,944 published in 2015 FY.

EBITDA MARGIN BREAKDOWN

(% of sales)	H1 16	% total	H1 15	% total
Biedronka	7.0%	84.4%	6.8%	84.0%
Pingo Doce	4.7%	20.4%	4.7%	21.1%
Recheio	5.0%	5.3%	4.8%	5.2%
Others & Cons. Adjustments	n.a.	-10.1%	n.a.	-10.3%
JM Consolidated	5.6%	100%	5.5%	100%

BALANCE SHEET

(Million Euro)	H1 16	2015	H1 15
Net Goodwill	628	640	646
Net Fixed Assets	3,026	3,060	3,002
Total Working Capital	-1,919	-2,001	-1,732
Others	9 7	8 2	110
Invested Capital	1,833	1,780	2,026
Total Borrowings	468	658	743
Leasings	0	0	0
Accrued Interest	1	0	6
Marketable Sec. & Bank Deposits	-195	-471	-364
Net Debt	274	187	386
Non Controlling Interests	248	252	238
Share Capital	629	629	629
Reserves and Retained Earnings	681	712	773
Shareholders Funds	1,558	1,593	1,640
Gearing	17.6%	11.7%	23.5%

H1 2016 Results

					H1 15
CASH FLOW					363
					-13
					1 1
					-53
					308
					-188
					-55
					-4
	Free Cash Flow		9 9		6 1
			1
			-2
				H1 15 Weight
(Million Euro) H1 16 EBITDA 388 Interest Payment -8 Other Financial Items 3 Income Tax -60 Funds From Operations 323 Capex Payment -184 Working Capital Movement -39 Others 0 (Million Euro) H1 16 H1 15 FINANCIAL COSTS Net Interest -6 -12 BREAKDOWN Exchange Differences -3 Others -2 Financial Results -11 -13 (Million Euro) H1 16 Weight CAPEX Biedronka 7 7 43% Distribution Portugal 7 4 41% Others 2 9 16% Total CAPEX 180 100% (Million Euro) H1 16 WORKING Inventories 657 CAPITAL in days of sales 1 7 Customers 5 8 in days of sales 2 Suppliers -2,233 in days of sales -58 Trade Working Capital -1,518 in days of sales -39 Others -400 Total Working Capital -1,919 in days of sales -50 (Million Euro) H1 16 DEBT Long Term Debt 329 BREAKDOWN as % of Total Borrowings 70.3% Average Maturity (years) 2.7 Bond Loans 150 Commercial Paper 6 5 Other Debt 114 Short Term Debt 139 as % of Total Borrowings 29.7% Total Borrowings 468 Average Maturity (years) 1.6 Leasings 0 Accrued Interest & Hedging 1
			9 8	55%
				5 4	30%
				2 5	14%
				177	100%
			2015		H1 15
			639		621
			1 7		1 7
			5 2		5 6
			1		2
			-2,320		-2,088
			-62		-57
			-1,628		-1,411
			-43		-38
			-373		-321
			-2,001		-1,732
			-53		-47
			H1 15
			334
			45.0%
			3.0
				0
				0
			334
			409 55.0%
			743
			1.7
				0
				6
	Marketable Securities & Bank Deposits	-195	-364
	Net Debt	274	386
	% Debt in Euros (Total Borrowings + Leasings)	47.2%	30.3%

JERÓNIMO MARTINS

% Debt in Zlotys (Total Borrowings + Leasings) 34.5% 58.5% % Debt in Pesos (Total Borrowings + Leasings) 18.3% 11.2%

NOTES

1. Definitions

Like For Like (LFL) sales: sales made by stores that operated under the same conditions in the two periods. Excludes stores opened or closed in one of the two periods. Sales of stores that underwent profound remodelling are excluded for the remodelling period (store closure).

Gearing: Net Debt / Shareholder Funds

2. Restatement sales in Recheio

Recheio sales in 2015 included when reported intercompany sales that are now being corrected, with impact in the headings Recheio Sales and Other and Consolidated Adjustments.

2.1 Sales Evolution

	Reported	Restated
Sales	H1 15	H1 15
Recheio	393	390
Others & Cons. Adjustments	26	29

2.2 Sales Breakdown

		Reported		Restated
Sales	Q2 15	H1 15	Q1 16	Q2 15	H1 15	Q1 16
Recheio	213	393	188	211	390	188
Others & Cons. Adjustments	-6	-10	-4	-4	-8	-4

2.3 Sales Growth

Total Sales Growth	Reported	Restated
	Q1 16	Q1 16
Recheio	4.3%	4.4%

3. P&L - Reconciliation note

P&L in page 2	Income Statement by Functions in page 6
Non Recurrent Items in the	Includes the values in 'Exceptional Operating Profit/Loss' and in
'Net Consolidated Profit'	'Gains/Losses in other investments'

4. Balance Sheet - Reconciliation note

(Following ESMA guidelines on Alternative Performance Measures from October 2015)

Balance Sheet in this Release	Balance Sheet in the Annual Report
Net Goodwill	Includes the value reflected in Note - Fixed assets, intangible assets and investment property
Net Fixed Assets	Includes the Balance Sheet headings: Tangible and Intangible assets excluding the net goodwill value
Total Working Capital	Includes the Balance Sheet headings: Current Trade debtors, accrued income and deferred costs; Inventories; Biological assets; Trade creditors, accrued costs and deferred income; Employee benefits; the value of Cash and cash equivalents in note Cash and cash equivalents; the value transferred from 'Others' due to its operational nature (€-7.3m in Dec 2015, €- 7.3m in Jun 2016 and €-9.7m in Jun 2015). Excludes: Interest accruals and deferrals in note - Financial debt
Others	Includes the Balance Sheet headings: Investment property; Investments in joint ventures and associates; Loans to associates; Available-for-sale financial assets; Non-current Trade debtors, accrued income and deferred costs; Deferred tax assets and liabilities; Income tax receivable and payable; and Provisions for risks and contingencies. Excludes: Collateral deposits associated to financial debt (Note - Trade debtors, accrued income and deferred costs); values that were transferred to working capital due to its operational nature (€-7.3m in Dec 2015, €-7.3m in Jun 2016 and €-9.7m in Jun 2015)
Invested Capital
Total Borrowings	Includes the Balance Sheet heading: Borrowings excluding leasings
Leasing	Includes the value of Financial lease liabilities on Note - Current and non-current loans
Accrued Interest	Includes the Balance Sheet heading Derivative financial instruments and the value in Interest accruals and deferrals in note - Financial debt
Marketable Sec. & Bank Deposits	Includes: the Balance Sheet heading Cash and cash equivalents and the value of Collateral deposits associated to financial debt (note - Trade debtors, accrued income and deferred costs). Excludes the value in Cash and cash equivalents in note - Cash and cash equivalents
Net debt
Non-Controlling Interests	Includes the Balance Sheet heading Non-controlling interests
Share Capital	Includes the Balance Sheet heading: Share capital
Reserves and Retained Earnings	Includes the Balance Sheet heading: Share premium, Own shares, Other reserves and Retained earnings
Shareholders Funds

5. Cash Flow - Reconciliation note

(Following ESMA guidelines on Alternative Performance Measures from October 2015)

Cash Flow in this Release	Cash Flow in the Annual Report
EBITDA	Included in the Cash Flow Statement heading: Cash generated from operations
Interest Payment	Includes the Cash Flow Statement headings: Interest paid and Interest received
Other Financial Items	Includes the Cash Flow Statement heading: Dividends received
Income Tax	Includes the Cash Flow Statement heading: Income tax paid
Funds From Operations
Capex Payment	Includes the Cash Flow Statement headings: Disposal of tangible assets; Disposal of Intangible assets; Disposal of financial assets and investment property; Acquisition of tangible assets; Acquisition of intangible assets; Acquisition of financial assets and investment property
Working Capital Movement	Included in the Cash Flow Statement heading: Cash generated from operations
Others	Included in the Cash Flow Statement heading: Cash generated from operations
Free Cash Flow