Jeronimo Martins — Earnings Release 2018

Jul 25, 2018

First Half 2018 Results

Lisbon, 25 July 2018

+8.7% SALES TO €8.4 BN

Solid delivery in the first half of the year and market share gains in all businesses

• CONSOLIDATED SALES grew 8.7% with Group LFL of 4.1%

BIEDRONKA SALES up 7.5% in zloty (+3.3% in Q2), with LFL of 4.5% (+0.6% in Q2)

PINGO DOCE SALES increased 4.6% (+2.3% in Q2), with LFL (excl. fuel) of 3.4% (+0.7% in Q2)

RECHEIO SALES increased 3.5% (+2.9% in Q2), with LFL of 3.0% (+2.6% in Q2)

ARA SALES in local currency grew 66.8% (+60.3% in Q2)

HEBE SALES in local currency grew 24.6% (+22.7% in Q2)

• NET PROFIT attributable to JM were €180 million, 3.9% up from H1 17
• NET DEBT was €367 million as at the end of June, after the dividend payment of €385 million in May

MESSAGE FROM THE CHAIRMAN AND CEO

PEDRO SOARES DOS SANTOS

Our teams delivered strong performances in competitive environments and we posted solid results in the first half of the year. This performance follows the consistent implementation of our strategy and the clear focus on our priorities.

Our banners remained focused on sales growth and committed to reinforcing their positions in the respective markets.

Biedronka added 2pp to its market share in the first half, demonstrating its agility and resilience in dealing with the initial impact of the Sunday trading ban as well as in setting the stage for continued growth. In Colombia, Ara keeps expanding and gaining market relevance.

Aware of the challenges ahead, we will continue to work to deliver sustainable profitable growth.

OUTLOOK FOR 2018

The results for the first half-year show that our businesses are well placed to continue delivering robust performances.

The Polish economy is growing and we maintain a positive outlook on consumer demand. Biedronka will remain focused on meeting consumer expectations and continue to grow despite having 13 fewer trading days in the second half of 2018 as a result of the new trading regulation.

Pingo Doce and Recheio are well prepared to further reinforce their market positions and to take advantage of favourable consumer and HoReCa environments.

In Colombia, Ara will continue to expand quickly and gain scale. It expects to open 100 stores in H2.

Supported by our H1 results, we reiterate our previous guidance: Ara and Hebe's combined losses, at EBITDA level, will be slightly lower than in 2017 at constant exchange rates and capex for the year is expected to amount to €700-750 million. This level of investment in new and established businesses is essential to guarantee future growth and solid returns.

+7.4% EBITDA TO €446 MN (+5.5% at constant exchange rates) (+8.2% at constant exchange rates) +2.7% EPS TO €0.29 (excluding other Profits/Losses) • GROUP EBITDA increased 7.4% +3.9% Net Profit TO €180 MN

KEY FIGURES

CONSOLIDATED RESULTS

(Million Euro)		H1 18		H1 17	D		Q2 18		Q2 17	D
Net Sales and Services	8,426		7,754			8.7% 4,225		4,075		3.7%
Gross Profit	1,811		21.5% 1,634	21.1%	10.9%	913	21.6%	856	21.0%	6.7%
Operating Costs		-1,365 -16.2% -1,218 -15.7%			12.0%		-682 -16.1%		-632 -15.5%	8.0%
EBITDA	446	5.3%	416	5.4%	7.4%	231	5.5%	224	5.5%	3.2%
Depreciation	-179	-2.1%	-160	-2.1%	11.7%	-90	-2.1%	-82	-2.0%	9.4%
EBIT	268	3.2%	256	3.3%	4.6%	142	3.3%	142	3.5%	-0.3%
Net Financial Costs	-13	-0.2%	- 4	0.0%	n.a.	- 9	-0.2%	- 4	-0.1%	n.a.
Gains in Joint Ventures and Associates	0	0.0%	0	0.0%	n.a.	0	0.0%	0	0.0%	n.a.
Other Profits/Losses	- 5	-0.1%	- 7	-0.1%	n.a.	- 3	-0.1%	- 6	-0.1%	n.a.
EBT	250	3.0%	245	3.2%	1.9%	130	3.1%	133	3.3%	-1.9%
Income Tax	-63	-0.7%	-62	-0.8%	0.7%	-31	-0.7%	-33	-0.8%	-6.0%
Net Profit	187	2.2%	183	2.4%	2.4%	99	2.3%	99	2.4%	-0.5%
Non Controlling Interests	- 7	-0.1%	-10		-0.1% -25.3%	- 4	-0.1%	- 4	-0.1%	-4.1%
Net Profit Attributable to JM	180	2.1%	173	2.2%	3.9%	95	2.3%	95	2.3%	-0.3%
EPS (€)	0.29		0.27		3.9%	0.15		0.15		-0.3%
EPS without Other Profits/Losses (€)	0.29		0.28		2.7%	0.15		0.16		-2.3%

CONSOLIDATED BALANCE SHEET

(Million Euro)	H1 18	2017	H1 17
Net Goodwill	632	647	643
Net Fixed Assets	3,665	3,639	3,324
Total Working Capital	-2,256	-2,496	-2,142
Others	87	54	74
Invested Capital	2,129	1,843	1,899
Total Borrowings	606	529	467
Leasings	12	8	6
Accrued Interest	2	4	1
Marketable Sec. & Bank Deposits	-253	-712	-390
Net Debt	367	-170	84
Non Controlling Interests	217	225	248
Share Capital	629	629	629
Reserves and Retained Earnings	916	1,159	938
Shareholders Funds	1,762	2,013	1,815
Gearing	20.8%	-8.5%	4.6%

CASH-FLOW

(Million Euro)	H1 18	H1 17
EBITDA	446	416
Interest Payment	-11	- 7
Other Financial Items	0	0
Income Tax	-96	-91
Funds From Operations	339	317
Capex Payment	-337	-288
Change in Working Capital	-136	-67
Others	- 3	- 3
Free Cash-Flow	-137	-40

SALES PERFORMANCE

Group sales, at €8.4 bn, were 8.7% above H1 17 (+8.2% at constant exchange rates).

In the first six months, Group LFL sales growth was 4.1%, driven by strong competitive positions. In Q2, LFL was at 0.9%. The swing in the LFL performance from Q1 to Q2 results mainly from a calendar effect: Easter was in Q1 in 2018 and in Q2 in 2017. The LFL performance also reflects the more demanding comparison base in Q2 for both Poland and Portugal.

Sales (Million Euro)

In Poland, the consumer environment remained favourable. However, the operating landscape continued to be very competitive and there was a slight increase in promotional activity in response to the implementation of the Sunday trading ban. Food inflation was 3.6% in H1 (+3.2% in Q2).

Biedronka remained consumer oriented and sales driven. In the last three months, special attention was paid to the changes in consumer behaviour caused by the new regulation.

The banner is adjusting its operations to match the higher sales flow registered in certain days of the week because of shifts in shopping patterns caused by the Sunday closures.

In H1, Biedronka delivered sales growth of 8.6% (+7.5% in local currency) to €5.8 bn. LFL performance, at 4.5%, included a flattish basket inflation.

In Q2 18, sales grew 2.2% to €2.8 bn and LFL was 0.6%, strongly impacted by the negative calendar effect in April. In the months after Easter (May and June), Biedronka showed its resilience, while dealing with the initial impact of the Sunday trading ban, by posting a like-forlike in line with H1 18 (above 4%). The Company gained 2p.p. of market share in the period up to May 2018.

Biedronka is on track to deliver its expansion programme for 2018. In H1 18, the Company opened 30 new stores (9 net additions) and refurbished 87 stores.

Hebe delivered sales of €94 mn, a 25.9% growth on H1 17 (+24.6% at constant exchange rate) and opened 20 new stores.

In Q2, Hebe's sales grew 21.4% (+22.7% at constant exchange rate) to €47 mn.

In Portugal, the Food Retail sector continued to be highly competitive and promotional. Food inflation was low with an average value of 0.8% in the six-month period (+1.0% in Q2).

Pingo Doce registered in H1 a solid 3.4% LFL sales growth (excl. fuel) which, combined with the expansion in the number of stores, led to a 4.6% sales increase to €1.8 bn.

In Q2, despite the negative calendar impact in April, sales increased 2.3%, with LFL of 0.7%, to €936 mn. In the after-Easter period (May and June), the Company posted a 4.1% LFL.

Recheio maintained a solid performance and delivered in H1 a 3.0% LFL sales increase (+2.6% in Q2). Sales grew 3.5% (+2.9% in Q2) to €458 mn.

In Colombia, consumer confidence continued to improve, reaching positive levels in May and June. Food inflation remained soft across the period, reaching 1.4% in H1 (+1.6% in Q2).

Ara delivered sales of €283 mn, 53.2% ahead of H1 17 (+66.8% at a constant exchange rate). In Q2, sales increased 52.1% (+60.3% at constant exchange rate) to €149 mn.

The banner opened 50 stores in the first six months of 2018, which is in line with the plan to open c.150 stores in the year. The construction of the distribution centre in Bogota planned for this year is close to being finished. The centre is expected to start operating in Q3.

RESULTS PERFORMANCE

Group EBITDA totalled €446 mn in H1 18, growing 7.4% relative to the previous year (+5.5% at constant exchange rates).

Excluding the impact of Ara and Hebe, EBITDA increased 6.3%, despite the pressure on operating costs, coming mostly from wage rises.

EBITDA & EBITDA Margin

Biedronka's EBITDA was €407 mn, up 8.4% relative to H1 17 (+7.3% at a constant exchange rate). EBITDA margin was 7.1%, in line with the previous year.

This performance was achieved despite ongoing operational changes necessary to adapt to the ban on Sunday trading.

Pingo Doce registered an EBITDA of €77 mn, 4.5% below H1 17. EBITDA margin was at 4.2%. The decline from the 4.7% margin posted in H1 17 reflected the wage

increases implemented in Pingo Doce throughout Q4 17.

Recheio posted EBITDA of €23 mn, 4.6% ahead of H1 17, with the respective margin at 5.0% (5.0% in H1 17).

Ara and Hebe, registered EBITDA losses of €45 mn, with Ara accounting for 85% of the total. The comparable losses in H1 17 were €47 mn.

Net financial costs were €-13 mn, reflecting the higher interest-bearing debt in foreign currencies (Polish Zloty and Colombian Peso). It also includes losses from exchange differences due to the Zloty depreciation.

Other profits/losses were €-5 mn in H1 18, mainly attributed to restructuring costs.

Group net profit was €180 mn, 3.9% above H1 17, driven by the solid operating performance.

Group capex amounted to €295 mn, of which 56% was invested in Biedronka and 17% in Ara.

Cash-flow in the period was negative at €137 mn reflecting the seasonality in the working capital and faster capex execution than in H1 17.

Net debt was €367 mn as at the end of June, reflecting the dividend payment in May in the amount of €385 mn and the working capital seasonality, with gearing at 20.8%.

July 25, 2018 | 5

+351 21 752 61 05 investor.relations@jeronimo-martins.com Cláudia Falcão claudia.falcao@jeronimo-martins.com Hugo Fernandes hugo.fernandes@jeronimo-martins.com

FINANCIAL CALENDAR

9M 2018 Results: 30 October 2018 (after the market close)

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.

APPENDIX INCOME STATEMENT BY FUNCTIONS

(Million Euro)	H1 18	H1 17
Net Sales and Services	8,426	7,754
Cost of Sales	-6,615	-6,120
Gross Profit	1,811	1,634
Distribution Costs	-1,410	-1,255
Administrative Costs	-133	-123
Other Operating Profits/Losses	- 5	- 7
Operating Profit	263	248
Net Financial Costs	-13	- 4
Gains/Losses in Other Investments	0	0
Gains in Disposal of Business	0	0
Gains in Joint Ventures and Associates	0	0
Profit Before Taxes	250	245
Income Tax	-63	-62
Profit Before Non Controlling Interests	187	183
Non Controlling Interests	- 7	-10
Net Profit Attributable to JM	180	173

SALES BREAKDOWN

(Million Euro)		H1 18		H1 17	D %		Q2 18		Q2 17		D %
		% total		% total w/o FX Euro				% total			% total w/o FX Euro
Biedronka	5,762			68.4% 5,305 68.4%	7.5%			8.6% 2,839 67.2% 2,778 68.2%			3.3%	2.2%
Pingo Doce	1,818			21.6% 1,738 22.4%		4.6%		936 22.2%		915 22.5%		2.3%
Recheio	458	5.4%	442	5.7%		3.5%	248	5.9%	241	5.9%		2.9%
Ara	283	3.4%	185		2.4% 66.8% 53.2%		149	3.5%	98		2.4% 60.3% 52.1%
Hebe	94	1.1%	75		1.0% 24.6% 25.9%		47	1.1%	39		1.0% 22.7% 21.4%
Others & Cons. Adjustments	12	0.1%	9	0.1%		27.0%	6	0.1%	5	0.1%		20.0%
Total JM	8,426	100% 7,754		100%	8.2%			8.7% 4,225 100% 4,075 100%			4.7%	3.7%

SALES GROWTH

		Total Sales Growth		LFL Sales Growth
	Q1 18	Q2 18	H1 18	Q1 18	Q2 18	H1 18
Biedronka
Euro	15.6%	2.2%	8.6%
PLN	11.9%	3.3%	7.5%	8.6%	0.6%	4.5%
Pingo Doce	7.1%	2.3%	4.6%	5.8%	0.7%	3.1%
Ex-Fuel	7.7%	2.4%	4.9%	6.4%	0.7%	3.4%
Recheio	4.2%	2.9%	3.5%	3.6%	2.6%	3.0%

STORE NETWORK

		Openings 2017		Closings
Number of Stores		Q1 18	Q2 18	H1 18	H1 18	H1 17
Biedronka	2,823	11	19	21	2,832	2,741
Pingo Doce	422	0	3	0	425	417
Recheio	43	0	1	1	43	43
Ara	389	25	25	0	439	269
Hebe	182	11	9	2	200	160

Sales Area (sqm)	2017	Openings		Closings/ Remodellings	H1 18	H1 17
		Q1 18	Q2 18	H1 18
Biedronka*	1,853,075	8,378	14,676	5,325	1,870,804	1,788,918
Pingo Doce	503,897	0	764	0	504,661	498,692
Recheio	131,997	0	3,942	2,860	133,079	131,996
Ara	133,692	9,010	8,939	0	151,642	89,672
Hebe	43,053	2,719	2,376	462	47,685	37,516

* Restated figure from 1,856,992 published in 2017 FY

EBITDA BREAKDOWN

(Million Euro)	H1 18	Mg	H1 17	Mg
Biedronka	407	7.1%	375	7.1%
Pingo Doce	77	4.2%	81	4.7%
Recheio	23	5.0%	22	5.0%
Others & Cons. Adjustments	-60	n.a.	-62	n.a.
JM Consolidated	446	5.3%	416	5.4%

FINANCIAL RESULTS

(Million Euro)	H1 18	H1 17
Net Interest	-9	-6
Exchange Differences	-2	4
Others	-2	-2
Financial Results	-13	-4

CAPEX

(Million Euro)	H1 18	Weight	H1 17	Weight
Biedronka	164	56%	86	35%
Distribution Portugal	56	19%	55	22%
Ara	50	17%	62	25%
Others	24	8%	45	18%
Total CAPEX	295	100%	249	100%

WORKING CAPITAL

(Million Euro)	H1 18	2017	H1 17
Inventories	872	847	777
in days of sales	19	19	18
Customers	64	56	57
in days of sales	1	1	1
Suppliers	-2,717	-2,849	-2,526
in days of sales	-58	-64	-59
Trade Working Capital	-1,781	-1,946	-1,691
in days of sales	-38	-44	-39
Others	-475	-551	-450
Total Working Capital	-2,256	-2,496	-2,142
in days of sales	-48	-56	-50

DEBT DETAIL

(Million Euro)	H1 18	H1 17
Long Term Debt	217	177
as % of Total Borrowings	35.8%	38.0%
Average Maturity (years)	2.1	2.4
Bond Loans	0	0
Commercial Paper	0	0
Other Debt	217	177
Short Term Debt	389	290
as % of Total Borrowings	64.2%	62.0%
Total Borrowings	606	467
Average Maturity (years)	1.0	0.9
Leasings	12	6
Accrued Interest & Hedging	2	1
Marketable Securities & Bank Deposits	-253	-390
Net Debt	367	84
% Debt in Euros (Total Borrowings + Leasings)	14.6%	31.7%
% Debt in Zlotys (Total Borrowings + Leasings)	47.0%	40.6%
% Debt in Colombian Pesos (Total Borrowings + Leasings)	38.5%	27.7%

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

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

Income Statement	Income Statement by Functions in the Consolidated Report & Accounts - First Half 2018 Results
Net Sales and Services	Net sales and services
Gross Profit	Gross profit
Operating Costs	Includes headings of Distribution costs; Administrative costs; Other operating costs and excludes Depreciations of €-178.6 mn
EBITDA
Depreciation	Value reflected in the Other operating costs by nature note
EBIT
Net Financial Costs	Net financial costs
Gains in Joint Ventures and Associates	Gains (Losses) in joint ventures and associates
Other Profits/Losses	Includes headings of Other operating profits/losses; Gains in disposal of business and Gains/Losses in other investments
EBT
Income Tax	Income tax
Net Profit
Non-Controlling Interests	Non-Controlling interests

Net Profit Attributable to JM

3. BALANCE SHEET RECONCILIATION NOTE

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

Balance Sheet in this Release	Balance Sheet in the Consolidated Report & Accounts - First Half 2018 Results
Net Goodwill	Included in the heading of Intangible assets
Net Fixed Assets	Includes the headings Tangible and Intangible assets excluding the Net goodwill value (€632.4 mn)
Total Working Capital	Includes the headings Current trade debtors, Accrued income and Deferred costs; Inventories; Biological assets; Trade creditors, Accrued costs and Deferred income; Employee benefits; the value of €3.9 mn Cash and cash equivalents (note - Cash and cash equivalents) and the value of €-5.5 mn related to 'Others' due to its operational nature. Excludes the value of €-2.1 mn related to Interest accruals and deferrals (note - Financial debt)
Others	Includes the headings Investment property; Investments in joint ventures and 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 the value of €34.4 mn related to collateral deposits associated to Financial debt (note - Trade debtors, Accrued income and Deferred costs); and also the value of €-5.5 mn related to others due to their operational nature
Invested Capital
Total Borrowings	Includes the heading Borrowings excluding Leasings
Leasings	Value reflected in Borrowings note
Accrued Interest & Hedging	Includes the heading Derivative financial instruments and the value of €-2.1 mn related to Interest accruals and deferrals (value reflected in note - Financial debt)
Marketable Sec. & Bank Deposits	Includes the heading Cash and cash equivalents and the value of €34.4 mn related to collateral deposits associated to Financial debt (reflected in Trade debtors note) and excludes the value of €3.9 mn in Cash and cash equivalents (reflected in note - Cash and cash equivalents)
Net Debt
Non-Controlling Interests	Non-Controlling interests
Share Capital	Share capital
Reserves and Retained Earnings	Includes the heading Share premium, Own shares, Other reserves and Retained earnings

Shareholders' Funds

4. CASH-FLOW RECONCILIATION NOTE

(Following ESMA guidelines on Alternative Performance Measures from October 2015

Cash-Flow in this Release	Cash-Flow in the Consolidated Report & Accounts - First Half 2018 Results
EBITDA	Included in the heading of Cash generated from operations
Interest Payment	Includes the headings of Interest paid and Interest received
Other Financial Items	Dividends received
Income Tax	Income tax paid
Funds From Operations
Capex Payment	Includes the 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 properties
Change in Working Capital	Included in the heading of Cash generated from operations
Others	Includes the headings disposal of business (when applicable), being the remaining amount included in the heading Cash generated from operations
Free Cash-Flow