Jeronimo Martins — Interim / Quarterly Report 2015

Nov 5, 2015

Jerónimo Martins SGPS, S.A.

First Nine Months 2015 Results

Strong top line performance across all banners driving Group sales to grow 9% and EBITDA to increase 7.3%, in the first 9 months of the year. That against a background of continuous food deflation in our main businesses.

• Biedronka sales increased 10.4% (in euros), with a LFL growth of 2.9%
• Pingo Doce posted a very good evolution of the same-store-sales with LFL growth reaching 4.7% in the 9 months
• Net earnings grew 6.4% to 252 million euros

In view of the strength of the Balance Sheet and the cash flow generated over the period, the Board of Directors will request an Extraordinary Shareholders' Meeting to approve the payment in 2015 of 236 million euros from free reserves.

Lisbon, 5 November 2015

Message from the Chairman and CEO Pedro Soares dos Santos

'In the nine months of the year the Group strengthened its competitive position in all markets where it operates while strongly increasing cash flow generation.

Biedronka strengthened its market share and continues reinforcing the competitiveness of its model for the future.

In Portugal, Pingo Doce and Recheio continued to outperform their respective markets.

In Colombia, in line with our expansion plan, we opened a second region in the Caribbean Coast, and we had 110 stores operating under the Ara brand at the end of September.

With most of the year behind us, I feel reassured by the proven capacity of all our Companies to leverage on their differentiated strategies and to keep on track to deliver our targets, with top line growth as their main priority.'

(Million Euro)	9M 15	9M 14	Δ% (Euro)	Δ% (w/o F/X)
Consolidated Sales	10,174.6	9,332.6	+9.0	+8.7
EBITDA EBITDA Mg (%)	587.5 5.8	547.5 5.9	+7.3	+6.3
Net Profit JM w/o non-recurrent	252.2 257.2	237.1 237.7	+6.4 +8.2	+3.9 +5.7
EPS (€)	0.40	0.38	+6.4
Net Debt Gearing (%)	176.2 10.1	449.2 28.4

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

				D					D
10,175		9,333					3,281		7.6%
2,169	21.3%	1,980	21.2%	9.5%	757	21.5%	694	21.1%	9.2%
				10.4%					9.3%
588	5.8%	547	5.9%	7.3%	224	6.4%	206	6.3%	8.9%
-221	-2.2%	-205	-2.2%	7.6%	-74	-2.1%	-70	-2.1%	5.4%
367	3.6%	342	3.7%	7.1%	151	4.3%	136	4.1%	10.8%
-20	-0.2%	-26	-0.3%	-24.7%	-7	-0.2%	-8		-0.3% -18.8%
1 5	0.1%	1 5	0.2%	-0.4%	7	0.2%	7	0.2%	1.6%
-7	-0.1%	-1	0.0%	n.a.	-3	-0.1%	-1	0.0%	n.a.
354	3.5%	330	3.5%	7.4%	148	4.2%	133	4.1%	10.7%
-83	-0.8%	-74	-0.8%	11.5%	-34	-0.9%	-30	-0.9%	13.2%
272	2.7%	256	2.7%	6.2%	114	3.2%	104	3.2%	10.0%
-20	-0.2%	-19	-0.2%	4.3%	-11	-0.3%	-12	-0.4%	-2.0%
252	2.5%	237	2.5%	6.4%	103	2.9%	9 2	2.8%	11.5%
0.40		0.38		6.4%	0.16		0.15		11.5%
		9M 15		9M 14 -1,581 -15.5% -1,432 -15.3%		9.0% 3,531	Q3 15 -533 -15.1%		Q3 14 -488 -14.9%

EBITDA EVOLUTION

SALES EVOLUTION

In the first nine months of the year, Group sales increased 9.0% to €10,175m (+8.7% excluding the currency impact).

The performance in the period was the result of solid delivery across all banners which drove Group LFL sales to increase by 3.3%.

In Poland, the competitive landscape remained intense and promotion oriented. Food deflation was at -2.2% in the nine months, softening from -2.1% in Q2 15 to -0.9% in Q3 15.

Biedronka total sales grew 10.4% to €6,836m both driven by 2.9% LFL sales increase and by our continued store expansion programme. In the third quarter of the year, Biedronka maintained a strong LFL of 3.5% with volume growth substantially overcompensating basket deflation which remained close to -3%. In the first nine months of the year, the Company opened 92 stores (72 net additions).

In Q3 15 Biedronka focused on its revamping programme and its in-store adjustments in order to benefit fully from the new offer already in place.

In Portugal, while food inflation was 1.2% for the 9M 15 (+1.7% in Q3 15) the market remained very promotion-driven.

Pingo Doce had another very strong quarter with LFL sales growth, excluding fuel, reaching 4.7% in the 9M 15 (+5.2% in Q3 15).

Pingo Doce maintained its promotional strategy while continuing to improve the shopping experience (21 remodellings in the 9 months) and quality and innovation of the overall offer. Pingo Doce opened 19 stores, two of which replaced existing locations.

Recheio delivered another sound quarter with LFL reaching 4.2% in the 9M 15 (+3.9% in Q3 15). Total sales increase 4.6% over the 9M 14.

In the 9M 15, Ara and Hebe sales were €83m and €72m, respectively.

In September, Ara opened its second distribution centre entering in the Caribbean Coast region, and ended the month with a total of 110 stores.

At the Group level, 9M 15 consolidated EBITDA grew 7.3% to €588m. The respective margin was 5.8%, 10bps down from the margin registered in the same period last year. In Q3 15, EBITDA grew 8.9% with an EBITDA margin of 6.4%, 10bps higher than in Q3 14.

In the first nine months, Biedronka's EBITDA reached €474m, posting an increase of 9.4% on previous year (+10.8% in Q3 15). EBITDA margin was at 6.9%, 10bps down on 9M 14, reflecting the investments made in the value proposition.

The distribution businesses in Portugal reached an EBITDA of €169m, 1.3% ahead of the same period last year. EBITDA margin was at 5.4%, 20bps down on previous year impacted by the investments in the value proposition and in the top line.

Financial charges for the Group were €20m, €6m below the 9M 14 due to lower average net debt and lower cost of debt.

Net Profit attributable to Jerónimo Martins in the 9M 15 was €252m, 6.4% ahead of the same period last year. The 9M 15 net profit includes start-up losses in Ara and Hebe which at EBITDA level amounted to €42m.

The Group Capex was €283m in the first nine months of the year, c.50% of which was invested in Biedronka.

The Free Cash Flow in the period, after capex payments, was €258m, €150m above the same period in 2014.

Net Debt for the Group was €176m and Gearing was 10.1%.

In the context of our strong balance sheet and continued cash flow generation, the Board of Directors decided to propose a distribution, in 2015, of free reserves to Shareholders, in the terms below.

Distribution from Free Reserves

At its meeting on November 4, 2015, the Board of Directors decided to request the Chairman of the General Meeting to summon an Extraordinary Shareholders' Meeting to present a proposal for the distribution of an amount of €235,662,832.50 from free reserves payable in 2015. This includes the dividends that would be paid in 2016 and is equivalent to the gross amount of €0.375 per share, to be distributed to the Shareholders proportionally to their holdings, excluding own shares.

Outlook for 2015

The solid performance in the first nine months of the year reinforces our confidence that the banners will deliver their targets. Our commitment to top line performance across the markets where we operate remains unchanged.

For Ara and Hebe EBITDA losses are still expected in the range €60-70m (excl. F/X).

Our capex for the year is estimated to be no higher than €450m following an efficient execution of the revamping plan in Biedronka.

The store opening programme in Biedronka is confirmed in line with the planned 100 new stores for the year.

Due to both strong volume growth and tightly controlled execution plan, Biedronka's EBITDA margin for the year is expected to be above the established floor of 6.5% on sales.

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)	9M 15	9M 14
Net Sales and Services	10,175	9,333
Cost of Sales	-8,006	-7,353
Total Margin	2,169	1,980
Distribution Costs	-1,637	-1,479
Administrative Costs	-165	-158
Exceptional Operating Profit/Loss	-7	-1
Operating Profit	359	341
Net Financial Costs	-20	-26
Gains/Losses in other Investments	0	0
Profit in Associated Companies	1 5	1 5
Profit Before Taxes	354	330
Income Taxes	-83	-74
Profit Before Non Controlling Interests	272	256
Non Controlling Interests	-20	-19
Net Profit attributable to JM	252	237

Note: 'Non Recurrent Items' in the 'Net Consolidated Profit' table in page 2 of this report include the values in 'Exceptional Operating Profit/Loss' and in 'Gains/Losses in other investments' shown in the table above.

SALES
BREAKDOWN

(Million Euro)	9M 15			9M 14	D %		Q3 15		Q3 14	D %
		% total		% total Pln	Euro		% total		% total Pln	Euro
Biedronka		6,836 67.2% 6,191 66.3% 9.8% 10.4% 2,337 66.2% 2,162 65.9% 8.4%								8.1%
Pingo Doce		2,511 24.7% 2,391 25.6%			5.0%		888 25.2%		835 25.4%	6.4%
Recheio	631	6.2%	603	6.5%	4.6%	238	6.7%	229	7.0%	3.9%
Mkt. Repr. and Rest. Serv.	5 6	0.6%	5 6	0.6%	0.9%	2 0	0.6%	2 0	0.6%	0.3%
Others & Cons. Adjustments	140	1.4%	9 2	1.0%	n.a.	4 8	1.3%	3 5	1.1%	n.a.
Total JM	10,175		100% 9,333	100%		9.0% 3,531 100% 3,281 100%				7.6%

SALES GROWTH

			Total Sales Growth			LFL Sales Growth
	Q1 15	Q2 15	H1 15	Q3 15	9M 15	Q1 15	Q2 15	H1 15	Q3 15	9M 15
Biedronka
Euro	11.2%	12.1%	11.7%	8.1%	10.4%
PLN	11.4%	9.8%	10.6%	8.4%	9.8%	2.9%	2.4%	2.6%	3.5%	2.9%
Pingo Doce	3.9%	4.7%	4.3%	6.4%	5.0%	3.4%	4.2%	3.8%	4.5%	4.1%
Ex-Fuel	4.7%	5.2%	4.9%	7.1%	5.6%	4.2%	4.7%	4.5%	5.2%	4.7%
Recheio	4.1%	5.8%	5.0%	3.9%	4.6%	4.7%	4.1%	4.4%	3.9%	4.2%

9M 2015 Results

STORE NETWORK

Number of Stores 2014			Openings		Closings	Network
		Q1 15	Q2 15	Q3 15	9M 15	9M 15	9M 14
Biedronka	2,587	5 8	2 5	9	2 0	2,659	2,527
Pingo Doce	380	2	4	1 3	2	397	380
Recheio	4 1	0	0	0	0	4 1	4 1

Sales Area (sqm)	2014	Openings		Closings/ Remodellings	Network
		Q1 15	Q2 15	Q3 15	9M 15	9M 15	9M 14
Biedronka	1,649,889	40,870	17,991	6,250	4,465	1,710,534	1,604,628
Pingo Doce	460,863	1,252	4,540	12,486	1,018	478,123	460,863
Recheio	128,665	0	0	0	524	128,141	128,665

EBITDA MARGIN BREAKDOWN

9M 15	% total	9M 14	% total
6.9%	80.7%	7.0%	79.1%
5.4%	28.8%	5.6%	30.5%
n.a.	-9.4%	n.a.	-9.6%
5.8%	100%	5.9%	100%

BALANCE SHEET

(Million Euro)	9M 15	2014	9M 14 *
Net Goodwill	642	640	647
Net Fixed Assets	2,997	2,940	2,895
Total Working Capital	-1,829	-1,778	-1,630
Others	114	111	119
Invested Capital	1,924	1,912	2,031
Total Borrowings	689	714	742
Leasings	0	1	2
Accrued Interest	5	4	1 0
Marketable Sec. & Bank Deposits	-519	-446	-305
Net Debt	176	273	449
Non Controlling Interests	248	243	240
Share Capital	629	629	629
Reserves and Retained Earnings	871	767	713
Shareholders Funds	1,748	1,639	1,582
Gearing	10.1%	16.7%	28.4%

* Restated values - see note 1 on page 8.

CASH FLOW

(Million Euro)	9M 15	9M 14
EBITDA	588	547
Interest Payment	-20	-23
Other Financial Items	1 1	1 6
Income Tax	-84	-85
Funds From Operations	496	455
Capex Payment	-283	-348
Working Capital Movement	5 1	0
Others	-5	1
Free Cash Flow	258	109

FINANCIAL COSTS BREAKDOWN

(Million Euro)	9M 15	9M 14
Net Interest	-17	-23
Exchange Differences	0	0
Others	-3	-3
Financial Results	-20	-26

CAPEX

(Million Euro)	9M 15	Weight
Biedronka	145	51.2%
Distribution Portugal	100	35.4%
Others	3 8	13.3%
Total CAPEX	283	100%

NOTES

1. Change of accounting policies

The Group changed the previous accounting policy for Land (classified as Tangible Assets) and adopted the historical cost for Land in the financial statements prepared as at December 31, 2014, as explained in the 2014 Full Year Results release. The Balance Sheet presented for September 2014 was restated in line with the new accounting policy.

2. 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