Jeronimo Martins — Interim / Quarterly Report 2018

Apr 26, 2018

First Quarter 2018 Results

Lisbon, 26 April 2018

Focus on sales and positive calendar effect drove a strong start to
the year

+14.2% SALES TO €4.2 BN (+12.1% at constant exchange rates) +12.2% EBITDA TO €215 MN (+7.5% at constant exchange rates) +9.1% EPS TO €0.14 (excluding other Profits/Losses)	• CONSOLIDATED SALES' growth of 14.2% and Group LFL at 7.7% driven by the banners' strong performance and the early Easter BIEDRONKA SALES grew 11.9% in local currency, with LFL at 8.6% PINGO DOCE SALES increased 7.1%, with LFL (excl. fuel) at 6.4% RECHEIO SALES increased 4.2%, with LFL at 3.6% ARA SALES in local currency grew 74.5% HEBE SALES in local currency grew 26.6% • GROUP EBITDA increased 12.2% • NET RESULTS attributable to JM were €85 million, 9.1% up from Q1 17 • NET CASH position of €80 million as at the end of March
MESSAGE FROM THE CHAIRMAN AND CEO PEDRO SOARES DOS SANTOS	Strong sales performance drove good results in the quarter, with all our banners making the most of the Easter season. Aware that we still have much to do to reach our targets for the year, we will focus on the main challenges ahead, by (i) responding to the changes caused by the Sunday Trading ban in Poland and (ii) consolidating our expansion rhythm in Colombia. We have a positive outlook for 2018 and we remain committed to outperform in all our markets.
OUTLOOK FOR 2018	We had a strong start to the year, with a sound underlying Q1 performance, in line with our expectations, and the impact of a good Easter trading. Biedronka and Pingo Doce enjoyed a particularly strong season, driven by adjusted commercial approaches that were successfully executed. In Poland we maintain a positive outlook on the economy and consumer demand for the quarters ahead. Biedronka will remain focused on capturing all sales opportunities and growing market share. On the Sunday trading ban we are confident that our plans to adapt to the new rules in the sector will prove to be effective. In Portugal, Pingo Doce and Recheio are well prepared to benefit from a positive economic environment and to continue to reinforce their market positions. In Colombia, consumer sentiment is recovering and Ara will keep focused on expanding the scale of operations. At constant exchanges rates, Ara and Hebe's EBITDA losses are expected to be slightly lower than in 2017. To fully capture the growth opportunities, both in terms of organic expansion and LFL progression, we confirm our investment programme at €700-750 million. This programme includes the net addition of 70-80 Biedronka stores, the opening of c.150 Ara stores and the major refurbishment programmes of both Biedronka and Pingo Doce.

***

Dividend payment for 2018 in the amount of €385.2 million will take place on May, 10.

KEY FIGURES

CONSOLIDATED RESULTS

(Million Euro)	Q1 18		Q1 17		D
Net Sales and Services	4,200		3,679		14.2%
Gross Profit	898	21.4%	778	21.2%	15.4%
Operating Costs	-683	-16.3%	-586	-15.9%	16.4%
EBITDA	215	5.1%	192	5.2%	12.2%
Depreciation	-89	-2.1%	-78	-2.1%	14.1%
EBIT	126	3.0%	114	3.1%	10.8%
Net Financial Costs	- 5	-0.1%	0	0.0%	n.a.
Gains in Joint Ventures and Associates	0	0.0%	0	0.0%	n.a.
Other Profits/Losses	- 2	-0.1%	- 2	0.0%	n.a.
EBT	119	2.8%	112	3.0%	6.4%
Income Tax	-31	-0.7%	-29	-0.8%	8.4%
Net Profit	88	2.1%	83	2.3%	5.8%
Non Controlling Interests	- 3	-0.1%	- 6	-0.2%	-40.0%
Net Profit Attributable to JM	85	2.0%	78	2.1%	9.1%
EPS (€)	0.13		0.12		9.1%
EPS without Other Profits/Losses (€)	0.14		0.12		9.1%

CONSOLIDATED BALANCE SHEET

(Million Euro)	Q1 18	2017	Q1 17
Net Goodwill	644	647	643
Net Fixed Assets	3,682	3,639	3,284
Total Working Capital	-2,377	-2,496	-2,027
Others	51	54	77
Invested Capital	1,999	1,843	1,977
Total Borrowings	680	529	403
Leasings	10	8	6
Accrued Interest	3	4	11
Marketable Sec. & Bank Deposits	-773	-712	-555
Net Debt	-80	-170	-135
Non Controlling Interests	213	225	256
Share Capital	629	629	629
Reserves and Retained Earnings	1,237	1,159	1,226
Shareholders Funds	2,080	2,013	2,112
Gearing	-3.9%	-8.5%	-6.4%

CASH-FLOW

(Million Euro)	Q1 18	Q1 17
EBITDA	215	192
Interest Payment	- 4	- 2
Other Financial Items	0	0
Income Tax	-27	-60
Funds From Operations	184	129
Capex Payment	-176	-123
Change in Working Capital	-89	-206
Others	- 2	- 1
Free Cash-Flow	-83	-200

SALES PERFORMANCE

Group sales totalled €4.2 bn, 14.2% above Q1 17 (+12.1% at constant exchange rates).

Group LFL sales growth was 7.7%, benefiting from the strong performance across all banners and from a particularly successful Easter season.

In Poland, consumer demand was strong and the operating environment continued to be very competitive. Food inflation fell from 5.6% in Q4 17 to 4.0% in Q1 18.

Biedronka maintained its sales-focused consumer-centric approach and achieved excellent results.

In the quarter, LFL growth was 8.6%, benefiting from a calendar effect. Sales in euros increased 15.6% in euros (+11.9% in local currency), reaching €2.9 bn.

Space contribution to sales growth reflected the strong opening programme in Q4 17 when 70 stores were added to the network. In Q1 18, 11 stores were opened (2 net additions).

Hebe delivered sales of €47 mn, a 30.8% growth on Q1 17 (+26.6% at constant exchange rate) and opened 11 new stores.

In Portugal, the Food Retail sector continued to be driven by promotions. Food inflation fell from 2.0% in Q4 17 to an average of 0.7% in Q1 18.

Pingo Doce achieved a remarkable LFL growth (excl. fuel) of 6.4% pushing total sales up by 7.1% to reach €882 mn while reinforcing its market position.

Recheio continued to seize its market opportunities in a favourable HoReCa context. The banner delivered a 3.6% LFL sales increase. Sales grew 4.2% relative to the same period in 2017, reaching €210 mn.

In Colombia, consumer sentiment continued to improve. Food inflation softened from 2.3% registered in Q4 17 to 1.1% in Q1 18.

Ara delivered sales of €134 mn, 54.4% ahead of the same period in 2017 (+74.5% at a constant exchange rate). The banner opened 25 stores in Q1 18, running a total network of 414 locations by the end of March. The Company is prepared to fully execute its expansion plan of adding c.150 stores in the year.

RESULTS PERFORMANCE

Group EBITDA totalled €215 mn in Q1 18, 12.2% up relative to the previous year (+7.5% at constant exchange rates), despite the continued pressure on labour costs, particularly in Biedronka and Pingo Doce.

Excluding the impact of Ara and Hebe, EBITDA increased 11.4%.

Biedronka's EBITDA was €198 mn, up 15.7% relative to Q1 17 (+12.0% at a constant exchange rate). EBITDA margin was 6.8%, which is in line with the previous year.

Pingo Doce and Recheio had a combined EBITDA of €49 mn, 3.5% below Q1 17. EBITDA margin for the distribution businesses in Portugal was 4.5%. The decline from the 5.0% margin posted in Q1 17 reflected the wage increases implemented in Pingo Doce throughout Q4 17.

Ara and Hebe, recorded losses of €24 mn at EBITDA level, with Ara accounting for 85% of the total. The comparable losses in Q1 17 were €23 mn.

Net financial costs were €-5 mn, reflecting the higher interest bearing' debt in foreign currencies (Polish Zloty and Colombian Peso).

Other profits/losses were €-2 mn in Q1 18, mainly driven by restructuring costs.

Group net profit was €85 mn, 9.1% above Q1 17, driven by the strong operating performance.

Group capex amounted to €141 mn, of which 56% was invested in Biedronka and 14% in Ara.

Cash-flow in the period was negative at €83 mn, reflecting the normal seasonality of working capital after the Christmas season.

The Group ended the quarter with a positive cash position of €80 mn, with gearing standing at -3.9%.

+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

Dividend payment date: 10 May 2018

H1 2018 Results: 25 July 2018 (after the market close)

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)	Q1 18	Q1 17
Net Sales and Services	4,200	3,679
Cost of Sales	-3,302	-2,901
Gross Profit	898	778
Distribution Costs	-705	-604
Administrative Costs	-66	-60
Other Operating Profits/Losses	- 2	- 2
Operating Profit	124	112
Net Financial Costs	- 5	0
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	119	112
Income Tax	-31	-29
Profit Before Non Controlling Interests	88	83
Non Controlling Interests	- 3	- 6
Net Profit Attributable to JM	85	78

SALES BREAKDOWN

(Million Euro)		Q1 18		Q1 17	D %
		% total		% total w/o FX		Euro
Biedronka	2,922	69.6%	2,527	68.7%	11.9%	15.6%
Pingo Doce	882	21.0%	823	22.4%		7.1%
Recheio	210	5.0%	201	5.5%		4.2%
Ara	134	3.2%	87	2.4%	74.5%	54.4%
Hebe	47	1.1%	36	1.0%	26.6%	30.8%
Others & Cons. Adjustments	6	0.1%	5	0.1%		34.2%
Total JM	4,200	100%	3,679	100%	12.1%	14.2%

SALES GROWTH

	Total Sales Growth	LFL Sales Growth
	Q1 18	Q1 18
Biedronka
Euro	15.6%
PLN	11.9%	8.6%
Pingo Doce	7.1%	5.8%
Ex-Fuel	7.7%	6.4%
Recheio	4.2%	3.6%

STORE NETWORK

Number of Stores	2017	Openings	Closings	Q1 18	Q1 17
	Q1 18 Q1 18
Biedronka	2,823	11	9	2,825	2,729
Pingo Doce	422	0	0	422	415
Recheio	43	0	0	43	42
Ara	389	25	0	414	244
Hebe	182	11	2	191	159

Sales Area (sqm)	2017	Openings Q1 18	Closings Remodellings Q1 18	Q1 18	Q1 17
Biedronka*	1,853,075	8,378	4,147	1,857,306	1,775,511
Pingo Doce	503,897	0	0	503,897	495,331
Recheio	131,997	0	0	131,997	130,597
Ara	133,692	9,010	0	142,702	79,079
Hebe	43,053	2,719	462	45,310	37,294

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

EBITDA BREAKDOWN

(Million Euro)	Q1 18	Mg	Q1 17	Mg
Biedronka	198	6.8%	171	6.8%
Distribution Portugal	49	4.5%	51	5.0%
Others & Cons. Adjustments	-32	n.a.	-30	n.a.
JM Consolidated	215	5.1%	192	5.2%

FINANCIAL RESULTS

(Million Euro)	Q1 18	Q1 17
Net Interest	-4	-2
Exchange Differences	0	3
Others	-1	-1
Financial Results	-5	0

CAPEX

(Million Euro)	Q1 18	Weight	Q1 17	Weight
Biedronka	79	56%	49	48%
Distribution Portugal	30	21%	22	22%
Ara	20	14%	18	18%
Others	12	9%	11	11%
Total CAPEX	141	100%	101	100%

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 Quarter 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 €-88.9 mn
EBITDA
Depreciation	Value reflected in the Segments reporting 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 exceptional 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 Quarter 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 (€644.1mn)
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 €4.1 mn Cash and cash equivalents (note - Cash and cash equivalents) and the value of €-3.7 mn related to 'Others' due to its operational nature. Excludes the value of €-3.1 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 €-3.7 mn related to Others due to its 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 €-3.1 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 €4.1 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

1. 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 Quarter 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