Jeronimo Martins — Interim / Quarterly Report 2019

Oct 23, 2019

Nine Months 2019 Results

Lisbon, 23 October 2019

The performance analysis in this release is presented excluding the impact of IFRS16 unless otherwise stated. The IFRS16 impact in the Financial Statements is presented in Appendix 1 of this release.

Another quarter with good sales' performance increases EBITDA and cash generation

+6.7% SALES TO €13.7 BN (+7.9% at constant exchanges rates)

+6.7% EBITDA TO €757 MN (+7.4% at constant exchanges rates) [EBITDA at €1,049 mn under IFRS16]

+3.5% NET PROFIT TO €302 MN [Net Profit at €267 mn, under IFRS16]

+3.4% EPS TO €0.49 (excluding Other Profits/Losses) [EPS at €0.43 under IFRS16]

• CONSOLIDATED SALES increased 8.7% in Q3 (+9.3% at constant exchange rates) with LFL of 6.2%, contributing to a 6.7% growth in the nine months. In accumulated terms, at constant exchange rates, Group sales grew 7.9% with LFL of 4.7%.

Biedronka – sales in local currency grew 8.3% (+10.9% in Q3), with LFL of 5.1% (+7.8% in Q3)

Hebe – sales in local currency increased 26.6% (+26.9% in Q3), with LFL of 8.0% (+8.1% in Q3)

Pingo Doce – sales grew 2.9% (+0.8% in Q3), with LFL (excl. fuel) of 2.4% (+0.6% in Q3)

Recheio – sales increased 2.5% (+3.4% in Q3), with LFL of 3.4% (+3.4% in Q3)

Ara – sales in local currency grew 34.8% (+40.7% in Q3), with LFL of 13.6% (+20.1% in Q3)

• EBITDA increased 6.7% (+7.4% at constant exchange rates)
• FREE CASH FLOW stood at €356 million versus €-16 million in 9M 18
• NET CASH position of €60 million at the end of September (Under IFRS16, net debt stood at €2,189 million)

MESSAGE FROM THE CHAIRMAN AND CEO

PEDRO SOARES DOS SANTOS

'These results highlight our banners' remarkable ability to grow consistently faster than the markets in which they operate.

Our consumer centric approach and the primacy given to sales, while preserving the efficiency of the business models, are the common drivers of our Companies' performance.

In Colombia, a more assertive strategy in terms of assortment and price produced stronger sales growth and provided further validation of the commercial potential of our store network.

Our banners are well prepared for the last and most important quarter of the year. We feel confident that we will deliver another good year both in terms of growth and profitability.'

OUTLOOK FOR 2019

The first nine months of the year reflect the competitive strength of all our banners and their ability to conquer market share.

The guidance announced on 27 February* remains therefore valid except for an adjustment in the capex plan.

During the year, we have prioritized the acceleration of Ara's LFL growth as key to increasing sales density and critical to achieving profitability. The performance of these last quarters confirms the rightness of the strategy we are following and, in order to focus on validating store sales' potential, the Company reviewed its calendar of openings, which this year should represent c.110 new locations.

As a result, the capex for 2019 is now estimated at c.€650 mn, a reduction from the €700-750 mn previously forecasted.

\*https://www.jeronimomartins.com/wp-content/uploads/com/2019/Results2018.pdf

KEY PERFORMANCE FIGURES

[tables excluding IFRS16 impact]

CONSOLIDATED RESULTS

(Million Euro)	9M 19		9M 18		D	Q3 19			Q3 18	D
Net Sales and Services	13,662		12,800		6.7%	4,754		4,374		8.7%
Gross Profit	2,991	21.9%	2,769	21.6%	8.0%	1,058	22.3%	958	21.9%	10.5%
Operating Costs		-2,234 -16.4% -2,060 -16.1%			8.5%		-773 -16.3%		-695 -15.9%	11.2%
EBITDA	757	5.5%	709	5.5%	6.7%	285	6.0%	263	6.0%	8.6%
Depreciation	-294	-2.2%	-269	-2.1%	9.1%	-99	-2.1%	-91	-2.1%	8.9%
EBIT	463	3.4%	440	3.4%	5.2%	187	3.9%	172	3.9%	8.4%
Net Financial Costs	-24	-0.2%	-19	-0.2%	21.4%	- 8	-0.2%	- 6	-0.1%	30.2%
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	- 6	0.0%	- 7	-0.1%	n.a.	- 2	0.0%	- 2	-0.1%	n.a.
EBT	434	3.2%	414	3.2%	4.9%	177	3.7%	164	3.7%	8.0%
Income Tax	-106	-0.8%	-102	-0.8%	4.0%	-43	-0.9%	-40	-0.9%	8.6%
Net Profit	328	2.4%	311	2.4%	5.2%	134	2.8%	124	2.8%	7.8%
Non-Controlling Interests	-25	-0.2%	-19	-0.1%	31.6%	-13	-0.3%	-12	-0.3%	5.7%
Net Profit Attributable to JM	302	2.2%	292	2.3%	3.5%	121	2.6%	112	2.6%	8.0%
EPS (€)	0.48		0.46		3.5%	0.19		0.18		8.0%
EPS without Other Profits/Losses (€)	0.49		0.47		3.4%	0.19		0.18		7.9%

CONSOLIDATED BALANCE SHEET

(Million Euro)	9M 19	2018	9M 18
Net Goodwill	632	637	639
Net Fixed Assets	3,906	3,842	3,797
Total Working Capital	-2,567	-2,454	-2,355
Others	78	70	74
Invested Capital	2,049	2,096	2,155
Total Borrowings	654	624	604
Financial Leases	17	15	15
Accrued Interest	- 1	2	3
Marketable Securities and Bank Deposits	-730	-562	-373
Net Debt	-60	80	250
Non-Controlling Interests	248	238	229
Share Capital	629	629	629
Reserves and Retained Earnings	1,231	1,149	1,047
Shareholders Funds	2,108	2,016	1,905
Gearing	-2.8%	3.9%	13.1%

FREE CASH FLOW

(Million Euro)	9M 19	9M 18
EBITDA	757	709
Interest Payment	-22	-17
Other Financial Items	0	0
Income Tax	-116	-122
Funds From Operations	619	570
Capex Payment	-399	-528
Change in Working Capital	141	-53
Others	- 5	- 5
Free Cash Flow	356	-16

Note: When applying, from the 1st of January 2019, the new accounting standard on leases - IFRS16 – the Group decided to adopt the modified retrospective method, according to which there is no restatement of historical data. As the adoption of the new standard also does not change the way Jerónimo Martins manages and measures the operating performance of its businesses, the below analysis does not consider the application of IFRS16. The impact of this standard on the Group financial statements is presented in the Appendix 1 of this release.

SALES PERFORMANCE

In the first nine months of the year, Group's net sales grew by 6.7% to €13.7 bn. At constant exchange rates, sales grew by 7.9%, with a LFL of 4.7%. In Q3, sales increased 8.7% (+9.3% at constant exchange rates) and achieved a LFL performance of 6.2%.

In Poland, consumer demand continued to grow, driven by rising household's disposable income.

Food inflation increased until August and then declined slightly in September. In Q3 food inflation was 6.7%, averaging 4.4% in the nine months.

Biedronka maintained its strategic focus on sales performance without losing sight of the efficiency of its business model. This efficiency is particularly important since the Company continues to face cost's inflation.

Sales reached to €9.2 bn, an increase of 8.3% in local currency (+7.0% in euros), and the banner strengthened its market share. LFL growth was 5.1% despite the loss of 10 trading days due to the Sunday trading ban regulation.

In Q3, sales in local currency grew 10.9% to €3.2bn, (+10.5% in euros). The LFL growth of 7.8%, reflects in part the rising food inflation. In some seasonal products, we have recently seen a moderation in price's rises that is likely to lead to lower basket inflation in Q4.

Biedronka opened 46 new stores and closed 14, resulting in 32 net additions in the first nine months, ending the period with a total network of 2,932 stores.

In the nine months, Hebe posted sales of €180 mn, a 26.6% increase in local currency (+25.0% in euros). Despite the impact of 10 additional Sunday closures, LFL was 8.0%.

In Q3, sales reached €63 mn, an increase of 26.9% in local currency (+26.4% in euros), with a LFL of 8.1%.

Over the 9M period, Hebe opened 26 stores, ending September with a total network of 255 locations, including 29 standalone pharmacies.

In Portugal, food inflation has remained low, falling in the last months of the period, largely due to lower fruits and vegetables inflation. Food inflation was 0.3% in the 9M and -0.1% in Q3, which contrasts with the sharp price increase experienced in these products in Q3 18.

Pingo Doce posted sales growth of 2.9% to €2.9 bn euros. LFL growth (excluding fuel) was 2.4%.

In Q3, sales increased 0.8% to €1 bn. LFL growth (excluding fuel) was 0.6%, reflecting food deflation in the basket over the quarter.

In the first nine months of the year, the banner opened 5 new stores.

Recheio grew sales by 2.5% to €757 mn. On a LFL basis, sales grew by 3.4%. In Q3, sales amounted to €291 mn, up 3.4% from Q3 18, with LFL of 3.4%.

In Colombia, consumer demand remained more favourable than in 2018. The food retail sector continued to be very competitive and dynamic.

Ara's sales grew 34.8% in local currency (+27.6% in euros) to €560 mn.

In Q3, the Company maintained, with good results, its price investment strategy to stimulate sales. This strategy increased sales by 40.7% (+30.6% in euros) to €204 mn, producing a LFL growth of c.20%.

In the first nine months of the year, Ara opened 46 new locations, ending the period with 578 stores.

The Group's EBITDA reached €757 mn, 6.7% above the value obtained a year ago. At constant exchange rates, EBITDA grew 7.4%, broadly in line with sales growth reflecting the focus of the

RESULTS PERFORMANCE

[figures excluding IFRS16, unless otherwise stated]

businesses on preserving their efficiency.

Biedronka recorded EBITDA of €665 mn, a growth of 8.3% in zloty (+7.0% in euros). The EBITDA margin was 7.2%, which is in line with the margin obtained in the same period of last year.

The focus on sales growth and sales mix, together with our efforts to increase operational efficiency, allowed us to maintain our commercial intensity while posting a stable EBITDA margin.

Distribution in Portugal generated EBITDA of €189 mn, with the respective margin at 5.1%, above the 5.0% recorded in the same period of 2018.

Ara and Hebe generated EBITDA losses of €56 mn, of which 91% are attributable to Ara. In the first nine months of 2018 EBITDA losses were €65 mn.

Net financial costs were €-24 mn, higher than the €-19 mn recorded in 9M 18, due to the increase in the amount of debt denominated in Colombian pesos.

Group net profit was €302 mn, 3.5% above 9M 18.

Group capex (excluding usage rights acquired under IFRS16) was €405 mn, of which 55% was allocated to Biedronka.

Free cash flow generated in the period was €356 mn reflecting a good operating performance as well as a favourable seasonal behaviour of our working capital.

Net cash position, excluding capitalized operating leases, was €60 mn.

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

DISCLAIMER

Statements in this release that are forward-looking 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

1. Financial Statements

INCOME STATEMENT BY FUNCTIONS

(Million Euro)	9M 19 IFRS16	9M 19 Excl. IFRS16	9M 18
Net Sales and Services	13,662	13,662	12,800
Cost of Sales	-10,671	-10,671	-10,031
Gross Profit	2,991	2,991	2,769
Distribution Costs	-2,239	-2,296	-2,127
Administrative Costs	-231	-232	-202
Other Operating Profits/Losses	- 8	- 8	- 7
Operating Profit	513	455	433
Net Financial Costs	-127	-24	-19
Gains/Losses in Other Investments	2	2	0
Gains in Joint Ventures and Associates	0	0	0
Profit Before Taxes	389	434	414
Income Tax	-99	-106	-102
Profit Before Non Controlling Interests	289	328	311
Non-Controlling Interests	-23	-25	-19
Net Profit Attributable to JM	267	302	292

INCOME STATEMENT (Management View)

(Million Euro)	9M 19 IFRS16	9M 19 Excl. IFRS16	9M 18	Q3 19 IFRS16	Q3 19 Excl. IFRS16	Q3 18
Net Sales and Services	13,662	13,662	12,800	4,754	4,754	4,374
Gross Profit	2,991	2,991	2,769	1,058	1,058	958
Operating Costs	-1,941	-2,234	-2,060	-676	-773	-695
EBITDA	1,049	757	709	382	285	263
Depreciation	-528	-294	-269	-177	-99	-91
EBIT	521	463	440	206	187	172
Net Financial Costs	-127	-24	-19	-49	- 8	- 6
Gains in Joint Ventures and Associates	0	0	0	0	0	0
Other Profits/Losses	- 6	- 6	- 7	- 2	- 2	- 2
EBT	389	434	414	155	177	164
Income Tax	-99	-106	-102	-39	-43	-40
Net Profit	289	328	311	115	134	124
Non-Controlling Interests	-23	-25	-19	-12	-13	-12
Net Profit Attributable to JM	267	302	292	103	121	112
EPS (€)	0.42	0.48	0.46	0.16	0.19	0.18
EPS without Other Profits/Losses (€)	0.43	0.49	0.47	0.17	0.19	0.18

BALANCE SHEET

(Million Euro)	9M 19 IFRS16	9M 19 Excl. IFRS16	2018	9M 18
Net Goodwill	632	632	637	639
Net Fixed Assets	3,906	3,906	3,842	3,797
Net Rights of Use (RoU)	2,209	-	-	-
Total Working Capital	-2,572	-2,567	-2,454	-2,355
Others	85	78	70	74
Invested Capital	4,260	2,049	2,096	2,155
Total Borrowings	654	654	624	604
Financial Leases	17	17	15	15
Capitalised Operating Leases	2,249	-	-	-
Accrued Interest	- 1	- 1	2	3
Marketable Securities and Bank Deposits	-730	-730	-562	-373
Net Debt	2,189	-60	80	250
Non-Controlling Interests	246	248	238	229
Share Capital	629	629	629	629
Reserves and Retained Earnings	1,196	1,231	1,149	1,047
Shareholders Funds	2,071	2,108	2,016	1,905

FREE CASH FLOW

(Million Euro)	9M 19 IFRS16	9M 19 Excl. IFRS16	9M 18
EBITDA	1,049	757	709
Capitalised Operating Leases Payment	-194	-	-
Interest Payment	-120	-22	-17
Other Financial Items	0	0	0
Income Tax	-116	-116	-122
Funds From Operations	619	619	570
Capex Payment	-399	-399	-528
Change in Working Capital	140	141	-53
Others	- 5	- 5	- 5
Free Cash Flow	356	356	-16

EBITDA BREAKDOWN

(Million Euro)	9M 19 IFRS16	Mg	9M 19 Excl. IFRS16	Mg	9M 18	Mg
Biedronka	864	9.4%	665	7.2%	622	7.2%
Distribution Portugal	242	6.6%	189	5.1%	178	5.0%
Others & Cons. Adjustments	-56	n.a.	-97	n.a.	-90	n.a.
JM Consolidated	1,049	7.7%	757	5.5%	709	5.5%

FINANCIAL RESULTS

(Million Euro)	9M 19 IFRS16	9M 19 Excl. IFRS16	9M 18
Net Interest	-18	-18	-15
Interests on Capitalised Operating Leases	-98	-	-
Exchange Differences	- 8	- 2	- 1
Others	- 3	- 3	- 4
Financial Results	-127	-24	-19

SALES BREAKDOWN

(Million Euro)	9M 19			9M 18	D %		Q3 19		Q3 18		D %
		% total			% total excl. FX Euro			% total			% total excl. FX Euro
Biedronka	9,236	67.6%	8,632	67.4%		8.3% 7.0%	3,172	66.7%	2,871		65.6% 10.9% 10.5%
Pingo Doce	2,912	21.3%	2,829	22.1%		2.9%	1,019	21.4%	1,011	23.1%		0.8%
Recheio	757	5.5%	739	5.8%		2.5%	291	6.1%	281	6.4%		3.4%
Ara	560	4.1%	439		3.4% 34.8% 27.6%		204	4.3%	156		3.6% 40.7% 30.6%
Hebe	180	1.3%	144		1.1% 26.6% 25.0%		63	1.3%	50		1.1% 26.9% 26.4%
Others & Cons. Adjustments	17	0.1%	17	0.1%		-1.9%	6	0.1%	6	0.1%		-3.2%
Total JM	13,662		100% 12,800	100%		7.9% 6.7%	4,754	100%	4,374	100%		9.3% 8.7%

SALES GROWTH

	Total Sales Growth					LFL Sales Growth
	Q1 19	Q2 19	H1 19	Q3 19	9M 19	Q1 19	Q2 19	H1 19	Q3 19	9M 19
Biedronka
Euro	-0.8%	11.5%	5.2%	10.5%	7.0%
PLN	2.0%	12.1%	7.0%	10.9%	8.3%	-1.1%	8.6%	3.7%	7.8%	5.1%
Hebe
Euro	19.8%	28.7%	24.3%	26.4%	25.0%
PLN	23.3%	29.4%	26.4%	26.9%	26.6%	5.4%	10.3%	8.0%	8.1%	8.0%
Pingo Doce	2.6%	5.6%	4.1%	0.8%	2.9%	1.7%	4.9%	3.3%	0.3%	2.2%
Excl. Fuel	2.5%	5.8%	4.2%	1.1%	3.1%	1.6%	5.1%	3.4%	0.6%	2.4%
Recheio	1.9%	2.1%	2.0%	3.4%	2.5%	3.7%	3.2%	3.4%	3.4%	3.4%

STORE NETWORK

		Openings			Closings
Number of Stores	2018	Q1 19	Q2 19	Q3 19	9M 19	9M 19	9M 18
Biedronka	2,900	8	19	19	14	2,932	2,850
Hebe *	230	8	9	9	1	255	207
Pingo Doce	432	2	2	1	0	437	430
Recheio	42	0	0	0	0	42	42
Ara	532	9	16	21	0	578	475

* 9M 19: 255 stores: 29 pharmacies and 226 drugstores (21 of which include a pharmacy)

Sales Area (sqm)	2018	Openings		Closings/ Remodellings	9M 19	9M 18
		Q1 19	Q2 19	Q3 19	9M 19
Biedronka	1,933,104	5,783	14,182	13,651	1,198	1,965,522	1,888,800
Hebe	55,035	2,000	2,791	2,282	56	62,052	49,431
Pingo Doce	506,754	1,458	1,681	107	-142	510,142	507,117
Recheio	133,826	0	0	0	0	133,826	133,826
Ara	182,005	2,503	4,808	6,190	0	195,506	163,827

CAPEX

(Million Euro)	9M 19	Weight	9M 18	Weight
Biedronka	221	55%	283	59%
Distribution Portugal	109	27%	80	17%
Ara	57	14%	75	16%
Others	18	4%	38	8%
Total CAPEX	405	100%	476	100%

2. Notes

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

INCOME SATEMENT

1. Reconciliation Following ESMA guidelines on Alternative Performance Measures from October 2015

Notes figures under IFRS16

Income Statement (Management View) in Appendix 1. of this release	Income Statement by Functions in the Consolidated Report & Accounts – First Nine Months 2019 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 €-528.4 mn
EBITDA
Depreciation	Value reflected in the note - Operating costs by nature
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 (when applicable) and Gains/Losses in other investments (when applicable)
EBT
Income Tax	Income tax
Net Profit
Non-Controlling Interests	Non-Controlling interests

Net Profit Attributable to JM

BALANCE SHEET

Balance Sheet in Appendix 1. of this release	Balance Sheet in the Consolidated Report & Accounts - First Nine Months 2019 Results
Net Goodwill	Included in the heading of Intangible assets
Net Fixed Assets	Includes the headings Tangible and Intangible assets excluding the Net goodwill (€632.1 mn) and Financial leases (€17.5 mn)
Net Rights of Use (RoU)	Includes the heading of Net rights of use excluding the Financial leases (€17.5 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 €-13.1 mn related to 'Others' due to its operational nature. Excludes the value of €-1.3 mn related to Interest accruals and deferrals (note – Net financial debt)
Others	Includes the headings Investment property; Investments in joint ventures and associates; Other financial investments; 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 €19.4 mn related to collateral Deposits associated to Financial debt (note - Trade debtors, Accrued income and Deferred costs); and also the value of €-13.1 mn related to Others due to its operational nature
Invested Capital
Total Borrowings	Includes the heading Borrowings current and non-current
Financial Leases	Value reflected in the headings of Lease liabilities current and non-current
Capitalised Operating Leases	Value reflected in the headings of Lease liabilities current and non-current excluding Financial leases liabilities (€17.3 mn)
Accrued Interest	Includes the heading Derivative financial instruments and the value of €-1.3 mn related to Interest accruals and deferrals (value reflected in note – Net financial debt)
Marketable Securities and Bank Deposits	Includes the heading Cash and cash equivalents and the value of €19.4 mn related to collateral deposits associated to Financial debt (reflected in note - Trade debtors) 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

FREE CASH FLOW

Following ESMA guidelines on Alternative Performance Measures from October 2015
Free Cash Flow in Appendix 1. of this release	Cash Flow in the Consolidated Report & Accounts - First Nine Months 2019 Results
EBITDA	Included in the heading of Cash generated from operations
Capitalised Operating Leases Payment	Included in the heading Leases paid
Interest Payment	Includes the headings of Loans interest paid, Leases interest paid and Interest 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 and investment property; Acquisition of tangible fixed assets; Acquisition of intangible assets; Acquisition of financial investments and investment property. It also includes acquisitions of tangible assets classified as finance leases under previous regulations (€6.7 mn)
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