LISBON (Reuters) -Portuguese retailer Jeronimo Martins posted a near 9% fall in second-quarter net profit on Friday, even as sales and core earnings rose, and warned of enduring fierce competition and restrained consumption, leading to a 5% drop in its shares.
The company, whose main market is Poland, where it operates the country’s largest food retailer Biedronka, booked a net profit of 142 million euros ($162 million) in the quarter.
Sales rose 9.6% to 9.02 billion euros and earnings before interest, taxes, depreciation and amortisation jumped 16.5% to 620 million euros.
“In an environment that remains volatile, we foresee that consumers will continue to be prudent and restrained, and that market competitive dynamics will stay fierce,” Jeronimo Martins said in a statement, adding though that it kept the outlook presented in March broadly unchanged.
Chief Financial Officer Ana Luisa Virginia also warned that, although usually sales in the second half are higher than in the first half, “it is not a given … that we will not also have our challenges in the margin and on the cost side”.
In the first half, consolidated net profit still rose 6.6% to 269 million euros on sales growth of 6.7%. Operating costs rose over 6% both in the second quarter and first half from a year ago.
Analysts pointed to mixed results, only modest same-store sales growth, and the pessimistic tone of the message about the state of the market, particularly in Poland, as the main reasons behind the fall in Jeronimo Martins shares.
Even as a 9.2% minimum wage increase in Poland boosted household disposable income, “for now, food retail competition is intense, and overall food consumption is relatively contained”, the company said.
($1 = 0.8765 euros)
(Reporting by Andrei Khalip, additional reporting by Tiago Brandao; Editing by David Latona)
