The results just presented by Jeronimo Martins show that the owner of Biedronka achieved much higher margins in Poland in 2022 than in his network in Portugal. One of the reasons for this state of affairs is the tax that has been in force in Poland for two years.
The published results of Jeronimo Martins show that the EBITDA margin achieved in the Biedronka network is 8.8 percent. Meanwhile, Portugal’s Pingo Doce had a margin of 5.9 percent. Business Insider asked Luis Araujo, CEO of Jeronimo Martins, how this difference could be explained.
Why is the Biedronka margin higher in Poland than in Portugal?
Araujo notes that it is not possible to compare the two markets or business models in which both networks operate. — It must be remembered that in both Poland and Portugal our margins are the lowest on the market — says Araujo.
CEO Jeronimo Martins highlights that in Poland the company has been able to develop a model where operating costs are very low, making it easier to create value. This is also possible due to the very large scale of operations carried out in Poland. Biedronka operates a very efficient discount model in a very large country. With 17 distribution centers, we have managed to keep logistics costs to a minimum. Pingo Doce operates on the model of supermarkets and hypermarkets. It’s a completely different business. - explains the interlocutor of the portal.
An important reason why the margin in Poland is higher than in Portugal is the retail sales tax, which has been in force in our country since 2021. This year’s budget assumes that the income from this will amount to less than 4 billion zł. In Portugal, there is no such load, so prices may be lower.
No need to increase margin
Araujo assures that there is no need to increase Biedronka’s margin in Poland in the near future. This is not facilitated by inflation, but also by very strong competition in our market. Araujo emphasizes that he is aware that Polish consumers are very price sensitive, and the search for promotions is even a “national sport.” Head Jeronimo Martins noted that four product categories are key for Polish buyers: meat, dairy products, sausages. , vegetables and In these categories, says Araujo, prices and margins should be extremely low.
Source: Wprost
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