Jeronimo Martins SGPS SA
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Ladies and gentlemen, thank you for standing by, and welcome to Jerónimo Martins Q1 2019 Results Call. [Operator Instructions] I must advise you the call is being recorded today, Friday, the 26th of April 2019.I would now like to turn the conference over to your first speaker today, Ana Luisa Virgínia, Chief Financial Officer of Jerónimo Martins. Please go ahead.
Good morning, ladies and gentlemen, and thank you for joining this call to present Jerónimo Martins first quarter 2019 results. As a reminder, materials include the release and a slide presentation, both available in our corporate website. I will now take you through the presentation.A brief initial remark to stress that on the application of IFRS 16, which shows the modified retrospective methods, and therefore, we will not make any restatement on 2018 figures. As the new standard does not change the way we measure the performance of our businesses, we will, for comparison purposes during 2019, analyze the performance without the application of this accounting standard. This said, our accounts are also reported as due under the application of IFRS 16 as you can see in the appendix.We have a good start to the year with our businesses delivering strongly both in sales, and profitability in a quarter that is usually the least material to the overall performance of the year. This performance was achieved despite a couple of negative effects that impacted the numbers.First, the calendar effect, which is twofold. The Easter shift from Q1 in 2018 to Q2 in 2019 and also the gradual implementation of the Sunday ban regulation that in 2019 will bring 13 extra days ban in Poland, of which 7 occurs already in Q1.Second, the zloty depreciation when comparing year-on-year. The zloty was at its peak in Q1 '18 and the foreign exchange difference versus Q1 '19 affected our performance in euro terms. With this in mind, when analyzing the underlying performance, we registered sound like-for-like trends in all banners. This confirms the strengths of the competitive position that we have achieved through assertive commercial activity and strong differentiation and resilient profitability, which reflects the efficiency of the business model. This confirms our ability to continue outperforming in the markets where we operate while preserving operating efficiency.Looking at the key performance figures. Consolidated sales at EUR 4.2 billion grew 1.1% in Q1 '19 impacted by exchange rates. At constant currencies, sales growth was 3.2%. Group EBITDA reached EUR 214 million, 0.6% below the same period last year, nevertheless growing 1.9% at constant exchange rate. The respective margin was 5%, slightly down from 5.1% in Q1 '18.Net earnings attributable to Jerónimo Martins were at EUR 72 million, 14.5% down in -- on previous year impacted by the operating deleverage due to fewer trading days in Poland, the absence of Easter and the zloty devaluation. Net debt was at EUR 100 million with gearing at 4.8%.Looking now at our Q1 P&L. In this first 3 months performance marked by low sales density due to the calendar, any features are amplified. Therefore, we should avoid extrapolating too much from the first quarter P&L. Even so, I will share a couple of comments that I believe are useful to understand the performance.Starting with the gross margin evolution. In Poland, it benefited from the comparison with Q1 '18 when there were strong investments in both Easter campaigns and actions to mitigate the takeoff of the Sunday ban regulation. In the context of their respective costs towards profitability, [indiscernible] gross margin also contributed as expected to this positive overall evolution. The light operating level, the cost structure reflected the lower leverage due to calendar impact on the top line. Below operational results, I ask you to take into consideration that the increase in financial charges reflect the higher debt in Colombian pesos and also some unfavorable foreign exchange differences. In the first case, the trend should be expected to continue in the quarters ahead.Noncontrolling interests were higher than in Q1 '18 due to Pingo Doce's good performance in its first 3 months and also to one-offs that reduced this company's net earnings in the same period last year.Net profit attributable amounted to EUR 72 million, 14.5% below Q1 '18, reflecting the lower sales quarter in line with expectations and the zloty devaluation year-on-year.In the seasonality framework of the food retail business, first quarter free cash flow was negative, having stood at minus EUR 6 million. This compares with the negative EUR 83 million registered in Q1 '18, an improvement that reflects a better calendar momentum of the working capital and a favorable phasing of CapEx payments.The robustness of the group's balance sheet remains unquestionable with net debt at EUR 100 million and gearing at 4.8%. CapEx in the period reached EUR 95 million, of which 46% were invested in Biedronka. Dividend distribution in the amount of EUR 204 million was approved by the Annual General Meeting and will be paid on the 9th of May. This represents a gross dividend of EUR 0.325 per share.I will now focus on sales performance in a bit more detail. In the most challenging quarter calendar-wise, all businesses delivered incremental sales, including Biedronka and Hebe, which lost 7 days of trading. This indeed confirms the competitive strengths of the banners.In Biedronka, sales grew 2% in zloty and were 0.8% down in euros at EUR 2.9 billion. Like-for-like performance was negatively impacted by the Easter shift and the additional days of ban with an estimated combined impact of 4 to 4.5 percentage points. Of the total impact, we assume that around 1/3 is attributable to the ban.It is important to flag here that our basket inflation peaked in March, a trend seen across the country driving out quarterly basket inflation to 1%. This may be a seasonal effect, and we are not taking it for granted for the months ahead.In the execution of its investment program, Biedronka added 2 net stores to the network and remodeled 24. All in all, this was a sound quarter.Despite the impact of the Sunday ban and the absence of Easter, Hebe grew sales in zloty by 23.3% with the like-for-like of 5.4% in the period. The banner opened 8 stores and remains focused on moving forward with its omnichannel approach to the health and beauty Polish market.In Portugal, Pingo Doce had another strong quarter with like-for-like excluding fuel at 1.6% and total sales growth at 2.6%. The good momentum created by key competitive advantages continues to boost delivery. Recheio delivered very well with a like-for-like of 3.7%. Exports pressured total sales growth, which increased by 1.9%.In Colombia, Ara registered sales growth of 28% in local currency. Focused on the Colombian consumers and on how to better serve them, Ara is determined to execute its investment program in what concerns both stores and DCs.Moving on to operating results. Group EBITDA reached EUR 214 million, a slight decline of 0.6%, but the 1.9% growth if we exclude the devaluation of currencies over the period. This was a resilient performance in a quarter in which calendar impacted both the top line and the operating leverage across the businesses.Group EBITDA margin was 5%, down from the 5.1% registered in the previous year. If we exclude the impact from Ara and Hebe's losses, EBITDA margin was 5.9%. The resiliency of the EBITDA margin, particularly at Biedronka that had a negative like-for-like, was supported by a positive margin mix effect when compared with Q1 '18.We see these sets of numbers as sound and as an evidence that our businesses are in good shape to deliver on the guidance we provided on the 27th of February. In a year we consider as challenging with a lot of uncertainty in the macro backdrop affecting food inflation and costs, it is pivotal that our banners continue to leverage on their competitive strengths and well-fitted business models. This is what will allow us to continue to grow [ above ] the markets and keep reinforcing our leadership position.Thank you for your attention. Operator, I am now ready to take questions.
[Operator Instructions] The first question we have today comes from José Rito from Caixabank.
My first question in terms of margin outlook for Poland. Do you still see it flattish for the full year? I think that in the previous calls, you mentioned that you see it broadly flattish. Can you comment on this? My second question on the gross margin evolution in this quarter versus last year. We witness an increase. Was it across the board or mainly related to Colombia? If you could provide a little bit some visibility on this also would be helpful. And finally, you mentioned that your basket inflation in Poland was 1% in the quarter. I think that was what you referred. You don't -- you mentioned that you don't see this as granted over the coming quarters. We have been seeing full inflation picking up again in Poland. Why don't you think that this positive basket inflation should be there over the coming quarters?
Thank you, José. So as for the margin outlook, of course, we don't think that these 3 months performance will change what we have said 2 months ago. So basically, we keep the idea that it is possible to maintain a broadly flattish EBITDA margin at Biedronka. So no change on that taking into consideration the 3 months performance.On the consolidated, so the group gross margin evolution, it was basically an improvement along what has been happening in the last year in all businesses. Of course, Biedronka here is the one that has the most importance due to its [ weights ] as it is preferred. So it was paramount that the margin mix performed in a positive way. But as you also referred and I mentioned it in the call, it was also important that the new businesses, Hebe and Ara, were able to increase their trading margin. So basically, all businesses growing in terms of gross margin, not losing competitiveness, but due to a better margin mix. On the basket inflation in Poland. So it was, as I referred, 1% in the quarter. What we -- what I refer is that we don't take it for granted for the future because, of course, this depends sometimes even on the deflation of commodities, on the fresh products. So there are a lot of variables besides even the competitiveness of the market. That may play a role here. And that's why when I say that we assume for the future usually no inflation in our plans is because of this. So we don't take it for granted. What I mean really is that we continue to work not assuming that we will have this trade -- this tailwind.
Okay. Understood. Yes. Okay, okay. Understood. But on the gross margin, just a follow-up. You mentioned that despite these increases in respect to Poland, you are not losing competitiveness. Should we assume that the difference in terms of prices that we had versus your competitors, namely are discounters, supers and hypers, is broadly the same base seen in the past? Having said this, so it means that the industry has also witnessed an increase on the gross margin or is this specifically that you are changing the mix, and because of this, you are witnessing this increase in the gross margin?
It's basically the mix. So it's not any further pressure upstream in the supply chain. So it's really the fact that you have the consumer willing to spend. And of course, playing or continue to play with in&out has been quite important to have this improvement in the gross margins at Biedronka.
The next question today comes from the line of Filipe Rosa from Haitong Bank.
So my first question relates to the EBITDA margin of Biedronka. I was wondering if you could clarify regarding the wage inflation in Poland. When do you plan to carry out the annual salary increases in that country? Because I believe that in Q1, you have only made some small adjustments. And I think that the wage inflation in Q1 has been well below the one that we should expect for the full year. So I don't know if you could elaborate a little bit on this for us to understand this impact from wage inflation in your OpEx structure in Q1 versus the full year, okay?My second question relates -- a follow-up -- is a follow-up from José's question. So can you confirm that your price gap to discounters and to the hypermarkets has been kept unchanged versus Q4 or versus the previous quarters?And my final question relates to the working capital performance that you have in Q1. There has been a very small deterioration of your working capital, while traditionally, historically, we have a more significant deterioration versus Q4. So is this related with the timing of Easter? Or have you managed to improve your performance in terms of inventories, which I think was quite -- was not that good in Q4?
Thank you, Filipe. So on the OpEx inflations and particularly on the wages inflation. So we usually make some reviews, and also our remuneration does not depend only on the salary increases. That may take place. Usually, it's in April but may also take place on other months. On that, I may say that, for instance, the first quarter was already affected by the fact that we reviewed our bonus system particularly in Poland but also in other businesses. So in this case, or particularly in Biedronka, as you mentioned its EBITDA margin, I don't think that from now on, the wage inflation at this point will be very different.Of course, we have other kinds of pressures. We know that from the energy side, there may be also, and we are counting on some more pressure on energy. And we have some other loss, namely on the third pillar pension that we are assuming will come into force in the country. So -- but we are assuming that when we say that we consider that the company will be able to still maintain a broadly flattish EBITDA margin.So on the price gap, from what we do and from the market research that we do, basically, this price gap remains unchanged. What we basically, as I said, have been doing in design is questing on the promotions and on the in&outs to really be able to boast a better margin mix. So for the competitiveness, we consider that it remains intact and that Biedronka didn't lose neither the perception, neither the effectiveness in terms of the -- of being the most competitive player in the market.On the working capital performance. So this -- the working capital has to do not just with inventories. And yes, it's true that with promotions and on -- with in&out throughout all the businesses, this has put some more pressure on the number of days of inventories in the total working capital. We don't hide that. Particularly on the first quarter and considering that the performance really depends on how and in which day the year ends because it really has to do with all the trading payables, not only just with inventories, this may have this kind of gap.And the other thing that I mentioned is the CapEx because, of course, if we tend, for instance, to concentrate a lot of investment in the last days of -- or in the last months of the year, of course, there will be more value to be paid to suppliers regarding CapEx, which was also the case when we compare with the first quarter 2018. So basically 2017, for instance, on 31st December, the working capital [ may remain ], and we mentioned that 1 year ago, it was very negative due to circumstances of the calendar and circumstances of the CapEx being concentrated at year-end, which, yes, the calendar was still in our favor this year but not the same as last year.
Just a follow-up on -- so just to clarify this. So you don't expect the wage inflation that you have in Q1 to -- over the next quarters to be substantially different from what you had in Q1, so there might be a small pickup, but nothing material.
No. Because the revisions that we do is throughout the year. So when we compare, we compare also from a higher basis. If -- so if we have to do some salary revisions, we'll be basically more or less on the same periods, Filipe. So in terms of percentage, I don't see any reasons to be much different at this point.
The next question we have today comes from Cedric Lecasble from MainFirst.
I have 3 questions. The first one is a follow-up on the price gap you mentioned versus competition. Could you recall how you established your benchmarks and how you set prices by category? Who are your main competitors? How you -- and recall the kind of price gap you have, which seems to be stable excluding promotions.The second question is on surfacing of openings in Colombia and potentially on the like-for-like. You gave a number at the end of the year last time on high single-digit like-for-likes in Colombia. Maybe you can give us some -- at least some flavor on how the operations moved up in Q1. And what could be the impact on earnings of the 2 DC openings, the impact on EBITDA? Could you recall as how surfacing of these DC openings will impact earnings since you confirm your full year guidance of 20, 25 reduction in total EBITDA loss? And the last one is on -- is technical. You mentioned some one-off on minorities and on the financial result. Could you just give us numbers for -- to help us now model these?
Thank you, Cedric. So on the prices, basically, what we compared is -- depends, of course. It considers a certain number that can be higher or lower of main products that where we compare our prices with ones of the competition, and we consider basically almost all competitors. So we have on the discounters Lidl, Aldi, Netto. And on the hypermarkets, the Tesco, the [ Fiald ], so the Kauflands, and of course, on the supermarkets also, the other players. So on this, no change. And basically, we continue to see each other as -- and this was -- it's something that we want to make sure is that we don't lose competitiveness towards the other players. As we mentioned, it happened in the past.On the like-for-like for Colombia, I don't think that -- I will not give any like-for-like reference, even considering that in this case, the 3 months would even be more absurd in terms of comparison due to the calendar gap. So at this point, we don't see -- in terms of like-for-like, it is basically in line with what we expected. So no issue from that part.We know that we -- and we mentioned that, that we would be in -- mainly in the new regions. We are still fine-tuning and having to adjust and test to the neighborhoods, particularly in the center of Bogotá, but no more than that.On the pressure and impact on EBITDA from the 2 DCs opening, this is already incorporated in our guidance. So it's true that usually, a DC open, as we don't have it fully identified in terms of stores and in terms of store sales, puts pressure on the cost structure, but we are considering that this will be compensated by the progressions on the trading margin. So if everything goes according to plan in terms of sales density, we think that the pressure will be compensated, and we keep it as -- along with the guidance that we have provided for the losses at EBITDA level in Ara.As for the one-off in minorities. Last year was basically on the text heading, we made some adjustments, and this had a slight impact. I would say probably around EUR 1 million.And on the financials, the -- I would say that the one-off, or I don't know if it's going to be one-off because it will depend on the exchange or the foreign exchange differences, is also around EUR 1 million.
And can we just have an idea of the cost of the 2 DC openings just to have a rough idea of the underlying improvement of the stores?
I don't think we really provide that. No, Cedric. EUR 10 million on the call, you're saying -- it's [indiscernible]?
The EUR 10 million, EUR 12 million, just -- yes, yes. No, no. Absolutely, because the underlying improvement of the stores will be superior to the decline in losses because you have some extra costs induced by these 2 DCs. So it was just to have an idea of the underlying improvement of the stores themselves.
Well, I think it's reflected on the guidance that we provided. I've mentioned that we are expecting the losses to go down in local currency by 20% to 25%.
Yes. Okay, okay. It was just to fine-tune it.
Thank you.
The next question today comes from the line of Maxime Mallet from Deutsche Bank.
I'll have 3. The first one is you mentioned the inflation, your basket inflation of 1% in the quarter. Could you maybe give us exit rates of inflation in the quarter?The second one was with regard to Pingo Doce. If I'm looking excluding the calendar, in fact, it seems like the trend improved in the -- for this banner. I was wondering if you could comment whether it was coming from markets being stronger or Pingo Doce does gaining additional market share versus competitors in this market.And the last one is whether you have an update or any color on the potential additional incentives that the government wants to launch in Poland.
Great. So thank you, Maxime. On inflation, so the 1%, as I mentioned, has to do with our baskets and has -- and took place mainly on the fresh parts. And that's why we also said that we don't know if it's going to be sustainable or not because this is really variable prices product, and this may change along the year. But for the moment, it was positive, earning 1%.As to Pingo Doce performance, I would say it's both ways. So in the case -- the Portuguese food retail markets from the information that we have is growing. And at the same time, at least the -- from the base that we have, Pingo Doce was able to also slightly increase its market share. So I think that the company is performing very well and taking advantage also of this growth in the market.On the stimulus in Poland. So of course, it's always good news and helps because we were already assuming a positive outlook on the economy in Poland to really even help to mitigate the gradual impact of the Sunday ban. But of course, in this case, the -- what we are talking about basically is of the 500 plus on the first child. So from that, we don't expect really to have a big shift on that. Of course, it's good to have the stimulus because at least, as I said, it really helps or makes sure that the outlook comes the way that we were expecting.
Okay. And maybe just a quick follow-up on the first one I was asking. On the 1% basket inflation, where we're trying to go is, was is like a broad inflation that you saw through the whole quarter? Or was it something that you already saw declining through the quarter, which would explain maybe to your caution going into the next quarters.
No, no, no. We saw it throughout the quarter, Maxime. So my comment is just that we are not taking it for granted. It doesn't mean that it will -- won't continue, okay?
The next question today comes from the line of James Grzinic from Jefferies.
And also congratulations on your promotion, Ana. I had, I guess one question specifically on market share in Poland. I wondered if you have a number for Q1 this year compared to how that developed in 2018 as a whole. And also following on to Maxime's question on the fiscal stimulus, you're basically saying that we shouldn't look at 2016 as a good compassion and parallel for that may happen from the second half of this year in terms of your LFLs of Biedronka.
So James, thank you. Thank you for the congratulations. I don't think I will change my tone, but please let me know if I do. On the market share progressions in Poland. Yes, we still improve market share from the numbers that we have, and this is just until February. I don't think that we can extrapolate much because we grew a lot in the same months as last year. But from the numbers that we have, it's around 3 basis points -- sorry, 30 basis points [indiscernible].
Can remind you me what that number was in 2018, please? In terms of the improvement, that is.
The total number, market share?
No. The improvement. To compare that 30 basis points in Q1 relative to what it was for the full year in 2018.
It was higher than 1%. So I think it was almost 2.5%. Sorry. James, please?
Yes, sorry. No, I think you're about to address my second question.
Yes. So on the 2016 stimulus. Yes, what we consider is, of course, in 2016, these were -- let's say, it was the first time and it was applied. And really, there was a big shift and a big increase in the available income of most of the households in Poland. So this is really we -- what I'm saying is that we do -- it's true that we consider that this is positive, but of course, we have to take into consideration that the one in 2016 was really a big shift and a big disruption in terms of the increase that it made and particularly in the lower and middle income households. And these are the ones that allocate most of the budget to food. So any increase in their income, of course, has usually an impact on the way that the food retail market also progresses.This time, I don't think that the kind of stimulus has exactly the same impact. So -- but of course, as I said, we consider it as positive and as part of the positive outlook that we had on the Polish economy and on the fact that really, the government wants to make sure that the economy continues to grow above the average of the European Union, what we have seen for most of the last years, in fact.
And I presume also make sure they get reelected.
Also, of course. Also. Thank you.
The next question today comes from the line of Andrew Porteous from HSBC.
A couple from me. Firstly on gross margins. It sounds like you've had a bit of a tailwind in Q1 from lower Easter promotions and some of the timing benefit there as well. Could you just give us an idea of what the tailwind to gross margins was in the quarter and what we might expect is going forward to Q2? Obviously, with Easter dropping in there, it sounds like that tailwind might reverse a little bit.And then the second question I had was really on OpEx. I mean, we talk a lot about wage cost increases, et cetera. Could you just give us an idea of what sort of cost inflation or underlying cost inflation you're seeing within the business and then talk about are you still able to get cost savings through? Or was that more a story for last year? I'm just trying to understand how you're sort of preserving or looking at preserving the overall EBITDA margin this year.
Thank you, Andrew. So on the gross margin, as I said, really, there is -- Easter does not only have an effect on the top line. It really also has an effect on the trading margin because usually, you do a lot of different promotions on this kind of period. And with products, that's usually are the fresh with the big weight on the total sales. And that's why also, it really usually affects even downwards the trading margins.And so what I'm saying is that on the gross margins, what we have performed in the quarter, it's a good gross margin. I don't -- we are not disclosing the number for the margins or individually by businesses. But I can tell you that, of course, the idea is to continue to use, as I said, the promotions and the in&outs to continue to have a better margin mix in comparable terms. So the fact that we were able to almost post a flattish EBITDA margin even despite a negative like-for-like, it doesn't mean, as I said, that we change our view for the full year on this because I don't think that's an indication that it's going to grow for the remaining quarters, although, of course, we would like to.On the OpEx. I think that at this point, it's also very difficult to give you a full visibility on the wage cost inflation. As you said, this is the mix of the review that we do not only on salaries, but on the bonus schemes and on the initiatives that have to do with the total remuneration packages and the total initiative that we do around our employees. And of course, this means that we see that it's going to -- there will be inflation, not only due to the pressure of the market, but also from our own initiatives. But this being said, we don't think that it will affect on the total or the overall EBITDA margin of our businesses. It will -- we think that it will be mitigated by the operating performance of the businesses at top line and at trading margin.
The next question today comes from the line of Carole Madjo from Exane.
Two quick questions from me. Going back on the mix of Biedronka, could you remind us what is the latest average basket size? And also can you remind us what is the weight of in&outs and the class of promotions as a percentage of sales?And just the second question to come back on Portugal. Could you give some granularity on the profitability of Portugal? Is it fair to assume that the EBITDA margin of Pingo Doce increased a bit this quarter?
Thank you, Carole. So on the average basket for Biedronka, it is currently almost PLN 40. And at which -- and of course, on the total sales, the weight of in&outs and promotions more or less evenly divided is around 39%.On Portugal, can you repeat the question? Because I was not hearing very well. You want me to elaborate a little bit on the market progression?
Just on profitability, if you could give it more detail and if Pingo Doce increase the profitability level in Q1 and if you're a bit more than optimistic for the full year.
Okay, okay. So for Pingo Doce, as we mentioned, they performed very well, and they were even able to compensate for the calendar effect, which has its own weight also. So in terms of profitability, as we mentioned, as we are also reviewing basically the salaries and the remuneration policies, I cannot -- I think that we cannot assume that there will be a big increase at EBITDA margin level. We are assuming it to be flattish because, of course, also, we have other kinds of pressures. But we think that the company, considering the initiatives that it's doing and the commercial dynamic that it's imprinting in the market, we think that they will continue to perform well at top line and taking advantage of the market opportunity.
Okay. Sorry. Just a quick follow-up. The average basket size in Q4 last year was?
In Q4, so it's very -- of course, it has to do also with seasonality. But it was around the same amount. It was PLN 38, PLN 38, yes. Sorry, PLN 41. PLN 38 was the year of 2018.
[Operator Instructions] The next question today comes from the line of Kiranjot Grewal from Merrill Lynch.
Just 2 questions. Firstly, have you -- I'm not sure if you commented on full versus the basket growth in Poland, how those 2 have developed over the last year, year-on-year.And then, secondly, on gross margin. You guys saw expansion supported slightly by the Easter impact as well. Could you maybe give us some color on what you expect the gross margin trajectory to look like this year? Should we see it similar to last year? Or should it start to come down?
Thank you, Kiranjot. So on the footfall, of course, the number of tickets, particularly in Biedronka and considering the ban and also the campaigns that are put in place to really compensate for it, it's negative. The -- and it was negative in the last year, and it continues to be negative. So in this case, I think it was around minus 7%. What was the question? Did I answer your question, Kiranjot?
Yes. So that's minus 7% on ticket items?
The number of tickets in Biedronka, okay, for the quarter, yes. On the gross margin evolution. So the way that we see it is, of course, that it will improve when we compare it with last year. And this, as I mentioned, has to do with the whole structure of all the businesses. So it's not just the Biedronka and the design that it makes with the in&out, but also the fact that we are considering a very positive progression in Colombia and in Hebe. And we are assuming, of course, that some of the categories that have been increasing in Portugal will also bring on the gross margin level, also bring a positive trend to it. This being said, and of course, the -- it's quite important to continue on this path because, of course, we continue to see the pressure on costs, and hence the stability at the EBITDA margin of most of the established businesses.
And I just have 2 very quick questions in addition to that. I think you said 39% is where your promotion share is at now. Where do you think that could go to for the rest of the year or where could it peak in a few years time? And then secondly, last year, you -- obviously, you guided to increase in other costs. We haven't seen much of a hit this year, but -- or in Q1 this year. How do you see that other cost line developing for the remaining 3 quarters?
Okay. For the promotions, we think that, of course, can increase slightly, but I would say it will be more or less on this path of the 40% that we have been seeing in the last couple of years. The thing that changes is really the products and the kind of products that we also use as an in&out and in the promotion campaigns, that it's quite important to make sure that these campaigns are profitable and contribute positively to the trading margin. On the increase in the other costs. Besides the wage -- so the labor increase, I would say that the main heading here that will be showing increases is energy. So on utilities, we are assuming that there will be an increase in the price of energy both in Portugal and in Poland.
Okay. I was referring to your central cost line.
Okay, okay. So on the holding level, so on the corporate costs, I don't see, so it's going to increase basically in the same kind of line as last year considering, of course, that in the full year, we are assuming to have the same kind of impact that we had last year.
The next question today comes from the line of Nick Coulter from Citi.
Congratulations also. Just 2 quick questions, if I may. Firstly to follow up on the footfall or traffic number. Does that imply that your basket was up kind of mid-single digits excluding inflation? And then secondly, just on the 8 Biedronka stores that you've opened. Were those all smaller formats or were they, so I'll say, standard size?
Thank you, Nick, and thank you also for the congratulations. On the -- so on the follow-up on the traffic, yes. So you presume well that it was negative in terms of number of tickets, and it was compensated by an average basket of 6% on the quarter. And on the stores that were opened, some of which were -- and on the ones that are closed, we are talking about the standard stores, so not yet the smaller catchment areas, yes.
[Operator Instructions] The next question comes from the line of Borja Olcese from JPMorgan.
Just a couple from me. Straightforward, the first one. Were not Colombia losses running a little bit ahead of plan in 1Q, if I extrapolate the EUR 20 million, that would mean some [ EUR 80 million ], and I think guidance suggests a lower number and what are the offsets going forward in the pending 3 quarters? And the second one is, where do you see consensus and the full expectations for Biedronka in the year, please?
So on the consensus, I think that you have to look for it. On the losses of Ara, of course, it has to do also with calendar effects. So the way that we see it, it has to do also with the sales density that have been also impacted by calendar. So -- and of course, it also has to do with the way that we progress in terms of the -- all the costs and the fact that, for instance, we've opened also a DC last year, so it was not open in the first quarter. So there are a number of, let's say, different variables that change and when we compare it. That's why we saw no progressions in the losses in this particular quarter. But of course, we tended to consider that this will change for the remaining one.
There are no further questions at this stage. Please continue.
Thank you all for your questions and for attending this conference call on our first quarter results. Considering the performance delivered in the first 3 months of 2019, the guidance we provided 2 months ago remains unchanged. Although we acknowledge that we have still a lot to do for the remainder of the year, we are confident we will overcome the challenges ahead and continue to grow soundly and profitable. Thank you once again, and I wish you all a nice day.
Thank you very much. That does conclude the conference for today. Thank you for participating. You may all disconnect.