Jeronimo Martins SGPS SA
ELI:JMT
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
15.29
23.68
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
You don't have any saved screeners yet
Good morning, ladies and gentlemen, and thank you for joining this call. As a reminder and as usual in our corporate website a set of materials is available including the release, a slide presentation and a fact sheet adding a bit of color on our activities in the quarter.
Starting with some words on the context. Throughout these first six months of 2022, we have operated under increasing inflation in the three countries. In Poland, despite the further decrease in consumer confidence after the war outbreak, food demand continued to record solid growth. The government's measures to reduce the impact of inflation on households combined with an increased consumer base due to the Ukrainian refugee influxes supported the positive dynamic in the sector.
In Portugal and in Colombia where the economies are more sensitive to the worsening macroeconomic context, the increasing pressure caused by rising prices are already visible in consumer behavior, trading down increased private label share on total sales and volumes reductions.
Cost inflation rose sharply throughout Q2 with the war intensifying the pre-existing trends derived from disruptions in global supply chains and inducing an energetic crisis without precedent in the last 20 years. In this very challenging context, our banners kept a strong commitment to price competitiveness and we're able to implement effective measures to limit the impact of rising prices on the consumers' purchasing power, thus assuring that preference.
Sales were up 20% or 21.7% at constant exchange rates to reach €11.9 billion. EBITDA grew 19.1% or 21.2% at constant exchange rates to reach €851 million. Cash generation was robust at €97 million and the strength of the balance sheet is clearly demonstrated by the net cash position excluding capitalized operating lease liabilities of €593 million. This amount already reflects the dividend payment of €493 million done in May. The remarkable performance of our banners coupled with our good financial health gives us confidence to continue to push forward in a context that remains highly uncertain.
Despite the extra pressures on all fronts felt by our operations the group also registered significant progress in its corporate responsibility pillars. Fight against deforestation, sustainable food production and alternative sources of energy continue to be high priorities in our banner's agendas for this year.
Looking now at the financial delivery. Our first half P&L, shows the sales-driven performance as does the P&L for Q2. My comments will, however, focus on Q2 delivery as trends around inflation and consumer context have been changing since April. Our decision to stand by our consumers further investing in prices and offering them saving opportunities, protected volume growth and maintained our strong sales momentum.
In Q2, sales went up by 24.5%, 26.2% at constant exchange rates to reach €6.4 billion in the quarter. The decline in gross margin from 21.6% to 20.8% in Q2 reflects the price investments that drove strong growth in sales enabling us to offset rising cost inflation particularly the prices of electricity and fuel. All-in-all, EBITDA in the quarter grew 22% plus 24.5% at constant exchange rates and the respective margin was at 7.5% compared with 7.7% in Q2 2021.
Net financial costs were at €40 million and included a loss of €3 million in the quarter related to currency impact on euro-denominated lease agreements in Poland that in Q2 2021 had generated a profit of €9 million. Other profits and losses totaled €12 million and included among others indemnities and increased provisions for different contingencies.
Cash flow at €97 million reflected our strong operational and sales performance that resulted in EBITDA growth and a solid working capital inflow. This compensated for higher CapEx payment versus the same period last year.
The robustness of our balance sheet at the end of June, guarantees our capacity to continue investing to develop and defend our businesses. With all models delivering well, and a healthy financial condition supporting us, we are keeping our capital expenditure program as planned, capturing the opportunities in the markets where we operate and enhancing the quality of our stores and logistics.
The CapEx was at €318 million in the first six months of 2022, half of it invested not surprisingly in our biggest business Biedronka. We are on track to deliver the targets in openings and remodels planned, for all banners this year and we are also investing to reinforce our logistic infrastructure in Colombia.
Moving now into the detail of the performance, I will start with the top line, which remains our number one priority. The strength of the performance is clearly reflected, in the solid incremental sales delivered by all banners, that grew like-for-like in the six months to reach 17.5%. Even if rising inflation was also a non-engagble driver, of our performance in all markets, our companies didn't fail to accomplish volume growth and market share increases.
Biedronka continued to guarantee the quality of its offer, while strengthening its commercial assertiveness and containing price increases. The banner's shelf inflation maintained a gap of more than two percentage points, below the country's inflation. This contributed decisively to market share reinforcement. The strategic focus on price competitiveness, allowed Biedronka to accelerate its growth in Q2, capturing the benefits of a positive food market dynamic in Poland, which included a larger consumer base, due to the Ukrainian refugees influx and the positive seasonal effect of Easter.
In H1 2022, sales grew by 21.3% in local currency, including a like-for-like of 17.5%. In euros, sales were at €8.3 billion, 18.7% ahead of the first six months of 2021. On track to execute its investment program, Biedronka opened 40 new stores, closed 7 and remodeled 127 locations in the period.
Also in Poland, Hebe recovered strongly against the first half of the previous year, which was impacted by restrictions in the context of the pandemic. Sales grew by 34.7% in local currency, including a like-for-like of 26.9%. Despite changes in consumer behavior, following the lifting of all restrictions on the normal activity of stores and shopping centers, we continue to see a good development of our e-commerce operations, which represented 14.6% of total sales.
Pingo Doce, is leveraging its unique value proposition in perishables and food solutions and combining this strength, with the generation of relevant saving opportunities for the families in Portugal. Confirming the mounting pressure on consumer disposable income, we continue to see signs of trading down and the way the private brand increased, compared with the same period of the previous year. All in all, the quality of the offer and dynamic commercial actions, drove sales to grow 8.5% and reached €2.1 billion with like-for-like excluding fuel at 6.5%.
Recheio entered 2022 with a strong model and is now in good shape, to take active part in the HoReCa recovery boosted by tourism take-off. As a reminder, I want to flag that the restrictions over both HoReCa and touristic activity, still impacted the first half of 2021. Sales of our wholesale banner, grew by 28.9% to reach €530 million in the first six months of this year.
And finally, Colombia. Ara delivered an outstanding first half of the year, building on the very strong momentum created in the last two years. In an extremely fragile consumer environment, Ara stood by its promise of low prices and consistently invested to continue gaining consumer preference. As a result, top line in local currency grew 70.1% including like-for-like at 44.3% basket inflation being also a feature of the performance. The banner opened 57 stores in the quarter, having closed one location.
Group EBITDA reached €851 million 19.1% up on H1 2021. This corresponds to a 21.2% increase at constant exchange rates. All business areas actively contributed to the group's EBITDA performance. EBITDA margin for the group in the first half of the year was at 7.2% in line with the same period in the previous year. The strong cost inflation was offset by sales going ahead of food inflation, together with a strong EBITDA margin improvement at both Ara and Recheio.
At Biedronka, margin pressure reflects price investments, coupled with significant cost inflation. Both price investment and cost inflation were intensified in the second quarter of the year. One word on cost inflation to flag that prices of energy and fuel are escalating, particularly in Poland and Portugal despite having been fully hedged in Portugal until the end of June.
We entered the year with robust and efficient models, operating with strong sales momentum. In the light of mounting food inflation, we invested in price and stood by our promise of quality and value for money. The determination and competence of our teams, led all banners to preserve, the good sales momentum and to mitigate the pressure of cost inflation on profitability.
All-in-all H1 sales and profits grew strongly and we ended the period with enhanced market position. We are conscious that generalized price increases amplified by the war, and coupled with interest rate hikes will significantly impact consumer behavior to an extent that, it's still difficult to predict.
Despite this uncertainty, and the actual challenges brought by the rising cost inflation, the performance we have been able to deliver so far reinforces our confidence in the ability of our banners to continue investing in competitiveness, while dealing with much increased cost pressure through sales performance and operational efficiency. The outlook provided at the time of our 2021 results release is therefore confirmed.
Thank you for your attention. Operator, I am now ready to take questions.
Thank you. [Operator Instructions] Now, we’re going to take our first question. Please standby. And the first question comes from the line of William Woods from Bernstein. Please ask your question. Your line is open.
Good morning, and a couple of questions. The first one just on Portuguese like-for-like. They're obviously below headline inflation. Would you be able to just explain some of the drivers behind this? Is this lower volumes more promotions or perhaps under-inflating versus the headline inflation? The second one was just on store openings. You are happy that they're on track. Should we still expect it to be Q4 weighted? And then the final one was just on uses of cash for FY 2022. Should we expect Romanian expansion to come back or perhaps another special dividend? Thank you very much.
Hi, William. So on Portugal, inflation unfortunately for Portugal is also kicking in. So, inflation has been a driver of the performance. Of course, in the quarter, you also have let's say a more benign comparable when you compare with last year and that has to be taken into account, as well as the Easter effect that affected this year more the second quarter.
So I would say that, basically you have the impact of Easter, the benign comparable. And then of course for us, the most important the fact that despite being affecting already consumer behavior, the fact that our banners and in this case, the retail banner Pingo Doce being very competitive and offering saving opportunities is also being able to grow. But I would say that, more than volumes that have been more or less stable, these are the main drivers of the performance, if we consider the quarter sales.
On store openings, I think that, we are on track for now. We don't see reasons considering the strength of our balance sheet and the performance as we have it, to somehow decelerate our CapEx program. It's true that, usually, most of the openings take place on the second half of the year, and it's going to happen the same this year, but we are with all banners doing our openings and our remodeling program, to really make sure that the stores are in shape to serve the consumers. As for the use of cash. So, it's true that we have a strong balance sheet, but we also are aware that we are highly leveraged from the operational point of view. So this is also a defensive move, from our part to maintain our position of cash.
As you know, we had an exceptional payout this year already and paid 100% of our net earnings pre-IFRS 16. A decision of any extraordinary dividends going forward will be from the Board. So at this time, we cannot exclude it, but we cannot also advance anything on that. Regarding any possible or other expansion. For now, we are mainly focusing on the CapEx progression of our current businesses. And we are even trying to accelerate further in Colombia, and that's why we will push forward also for the logistics, as we seize the opportunity to accelerate growth in the country.
Excellent. Thank you.
Thank you, William.
Thank you. Now we are going to take our question. [Operator Instructions] The next question comes from the line of José Rito from CaixaBank. Please ask your question. The line is open.
Yes. hi. Good morning to all. So on Poland, three questions. The first one, in terms of, the number of refugees, if you can provide any insight, just to understand how much was the extension of the addressable market this quarter. We have been seeing some data, but we don't have let's say, accurate numbers. If you can provide a little bit more detail on this, it will be helpful. Second question, on the trading down. Any sign of this being accelerating or if this remains a contained effect, at this point? And the third question on Biedronka, if the company could anticipate some of the wage increases expected to 2023 already in September October this year? Thank you.
Hi, José. Good morning. So, as to the number of refugees, as you know there was an influx very relevant in the beginning of the war. Meanwhile, some have gone to other countries and probably the majority even has gone back to Ukraine. So currently, we don't know exactly, what is the total number of refugees. We estimate probably one million persons in this moment, mainly women and children.
So, there is certainly an impact that we cannot completely -- or have a total clear estimate. What we think is that, the impact is mainly on the increase that we had, on the sales of commodities, which of course helped sales but also pressure the margins as these are the categories that have a lower margin.
As to the trading down, I think, that currently in Poland there is a contained effect. It's true that the numbers in June of the retail progression signal, that this may be a short-term thing that we have to beware for the future. But for now, in the current numbers it doesn't reflect and we don't see still the same pattern, as we see for instance, in Portugal and in Colombia, where the trade down and the transfer to lower price product within the same category or to substitute products that are less expensive is already a reality.
On Biedronka and wage increases. So we don't exclude, to have to review wages. But this has been of course, a challenge for all the banners, but particularly in Biedronka, the fact that the labor market is very difficult, not only for the retail business, but also for the retail business. And this may mean, of course, to consider any new reviews. But for the moment, we don't have a clear view if we are going to do it in the second half or as usual in the first half -- in the beginning of the year.
Thank you.
Thank you.
Now we are going to take our next question. Please standby. And the next question comes from the line of Rob Joyce from Goldman Sachs. Your line is open. Please ask your question.
Hi, good morning. Thanks very much for taking the questions. I've got three. So first one, just a slight change in your comments on margin implying that you definitely expect further margin compression in the second half. I'm just wondering, if we just focus on Poland I guess you had 34, 35 basis points of margin pressure in that second quarter. I think incentives have that escalating to 50, 60, 70 around that region in the second half. Is that about the right number you're thinking as you see things there, sort of, up to that 50 to 60 basis points pressure in the second half on margin in Poland?
Second question is just on food inflation as you see it. Can you -- are you seeing any signs that this is starting to roll over in Poland, or are you still seeing that food inflation continuing to accelerate?
And then the final one, just if you could remind us in terms of trade down when you talk about that, is that a big margin impact, or do we predominantly see that just in the top line and the margin is broadly neutral effect? Thank you.
Thank you Rob. So regarding margins, as you are aware there is a quite significant number of moving parts here. And it starts with sales mix of course, and probably linked to your third question, the fact that people trade down, it has an impact on sales and particularly on margins.
So, of course, if you sell more of the lower-margin products, which are the commodities or the products that have more or less value added, of course, this has an impact on your margins in percents. But this to say that more than -- of course this will depend in Poland on the consumer behavior, and the fact is that we are seeing new or additional sources of pressure on this and that comes particularly from the cost increases that does not only affect directly our companies and particularly in this case Biedronka but also the families.
So if you see the energy prices going up and coming into winter, if this is going further up and of course the mortgages that are being revised and you have a lot of people still with floating rates this will probably mean that there is a tendency for people to start being aware that they have to spare or to save money in food. This being said, of course, Biedronka is best positioned to get also new clients and we think that this is happening besides the refugees. So this is on the positive.
On the negative is this big question mark on how costs are progressing. You have all sorts of different forecasts on inflation. But the way we see it is that the pressure or at least we are being prepared for the pressure to continue. And this starts, of course, with the cost of goods sold. And as you probably are aware even if the commodity prices have been a little bit more stable now in the last months or it seems so, the fact that you have a dry season for certain of the products that will affect the prices. And then you have all the costs that will be incorporated in the production. So there is a delay in some of the costs that will affect the food prices still in our opinion.
So in my opinion and in our opinion here in Jerónimo Martins, we think that the pressure on cost will continue starting with the cost of goods sold, but also and particularly relevant the energy costs and even more relevant the transport, because of course, as we are fighting and we are increasing volumes significantly improving, transport costs tend to increase more with the price increases in fuel. So, this is why at this point, I think that we cannot commit because we have tailwinds but we have a lot of headwinds that can affect the margins at EBITDA level.
On food inflation, as I said, we don't think that we saw the end of it. It's true that it seems that the comparable is a little bit -- it was already on the high end last year. But the way that things are progressing, considering all factors, we think that we didn't see the end of it unfortunately in Poland but also in the other countries in Portugal and Colombia.
Okay. Thanks. And just to be clear though in terms of the second half margin, are we expecting -- I mean if it's the base case then much more pressure than the second quarter, or are you working hard to sort of maintain that sort of margin pressure versus that sort of 9.1%? Is that what we're looking at for the second half, or do you think the pressure gets a lot worse than the net just in your base case?
Rob, as you can imagine, of course, the company will do its best to also preserve margins. But as we said, we want to remain as competitive as possible. And this may mean, of course, to not only be affected by the trade down impact on margins and on gross margins particularly, that is already visible even at the consolidated level. But also, it may mean that if you have to invest in prices that this will put further pressure on the margin. But, as I said, the first priority will be to stay competitive and to make sure that we are the choice of the consumer, because this is the best way to protect our cash EBITDA.
Yes, understood. Thanks very much.
Thank you.
Thank you, Rob. Now we’re going to take our next question. Please standby. The next question comes from the line of João Pinto from JB Capital. Your line is open. Please ask your question.
Hi. Good morning, everyone. Thanks for taking my question. The first one on gross margin and on the gross margin decline of 80 basis points at the group level. Is this a good proxy for Biedronka's gross margin decline? And do you think this decline is a good proxy for the second half, or is there any specific effect in the quarter like mix during the Easter that won't happen in the second half?
My second question on EBITDA. Do you think that you'll be able to deliver EBITDA growth in Poland on an absolute basis in the second half of the year? And finally, a follow-up on Jose's question. Do you have any estimate for the positive impact that refugees had during the second quarter on volume growth? Many thanks.
Thank you, João. So, as I mentioned, I don't think that at this point, we can take any of the progression as a proxy. The context is quite challenging. So, I'm aware that the performance -- and we cannot exclude that the performance is remarkable from our teams, but we know the business.
And we are conscious that this kind of growth that we had in the top line if it was not for the current circumstances would have an operational leverage much more visible than it really has. So the number is high and a question which is why for us at least gave us or we tend to be quite cautious, which is the cost progression.
As I mentioned when answering to Rob, I think that we have to be cautious when seeing the progression of costs. And the best way, of course, is to protect our sales and to make sure that we are the choice of the consumer to be able to continue fighting to dilute the costs. But this will be a challenge we don't hide.
So, what we think and I mentioned that in our earlier calls. I think that with the current progression, we still estimate a growth in absolute terms. What we think is of course that in percentage, which is what we mentioned in the outlook this will be pressured. So we are estimating that this will – even to grow, as I mentioned, we are growing more of the categories that have lower margins. So this is going to be also a source of pressure on our margins.
But in absolute terms, we continue to believe that, we are going to deliver but the comparison is more challenging for the team. On the estimates of the refugees as I mentioned, currently with the flux of refugees coming in and coming out, it's very difficult to have a clear number. We think that it's not the bulk of the impact that we have and the growth that we have. But at this point I cannot give you an exact number because it would not be a totally accurate one.
Thank you very much.
Thank you, João. Now we are going to take our next question. Please stand-by. The next question comes from the line of Andrew Gwynn from Exane BNP Paribas. Your line is open. Please ask your question.
Hey, good morning. I have two questions if I can. So firstly, could we just talk a little bit more about the sequential improvement in Poland in Q2 versus Q1? Obviously, food inflation picked up but the volume story seems to be very good. And maybe slotting into that where the market share performance was. And then secondly, you mentioned Portugal, you've got the end of the energy hedge coming to what already happened in June. Is there anything else like that to have in mind for the rest of the group, mindful if there's any sort of energy hedges within Poland for instance? Thank you so much.
Thank you, Andrew. So on Biedronka sales, as you mentioned you have several different effects. One is inflation of course, and we don't hide. But as I mentioned in my introduction, Biedronka manages to have an internal inflation that is below the country's inflation. So we are really containing prices and maintaining competitiveness.
The other one is volume growth. So we have grown volumes in the second quarter versus the same period last year. And of course, we had the Easter effect that it's probably 1.5 percentage points according to our own numbers, despite having had a very good performance last year in Easter, which was quite extraordinary last year. So basically and from the numbers that we have until May, Biedronka continued to grow market share slightly below one percentage point.
On the hedge of energy, so Portugal was fully hedged so we had a long-term contract with an energy company. This going forward, we are not totally hedged. So we are partially hedged in Portugal and not hedged in Poland. So energy will first of all in Portugal start to have a bigger impact, which – because until now I think that we can consider a saving but for the second half, it's going to pressure also our costs.
And in Poland, we continue – as I said, Energy has increased quite significantly as a percentage of sales because it's double the cost. And of course with the growth that we had in sales we were able to dilute that. The way that we see it is that fuel is also of importance. And so transport costs are already visible in Portugal and in Poland and it will continue to be as we continue to grow sales also. So this will be another – as I mentioned another extra source of pressure for our cost structure.
Okay. It's very clear on the cost. And just on the market share gains, I'm being lazy. Can you just remind me where you were in Q1? I'm not sure if that's –– I think it's loosely about the same as Q1.
Yes, it is more or less in line with the progression in Q1.
Okay. Firstly, Ana, very good performance. Thank you so much. Have a good summer.
Thank you, Andrew. Now, we’re going to take our next question. Please stand by. The next question comes from the line of Xavier Le Mené from Bank of America. Your line is open. Please ask your question.
Yes, thank you. Two if I may. The first one, can you potentially update on Ara, where is your market share today? And how much market share gains you had in Q2? And can you also tell us a bit about the brand recognition and how good or better Ara is today? And potentially, what are you expecting in terms of openings from 2023 onward? That's the first question. The second one just on Pingo Doce. Can you tell us how you see Q2? Do you think you're back to normal and footfall and traffic is back to normal, or do you think, you still have room for improvement going forward?
Xavier, just to clarify, the last question was on Pingo Doce, right?
That's correct.
Okay. Thanks. So, on Ara, we don't disclose still the market share of Ara because we don't think that there is a reliable number to be disclosed. Nonetheless, if we consider the market progression in Colombia, I have no doubt that Ara is gaining significant market share in the regions where it operates. And this is quite visible, as I mentioned because the country in fact has been -- the retail market has been contracting and considering the increase even in inflation in real terms. So for our business, I would say that, this is the format that -- and our particular brand is the one that is gaining more share, probably together with the other discounters.
As for brand recognition, I think that, it's been increasing definitely. And this is visible, not only of course on the fact that we sell more, but we have much more traffic in our stores. So the sales per day per store is increasing significantly even with this kind of inflation. So volumes are up and this is something that is quite significant. And it comes from the fact that people are recognizing now Ara as providing a really saving opportunity. So it's a good store, with limited assortment, with the best prices despite having a very good shopping environment, contrary to probably other kinds of formats.
As for the openings on 2023 going forward, so the idea is to accelerate as I mentioned. So we are further investing in logistics, because we want to surpass the 200 openings for the next years going forward.
On Pingo Doce, if we saw the end of the recovery in terms of traffic, I don't think so. I think that of course is difficult to say because, currently, we are increasing in the number of tickets compared with the average ticket. But that has also to do with the comparable and with the pandemic effects in the prior year. This being said, I think that Pingo Doce has still the possibility to grow and the fact of betting in saving opportunities and in price will be paramount to recover.
One thing that we are seeing is and this is important for us is the recovery of our takeaway and meal solutions category. So meaning that people are going back and buying even the prepared foods, which is a differentiation factor in Pingo Doce and we think that this will continue also to increase in the next quarters.
Okay. Thank you.
Thank you, Xavier.
Thank you. Now, we’re going to take our next question. Please stand by. The next question comes from the line of Cedric Lecasble from Stifel. Your line is open. Please ask your question.
Yes, good morning team. Thank you for taking my questions. I have two follow-ups. The first one on the negotiations with the suppliers. You said that one of the moving parts was the cost of goods and the production costs and that you would probably see it raise in percentage terms in H2 versus H1. What's the kind of frequency of your negotiations with suppliers depending on the categories and how often do you reconsider prices? And what could be the potential impact on gross margin at this production rise in costs? That's question number one. The second one is very factual. Could you recall us your market shares in Poland Biedronka and Portugal Pingo Doce? Thank you very much.
Thank you, Cedric. Starting with the last one. On market shares, so Biedronka is ahead at 28% and in here – in Poland we are quite confident on the numbers that are disclosed because we have information or the service provider that we have had information from all players, in Portugal. We have to do our estimates because not all players provide their sales. So it's very hard to -- and we don't have a quite reliable source of market share.
Nonetheless, from our internal estimates we also grew market share in Pingo Doce. So Pingo Doce is recovering market share. As for the negotiation with suppliers of course in the current context, usually you have annual negotiations with suppliers. But in the current context of course, we expect to have probably new rounds of negotiations.
On top of that, you have negotiations that are done to -- of course make sure that you have special campaigns or that you have to introduce even new products. And of course this kind of dynamic will depend also if the suppliers and some of our suppliers want really to increase their volumes also, I think that they will further invest in price as we are doing it. But this depends a lot on the kind of dynamic that we want to imprint. So, we may have revisions of prices or negotiations of gains that are done weekly or monthly.
May I just ask for the absolute number for the market share in Portugal at Pingo Doce?
Cedric, I would prefer not to give it. As I said, we don't have a proper base, a reliable base in terms of market share. We think it may be near 20%, but we are not sure.
Okay. Fine. Thank you very much.
Thank you, Cedric.
Now we’re going to take our next question. Our next comes from the line of Artur Amaro from CaxiaBI. Your line is open. Please ask your question.
Hi, good morning. Thanks for taking my question. Just a quick follow-up on the previous questions regarding the market share in Portugal, if it's possible. So Pingo Doce market share is roughly around 20%. Can you just disclose more or less the figure of the market share gain since the beginning of the year just to have an idea?
And the second question is related with the EBITDA margin loss in Poland. So apparently the 40-basis points decrease is related with price investment and cost inflation. If it's possible again to give more or less an idea of how much of the loss was related to price investment and how much of the loss was related with cost inflation? And that's it for me. Thanks for taking the questions once again.
Good morning. Artur. So, as I mentioned for Pingo Doce share, we don't have reliable figures, because not all players provide the number of sales. So what I said is that we think that it may be near 20%, but these are our own internal estimates. And of course, we have to do a disclaimer on that.
.
As for EBITDA margin loss or the reduction in percentage terms for Biedronka, this of course has to do mainly with price investments, because of course, we are being able to dilute the cost, because we are increasing quite significant sales. So we are growing more than 20% in total sales in Biedronka. But costs are also growing more or less that. So the dilution, I would say that if we want to look just at the percentage would come mainly from the margin investments.
Price investment. Okay. Just a follow-up again, sorry. So, apparently, this 20% which is your own estimate, how much have you gained since the beginning of the year 1% something like that, or it's too much? Again, accordingly to your own internal estimates.
Okay Artur. So, according to our estimates we've gained market share, but I would prefer not to disclose that.
Okay. Okay. Fine. Thank you. Fine. Thank you very much.
Thank you, Artur. Now we’re going to take our next question. Please continue to standby. The next question comes from the line of Michal Potyra from UBS. Your line is open. Please ask your question.
Good morning, Ana Luísa. Good morning everyone. Actually most of my questions have already been answered. So just two if I may. The first one is about regulatory risks. I wanted to ask if you see any risks of windfall taxes in Poland or any other additional regulation, which could impact your business in the near future? So that's the first one.
And the second question is about next year outlook. Would you share any early thoughts on 2023? When we could see an inflection point in terms of margin progression. I know it's a difficult one but any color would be appreciated. Thank you.
Thank you, Michal. So on the regulatory, of course, I would say that the current context, you are seeing more regulation coming in even from all the directives that have to be transposed by the European Union and by the different member states. So we think that there will be further regulation particularly conceiving the current context, I will be totally honest, I think that there is a systemic effect of everything that is happening.
So, the energetic crisis, the inflation, the disruptions in the global supply chain. And I think that this will pressure the government to give further stimulus in some cases. And to support the economies, I don't rule out that the government will have to find new taxes or new ways to also finance their own expenses.
But I wouldn't say that this will affect particularly the sector. I think it's going to be for the general economy in fact. But I think it comes from the context and not just in Poland I think it's going to be everywhere. It's going to be another thing to add on the current context.
As to 2023, currently, the way that we see it is that it's going to continue to be very challenging. I think that part of the effect that the families are feeling and all the economy in general is feeling will still have effect for next year. And so our companies will have to be prepared to deal with extra sources of pressure. So this is not something apparently.
We are not -- currently we don't see unfortunately an end to the war. I think that its effects will continue for the future. And this is connected also and connects not only to the let's say the recovery of the supply chains and the balance between supply and demand particularly on food, but also it has to do with the energetic crisis. So how it's going to inflect or not.
Thank you.
Thank you Michal.
Thank you. Now, we are going to take our next question. Please standby. The next question comes from the line of António Seladas, AS Independent Research. Your line is open. Please ask your question.
Hi, good morning. Well, most of the questions are already answered. Just a small one in terms of Hebe's performance. Taking in consideration that the quarter was very strong in terms of sales as the economy is doing well, it's still doing well. Hebe has just reached breakeven in terms of EBITDA before IFRS. So it still fits with your targets or not?
Hi, António. So, yes, so any recovery of course it's something that we want. We don't want our businesses to be loss making, of course, because this is quite important not only to serve our shareholders but all our other stakeholders. And for Hebe, so the recovery in sales has part to do with the comparative and the fact that we were having a lot of restrictions still in place in the first half of 2021, but also part has to do with all the work that has been done by the company not only at the store level but as an omnichannel approach to the market that is being also recognized by the consumers. So in this sense, I think that they are meeting their targets also.
Okay. Thank you very much.
Thank you. Now, we are going to take our next question. Please standby. The next question comes from the line of Nick Coulter from Citi. Your line is open. Please ask your question.
Hi. Good morning. Two very quick questions, please. Firstly could you comment on the inflation rate in Colombia, I guess for the market? And then, where Ara is relative to the market please? And then, on Biedronka's price gap versus the market. Has that widened in the last quarter? Thank you.
Hi. Nick. So inflation in Colombia is more or less on the 23%, it has maintained versus the first quarter. In the case of Ara, and our inflation is below that around three percentage points. So we are continuing to contain. We already have the best prices in the market. We have been trying to contain some of the increases that in some cases are quite significant as you can imagine.
So with this kind of progression, in terms of sales the total margin should be progressing more than it is basically because the company is heavily investing in prices and containing the price increases from the suppliers. As to Biedronka's price gap, the way that we see it and the way that we measure it even for the commodities has been increased versus the other players.
But are you invest or did you invest more in the second quarter, I guess is the base question? It feels like you might have given the volume performance.
For us, as I mentioned, it is paramount to try to not only contain inflation but to protect the volumes. And Biedronka managed to increase volume 7%. And this has to do of course with the fact that it stayed more competitive and that some of the customers are now choosing Biedronka. So firstly, probably, they chose other players and they are now buying from Biedronka.
Okay. Thanks so much.
Thank you, Nick. Now we are going to take our last question. Please standby. And the question comes from the line of Michał Majerski from Allianz. Your line is open. Please ask your question.
Hi. I have only one question. Could you tell me, the reason why there is lack of for example sugar in Biedronka in Poland? Do you have any problem with suppliers or maybe it's something totally different? Thank you.
Hi Michal, I don't think that this may happen from punctual or temporary shortages because of some constraints. But I don't think that there is really a lack of sugar in Biedronka currently.
Thank you, Michal. There are no further questions, and I would like now to hand the conference over to your speaker, Ana Luísa Virgínia for closing remarks.
Thank you all for your questions and for attending this conference call. Our banners' market positions and the strong financial situation of the group allow us to stick to our long-term vision and to continue to build a profitable and sustainable business, while leading up to our social responsibility.
This ability will be paramount on what we believe to be the verge of the new economic and geopolitical order that will likely reshape global supply chains and consumption patterns. Thank you once again. And I wish you …