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Increased market shares in all the Group’s areas of business Consolidated sales rise 8.7% in the first nine months of the year

Main Group highlights
↑ Profit rises 6.2% in the first nine months to 272 million euros, with the main contribution coming from Biedronka
↑ Consolidated Sales rise 8.7% in the period and reach 7,954 million euros
↑ Operational Cash Flow (EBITDA) increases 5.2%, when compared to the first nine months of 2011, to 554 million euros
↑ Net Debt falls to 252 million euros, with gearing at 16%
↑ Capex amounted to 327 million euros
↑ Investment in Biedronka corresponded to 87.4% of total investment
↑ Investment in Portugal totalled 38 million euros
↑ In view of the strength of the Balance Sheet, the Board will request an extraordinary Shareholders Meeting to approve the distribution in 2012 of €150 million from free reserves.

In an increasingly challenging socio-economic environment, the Group recorded sales growth in Poland and Portugal. On a consolidated basis, sales rose 8.7%, reaching 7,954 million euros (11.7% at a constant exchange rate).
Even considering the slowdown in the growth of the Polish economy, Biedronka continues to strengthen its market share and its sales performance is clearly above the market average.
In Portugal, despite the downturn in consumption, the Group’s food distribution retail chains increased their market shares.

Up to the end of September, consolidated EBITDA increased 5.2% and the Group’s net profit rose to 272 million euros, which represents a growth of 6.2% over the same period of 2011. In the last 12 months, net debt fell by 79 million euros to 252 million euros, with gearing at 16%.
In this period, the Group’s investment was 327 million euros, with 87.4% allocated to Biedronka. In Portugal, the Group invested around 38 million euros by the end of September, of which 35 million in food distribution.
Pedro Soares dos Santos, the Group’s CEO, considers that “Biedronka completed, ahead of schedule, its ambitious plan to convert all stores to a new layout, confirming its execution capacity and operational excellence. The Company has now a completely new store network that reinforces the visibility of its perishables operation as an additional key differentiating factor. This gives Biedronka a significant competitive advantage executed at the most efficient cost in the market to build on the strong market share growth already achieved. By anticipating consumption trends and acting fast in responding to the new needs of the Polish consumer, Biedronka has consolidated its position as the preferred food store in the market, and strengthened the pillars of its profitable growth.
In Portugal, the deteriorating socio-economic environment is accentuating the decline of consumer expenditure and shoppers sensitiveness to price. In this context, our focus is to remain competitive in order to reinforce our market share.”

↑ Sales increase 17.6% in local currency
↑ Like-for-like (LFL) sales rise 6.5%
↑ Chain opens 66 new stores in the quarter (142 over the whole nine-month period)
↑ EBITDA increased 23.3% in local currency, significantly higher than sales growth
↑ Company completes process of conversion of stores to new layout
↑ Chain represents around 61% of sales and 72% of operating profits for the Group
In the third quarter of 2012, Biedronka continued its rapid expansion. It opened 66 new units and completed the adaptation to the new layout of all its stores.
LFL sales in the third quarter increased 5.5%, a higher rate than in the previous quarter. Increases in both the number visits and the average sales ticket contributed to this performance.

In the first nine months of the year, the 17.6% growth in sales was supported by LFL sales figures of 6.5% and by the increase in the number of stores, with 250 more stores than in the same period of 2011.
The EBITDA generated by Biedronka rose 23.3% in zlotys (+17.9% in euros) during this period, benefiting from economies of scale resulting from the increasing size of the chain and strong control of operating costs.
Biedronka is the clear leader of the food retail market in Poland and currently has more than 37,000 employees to serve the more than 3 million customers who visit its around 2,000 stores daily, in more than 800 Polish towns and cities. Biedronka opened its first store 17 years ago and preference for the chain is reflected in 92% of consumers recognising the brand (source: GFK), with 73% declaring that they habitually shop in the chain’s stores (source: PRM) and 42% of the Polish population naming Biedronka as their main store (source: PRM).

↑Sales increase 3.6% in the first nine months of the year, resulting in increased market share
↑ Pingo Doce represents 28.5% of Group sales
↑ Consumer behaviour has changed with trading down increasing
Pingo Doce sales rose 2.5% in the third quarter boosted by the contribution of five more stores than in the previous year and the strong promotional activity that marked this period. The LFL performance was -0.8%, excluding fuel, reflecting the increasing fall in overall consumption.
In response to the progressive deterioration in the socio-economic environment and the reduction in disposable income, Pingo Doce has invested in the creation of opportunities for real and immediate savings, to reinforce its policy of low and stable prices.
As a result of this strategic decision to consolidate the comparative position of Pingo Doce, the EBITDA generated in the first nine months of the year recorded a fall of 11.2% in the Distribution in Portugal, amounting to 155.5 million euros

↑ Sales increase 0.8% in the first nine months of the year, resulting in increased market share
↑ Recheio represents around 7.6% of Group sales
In a counter-cycle to the downward trend in the wholesale segment, Recheio sales in the third quarter were in line with the same period of the previous year, with LFL sales at -0.1%. Indeed, sales in the traditional retail segment showed signs of positive behaviour. However, the sharp contraction in the HoReCa channel, falling since March, meant that it was not possible to alter the pressure.
In the year in which it celebrates its 40th anniversary, Recheio has a strong competitive position that enables it to outperform the sector and to continue to strengthen its market share.

In the third quarter, although market conditions remained highly challenging, sales increased 2.2% due to the performance of certain categories, particularly the olive oil exports.
Marketing, Representation and Restaurant Services
In this area of the Group, which includes the brand representation, Jeronymo cafés, Olá kiosks, and Chilis and Jeronymo Food with Friends restaurants, the difficult market conditions led to an accumulated fall of 3.6% in the first nine months of the year.
The reduction in the EBITDA margin in the areas of Manufacturing and Marketing, Representation and Restaurant Services, reflected the decision to strengthen price competitiveness in some key categories.
Distribution from Free Reserves
At its meeting on October 24, 2012, the Board of Directors decided to request the Chairman of the General Meeting to summon an extraordinary Shareholders’ meeting to present a proposal for the distribution of an amount of €150,195,778.58 from free reserves payable in 2012. This is equivalent to the gross amount of €0.239 per share, to be distributed to the Shareholders proportionally to their holdings, excluding own shares.

2012 Outlooks
In the first nine months of 2012, all the Group’s business areas outperformed their markets, which enabled them to increase their market shares.
In Poland, Biedronka successfully exceeded the ambitious targets it had set itself, completing the process of converting all its stores ahead of schedule and implementing a challenging store opening plan, which means the chain will close out 2012 with 250 stores more than in the previous year.
The adaptation of the stores to new trends in the local market was another important step in the sustainable differentiation of Biedronka’s value proposition, achieved while maintaining a strong sales performance and tight control of operating costs.
The constant focus on efficiency and maintaining leadership in terms of costs, together with the ability to incorporate innovations and continuous improvements into the value proposition, will enable Biedronka to maintain the preference of Polish consumers and to continue to grow at a faster rate than the market.
In Portugal, the significant fragility of the economic environment is reflected in the downturn in consumption which shows signs of structural changes. In this scenario, Pingo Doce pursues a strategy geared to maintaining its strong market positioning, supported by three strategic pillars: consumers, employees and suppliers. The Company will remain committed to providing its consumers with high quality products, to increasing price competitiveness through additional opportunities for savings, and to supporting its employees and suppliers.
The Group’s investment programme for 2012 is expected to reach approximately 650 million euros, around 80% of which is to be invested in Poland.
Despite the challenges in Portugal and the slowdown in growth in Poland, the Group is confident that 2012 will be a year of good results. It expects double-digit growth in consolidated sales (at a constant exchange rate) and healthy improvement in profitability. Through the decision of strengthening the business competitiveness in Portugal, the EBITDA margin will be slightly below the previous year.
“Biedronka’s strong performance enables us to confirm the positive outlook for the Group in terms of double-digit sales growth (at constant exchange rate) and good earnings growth in 2012, reassuring my confidence that we have the right business model to achieve the growth potential we have identified in Poland”, says the CEO.


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