Jeronimo Martins May Seek to Grow With Acquisitions in Colombia, CFO Says
Jeronimo Martins SGPS SA (JMT), a Portuguese grocer with plans to expand in Colombia, may seek acquisitions to become one of the Latin American country’s top three retailers, Chief Financial Officer Alan Johnson said.
“I believe acquisitions will play a role” in the expansion, Johnson said in his first interview since taking over as finance chief in January. The retailer isn’t in talks with anyone at the moment, he said.
The Lisbon-based company said last year that it would target Colombia along with Poland, where it’s the leading discount-store operator, to mitigate the impact of Portugal’s shrinking economy. It will compete with Almacenes Exito SA (EXITO), Colombia’s biggest publicly traded retailer, and Carrefour (CA) SA.
“It will be a big business,” Johnson said of Jeronimo Martins’s plans for a Colombian unit. “You need $1.5 billion in sales a year to be in the top three.”
Chairman Alexandre Soares dos Santos said yesterday the company plans to open its first stores there in the fourth quarter.
Johnson worked at Unilever (UNA), the world’s second-largest consumer-goods maker, before joining Jeronimo Martins in January. The 56-year-old executive, who has lived in seven countries, was hired to help drive the Portuguese company’s international expansion.
Brazil as Elephant
Colombia marks Jeronimo Martins’s second attempt to expand in South America after the retailer entered Brazil in 1997 and pulled out in 2002. The company may return one day, though entering the country is akin to “trying to digest an elephant in one go, and for a company our size it could be a significant risk to take,” according to Johnson.
“Brazil will always be on our radar screen,” he said. “How we enter is more important rather than whether we enter.”
Portugal’s biggest retailer by market value owns the Pingo Doce hypermarket and Recheio wholesale brands. Earnings rose 21 percent last year to 340 million euros ($450 million), the retailer said in a regulatory filing yesterday. Sales climbed 13 percent to 9.8 billion euros, fueled by growth in Poland, where the company operates the Biedronka discount grocery chain.
The company may decide to expand further after it’s made enough inroads in Colombia and Poland, Johnson said.
“For the next four years we will be in three countries,” he said. “But I would not rule out another geography or two if appropriate opportunities that make sense for the business arise and we felt we had the capacity to take them.”
Johnson reiterated that Jeronimo Martins aims for double- digit sales growth at constant currencies this year. The recession in Portugal may weigh on sales, damping growth from Poland and Colombia, he said.
Jeronimo Martins said yesterday it was not planning any acquisitions in Portugal or in Poland.
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