Good day, and welcome to the Jerónimo Martins full year 2023 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Miss Ana Luísa Virgínia, Chief Financial Officer of Jerónimo Martins Group. Please go ahead, madam. Thank you, Sandra. Good morning, ladies and gentlemen, and thank you for joining this call. Before I invite you to go through the Jerónimo Martins 2023 full year results, I will give the floor to our Chairman and CEO, Mr. Pedro Soares dos Santos. Mr. Pedro Santos, the floor is yours. Thank you, Ana. Good morning, ladies and gentlemen. Before I give the floor to Ana Luísa, let me take a couple of minutes to share with you how I feel about 2023 performance, and also how I see the months ahead. As you may remember, in the last couple of years, my remarks regarding the operational environment have been very consistent, consistent with the words like uncertainty, pressure, in- and inflation, clearly setting the tone. It was against the persistently challenging backdrop in the three countries where we operate, that once again, we delivered what I consider a remarkable set of results. In 2023, we surpassed two very meaningful milestones. The EUR 30 billion in sales, with a relevant help from inflation and the EUR 2 billion in EBITDA. These indicators alone, when put into perspective, allow us to tell a story of growth driven by a clear priorities, firm execution, efficiency, and profitability. In fact, since 2019, we have been living through very demanding and risky times. A pandemic, a long-lasting war in the neighbor's countries to our most important market, inflation rates at the peak, and the more recent war in Gaza. This tragic conflict in the Middle East is raising tensions, namely in the Red Sea and the Gulf of Aden, further impacting international trade. Between 2019 and 2023, we opened more than 1,750 stores, mostly in Poland and Colombia, and added more than EUR 13 billion to our consolidated sale, sale, while decreasing by around 40% our carbon footprint in relative terms per each EUR 1,000 of sales. During this period, we also invested above EUR 4 billion in our business, of which, not surprising, most of them, half in Biedronka. We also double the net profits attributable to Jerónimo Martins. In the five years period, the accumulated net profit surpassed EUR 2.5 billion. Many things have changed in the last five years, some even dramatically, but our business priorities remain the same, to always put sales first, to keep customers with us, and to protect volume as a means also to preserve profitability. In the period, Biedronka grew sales by over 80%, reinforcing its role at the group- as the group main growth engine, and became Poland's biggest employer. All our banners, irrespectively of the market they are operating in, commit themselves to reinforce price leadership and market share. Under many sources of simultaneous pressure, our teams kept focused and worked hard to deliver impressive sales growth year-on-year. This was true also in 2023. Inflation did help sales on one hand, but also further pushed costs up, namely personnel and rents. When looking at the last five years, we see both inconsistent trends of cost increase and price investment pressuring EBITDA margin. Since the end of 2023, a dangerous combination of persistent cost inflation and rapid decrease of food inflation has presented itself. Our main food retail business are already operating with deflation in their baskets, which makes comparatives with the previous year even tougher. We also experienced an increase of competition, particularly in Poland, and of the fight for volumes and market, particularly in Poland. This necessarily means more cost and therefore, further pressure on margin, as we will not put our price leadership at risk. We will also not compromise on the remuneration package of our people. In 2023, all our companies increased salaries, and we invest nearly EUR 360 million in bonus and their incentives, and also in social responsibility and well-being measure targets at our employees. In January of 2024, our biggest companies rose their minimum salaries again, and we also had nearly EUR 100 million more in bonuses, payments to our operational teams in the three countries with regard 2023. It's worth mentioning that in the last five years, we have invested more than EUR 1.1 billion in bonus pay to our employees to acknowledge their contribution and sense of community, commitment. We will also keep investing in the expansion and quality of our network, including the development of the logistics infrastructure in the three countries. We are enthusiastic about Biedronka's internationalization to Slovakia and the perspective of the first stores opening by the end of the year. We expect nothing to be easier for us in 2024, and we are prepared to keep working very hard to grow volume, reinforce our competitive position, and meet our goals. We expect further cost discipline from our teams and sacrifice of all our non-essential expenses. At the same time, we will keep the strategic investment in our business and our people, and to guarantee that real progress is made in the sustainability-related targets we set for ourselves. Thank you very much. Ana Luísa, now it's your time. Thank you, Chairman. As a reminder, in our corporate website, you can find the results released, a slide presentation, and a media presentation for the year. 2023 was another year of remarkable performance for the group. Against the backdrop of economic slowdown, consumers turned more cautious and price sensitive, despite the progressively lower food inflation registered throughout the year. All our banners worked relentlessly to keep prices low and offer compelling promotional dynamics, driving sales to grow by 20.6% and surpassing the EUR 30 billion milestone. At constant exchange rates, sales increased by 18.1%. The strong sales delivery mitigated the impact of price investments and cost inflation. While EBITDA margin was 7.1%, 22 basis points down on the prior year, EBITDA, in absolute terms, grew by 17% to reach EUR 2.2 billion. Despite margin pressure, our sales-focused strategy allowed capital turnover to improve and protected profitability, with Pretax ROIC reaching 26.8%. While working hard every day to win consumer preference, we also executed an ambitious investment program encompassing all companies. All in all, we ended the year with reinforced market positions, improved store networks, and enhanced logistics infrastructure, and a strong balance sheet that included a net cash position, excluding IFRS 16, of EUR 1.2 billion by the end of December. We also continued to firmly follow our path to accomplish and deliver our corporate responsibility agenda and targets with important steps taken in all five pillars. Among the key achievements of the year, I would highlight the following: At the core of our mission to promote health through food, we are now proud to say that our Pingo's private brand offer is 100% free from artificial coloring and flavor enhancers. Acknowledging our high dependence on our teams, it is our key responsibility to guarantee fair and competitive remuneration packages, including recognition measures, and also to have internal support programs addressing well-being and emergency situations for our colleagues and their families. And finally, for the fourth consecutive year, our CDP Disclosure Insight Action, top score A in fighting against climate change and leadership level, A-minus, achieved both in water security and the forest programs, have placed us as the worldwide food retailer with the best overall performance on these fronts. All this was achieved in a challenging context. Food inflation declined sharply after the first half of the year, while consumers remained price sensitive and promotion-driven. In Poland, against the backdrop of cautious consumer behavior, volumes in the food retail market were negative throughout the whole year, resulting in increasing competition among peers. In Portugal, consumer demand continued to be fragile, reflecting the pressure on households' income, due mainly to the still high food prices and high interest rates. In Colombia, families' income remained subdued, and the struggle to buy an essential food basket was evident. I n the food sector, volumes were down, and there was a significant trading down effect. The year's results reflect the rightness of our strategic choices. The decrease of 58 basis points in our gross margin results from our decision to reinforce price competitiveness. This drove strong sales growth, creating an operational leverage that in 2023, more than offset the impact of cost inflation. All in all, EBITDA registered a remarkable increase of 17% despite margin pressure. Other profits and losses included indemnities, write-offs, and increased provisions for contingencies, as well as the payment in Q4 of EUR 24.4 million, related to bonuses granted on an exceptional basis to operational teams in Poland and Portugal for their commitment and dedication in a year marked by significant increase in the cost of living. Net results for the year increased by 28.2% to reach EUR 756 million. Cash flow generated in the period reached EUR 345 million. Let me remind you that the change in working capital reflected a very strong 2022 year-end position, following an outstanding Christmas season, a positive treasury calendar effect, and particularly, the food inflation trajectory. It also incorporates some adjustment to payment terms for critical suppliers in a context of high interest rates and difficult access to funding options. Our balance sheet remains solid, and the net cash position by the end of the period was at EUR 1.2 billion, excluding IFRS 16. As such, and in line with the defined policy, the Board of Directors will propose to the annual general shareholders meeting the distribution of a gross dividend of EUR 0.655 per share in a total amount of EUR 411.6 million. The robustness of the balance sheet after this distribution guarantees the execution of the investment program and give us the financial strength necessary to navigate the challenges ahead. The investment program reached EUR 1.2 billion, of which 46% were invested at Biedronka. The increase versus 2022, besides the impact of higher prices of materials, equipment and labor, was due to the acceleration of Biedronka store openings and the Pingo Doce refurbishing program, with the implementation of a new and differentiated store concept. It also included investments in the agri-food sector and the anticipation of capital expenditures related to the new logistics infrastructure in Colombia. I just want to flag here the impressive expansion in the year of Biedronka's already sizable network, reflecting capacity increases as it enters smaller neighborhoods with its very competitive format. I will now guide you through our sales performance. All banners contributed to the group sales growth and strengthened their market positions. Group like-for-like growth reached 12.8% in the year, and the slowdown across quarters reflects mainly the falling food inflation in all three countries in which we operate. Biedronka led the commercial activity in a market where volumes were under continuous pressure throughout the year. Our main banner grew consistently and significantly in value and volume, increasing its market share in 2023 by 1.5 percentage points. Due to its price competitiveness quarter after quarter, Biedronka widened the gap between its market, basket inflation and the country's food inflation, having registered a faster than the market fall in its own basket inflation, which was reflected in each quarter's like-for-like. Expansion and remodeling contributed with more than EUR 800 million of additional sales in 2023. In the year, the banner grew sales by 18.2% in local currency and reached EUR 21.5 billion at the top line. Hebe delivered very well throughout the year, having grown sales by 26.6% in local currency, with e-commerce posting a 47.8% increase and representing 17% of total top line. Our health and beauty banner added 28 stores to its network in Poland, and opened two flagship stores in Prague to help leverage the growth of its online operations in Czechia. In Portugal, consumer demand remains subdued, with families pressured by high food prices and higher interest rates. Pingo Doce's solid sales growth largely resulted from its intense pricing and promotional dynamic, the contribution of meal solutions, and an attractive store layout following the refurbishment program. The banner enhanced its digital loyalty programs, having grown volumes and reinforced competitiveness. Recheio's strong delivery reflects the good trend of the HoReCa channel, as well as the strength of the value proposition, which is tailor-made for each of its customer segments. In Colombia, many families are struggling with persistent pressure over income, leading to negative volumes in the food retail market and massive trade-down, reducing the value of the average food basket. Ara reinforced its price position, positioning, and asserted the strength of its brand, investing to increase Colombian families' access to essential food products. The solid increase in group's EBITDA reflects the strong sales delivery from all banners. As expected, the investments made to keep prices low put pressure on our gross margin. However, consumers' positive response to the increased price competitiveness drove sales growth, limiting the impact on EBITDA margin from the high cost inflation registered in the three countries. All in all, group EBITDA margin fell to 7.1% from 7.3%. At Biedronka, the significant growth in sales led to a considerable increase in EBITDA. Investment in price, combined with cost inflation, pressured EBITDA margin. The easier comps on electricity costs in the second half of the year helped easing cost inflation during that period. At Hebe, the strong sales performance in 2023 still reflected in the first half of the year, the recovery from a 2022 impacted by the COVID-19 pandemic. The company posted a substantial increase in EBITDA, with the respective margin increasing year-on-year. At Pingo Doce, the solid sales performance, together with several initiatives to increase operational efficiency, helped offsetting cost increases and the impact of the temporary closures related to refurbishing works. This protected EBITDA margin and led to a healthy EBITDA growth compared to the previous year. At Recheio, the first half of the year made evident the excellent work done by its teams to take advantage of the recovery from the impacts of the pandemic that spilled over to 2022. Driven by sales, EBITDA performance, performed well in the year, with the respective margin increasing from 5.1% to 5.4%, continuing its recovery trajectory compared to the pre-pandemic period. Ara remains focused on guaranteeing its competitiveness in a market where consumer demand was under severe pressure. The company's margin reflected the effects of the significant investment in price, the deterioration of the margin mix due to trading down, and the low maturity of a significant number of stores in its network. Summing up, the determination of all banners to maintain prices low led them to outperform all markets with sales growth, protecting the profitability of the group. To strengthen the coverage, quality, and efficiency of our store networks, all our companies continued to open new locations, with Biedronka and Ara absorbing the vast majority of the expansion CapEx. At the same time, investment in renovation speeded up at Pingo Doce and was maintained at a fast pace at Biedronka. In 2023, we successfully reinforced competitiveness, improved the banners' assortment and their store networks, driving strong sales momentum and market share gains. This positions us well as we face an extremely challenging 2024. In the current geopolitical context, marked by instability and complexity, it is very difficult and premature to anticipate how the leading economies will perform in 2024, and how that will influence the markets in which we operate. With our food retail businesses operating with deflation in their main categories since the end of last year, the group faces a severe combination of rapid decrease in food prices with high cost inflation. Also, deflation will lead to tougher competition in the food retail market as all players strive for sales growth. To this context, which will put further pressure on margins, one must add the contrast with the previous year, which presents demanding comparatives, particularly in the first six months, due to the outstanding performance and the high price increases registered in those months. On the other hand, the increase in real household income could drive an important improvement in consumer behavior through the year that will be decisive for the evolution of our businesses and to developments in their competitive environments. Despite the increased challenge, we know that we have strong business models that are prepared to live up to the circumstances. In Poland, together with reinforced social support measures, there was a 17.8% increase in the minimum wage in January, which will be followed by a further increase of 1.4% in July. It is expected that this will contribute to a recovery in purchasing power. However, for now, the consumer remains extremely price-oriented, and in January, food retail prices in the market continued to register negative volumes. In this context, Biedronka will stick to its price leadership and remains focused on sales growth, leveraging its commercial strength to raise the bar on the creation of saving opportunities for the Polish consumers. In an extremely competitive and tough market, as we have today in Poland, this is currently driving price deflation in our basket. In our view, protecting sales growth is of strategic importance to reap the benefits of any potential improvement in the consumer environment, to protect profitability in a high-cost inflation scenario, and to sustainably protect market position. However, having in mind the context, we cannot exclude that this strategic focus, combined with the substantial investment to increase our team's wages, may pressure EBITDA margin more than the impact registered in 2023. Continuing to leverage its flexibility in adapting to expand its model, Biedronka plans to add 130-150 stores to its network and remodel more than 300 locations. In Portugal, despite the increase in minimum wage, consumption in 2024 is expected to remain subdued, with ongoing pressure on families from high interest rates. Pingo Doce will maintain its strong commercial strategy and will continue to roll out the new store concepts that highlights the brand's differentiation in perishables and new solutions by renovating 60-80 stores. The banner will also open around 10 new locations. Recheio will remain focused on ensuring that the value propositions designed for each of its customer segments continue to drive top line growth. The cash and carry company will also keep remodeling its stores to enhance the value proposition for the HoReCa channel, while also growing the Amanhecer retail stores partnership. In Colombia, the consumer context is expected to remain challenging in 2024. Ara will stick to its low price strategy to continue winning consumer preference. It will also work on operational efficiency to drive profitability improvement in the year. The expansion program is expected to add around 150 stores to the network, while from an infrastructure perspective, and in addition to a new distribution center that has already opened this year, further investments will be made to reinforce logistic capacity. All in all, we are facing an extremely challenging and uncertain context that we will address from a position of competitive strength with leading price positioning, improved assortments, and well-prepared stores. Our strategic priorities are clear and will remain focused on growing sales, with strong price offers being pivotal to the effectiveness of execution. In a context of deflation, slowdown in growth, and persistent pressure over some suppliers due to higher interest rates and more difficulty to accessing financing, we also expect to invest more in working capital. Finally, with confidence in our business models and guided by an unchanged long-term vision, we will continue to move forward investing in our businesses. Our EUR 1.2 billion CapEx program will be dedicated to expanding store networks, remodeling and rolling out new store concepts, improving and expanding logistics, and preparing the kickoff of our operations in Slovakia, where the first stores are expected to open by the end of 2024. Thank you for your attention. Operator, I am now ready to take questions. Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. We will now take the first question. Coming from the line of João Pinto from JB Capital, please go ahead. Hi, good morning, everyone. Thanks for taking my questions. The first one on margins in Poland. Let me break it down in two. Firstly, on gross margin, do you see any room for gross margin to increase? I'm just trying to understand the balance between better mix and lower PPI versus the tough price competition in the market. The second part of the question on electricity costs, how much could be the tailwinds in 2024? Of course, this is volatile, but if you could share with us what do you factor in in your budget, would be great. My second question on CapEx plans: can you tell us how much do you include for Slovakia, and how much do you include for the deposit return system in Poland? And finally, in Colombia, why are you slowing down expansion? Do you see any risks to the 2.3K stores target for 2028? Many thanks. Hi, João. Good morning. So on margins in Poland, and particularly in gross margin, of course, we have to take into consideration that, as you mentioned, we are having several moving parts. So what we think is that, we will have to continue to invest in prices and, and this is not just the... Of course, it's the tougher competition in the market and is also, of course, the willingness to keep our price position and to really lead the markets, in terms of price, as we always have done, with Biedronka. As to a better mix, again, it will depend on how the consumer will behave. Up till now, and what we saw in January, although anticipating a quite significant increase in salaries, we didn't see really a pickup in the consumer demands. So it will really depend. I think that on the positive side, you can have that. So if the consumer reacts to the fact that it has more available income, it will be on the positive. Also, if some of the suppliers will want, in a deflationary context, also get more volumes, they may be able to also invest with us, and this is on the positive. But again, up till now, what we will know is that we will fight for price competitiveness, and that will put pressure also at the level of the gross margins. As for the energy costs, I think that we made it clear that it really helped in the second half of 2023, because it compared with a very high prices in 2022. Up till now, the markets in energy are quite stable and/or going down. But we also have to consider that there is a transition to be made still in terms of climate change, and Poland will have to do that. And this may put further pressure on the energy costs. What we are doing from our side, of course, is to prepare to mitigate that, and that's why also we are installing photovoltaic panels in our stores, to really have some savings, that is basically the production of those panels is to be used in the store. It's not really a very significant part of the store, but it's nevertheless almost 15% of savings that we can have. And so it's quite important for us. This being said, I think that it will not be the energy, it will not be the main cost lines increasing. I think that, as we expect growth in sales, that line, we believe it will be further diluted. Where we see a high cost really is, of course, on our major headings, is everything that has to do with, with salaries and wages, and it's the rents that really follow not the year's inflation, but the prior year's one, which was in Poland, above 10%. As for the CapEx, in terms of, of the, number of stores in Colombia, it's true that it's slightly less than the last year, and it's slightly less than the average that we would need of around 200 stores to reach our targets, but we don't see it as an issue. I think that our main priority is really finding the best location for now and ensuring that while the market is still subdued, and take that opportunity to really grab the best locations in the market, and then we can always accelerate if we want to. So I think that the ambition remains. Of course, it may be difficult, but this will, I don't think it puts really in danger the ambition that we can accelerate if we want in the following years. As for the CapEx in Poland. In Poland, as for the deposit return system, so it is foreseen and included in our CapEx. So from 2025, we will have to have the deposit system in place. This is going to be a CapEx from the company, and we believe it will be between EUR 80 million-EUR 100 million for all the stores. And but this is included in the EUR 1.2 billion. As for Slovakia, yes, we are preparing the logistics infrastructure and for stores, but this is marginal. So we are at this point, I don't think that we need to disclose this because it really will depend on the, on a very difficult, we don't hide, because, of course, all the licensing process, all the, and we don't want to just open stores, we want to open stores where they should be opened, and to really test the concept and test the market in, in Slovakia, but it's very marginal, João. Thank you very much. Thank you. Thank you. We will now take the next question from the line of William Woods from Bernstein. Please go ahead. Hi, thank you for taking the question. The first one is just on your outlook for inflation. I think you've mentioned deflation in your report a number of times. Do you think that we will see actual deflation, i.e., negative pricing, or do you think we'll just see disinflation, but continued falling of inflation to a lower level? And then the second bit is on the EBITDA margin pressure in Poland. I suppose, are you building the greater than, the greater margin pressure in 2023 on the view that there is no recovery or little recovery in the Polish consumer throughout the year, and therefore, should we think of that as a worst-case scenario? Thanks. Okay, Will. Good morning, William. I will try to address your questions, but I have to tell you that we were hearing very badly. So I believe that you referred to deflation. So what we said, and even the Chairman confirmed that in his introductory speech, we are working with deflation, so prices are going down compared with the prior year prices. So what happened in 2023 is that we, prices went up quite significantly in the beginning of the year still, and peaked in the first quarter. That then there was this inflation, and what we saw in the last months of the year in 2023, so the exits in terms of prices, was already deflation in the main categories. Now, in the first months of the year, we are having decreases in prices versus the prior year. So it's really deflation in the market. And it's not just in Poland, it's, we are also seeing that in Portugal and in Colombia. Because of course, you have, first of all, commodities prices are going down, and this is overall. Then, of course, you have all the players also wanting to fight for volumes and reacting and wanting to grab a piece of the market share in a market that is getting lower than it was before. On the margin pressure, I think that the worst case scenario, of course, is if the consumer does not react to the fact that it has more available income, at least in Poland. That's. I understood that the question was for the margin pressure in Poland. But we are seeing that, as currently, we are not really seeing a massive trade up. We are being able to grow in volume. But of course, it's this is a very challenging context, as we say, because with deflation at top line and inflation on quite significant cost headings, this will put further pressure not only on the gross margin, if the—as I said, if consumers do not react, but also on our EBITDA margin. Great, thank you. Just to follow up on the deflation, do you think you'll see deflation across the whole basket in 2024? I appreciate there are some commodity-driven products that are negative, but do you think it'll be across the whole basket? I think that's that is the most plausible scenario for at least the first half of the year, definitely. And even so, you have to take into consideration that even with deflations, prices are still high. So for considering what they have increased in the last two years, so we are not, prices are lowering, but it comes from a very high level, and that is also part why, or partially why, the consumers remain quite cautious. Understood. Thank you. Thank you. Thank you. We will now take the next question, coming from the line of Viraj Brahmbhatt from Citi. Please go ahead. Thank you. Good morning. Yeah, I have two questions, if I may. So the first one is for store openings for Biedronka. You've noted 130-150 net openings, but you could give some more color, please. I guess what's the split of the small, large formats in Poland, perhaps the expected average store size? And what's the split between Poland and Slovakia? It might be too early for Slovakia, but it would be helpful. And the second question is for Ara. With notable increases in minimum wage in Colombia, while Ara is understandably protecting its price leadership, also thinking about the store openings and maturity playing through, how do you expect the margin profile to go forward? Hi, Viraj. Good morning. So on the openings of Biedronka, from those 130-150, we believe that around 40% of those will be in smaller towns, so what we call our efficiency stores, that are really adapted to a lower number of customers in the area of influence of the store. As for Slovakia, as you said, at this point, is very premature. Of course, we really want to open, and we think that we are not considering to open just one store. But this being said, it's going to be still quite challenging to open stores. So at this point, we don't commit with any definite target for 2024. As for Ara, it's true that the market continues to be very challenging. We had, as we mentioned, negative growth in real terms, so volumes didn't increase in the country throughout the whole year. We don't expect a major pickup at this point, as the economy is still not recovering. This being said, again, the company will have to continue to invest. What we are really doing is preparing even to have better saving opportunities for the family, so betting on more relevant promotions. What we have to do, or on the positive side, of course, we will have the recovery-... Somehow of the stores that are less mature on one hand, and also we already did work on, even on our cost structure to be the most efficient possible, if we need to further invest in margin. So we are not expecting really a big pickup in margin, considering again that we will continue to invest in pricing. Very clear. Very clear. Thank you. Thank you. Thank you. We will now take the next question. From the line of José Rito from CaixaBank BPI, please go ahead. Yes, good morning to all. So I have three questions. The first one on the gross margin, just a clarification. You mentioned that we have a lot of moving parts, so the company's gross margin in Poland. The company is investing in prices. We also have potential trade up, suppliers also may bet on those players that are increasing volumes. But on the specific case of Biedronka, what is your target? Is gross margin going up in 2024, flattish, or eventually going down? So that will be my first question. The second question on the higher competition in Poland in 2024, if you can provide which players have been more aggressive at the beginning of the year. Finally, on the working capital side, there was a four days reversion in 2023. You mentioned that eventually we could have further investment in 2024. How many days we could still see working capital as percentage of sales declining in 2024? Thank you. Thank you, José. On the gross margins, as I said, at this point, I believe we do not have visibility. What we will have to be prepared is really to maintain competitiveness and price leadership, in what we consider, as it will happen in if in fact, in all food retail markets under this kind of context, is that we may have to continue to invest. But at this point, I cannot say, because as I said, it will really depend on the mix, on the level of price investments, which we expect to be quite significant, and also on how PPI, so the inflation even, and the willingness of the suppliers to invest to further recover their market shares, will be willing to invest with us to really drive the market. So on that, I think that we cannot commit on any guidance on gross margin. As for higher competitions, what we believe—so this is now more visible in Poland, but we expect really a rise in competition in all food retail markets. As I mentioned, food inflation will no longer be a driver of growth. The delay in high cost inflation, so the fact that wages are increased the following year, rents are increased the following year, will put further pressure, not only of course, in Biedronka, but in all players in the market. And so the only way to protect profitability is continuing to fight for sales. And so what we will think it will happen is what is already happening, is in a very competitive market, competition is getting tougher. Of course, there are some players that are a little bit more tough than others, because they have also, or they play exactly on the same growth drivers, which is price. So basically, the ones that we are seeing more aggressive are the discounters and Lidl. But this is a normal reaction to, let's say, all the food retail dynamics in the last years, where Biedronka really gained a lot of market share. And now, as the market is being pressured with deflation at the top line and inflation at the cost line, this will put pressure and puts pressure also to be more aggressive, to get sales. So what we are seeing is really a raise in the communication of price by all players. As for the working capital, it was four days. As for the future, it really will depend, José, because in fact, you have parts, one thing is of course, the terms of payments, and what we are flagging is really that we will have to invest on that, definitely. We are seeing some of our suppliers and curiously, even some big suppliers, wanting to decrease price terms, even because otherwise, they will have get into trouble with the kind of constraints in funding, really, from the banks and from all other sources, and of course, the level of so interest rates that are demanded. But it's not just the interest rates, it's really a constraint in funding. And on the other hand, you really have in this... The fact that inflation and the level of growth really influences also the way that the working capital evolves. So, if you have even if you have the suppliers investing more with us, the cost of goods sold will go down. And so even working capital, when growth tends to slow down, being it for deflation or being because of volumes, this will have the opposite effect that it had, for instance, in 2022, when the inflation trajectory was going up. So the level of suppliers at the end was quite significant compared with the prior year. So, this really will depend and will depend also on the level of assets. Okay, understood. Thank you. Just on, just on the gross margin, a question on in terms of the suppliers, there is a change on the suppliers, willing to offer better terms now versus what you comment on October? Because I think that, in October, you mentioned that you were seeing that suppliers were willing to bet on those players that were offering higher volumes growth. Is this the same? Are you seeing any change versus what you mentioned in October? What we mentioned in October is that what would make sense is in a market where really the A brands were losing share in the several markets, that in principle, if at a certain point, if they will want also to increase sales and protect their own profitability, we believe they should be willing to invest with us. But of course, that will depend on the dynamics. In principle, that would be what makes sense. Okay, understood. Thank you. Thank you. We will now take the next question. From the line of Michał Potyra from UBS. Please go ahead. Hi, good morning, everyone. I have most of my questions have been answered. I have, I have two questions, follow-up questions, please. The first one is on VAT on basic food in Poland. It's, it's unclear what may happen during the year, but I'm wondering what is embedded in your guidance, please. Are you, are you accounting for the VAT to be increased soon or, or that increase to be delayed? That's the first question. Thank you. Thank you, Michał. I think that's... Well, VAT, unfortunately, here, can only pressure consumers, but not helping retailers, as you can imagine. So, at this point, our base scenario, what the government has said, that probably they will put back the VAT on essential products. But from, again, from a consumer perspective, it's not good because, of course, it increases the prices for consumers. But for the retailers, it can only put further pressure because, of course, it is not an amount that it's not going to their sales or to their net sales, but and, and so it can be inflation for consumers, but not - it will not be an inflation for our baskets. Yeah, that's all very clear. So just wanted to make sure that you anticipate in your declining EBITDA margin guidance that the VAT will be reversed, right? Hello, can you hear me, please? Hello, Michał. I don't know if you hear my answer. It was yes. From the next quarter, is that from the second quarter, do you assume? We are considering that this will be put back by the government as it was announced. But, for now, it's something that it will, as I said, will put just pressure on consumers, not from our side. Understood. Thank you. And just, you know, another question. I think I asked about it a year ago. I have this question about those exceptional bonuses. I think it's, like, fourth years in a row, so I'm not thinking that you pay those bonuses, so do you still see it as a non-recurring, please? On that, Michał, so this is bonuses that is decided, the one that we are mentioning, these are bonuses that are decided on top of what we provide as remunerations and performance bonuses. So this is a discretionary bonus decided at level of the board of Jerónimo Martins. And it is clearly given to our employees, being mentioned that it's on an exceptional basis. It's true that we have been, since 2020, considering the COVID and then the high cost inflation, and then increasing the cost of living, that as we can, we have been providing this to our employees as a way of recognition. But of course, it's something that is not a given. It's really a discretionary decision made at year-end. Same as in our industry. I understand. Thank you. Thanks, Michał. Thank you. We will now take the next question. From the line of Clément Genelot from Bryan, Garnier & Co. Please go ahead. Yes, good morning. Thank you. Just two questions on my side. So the first one is just to come back on the working cap. Are you trading off shorter payment times for, let's say, higher gross margins or lower purchasing prices? Or are you just offering what are the payment times just for free? And then just to come back on the competitive landscape in Poland. So if I'm right there, we're gonna just have three players fighting for one of the cheapest prices being Lidl, Auchan, and you. So are you just kinda responding to Lidl at this stage, or is it also Auchan becoming more aggressive? Would you expect other players, historically not being so cheap, to try to really join the pack of Lidl, Biedronka, and Auchan to really, really become really cheap players? Thank you. Thank you, Clément. On the, on the working capital. So in some cases, of course, I believe that we, we are betting, and the fact that we are willing to decrease the terms of payments has really to do, and these are particularly the, the suppliers that are more critical. We are talking about the fresh product suppliers and the private label suppliers. So in turn, of course, the idea is to not lose any alternatives in our offer, first of all, and to really make sure that we have the best offers in place, and this is something that is not for free. So, of course, if we have, if this allows our suppliers also to provide us a better margin, because of better cost, price conditions, of course, this is something that we will take into consideration. So it's not just something done from a financial point of view to have alternatives in our supply chain. It's something that our commercial teams also know, and I think that this increases the engagement of critical suppliers with our brands. As for the competitive landscape, what we assume, Clément, is that I think that all the market, in fact, will have to turn more competitive if they want to strive and to fight for sales. So it's true that we are seeing some players are being more vocal than others, particularly on the communication side. But I think that all of them will have to turn to also look at prices, even the ones that have enlarged assortments, et cetera. So in fact, I would say that currently, even Carrefour, Auchan, all the players are really communicating price, because this has become really even more of a drive or more important KPI to drive sales. And so what we expect is that every player will have to go and communicate price more aggressively, in a more aggressive way. Mm-hmm. Okay. Thank you. Thank you. Thank you. We will now take the next question. From the line of Nicolas Champ from Barclays. Please go ahead. Hi, good morning. Most of my question have been answered, but I have two technical ones. One, regarding Q1, I mean, could you elaborate on the Easter impact during the first quarter? Is it possible to have a view of the magnitude of the tailwind? And second, the technical one, I mean, how do you see your net debt position evolve this year? I mean, should we expect a reduction of net cash, sorry, net cash position by the end of 2024? Thank you. Hi, Nicolas. So on Q1, it's true that we will have a tough comparison versus last year, considering that we don't have the tailwind of the part of the inflation. But as we have two calendar effects that have to be considered. One is the leap year, and we think that will account for more or less 1 percentage point in terms of growth. And the other one, as you say, Easter will take place in the first quarter, and we think it will be around 2 percentage points for our like-for-like sales at the group level. As for net debt, what the base scenario that we are assuming, even considering the level of dividends that we will be distributing this year, is that our net cash position will go down. So currently, excluding IFRS 16, of course, if it's IFRS 16, we have it been increasing because we are investing. And when you capitalize more leases, most of the stores are leased, the ones that we open. So, it will tend always to go up if we consider with the IFRS 16. If we consider just on a pure cash base... What we assume is with the level of CapEx, and with the working capital that we will have to invest and dividends that we'll have to pay, is the level of cash generation will of course probably drive a lower cash position at year-end. Understood. Thank you. Thank you. Thank you. Thank you. We will now take the next question from the line of Nick Coulter from Citi. Please go ahead. Hi, good morning. Three quick ones, if I may. I'll go one by one. Firstly, just to follow up on Nicolas's question on balance sheet. You do have a very sizable cash balance, which clearly gives you certainty in an uncertain world. But how do you think about balance sheet efficiency going forward, please? Noting it, it's a while since you paid a special. Thank you. Hi, Nick. So on the balance sheet, as we know, we believe that we should have full flexibility on our balance sheet. We are facing a period where, as we said, it is, and probably this is a strong word, but it's what we really feel. It's a dangerous combination of having no or smaller growth. So growth is getting tougher at the top line. Even if we strive for volumes, which we will do, because we have been increasing our volumes, this will add further pressure on costs. So, you have not only the negative impact from the pressure on the P&L, and this of course has an impact on cash, as we want to grab the opportunity to continue to invest, to improve our businesses, and we have to have, and we want to have the flexibility of being able to also help our suppliers to cross these quite troubled times with us. So, all in all, we prefer to maintain the flexibility, and that's why we keep this on the balance sheet. This being said, in terms of cash, of course, we have a different situations in the different countries. We have chosen to naturally hedge our investments in the different countries, and this means that we are having debt increasing in Colombia in Colombian pesos. And this, of course, will increase the interest expenses also. And then we have the other countries where we really need the flexibility to continue to invest all across the board if we have opportunities to grab, as it is the case of Poland and Portugal. Very great, thank you. Thank you. Then the second one, I guess, as your ability to leverage SG&A fades, how do you think about the overall basket differential to market inflation? It seems that you've really taken the opportunity to dramatically improve your price position rather than just sustain it over the past couple of years. Does that normalize? And may I ask what you're solving to? I assume you're, you're solving to maximize sustainable EBITDA, but, but if you could kind of talk through your thought process, please. Thank you. So of course, we use as a proxy even of our competitiveness the difference that we have for the country's inflations, and this has been widened. But although we have, I must say we have some questions regarding the level of food inflation that has to do really with the fact that all players are already decreasing prices, and you don't see that really on the food inflation in the country, which is something that surprises us a little bit. So this is really a proxy of competitiveness. But again, for us, this is something that we measure quite on a very regular basis versus our peers. We maintain the competitiveness, and that's what we will continue to do. Of course, we know that this may be a further pressure on the gross margins. As I mentioned, the rest is going to be the way that the consumer will also react, and if it's going to increase volumes or if it's going to trade up to see what is the final or operational leverage that we can count on. At this point, we are assuming, and we don't hide, that it's going to be very challenging and we are assuming that we will not be able to dilute the total increase in wages and the increase that we are having in rents. It's going to be very challenging, and that's why we are saying that probably our, our EBITDA margins in Poland will decrease or may decrease even further than it did in 2023, because this- Right. This is the most plausible scenario. Okay, thank you. And just to follow up on your comments on working cap and end-to-end supply chain, your gross margin this year has been remarkably resilient, given the vast inflation versus input costs. Could you talk to the shape of that gross margin evolution and maybe the role that overriders or trade dollars have played in 2023 or mix, or just help us understand the shape of the reported year's gross margin so we can think about how it plays through in 2024, please? ... So Nick, on that, of course, the fact that you and that's why we usually use the proxy of the food inflation in the market to see our competitiveness, and not so much the gross margin, because of course, you have several effects. For instance, in Pingo Doce, when you increase the weight of meal solutions, this category has higher gross margins. And so it doesn't mean that you are not investing in other categories, just it's the mix that's also contributing positively to that. For instance, Recheio was exactly the same. So the recovery of the whole HoReCa, so you had several, Sorry, I was more thinking about Biedronka really than Portugal. Okay. That's the way of the group. It- It looks remarkably resilient. I just... And it is. But that has really to do also to the fact that, first of all, you didn't saw a major trade down as it happened in other markets in Poland. So as we mentioned, the consumer was cautious, but the fact is that what we saw, in fact, was in terms of the categories we didn't see, so you didn't have the same kind of increase in private label products or the, so much of the trade down in Poland in 2023. Now, of course, it may be a different thing, depending on the toughness of the competition, because as I said, this year, you won't have the help at the top line of the inflation as a driver for growth for any of the players. This may lead, of course, to more competitiveness in the market or more competition in the market, and having to have further investments, even on prices. Okay. Great, and just one cheeky one, if I may. You kind of talked to the second half, inflation deflation environment being better. So it kind of feels like you're talking to the potential for kind of transitory deflation. What kind of gives you that shape and to your forecast or thoughts? And then I'll go away. Thank you. No, no issue, Nick. You can continue to the question. No problem. So for what we mentioned for the second half, or what we say is that the first half, of course, deflation will be more important because of the comparison with the last year. But it doesn't make it more, or it doesn't make it easier for the second, because even if deflation is lower or you have, even if by any chance you have the possibility of having inflation versus last year, the fact is that you are having lower prices already, and that, of course, is not helping sales to grow at the same level. So it's a question of comparison with the prior year, in fact. Got it. Just the comps, not SG&A- Yeah ... feeding through into inflation. Okay, great. Thank you so much. Thank you. There are no further questions at this time. I would like to hand the conference back over to Ana Luísa Virgínia for closing remarks. Thank you all for your questions and for attending this conference call. 2023 was another outstanding year, and we are happy that we have navigated the last three tricky years, never hesitating to defend price competitiveness, to invest in our businesses by execution, by executing ambitious CapEx programs, and by protecting our teams and our supply chains. We are aware that this work will be paramount in a period when our group will face, with extraordinary severity, the combination of deflation at top line and high inflation on costs. In this context, we will remain focused on sales performance while working to enhance cost discipline and operational efficiency as the only ways to limit the impact on our profitability. Thank you once again, and I wish you all a nice day. This concludes today's conference call. Thank you for participating. You may now disconnect.