Jeronimo Martins' profit up as inflation boosts sales, outlook uncertain

LISBON (Reuters) - Portugal's second-largest retailer Jeronimo Martins on Wednesday posted a 14% rise in third-quarter net profit, as soaring inflation drove sales higher, and the company warned of an uncertain outlook for prices.

Jeronimo Martins netted 157 million euros ($157.97 million) between July and September.

Chief Executive Pedro Soares dos Santos warned that "with two months until year-end, the geopolitical instability and the supply chain constraints resulting from the pandemic make the outlook on food, energy, and fuel prices very uncertain".

As the company tries to contain prices that have soared since Russia's invasion of Ukraine on Feb. 24, the cost of inflation will further pressure margins, it said.

Consolidated sales in the third quarter rose 22.7% to 6.5 billion euros, driven by the company's market-leading Polish retail chain Biedronka, that posted a sales increase of 21.6% to 4.4 billion euros. Annual food inflation in Poland clocked 19% in September.

Even though Poland’s consumers grew more cautious and price-sensitive, spending on food has increased, outpacing food inflation.

At home, supermarket chain Pingo Doce posted a 13.4% rise in sales to 1.1 billion euros and Colombia's Ara booked 467 million euros in sales, up a steep 64% from a year earlier.

The company said it also increased its investment programme to 950 million euros from 850 million euros due to Ara's more ambitious expansion plan, with 230-250 new stores planned instead of 180, and the higher cost of construction and equipment in all its markets.

($1 = 0.9938 euros)

(Reporting by Patricia Vicente Rua; Editing by Andrei Khalip and David Gregorio)