Jerónimo Martins, SGPS, S.A. (JMT) Earnings Call Transcript & Summary

Good day, and welcome to the Jerónimo Martins First Half Results 2020 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Ana Luísa Virgínia, Chief Financial Officer of Jerónimo Martins Group. Please go ahead, madam.

Thank you. Good morning, ladies and gentlemen, and thank you for joining this call to present Jerónimo Martins First Half 2020 Results. As always, the set of materials, including the release and a slide presentation, are available in our corporate website. Please remember that as from this year, all the analysis will be made using the numbers under IFRS 16. To access historical series, you can find our financial statements without the application of this accounting standards in the appendix to this presentation. Not surprisingly, the first half performance was affected by the disruption caused by the COVID-19 pandemic in the second quarter. In these circumstances, a renewed word of appreciation to our teams at all levels and particularly the ones working at our stores and our distribution centers, all showed impressive levels of resilience, determination and commitment. The 3 markets where we operate had different restrictions in place, depending on the evolution and intensity of the pandemic that reflected differently in the respective economies and led to diverse consumer behaviors. While carefully reading the environment, all banners executed specific plans to address the different market realities. Biedronka was swift, innovative and flexible and strongly outperformed these markets in a very challenging environment. Our main banner performed impressively throughout the period. In Portugal, Pingo Doce and Recheio were heavily impacted as from March by the very severe restrictions on people's movement and absence of tourists resulting from the 3 periods in a row of declared state of emergency. From mid-May, as confinement measures started to be eased, the companies adjusted accordingly with performance giving signs of improvement. Finally, in Colombia, with the country under a strict lockdown that differs regionally, Ara suffered in Q2 a reduction of 30% in its selling hours. This in a market in which the economic impacts from the pandemic immediately affected consumer available income. All in all, the solid top line performance of Biedronka, coupled with reinforced cost discipline in all banners, allowed to mitigate at the group EBITDA level, the increased pressure coming from operational deleverage in the other businesses from the additional COVID-19 related costs and also from the zloty depreciation. Since March, the group CEO and the executive team have been working on a daily basis in coordination with the company's executive teams to streamline the decision-making process and allow rapid adaptation to changing market conditions. Each of the 3 countries has a different epidemiological context that triggers specific responses from the local government and, consequently, different consumer behaviors. The safety first approach that we followed in running the operations added costs in all companies. Incrementally higher risks in the context of the pandemic also required the increase of provisions for receivables. These costs, all together, reached a value of EUR 32 million in the first half of the year, of which EUR 29 million directly impacted EBITDA. In Poland, the confinement measures started to be softened as from May. Progressively, we see more people circulating in the streets as economic activities reopened. We are not, however, in any way, back to a pre-COVID-19 consumer landscape. The consumer is more restrained. Homeworking is still in place in many activities, and therefore, there is more planning of each purchasing act, which naturally hampers impulse buying. In the first days of April, strict limitations were imposed on the number of consumers allowed inside the stores. Biedronka reacted immediately by extending opening hours, working 24 hours in special days and executing well targeted and frequent campaigns that created awareness, traffic and price perception. All these integrated dynamic is very likely to have played a role in increasing preference given by consumers to buying in proximity. In Portugal, the state of emergency lasted until the 2nd of May. The country is now in state of alert with the Lisbon region still under strict rule. Restaurants were allowed to reopen on May 18. But in reality, this has been a slow process, and the vast majority of hotels delayed the reopening to July, hoping for better tourism flow. The economic impact of the pandemic is already visible as the country relies a lot on tourism that was pretty much reduced to 0 in the last months. In the food retail sector, there are still limits imposed on the number of people simultaneously allowed inside the shops, which particularly impact stores that have traditionally higher traffic, the case at Pingo. In Colombia, lockdown measures will be in place at least until the end of August, and municipalities have autonomy to manage restrictions depending on the pandemic development in the area. This regional approach to restriction measures according to the dimension of the health crisis is justified by the differences between regions, but also brings extra complexity to the management of operations. Looking now at the key performance figures. Consolidated sales grew 4.6% to reach EUR 9.3 billion. At constant exchange rates, sales growth was 7.3%. Group EBITDA reached EUR 635 million, 4.9% down on the previous year, and EBITDA margin was 6.8%, which compares with 7.5% in H1 '19. Net profit attributable to Jerónimo Martins was at EUR 104 million, a decrease of 36.2% on H1 '19. The group ended the period with a net cash position of EUR 99 million, excluding capitalized operating leases. Going now into Q2 P&L. Group registered a sales decline of 1.3%, strongly impacted by zloty and peso devaluation. At constant currencies, sales were up by 3.1%. Underlying this top line evolution we had on the positive side, a strong Biedronka performance. And on the negative side, a significant slowdown in growth in Colombia and the pressure over the Portuguese businesses from a very challenging pandemic evolution. Gross margin was broadly in line with the previous year in the quarter when all businesses maintain an intense promotional activity. Group EBITDA reached EUR 325 million, 8.8% down on Q2 '19 or 5% down at constant exchange rates. The respective margin was 7.1% from 7.7% in Q2 2019. In the quarter, EBITDA included EUR 13 million of direct additional costs related mainly to the safety requirements for running the business under COVID-19. The heading of other profits and losses at EUR 16 million includes EUR 5 million regarding the closure of the pharma business in Poland, EUR 6 million related to the increase of provisions for shares trade receivables and HeBe stocks, of which more than half is due to high risks in the context of the pandemic. And a reminder related to restructuring costs and write-offs essentially in Portugal. HeBe has been positioning itself more and more as a beauty specialist. And under this strategic vision, pharmacies have been losing relevance. After considering all the options to execute this strategic repositioning, the decision was made to close its 48 stores, of which 20 are spaces inside HeBe's existing stores. The pharmacies will be closed in the next day while the whole process will be carried out throughout the following months. The costs associated are already registered in our account. On the first half performance, sales were up 4.6% or 7.3% at constant exchange rates. EBITDA was at EUR 635 million, 4.9% down from previous year or 2.7% down at constant exchange rates. EBITDA in H1 accounted for EUR 29 million of direct costs related to COVID-19 and EUR 11 million for the launching of Biedronka Foundation in Q1. Net financial costs were EUR 96 million impacted by EUR 14 million of foreign exchange translation losses related to the capitalization of euro-denominated lease agreements in Poland. Take note of the fact that this is an accounting adjustment with no cash impact. Tax rate is higher this year compared with the same period of 2019, reflecting the different results mix with higher weights of loss generating businesses for which we are not, for the moment, recognizing deferred tax. In the period, cash flow was negative in EUR 118 million. The higher CapEx payment registered in 2020 relate to the concentration of the 2019 investment program in Q4 '19. This led to a higher amount of CapEx payables at year-end, which have now been paid. Working capital in Q2 incorporated a calendar effect, and we do not expect a material deterioration in this year's performance in terms of average days of sales. As such, funds generation will mainly depend on sales performance. Also a result of our prudent approach, the balance sheet remains very strong with a positive cash position, excluding the capitalized operating leases of EUR 99 million by the end of the period. Even considering the dividend payment in the amount of EUR 130 million that occurred after the period already in July, the strength of the balance sheet remains intact. We invested EUR 142 million in the first 6 months of the year, 43% of which allocated to Poland. Let me remind you that in the beginning of the global health crisis, we suspended the start of new construction works, and in some markets, there were also special restrictions to the construction sector. The banners concluded the works that had already been started and are now back in the execution pipeline, although limited by the market circumstances in the context of COVID-19. In the case of Colombia, the pace of execution is still heavily impacted by the existing lockdowns. While in Poland, Biedronka is expected to be back to a more normalized pace of execution, assuming the pandemic development remains under control. Moving now to the operating performance and starting with top line. Biedronka performed strongly across the period, more than compensating the pressure in Portugal and the devaluation of the currencies we are exposed to, which impacted sales growth in more than EUR 240 million. In Biedronka, sales increased 10.9% in local currency, with like-for-like at 7.8%. The banner started the year in excellent competitive shape and as the pandemic broke out and the restrictive measures we put in place, Biedronka acted swiftly by extending opening hours and changing commercial dynamics, aiming at being more effective in the current circumstances. Our main banner crafts more frequent opportunities sometimes after hours to allow consumers access to our stores throughout the entire day and avoid the indoor concentration of a higher number of people at a given time. The notoriety of Biedronka's actions also helped the company register the biggest increase in consumer trust during the pandemic, as measured by the IPC Institutes and Catchers agencies. Year-to-date market share is expected to have increased more than 2 percentage points on the same period of the previous year, with the gains having accelerated in Q2. Food inflation, not surprisingly, is decelerating in the country and also in our own business, whose basket inflation dropped from 4.9% in Q1 to 2.7% in Q2. We expect this trend to continue. In the 6 months, Biedronka opened 34 stores, 29 net additions and remodeled 71 locations. HeBe sales grew 1.2% in local currency, a decline of 1.7% in Europe. The discretionary offer of HeBe was heavily impacted by the pandemic as a result of social life and working out-of-home having been reduced to a minimum. In June, we saw the negative pressure starting to soften, which could indicate some improvement going forward. Online monthly sales have gained relevance since March and in Q2 increased 80% on the Q1 value. Pingo sales declined by 2.9% to EUR 1.8 billion, with a like-for-like of minus 2.8%, excluding fuel. The month of April was by far the most challenging one with like-for-like at minus 16%. With signs of recovery after April, Pingo Doce has been adapting its communication and commercial campaigns to reinforce awareness and relevance and is ready and well positioned to take off as soon as traffic limitations are eased. The banner opened 3 stores, and remodeled 6 locations in the first 6 months of the year. Recheio, due to its exposure to tourism, was strongly impacted by the restrictions imposed to the activity and registered a sales drop of 14.4%. In the second quarter, the sales performance reflects the closure of hotels and restaurants in April and May. Sales to traditional retail did well even if they couldn't compensate for the impact of a missing HoReCa channel, which, prior to this crisis, represented more than 35% of total sales. The next months will be critical for tourism in the country as well as for our cash and carry activity. In Colombia, the strict restrictions imposed in the context of the pandemic are already taking its toll to the economy. On top of a challenging consumer environment, Ara lost 30% of its trading hours in Q2 due to mandatory curfew hours and trading bans imposed by municipalities. The banner continued to invest in reinforcing the attractiveness of its value proposition to guarantee strong competitiveness in all regions. Sales grew 33.4% in local currency or 18.8% in euro terms to reach EUR 423 million. In H1, Ara opened 23 stores and closed 8 locations that did not reach the expected delivery. Group EBITDA at EUR 635 million was 4.9% below the previous year, a decline of 2.7% at constant exchange rates. Biedronka performed very well, supported by an assertive combination of strong top line growth and reinforced cost discipline. As a result, it was possible to mitigate the operational deleverage in Portugal due to the negative sales performance, some deleveraging brought by sales deceleration in Colombia, the EUR 29 million of extra costs incurred at EBITDA level in H1 due to COVID-19 and the zloty depreciation in the period. HeBe's EBITDA stood at EUR 4 million, the negative top line performance not allowing the margin to improve. Ara's EBITDA losses were at EUR 19 million, broadly in line with 2019, benefiting from the Colombian peso devaluation. The slowdown in sales progression, extra costs due to COVID-19 and the increased complexity brought to the operations by local measures further pressured the EBITDA margin in Q2 in the context of price investments. Group EBITDA margin was 6.8%, down from the 7.5% registered in the same period last year. Biedronka margin in H1 reflected the pressure from COVID-19 related costs in Q1. In Q2, margin was stable against the same quarter in previous year as a result of reinforced cost discipline. In Portugal, the margin decline was driven by negative sales performance, not allowing cost dilution with the months of April being particularly penalized. The first half of the year was marked by the outbreak of COVID-19 and the disruption it created in the operating landscape in all markets where we operate. Poland, our most important market, was the first to soften restrictions and to implement the reactivation of economic activity. Biedronka strengthened its competitive position thanks to the way it adjusted to market circumstances and, as a consequence, maintained or even reinforced its relevance for consumers. In Portugal, the effects of the long lockdown are already visible in a weakened economy. As the countries progressively reopened -- reopening, our banners remain committed to their value propositions and to perform in a consumer environment that is expected to be increasingly fragile and price centric. Finally, in Colombia, we are still operating in a market under strict lockdown, which makes it very difficult to predict how consumer demand will emerge as the market reopens. Ara preserved its model to guarantee competitive strength and, in the immediate time, this pressured the cost structure. We still have poor visibility on what lies ahead, but the combined strength of Biedronka and of our balance sheet are a solid basis on which to build the rest of the year. And it's precisely around these pillars that we keep faithful to our priorities: distributing good quality food at good prices in a safe environment, both for our people and our customers. Biedronka is well prepared to continue delivering sales and profitability, knowing that consumer reaction to assertive commercial campaigns and cost discipline will be critical. Pingo Doce and Recheio have kept intact their quality and price propositions, which we see as pivotal for the medium to long term. In Colombia, where we have less -- even less visibility over the medium term, we will continue to adjust our operations to mitigate the impacts over profitability, aware that the building up of sales density will be delayed in 2020. We said 2 months ago, and we say it now. No doubt that all our businesses will be affected by this health crisis. As uncertainty over the future developments of the pandemic and the respective economic impact is still very high, we stick to the decision of not issuing, for the moment, any guidance for the rest of the year. I can, however, say that we remain committed to our long-term vision and confidence that we will have the capacity to face the challenges ahead. This will allow us to protect business competitiveness and sustainability into the future. Thank you for your attention. Operator, I'm now ready to take questions.

[Operator Instructions] Your first question comes from the line of José Rito.

Yes, all I have 3 questions. The first question on this EUR 15 million one-off costs in Q2. How much was due to higher provisions? And from the EUR 15 million, how much is also explained by the Polish business? Second question on the drivers for the margin increase in Q2 in Poland. And also related with this, if post this margin evolution in Poland in the quarter, if the company is in conditions to reiterate flat margins for the year -- after the slight decline in H1, if eventually, the trends seen in Q2 could be maintained throughout the coming quarters? And finally, in Portugal, what are the company's plans to bring people to stores over the coming quarters in order to offset the negative trends that we have been seeing in terms of like-for-like?

Thank you, José. So on the EUR 15 million, I am assuming that you are talking about the COVID costs, the ones that we referred. So in the quarter...

No, actually, the extraordinary costs. So it was EUR 20 million in H1. In Q2, I think it was EUR 15 million. So below EBIT line.

In Q2, it was EUR 16 million, yes. Sorry. Because in Q1, we had COVID costs of around that number. Okay. So the EUR 16 million, regarding Poland, it's only HeBe. So in here, we don't have any costs relating to Biedronka, if the question was on that sense. So from the Polish business, there is a big or almost half of it refers to HeBe and almost EUR 5 million, as I referred, is related to the closure of the pharmacy business. So we are writing off the pharmacy business. Okay. So on the margin increase in Poland. This, of course, was possible because the consumer reacted to all the activities that Biedronka put in place in a very -- as we said, in a very agile and swift manner. And basically, this allowed to even in a market that is slowing down or basically reducing, because in the quarter, if we take the whole quarter, the food retail sector decreased quite significantly in terms of sales, as you probably know. So Biedronka was able to gain market share, and that's reflected on its profitability also. Of course, depending on how the economic evolves -- on how the consumer will also continue to react, as I mentioned, at the end of the introduction, we think it may be possible for the company to maintain the flat margin. But for now, we do not commit to that. On Portugal. So you know our business, we don't like to be losing market share as we are at the moment. And in fact, to all players because in this case, and as we said, as Pingo Doce was the higher density player in Portugal, the fact that it lost, on one hand, to the players that have more space because people want social distancing. And on the other hand, to the even more proximity or the other stores that has so much traffic. These is to avoid queues and, of course, also to avoid having to go shopping so frequently. And also, you have to take into consideration that we also lost in the main categories where Pingo Doce was betting, namely on takeaway, on the restaurants, on breads. So these kind of categories were heavily hit. And as you know, our restaurants and our takeaway were closed most of the lockdown period. And even after that, when they started, it was very slow and very progressive. What we think is, of course, that as if everything goes according to plan, as measure are eased and if restrictions are put in -- are not put in place, we think that Biedronka has -- sorry, Pingo Doce has at least the capacity to build the commercial dynamic, again, to attract the people to the stores and to be able to overcome the situation. The same with meal solutions, providing different solutions that people feel on a safer way, probably with less quantities, not with trays that are exposed in the store, but that people feel that there is no issue from the safety side. And for Recheio, of course, they will do their best and taking advantage of the strengths of our group to not only compensate at the smaller retailers, but also to become more relevant in the hotels, restaurants and cafés that will be able to open. So putting in place relevant campaigns and also commercial actions for these ones that will need support to go through this pandemic time.

Okay. Let me just go back to the margin question in Poland. So I understand that in other quarters, you have higher -- even higher than in this quarter, like-for-like evolution and the margin was flat. So in this case, with a 4.8% like-for-like, you managed to increase the margin. You are saying that, okay, we should read this on relative terms in the sense that the market declined. So even if your absolute like-for-like of 4.8% is lower than in previous occasions when margins were flat, the fact the market is softer, let's say it that way, it means that suppliers help Biedronka on relative terms when comparing with other players helps more Biedronka than the remaining players. Is that the reading that you should do related to these?

I don't think so, José. So in here, you have to consider 2 things. One, of course, is that as the basis is much stronger, the percentage of like-for-like even being lower than before, in cash terms, it's quite strong and allows for the dilution of the cost that we were expecting. So this comes really along the lines that we were expecting. On suppliers, on the contrary. We even put in place measures with suppliers and particularly the smallest ones that, like in Portugal, were having difficult in selling their production because they usually sold to the HoReCa channel that were closed. So we even allowed in Biedronka to have more suppliers coming in. And we didn't pass. It was really most of the inflation to the consumer but not taking into consideration or being more or pressuring the suppliers. Of course, the other thing that helps providing this margin was the cost discipline. So the fact is that Biedronka manage, for instance, to decrease -- well, one, of course, more obvious is the transportation cost because fuel prices went down. But the other one, for instance, is advertising where we've done much more commercial ads, much more leaflets than previously, but we were able to decrease the cost of production and the cost of releasing these ads and to the minimum. So every cost that was possible, considering because the uncertainty in the market and because we didn't know at that time that the market would react, for instance, to extending opening hours. In Portugal, we even tried that in some stores, but there was no reaction. So -- but in Poland, the consumer reacted, they didn't want it to be in the queues. And Poland, with enlarged ranges, managed to be a one-stop shop. And by extending the opening hours, people reacted because they preferred, in some cases, to go during the night to avoid being in contact with other people. So on the cost and on the margins -- or sorry, on the top line, helped provide this margin. So what we assume is that if everything continues like it was in the first quarter, so this reaction from the consumer and knowing that the company will do all its best to refrain any cost increase, we think that it's possible. But it still depends.

Your next question comes from the line of Xavier Le Mené.

Can you give us a bit of color of what was the EBIT rate? I just want to understand what you've seen in March -- sorry, April, May, but also June in the main geographies. So was your EBIT better? And should we extrapolate slightly better numbers going into July?

Xavier, so April was, of course, and as you know, 2 months ago when we released the Q1 results, we already gave you a sign that April was very challenging and very tough for our businesses that had to react to the lockdown measures. And in countries and economies that reacted also very differently, depending on the pandemic evolution, what we saw in May, in June was basically as the measures were eased, and this was faster in Poland where the government was very fast in wanting to ease and in providing even a crisis shield program very fast to have the economy going back to a new normal faster, let's say. What we saw was the progression, at least at the top line, and the reaction of the consumers that each -- at each month was slightly better. Of course, now things will depend on the other reflections that we will have in the economies particularly. And as we flagged on the more fragile ones, like in Portugal, that it's very dependent on tourism. And in Colombia, where, of course, the loss in income, particularly on the low, middle classes, was felt immediately.

Our next question comes from the line of Carole Madjo.

Two questions for me. First of all, on the COVID-19 cost. I think it amounted to around EUR 14 million in Q2. How should we think about this cost going forward? Do you still expect a chunk of it to be recurring? Second one on Ara. Can you give some color on the current trading in Colombia, so maybe in July? Have the trends improved in July? Or are the ongoing measures impacting severely the top line? And lastly, how should we think about the EBITDA losses evolution going forward?

So on the COVID-19, we had -- we booked in Q1 around almost EUR 60 million. It was more or less the same amount or slightly less at GDP level in Q2. I think at that time, I said that probably we would be talking about EUR 7 million on average, each month. I think it's a good basis to be considered because, for instance, in this quarter, we didn't pay any special bonus to the stores and to the DCs, and we may consider that even going forward. So I think it would be a good assumption because it's not just protective measures. It's all the costs that have to do or that kicked in due to the dynamic context. And that allow us, of course, to operate safer and with our people also feeling rewarded for that. On the -- on Ara. So of course, I will not comment on the current trading. What I can say is that it's very challenging for our operations not knowing when they will be able to sell the products or not. As you can imagine, in terms of replenishment, in terms of time schedules for our employees, it's very difficult with the curfews, with the trading bans, with stores having to close depending on the municipality. It's very difficult, even from the supply chain point of view to predict all this. And this introduced a lot of complexity. On the top line, in July and in August, as I said, we will continue with lockdown measures from the Colombian government, where the peak is expected now from the health point of view. Let's hope that it's the peak really. And there is already a sign that they may introduce also restrictions in the number of days where we can trade. So this will probably continue to be challenging, but the company is doing its best, of course, to increase sales and it managed to increase sales even under these circumstances. At EBITDA level, it's going to be challenging, of course, but the company is already also working and has already taken some initiatives that will impact H2 to reduce costs at the minimum to mitigate, as I said, the impact on profitability. So what we expect is that this is not going to be as we previously expected. So in terms of the path to a breakeven after 2020, it will probably imply a delay. But for the moment, the company is doing its best. And if the consumer reacts again and if we can put in place these initiatives, it's probably not a big delay.

Your next question comes from the line of Maria-Laura Adurno.

So the first one is, if you can provide us with some light around Poland sales exit rate in June? That would be the first question. The second question is with respect to Biedronka margin this quarter. So you mentioned underlying cost-saving measures that were implemented. Can you perhaps talk slightly in more detail around those cost savings measures? And also perhaps provide some color around how the opening of those costs has trended in the quarter versus last year and the previous quarter? And then the last question that I would like to ask. Coming back to the one-offs that were already asked, I'm sorry if I missed this, but can you confirm how much of this EUR 20 million that was incurred in the first half, how much was actually cash versus non-cash?

Maria-Laura, can you repeat the third question because I didn't hear properly.

Yes, sure. Sorry. Maybe my line is a bit bad. So the third question is with respect to the EUR 20 million cost incurred in the first half. If you can just confirm how much of it is cash versus noncash.

No. It's the previous one. So I have it, the Polish exit rate in June. On EBITDA, if -- I could give more color and more detail on the cost-saving measures. And I have the one-offs, but there was another question that you made that I didn't hear properly.

Yes. Sorry. It was with respect to Biedronka. I was asking if you can provide some color around also opening of new store costs that you incurred in the quarter and how that has actually trended versus 1Q and year-on-year.

Okay. Okay. Perfect. So on the Poland exit rate in June. In this case, it's not relevant. So I'm not giving, as I said, any news on current trading. But I can tell you that the performance of Biedronka was outstanding during the 3 months. So comparing with last year, all the months performed very well, considering even the context and the food retail sector. It was negative, as I said, in Poland. In June, it improved slightly. The market grew 0.2% in June. And Biedronka, of course, more than outperformed that. And we expect only on the months even to have added more than 2 percentage points in our market share. So I cannot speak about an exit rate. I think I can speak about the very successful sales performance considering the landscape for Biedronka. On the cost-saving measures, I can guarantee that the company went to all the cost headings, from stationary to advertising to rental lease to rents to transport to all headings, to make sure that it maintains a discipline -- because things are expected to put pressure, the market is not eased. And fortunately, the consumer reacted, but we have to be prepared to be operating in a very challenging environment. So we are talking about all kinds of possible headings at this point. I would say that the one that we save the least is probably personnel cost. We don't see it at this point. It's going to be the last one where we want to touch in terms of our businesses. But all the rest, so -- and I gave the example of advertising, where basically we were able to decrease the costs of advertising, continue to be or to do heavily campaigns and to continue to promote the actions that the company was doing and the extension of hours, the protection that was putting in place for the customers and the employees, et cetera. On the openings. Of course, in the second quarter, they were affected by the lockdown measures and some restrictions, particularly on the construction part. We are now resuming our expansions. And of course, probably this will depend on how things evolve. But for the moment, at least for now, we don't see any reasons for any slowdown for what we are expecting in terms of new openings, at least. Probably remodeling will be slightly less than we expected. But for now, if everything goes as it happened in the first quarter, so from the pandemic point of view. And we think that we will be able to cope and to continue the -- a CapEx program of Biedronka with just a slight delay now coming for Q2. And for the one-offs of the EUR 20 million. So on the first half, we are probably talking about half of it being cash. So on the restructuring, on part of the closure of the pharmacies, we are talking about severance allowance to the employees, some negotiations with landlords. So from the EUR 20 million, half of it is cash. All the rest is basically the increase in provisions and write-off and doesn't affect our cash position.

That's very helpful. Just one last question. With respect -- coming back to Poland, and it's very useful color that you provided us, can you comment a tiny bit around inflation and how do you expect the outlook to actually fair in the next period. Because if we are looking at the comments you've just made and the fact that there was some constructive momentum, should we imply that your underlying inflation has since been coming down?

Yes, Maria, no issue. And you're welcome to ask any questions. So in the case of inflations for the country, what we think is that it will continue. I think that the -- at least the National Bank of Poland continues to push down the interest rates and is allowing, of course, for the depreciation of the zloty and some inflation to kick in, in the market. But I think that in comparable terms and considering the inflation that we had last year, so this is on the country level, we will probably be talking about a slight slowdown. On our baskets, we know that Biedronka will be the last one passing all the price increases to the consumer because it knows how important it is not only to keep the price perceptions, but to guarantee that people feel that there is not a huge increase in prices in the current circumstances where the economy becomes a little bit more fragile also. And the second thing, of course, is that we know that it's important inflation can help on the like-for-like. But we know that, as I said previously in other calls, it hurts volumes. And we like both being a mass market food retail player. So in our case, we expect and we are prepared to operating with slight inflation on our basket.

Your final question this time comes from the line of Cedric Lecasble.

Ana Luísa, I have 2 follow-ups, 1 on Poland and 1 on Colombia. The first 1 is on Poland. You said you gained quite a lot of market share in the quarter. Could you maybe help us understand who you -- who was the main losers in the market and where this strong gain in market share came from? And maybe you can update us on the actual number for market share in Poland today. The second one is on Colombia. Could you please let us know how you see the development of Ara strategically as positioning? The disposable income, as you say, is under pressure, what might be the case in H2? Do you have a good answer for the consumer with the best prices on some categories? What's your view on this?

Thank you, Cedric. So for Poland. As you probably have seen, as I said, the markets in the food retail market in Poland decreased significantly during the quarter. And particularly in April versus last year, where it decreased more than 9%. And so when we see that Biedronka managed to increase sales in this current context, of course, this was done through a market share gain. And this is the numbers that we have. I said that year-to-date, so until the end of June, we gained more than 2 percentage points of market share. And we think that probably in the second quarter, we have gained 3 percentage points, more or less, on average. And from what we see and from the information that we have, I would say that the main losers would probably be the hypermarkets and the stores in the shopping malls that were closed. And so the shopping malls were closed, but the stores were open with no traffic. Of course, this has hampered the market share. And all the other players that were not able to react so fast in adapting their opening hours, in adapting their assortment and the campaigns that they have put in place. So I would say that probably -- yes?

No, no, no. Just could you recall us your absolute number of market share in Poland today?

Now in Poland, it's more than 25%. And then you have on Colombia. Of course, we will -- we are a limited assortment player and this heated a little bit because people want one-stop shop. But we are also -- or we gained a lot of price perception in the last year. And I think that this is going to be very relevant in a consumer that will have less available income. So from a strategic point of view, I think that we will have to make sure that we present the best opportunities and that we manage to operate with probably the trade downs that will happen, and that has already been seen. The fact that we bet on private labels and people had time to check that the private label have quality will also help Ara. So I would say that price and a good private label with lower price versus the industry brands will most probably help in terms of being one of the formats and one of the stores' formats that we'll be ready to face when the economy is and when it get backs, but already hits by, as I said, a low income in the case of -- particularly in the low middle classes.

Did your direct competitors in your segment suffer the same as you? Do you have any indication on your relative performance in the market?

At this point, the information that we have, it's very limited because it only considers the organized retail and doesn't include the other discounters. So we gained market share, but in this very limited scope. I think that it was us and Exito. The others seems to have decreased market share. I would imagine also that the traditionals may have gained market share because they provide credit -- much more credit than we do. They are much closer to the homes of the consumers. So they may probably have also gained some share. But at this point, I don't have full visibility on that, Cedric, to be honest.

We have no further questions, if you wish to continue.

If there isn't any questions, I thank you all for your questions and for attending this conference call. We will remain very focused on living up to our priorities in this very foggy times and in delivering in the short term while reinforcing our competitive positions, guided by our long-term vision. Thank you once again, and I wish you all a nice day.

Thank you. Ladies and gentlemen, that does conclude your call for today. Thank you all for participating, and you may now disconnect.