December 11, 2012 / 11:31 AM / in 5 years

UPDATE 1-Portugal's Jeronimo sees strong sales growth to 2016

(Adds quotes, details, share price)

LISBON, Dec 11 (Reuters) - Portuguese food retailer Jeronimo Martins expects double-digit annual sales growth over the next three years, fuelled by 2.5 billion euros of capital spending as it continues to expand its core business in Poland, the company said on Tuesday.

In an ‘investor day’ presentation the company said sales growth will be driven by its Polish business B iedronka, where it has plans to increase the number of stores by 50 percent to 3,000 by 2015. By that time Biedronka will contribute 80 percent of group sales from 61 percent currently, the company said recently. [ID:n L5E8LQ6BL]

The planned overall investment is higher than the 2.2 billion euros envisaged under the company’s previous strategic plan for 2012-14, with the increase following a decision announced late last year to open a retail business in Colombia, where it aims to be among the top three food retailers in five years.

Shares in Jeronimo were 3.4 percent higher at 14.92 euros by 1122 GMT on Tuesday, when the Lisbon PSI 20 index was up 1.4 percent.

“The company has reassured the market of the continuation of its growth, driven by Poland which will receive 70 percent of the investment, and showed it is very optimistic with a forecast of average annual sales growth of 10 percent,” said Albino Oliveira, an analyst at the Fincor brokerage.

It also said earnings before interest, taxes, depreciation and amortisation should grow at “at least” the same pace as sales in 2013-15. In October the company reported a 5.4 percent rise in EBITDA to 228 million euros on a 10.8 percent rise in sales to 2.85 billion euros.

The company plans to open over the next three years at least 150 stores in Colombia - a new market for Jeronimo Martins which it is due to enter next year. Its investment will total 400 million euros over the period, starting next year with 100 million euros to be spent on opening the first 30 to 40 stores.

“We expect solid growth in net results even considering the investment in Colombia,” the company said, adding that the first three years of penetrating the new market would cost the group less than 5 percent of EBITDA.

Jeronimo Martins said it would maintain its dividend distribution policy. It provided no further details but this year it is paying out 50 percent of net profits. The company also intends to continue reducing net debt and hopes to have no debt in 2015. (Reporting By Patricia Rua; Writing by Andrei Khalip; Editing by Greg Mahlich)

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