Good morning, ladies and gentlemen, and thank you for joining this call. As a reminder, the set of materials, including the release and a slide presentation, are available in our corporate website. In a context of ongoing uncertainty on the evolution of the pandemic and its effects, we started 2021 with clear strategic priorities for our banners. There was no hesitation in pursuing growth, while working on efficiency to protect profitability. All companies delivered well on both priorities despite a strong impact from currency devaluation.
Sales grew 5.7% at constant exchange rates, a growth of 1.5% in euro terms, and EBITDA increased ahead of sales, posting a growth of 8.9% at constant exchange rates, a 4% increase in euro terms. We acknowledge that this Q1 is difficult to compare due to calendar effects that include part of the Easter impact in Q1 'twenty one and the COVID-nineteen disruption from March 2020. Notwithstanding, this was indeed a promising start to the year. The strength of the numbers is undeniable, particularly when excluding the material foreign exchange negative impact. Following the strong operational results and considering a lower impact from the exchange losses on capitalized leases, net earnings grew by 66.3 percent to reach €58,000,000 Also, the strength of the balance sheet by the end of March is well reflected in a net cash position of €491,000,000 The year started and a wave of COVID-nineteen new infections, particularly in Portugal and Poland, that went through quite dramatic situations, placing huge pressure on the respective health care systems.
Both countries fought hard to overcome the very difficult circumstances, and these months were certainly the hardest since the beginning of the public health crisis. Business wise, our teams are today better prepared to adjust to the changes imposed by the confinement measures, and that is reflected in the performance. In terms of consumption, Poland, as expected, is the country where we continue to see a more resilient consumer demand. Polish consumers continue to prefer shopping and proximity and to react to improvements in the food offer, although remaining extremely price sensitive. Food inflation in the country slowed to 0.6% in Q1 from 1.7% in Q4 'twenty, driven by strong deflation in products such as meat that registered high inflation 1 year ago.
The retail sales tax, which has been enforced since January, was cleared by the European Court, who ruled that it does not infringe in union law. The consignment measures were first eased and then quickly reinforced during the quarter, and on average, the operational conditions for food retailers were similar to the ones in Q4 'twenty. In Portugal, the consumer environment remains weak as the economy continues to suffer from the absence of tourists. Food inflation decelerated from 2% in Q4 'twenty to 0.9% in Q1 'twenty one. A new lockdown period began on the 15th January.
Food retailers were able to remain open, but limits were imposed to the opening hours and to the sales of alcoholic beverages and non food products. Also, the communication to promote commercial campaigns was not allowed. In Colombia, the economic context continues to be fragile following the long lasting and strict lockdown in 2020. In Q1, the country had a more normalized environment with on and off restrictions depending on the number of infections in certain regions. From mid March, more regions implemented confinement measures that nevertheless, over the period, did not impact to retail operations in a material way.
It should be mentioned that in April, with infections on the rise in Colombia, the restrictions are becoming stricter and more frequent. Looking now at the P and L, there are a couple of notes I would like to share with you. The gross profit margin was 21.5%, down from the 22.1% registered in Q1 2020, reflecting mixed effects. On the one hand, we saw in Portugal the benefits of a better margin mix, particularly over the weeks lapping the outbreak of the pandemic in 2020 when stockpiling drove lower margin mix. But on the other hand, in Poland and despite the positive impact from executive sales mix management and inventory losses reductions, there was from the retail tax implementation.
Operating costs, whose weight on sales was at 14.8%, down from the 15.5% registered in Q1 'twenty, reflected the good delivery of the efficiency programs being put in place in all companies and also lower additional costs to manage specs, I would like to remind you that some of the costs incurred as a result of COVID-nineteen are now inherent in renegotiated contracts and are therefore impossible to isolate. That said, the direct costs we can identify were at around EUR 5,000,000 in in Q1 'twenty one versus €15,500,000 in Q1 'twenty when procurement conditions were extremely difficult and when we pay the special bonus in Poland. Net financial costs were €45,000,000 versus €63,000,000 in the same period last year. These costs include losses of €6,000,000 related to value adjustments in the capitalization of operational leases in Poland denominated in euros that in the same period of 2020 were minus €21,000,000 All in all, following strong operating performance and lower financials, mainly due to this foreign exchange adjustment imposed by IFRS 16, net profits attributable to Jean and Martin grew 66.3% to reach €58,000,000 As anticipated, due to the seasonality of the business, cash flow generated in Q1 2021 was negative in €21,000,000 The better performance versus Q1 2020 was driven by stronger EBITDA and lower CapEx payments in the first quarter.
The strength of the balance sheet is noticeable. Allow me to remind you that the dividends approved in the amount of €130,000,000 will be paid on the 16th May. Moving now into the detail of the operating performance, starting with sales. Despite impacted in euros by the devaluation of the zloty and of the Colombian peso, top line performance was robust with a growth 5.7% at constant exchange rates. Group like for like grew by 3.2%.
The delivery was mainly driven by a strong Biedronka that maintained a sound top line momentum while crafting its Easter campaigns to successfully capture show the opportunity of the festive season. The performance of PingoDoce and Ara reflected tough comparables. In Biedronka, sales increased by 9.2% in zloty and 3.9% in euros to €3,400,000,000 the banner maintained strong promotional dynamics, which combined with a continuously improved offer, drove like for like growth of 6.5%, including negative basket inflation of 1.3% and an estimated Easter benefit of at least 1.5 percentage points. A brief comment here on the confinement measures, which despite the negative impact over impulse buying due to the lower circulation of people offered opportunities to food retailers as with schools and restaurants closed, more people prepared meals at home. In line with the investment plan for the year, Biedronka opened 21 new stores, 15 net additions and renewed 79 locations.
Hebe sales declined 6.3% in local currency and 10.9% in euros. Like for like was flattish. Excluding the pharma business, which was discontinued in Q3 3/20, sales increased 5.4%. E commerce continues to gain momentum and help to limit the impact of confinement measures on store sales. Pingo's sales, excluding the negative fuel performance, were up by 0.3%.
The banner sales progression in January February continued to be challenged by the strong beginning of 2020. In March, performance was positive, reflecting the strength of the value proposition and a more benign basis against March 2020. The banner opened 2 stores and remodeled 5 locations in the 1st months of the year. Rochelio sales were down by 19%, severely hurt by the closure of hotels, restaurants and coffee shops in Q1. Despite the growth of 5.9% registered in the traditional retail segment, the company's performance was pressured by ORECA's decline.
In Colombia, Ara continued to perform well in a context that remains marked by the economic impact of the pandemic. Sales in local currency grew 10.5%. In euro terms, sales increased by 0.6%. The like for like was at 3.7% despite the strong comparison base. In Q1, Ara opened 26 stores, a good progression on the execution of the investment program designed for the year.
Standing at €322,000,000 group EBITDA grew 4% over Q1 'twenty. At constant exchange rates, EBITDA increased 8.9%. This sound performance reflects the strong sales growth, good delivery from the efficiency programs ran in all companies and lower COVID-nineteen related costs. EBITDA margin for the group increased from 6.6% to 6.7% following the good work done in the 3 countries. Biedronka followed its detailed plan and the teams worked hard in all fronts, sales dynamics, margin mix and cost efficiency to contain the impact of the retail tax over its profitability.
We saw good contribution from all these fronts, and it is never too much to remember that in this business, with costs under control, sales growth is always the best way to protect stability. Lower COVID-nineteen costs versus the same period last year also helps. In Portugal, and despite the pressure over shows EBITDA margin due to the negative top line, Pingo's EBITDA margin benefited from cost efficiencies and from a better margin mix when compared with March 2020. The Q1 of the year is difficult to compare, but signs are positive. Sales delivery reflected strength of our competitive position.
We are still operating in challenging conditions due to the pandemic. Nonetheless, we now have a better understanding of how to adjust and activate the operational flexibility to do it in an efficient way. Also, the renewed focus on efficiency is producing results in all banners. All in all, we are encouraged by the performance and confident in our capacity to deliver profitable growth in 2021. We confirm the outlook as disclosed in our 2020 full year results presentation.
Thank you for your attention. Operator, I am now ready to take questions.
Thank
We're taking our first question from the line of Rob Joyce at Goldman Sachs.
Hi, good morning. Thanks very much for taking my questions. I've got 3. So Thanks very much for the color on the gross margin. I just wonder if you could give us a bit of an idea on what the gross margin impact was specifically in Poland.
Should we assume it was higher than or lower, in fact, more negative than the group number of negative 58 bps given the offsets you mentioned in Portugal?
But do you want
me to ask all 3? I'll ask all 3. Okay. Sorry, I'll go I'll do 2 more then.
I'll ask you.
No, no, you go. Can you help on that one? Because I think it helps for the next two questions.
Okay. So thank you, Rob. On the gross margins, as you know, we don't disclose it by business area. Nonetheless, I can tell you that all business areas improved their gross margins. So basically, of course, Poland's weight on gross margins is the highest, which means that, of course, the gross margin was pressured because it is where we account for the retail tax.
So in fact, all businesses, so Colombia and in Colombia and Portugal, had a better gross margins, and Poland was the one that was pressured by the retail tax.
Okay. But I know it's fair to think that the net the impact that the pressure Poland, it will be more than that 58 basis points, I guess, given those offsets. If the others are up, Poland should be down.
I think it's a reasonable assumption, yes.
Okay. And then so then looking at in terms of our Q1 at the EBITDA level, I think some of The concern is that, that was against a comp where the margin was down 50 basis points in the Q1 last year. Looking at the year ahead, do you still feel that flat EBITDA margins in Poland are achievable in 2021 given the tougher comps to come? And should we expect a bigger decline in that second quarter margin given the comp is harder? And then finally, I'll just give you the 3rd question.
Clearly, in Poland, you've made some big operating cost reductions to offset that gross margin pressure. Do you consider those longer term? Are these structural cost reductions that we should think about longer term? Thank you.
Thank you again, Rob. So at the EBITDA level, of course, it's the teams had to work hard and they really prepared for the entering into force of the retail tax. But we have to acknowledge that the behavior of sales and the big growth in sales really help to dilute the effects of the retail tax. This being said, we always said that the stable margins would be possible, but that really depends not only on the company, but on the reactions at the top line. In terms of the company, all the measures that were taken and the initiatives at cost level are structural.
So we are talking about really improving improvements in the supply chains, the all the forecasting and replenishment, automation, etcetera. These are measures, the self checkout are measures that we consider structural. So and they were not just they will not be just impacting the Q1, they will also impact the other quarters because this was done throughout the year. And of course, not only in Poland, but also in Colombia and in Portugal, the effects of these cost control initiatives and this increase in efficiency of the operations will translate also in the remaining quarters. Because as you can imagine, the outbreak of the pandemic obliged the operations.
Really, this caused disruptions that probably were not felt by the consumer, but we're very hard on the operations. These introduced a lot of complexity in the operations that are now really better prepared to cope with all these adjustments from the curfews in Colombia to the different demanding and consumer behavior throughout the different lockdowns or the different measures of the pandemic. And that will help also throughout the year. So this being said, we think that stable margin is possible at the group and at Biedronka, but It will really also depends a lot considering all the pressure from the retail tax. It will depend a lot on the sales progressions.
And of course, we trust the company is doing all its best, of course, to retain and to have the consumer preference. But it will be mainly the top line that will dictate the pressure on margin or not.
And given the sort of Q1 is your toughest comp, is there anything you see out there that makes you expect The sales growth to slow down versus the Q1, anything material headwinds?
At this point, if we are talking about Poland, of course, we have a strong comp, but we also know that the company is crafting and preparing all their initiatives to make sure that the consumer continues to prefer it. 4th, When we compare the performance with Q1 and this is quite amplified by the fact that you also have the Easter impact, although this was partly offset by the deflation. I think that also the comparison versus last year may help slightly the fact that there was a strong deflation in this quarter, but nevertheless. So I think that from the consumer point of view, we it's not a headwind. But of course, we have to count that we are not alone in the markets, and we will make sure that the company stays the most competitive and the one that provides to the consumers not only the best offer, but the best prices.
And that, of course, may put some pressure again on our margin. Okay.
Thank you.
We are taking the next question from the line of James Grisnich at Jefferies.
Yes. Good morning. Thank you for that. Good morning and Alisa. I had a couple.
I guess the first one is around Colombian gross margin. You reset prices, I think back in 2019, between the end of Q1 and the start of Q2, I was just wondering, Have you had to sharpen the price proposition since then at all? Or have you found that the new level that's consistently been competitive enough for you when mobility recovered to really drive market share? That would be the first question.
Hi, James. Good morning. Thank you for your questions. So on Colombia, the company is making sure that although having pressure from even inflation in the country, there is food inflation, but I can tell you that the prices in Colombia, are the most competitive in the market. And this was really almost something that the company really wanted to assure not to disappoint the Colombian consumer and make sure that when the economy recover, the consumer knows exactly where they can get their value when they buy food.
So basically, what we make sure is that we stay the most competitive in the markets. And so in terms of prices, currently and comparing with all our other players, we are, in fact, the most competitive. Nonetheless, of course, a different scale from the business and really, The best that we are doing and the opportunities that we are creating with our suppliers also allow us to craft the way that we put the prices in a way that gross margin is improving. And that's what happened in Colombia versus last year.
That's very helpful. And I guess a follow-up from Rob's questions on Poland. Where is pricing your relative pricing position now in Poland? I mean, we had almost 4 months of the tax being Guys, what are you seeing in terms of relative price action out there in the market?
Well, as you know, overall, food inflation is below 1% in Poland. Of course, this is also influenced by some product prices from last year, particularly meat, as I referred. Nonetheless, at this point, we cannot say that we are seeing a price spike in Poland. I would imagine that some players will have to probably increase some of the prices. Nonetheless, in the case of Biedronco, what we make sure is that our prices stay the most competitive in the market.
So we we will make sure that we stay exactly with the same difference in terms of prices to our main competitors.
We're taking our next question from the line of Xavier LeMaine at Bank of America.
Yes, good morning. Thank you for taking my question. 2, if I may. The first one, you talked a lot about the efficiency and the kind of cost savings that you will be able to roll out in the coming quarters. But Any way you can quantify them or give us a sense of how big this efficiency were in the Q1, that would be quite helpful.
And the second one is just, I know it's difficult for you, but can you give us a sense of what was the Easter impact in Q1, especially on SELT and in Poland, more particularly.
Thank you, Javier. So in terms of the costs, what I can tell you, it's very difficult, of course, to really isolate all this impact, because it's not easy to measure, as you can imagine, all the complexity that was brought and the extra cost that was brought last year with the outbreak of the pandemic. What we know really is that, of course, if you consider just the additional costs from the COVID-nineteen, we have a benign comparison this quarter. I wouldn't say that this will probably happen in the quarters that, as I said, all the businesses, and we are talking about the restructuring in Colombia and the optimization of costs that they did and all the other initiatives to really get out more efficiency either in Portugal, either in Poland, we think that they will compensate for that in the next quarters at the cost levels. Because even in this Q2.
Of course, the level of cost from the operational point of view with all the changes in the pandemic and all the complexity brought by the different restrictions adjustments, of course, will be much better dealt now with our operation than previously. On the Easter impact, as I said, we believe it is higher than in Poland particularly, where Easter is really strong and the 1st and the week before Easter was already in March, we think that we are talking about an impact in sales that can be between 1.5% 2%. Thank you, Javier.
We're now taking our next question from the line of Jose Rito at Caixabank.
Yes. Hi, good morning. So my first question on the flat margin in Poland and the reference that this is dependent on sales. Should we assume that Piedronka will need a like for like in line with Q1 to maintain flat margin? Or the gross margin decline we saw in Q1 could eventually fade over the coming quarters And even with a lower like for like margin, it could remain flat.
And also related to this, are all the cost efficiencies already rolled out? Or eventually, we could see higher cost efficiencies in the future and even with a lower life for life margins will remain Right. So this will be my first question. I'm sure if you want to answer this.
Yes, Jose, we can. Good morning. So on flat margin, I don't think that it will we will be talking about the same level of like for like. I think that the way that we will adjust and incorporate, of course, the retail tax will then also be different because we have been preparing and this is something that we know we knew from 3 years or more than 3 years ago that it would happen. So I wouldn't say and I wouldn't make much comments on the fact that we would need a 6 0.5% like for like.
I think this is really influenced also by the base and by the Easter effect. So there is a lot of moving parts that can influence this like for like. And so this being said, What will depend, of course, and I said the most important will be sales because of the operational leverage. Of course, the rest will also depend on the way that we test our promotions to really have a better margin mix. And the other one is we think that the cost efficiencies are not totally reflected just on the Q1.
As I said already to Rob and even to James and Javier, I think that our cost efficiencies will be seen throughout the year. And this, of course, will help to mitigate and make it possible, although what I say is that, of course, it will depend really on the reaction and how strong is the dilution. But nevertheless, we think it's still possible to accommodate, but it's going to demand a lot from the company and of course, because it will depend on the company to really maintain the preference and continue to guarantee the preference the consumer and the level of market share that they have currently.
Okay. And understood on the cost efficiency that they are Recurrent, my question was, if the old impact that started in Q1, If we could see additional increases on these efficiencies over the coming quarters. So putting a number for So
in absolute terms, Jose, I can assure you that, yes, of course, it will depend on the top line, the way that you dilute it or not. But in absolute terms, you will continue to see the good impacts from the measures that were taken.
Okay. Understood. So the second question on Ara. So with this EUR 5,000,000 loss In Q1, I think that group of that the companies that breakeven in H2 can promise this. EBITDA breakeven in H2.
Okay, Jose. So of course, These are very good signs that the company can post a profitable operation at EBITDA level. But of course, we have to take into considerations that this will also depend on how things evolve even from the epidemiological point of view. So we know and I think that we flagged that in the full year results. We believe it may be possible to post a positive EBITDA, excluding IFRS 16, which was our target.
It's possible, but it really will depends on how the country will evolve. Because for instance, if there is a massive lockdown again, this will put a lot of pressure on top line. And of course, this may hamper the possibility of posting a positive EBITDA. But this being said, what depended on the company, particularly on the cost level, it was done. So we feel very comfortable with the situation currently in the country.
And so we think that it's possible. But of course, we will not compromise on that.
Okay. Understood. And finally, on Also in Colombia, so just a Bueno press report saying that the players asking for extended time to pay suppliers. So it seems that it is in a fragile situation, this player. Will this player feature Criteria for a possible M and A deal in Colombia.
So as you can imagine, Jose. It's a good try, but of course, we don't make comments on any M and A activity unless it's concluded. This being said, of course, Justi Wen, in some cases, opened stores that are very or are overlapping our own. So the fact that they are struggling with suppliers, of course, it's something that was in the news. But of course, what we have to think is about the consumers and the way that they are playing.
They continue to open stores. So let's see how things evolve. But the question for Laro really and the focus is on making sure that they prepare the best offer with the best prices in a country that is really fragile by the long lockdown measures. So in this case, we will be really making sure that we will go for the consumers. If there is some opportunity in the Colombian market being gusti Bueno or others.
As we stated in the full year, we continue to believe in the country. We think that there is a huge opportunity in the country that is intact as from the business point of view. And so we will continue to grow. If there is any opportunity in M and A, we may consider it.
We're taking our next question from the line of Andrew Gwynne at Exane.
Hi, Anuruz. Yes, two questions if I can. So first just coming back to your friend the retail tax. Like many of us being around a long time, it's quite unusual to offset well, firstly, 140 basis points, just to clarify If that is the exact impact in gross margin. So the question is, has any of that been pushed back to suppliers effectively fed up The supply chain.
The second question comes a little bit back to the comments you mentioned before around the competitive environment in Poland. Your expectation is we would see maybe some price increases as a result of the retail tax. But more generally, are there any Kind of bigger changes happening in the competitive landscape, noting, for instance, Tesco's sale to Neto. I'm wondering if we could expect to see any significant changes over the coming quarters. Thank you very much.
Thank you, Andrew. So on the retail tax, it's slightly below the 1.4 because, of course, then it has different levels depending on the level of sales, you are charged by a progressive rate. Nonetheless, as I said, this has a big impact on gross margins. And so if it wasn't really for the cost dilutions that was very significant in Poland. And of course, to that, what I said is that Basically, this was driven by the good sales performance and by the mix in margins, not really by a different cost conditions with suppliers.
So at this point, this doesn't play like that in the case of passing through in this way. So I think that we can conclude, at least in this Q1, this was really the hard work of the company to really make sure that it's posted the sales allowing to accommodate for this because at gross margins and from the commercial point of view, we didn't had any increase. On the competitive landscape. I would say that it continues to be very competitive. We continue to see a lot of openings by our competitors.
So it's not just Biedronka that is opening stores, all the others are really opening stores and, of course, doing their best in terms of the promotion, and seen that is seen even in the prices progression. So what we see really is everyone struggling. The question is that From a relative point of view, Biedronco was the most successful as it was shown in its market share increase. From the Neto Tesco operations, of course, we can expect an improvement because the Tesco operation was basically discontinuing and that but it's not currently, it's still not seen, But we would expect, of course, some pressure coming also from the fact that there is this consolidation in the market and some of the players that were performing were not in such a good shape. As they improved, this will put some more pressure in the market.
But I think that we never underestimate our competitors, and that is very important to continue to post a good performance.
Okay. It's very clear. I'll just come back to a point made before, a quick point of clarification really, but what's flat? Is it sort of plus or minus 20 basis points? Is that a reasonable Line of or reasonable set of tram lines?
I didn't understand, Drew. On what?
So on the guidance or the kind of ambition for flattish Margins in Poland and across the business, what do you constitute as flat? I mean, down 20 basis points, would that Sort of sound reasonable potentially? Or when you say flat, you mean pretty much exactly flat?
When I say flat, it's pretty blasch
The flat margin, the guidance for flat margin.
From usually, we still consider it from the without the IFRS 16. So I would say that without the dilution of the rents, probably we were talking about a slight decrease in the EBITDA margin as is currently posted with IFRS 16.
Okay. Yes, right. That's clear. Thank you very much.
We're taking our next question from the line of Cedric Caspol at Stifel.
Yes. Good morning, Anel Luisa and team. I have three follow ups, one per region. On Poland, maybe you could give us your view on Where do we stand in terms of the country reopening, restaurants, cash and carry, etcetera? So how can things Change for food retailers for food retail market.
And how do you see potential momentum as restaurants reopen and new ways of That's the first question on Poland. The second one is on to come back on your very good margin performance In Portugal, you mentioned positive mix relative to last year, especially in Piling, and you had better mix this year. Are there some other drivers For this very good performance to avoid deleverage as you did in Q1 in Portugal. And the last one is on AVA. You talked about your cost and efficiency improvement.
How do you compare to your main competitors in terms of offer proposition, In terms of product range, in terms of private labels, in terms of pricing, could you maybe give a little more color on this? Thank you very much.
Okay. Thank you, Cedric. So on Poland, as I mentioned, The market continues to be very dynamic, and we see, of course, all the competitors opening stores. In the particular case of Biedronka, As you know, we in our outlook have flagged that we are expecting to open at least 100 stores. Part of these in the let's say, with a in a more efficient or in a smaller format, around 50% of these stores.
So we still expect some growth to come from the expansions, and this plays a role together with the like for like also in the market share increase. I would say that from the consumer point of view, the fact is that the consumer and most of the households continue to increase their income, which is a good thing. So as you know, minimum salary in Poland has already increased again. The government is considering to increase the allowances for the kids. So the EUR 500,000,000 plus, they are considering to increase it also.
So in terms of the income of the consumer, you continue there is no degradation at this point from that point of view. And we see inflation compared with last year also at a lower pace. And so it continues to be a very attractive market from that point of view for food retailers. In this case, I would expect to continue to see openings not only from Biedronka, but from the other players. I think the important here The importance here is that Biedronka doesn't lose the relevance, and it continues to really make sure that it stays the most competitive in the and continues to serve the consumers the best way possible and evolving even on its offer on a continuous basis as it has been doing until now, which helps a lot, of course, in the gross sales and in the stability of the margins.
As to the margin in Portugal, so two main drivers for the margins because, of course, as you know, sales comparing with last year, the progression is not great. But I think that considering the basis, it was a very good and resilient performance. What we think is or what we have to say is that we had, Of course, in terms of margin mix, it was better because as we said, last year, even during the stockpiling, there was a lot of basic products that didn't help with the margin mix. And Portugal also put in place a lot of cost containment initiatives that are now bearing their fruits and allow for a better or an improved margins compared with last year. For the next three quarters, what we expect, of course, is a more benign comparable.
So we expect to be increasing our sales from last here. And that, of course, will help also to dilute. But we will continue, of course, as we said, to try to control the variables that is up really to the companies, and we are doing that on the cost basis and making sure that we control the cost structure because then when sales appear, that makes it very or makes it much better in terms of margin in percentage points. On Ara. So we continue to bet and our sales drivers, as we always said, would be our private label.
We are talking about private label that accounts around 40% of our sales. And This, we add the promotions and also a slight enlargement of the assortment to make sure that people can do most of their shopping in terms of food in other stores. This without losing any efficiency, On the contrary, this was really something that we pushed for in the last year to really make sure that the company will would control the costs and would be protecting the business with the slowdown in the economy and the decrease in the income of the consumer in the Colombian families. So on that, we feel quite comfortable with the current cost basis in Colombia. If sales appear, this will mean a path to possibility in the company at the very short term.
Okay. Very useful. Thanks.
Thank you, Cedric.
We're now taking our next Question from the line of Mikael Potira at UBS.
Hi, good morning, everyone. Thanks for the opportunity. I actually have just one topic I wanted to ask about, and it's about the cost Savings you've delivered. That is very impressive. I calculated you reduced cost per square meter by roughly 7%.
I'm wondering if you could give us a little bit more color what consisted. So is it mostly labor costs or some other costs you were able to take out? And also, as a follow-up, I'm wondering if you could disclose if you have received any kind of public help or any kind of, I don't know, co funding of the salaries, etcetera, in in the period would be good to know. Thank you.
Thank you, Michal. So on the cost saving and presumably so at in local currency, I don't know if it was really the 7%, but I can check it meanwhile. But the fact is that it was quite impressive, and it was not really on the personal costs. On these, we have already evened with the exception of the bonus that we paid last year in the Q1. We even increased the salaries already in January and making sure that we stayed competitive also from the employment point of view because as you know, the minimum national wage also increased.
And so it is not really on the personal costs that we are making our biggest savings in this particular. But of course, all the other headings from advertising, energy, from the all that it was possible. And together, not only, I would say that from the personal cost point of view, the main or the most important driver here is really efficiency. So it's not really the decrease in the salaries, on the contrary. It's the way that we do our processes and the fact that we were able to cope with an operation that it's much simpler and that we are trying really to make it even more simpler, not only from the supply point of view, but even on the shop floor with all the initiatives that I mentioned.
So in terms of automated forecasting and replenishment, in terms of trying to have direct linked to suppliers and have an automated approach to invoicing, etcetera. So to make sure that we save not only from the logistic point of view, but even from the administrative point of view. At the shop floor, what you see basically is that we, of course, are extending the self checkout to more stores to make sure that we have more places and more cashiers and POSs, points of sale for the consumer to use and to make it faster and more convenient at store level. In terms of public health, In our main businesses, there was no decrease in salaries or any contribution from the States, there was a small contribution in Hebe. That so not in Biedronka, but in Hebe.
There was some part time in this company.
And anything in Portugal?
No, nothing in Portugal.
Thank you.
We're taking our next question from the line of Maria Laura Adorno at Morgan Stanley.
Yes, good morning. My questions actually are very much similar to some of the ones that we've already had, but just maybe a little further. With respect to the margin resilience that you achieved in 1Q and considering on the gross margin front, I was just wondering if perhaps you could just give examples of initiatives that you put in And coming back to some of the questions, whether this is something that we could view as deep initiated as being something that is structured in the space. And the second question, so your basket inflation component was in negative territory, but just wondering and coming back Some of the comments you made about the competitive environment and the position you want to have for Biedronka. Are you seeing any signs of Inflation coming back and if so, in which category?
Thank you. And then the third question that I had, you had previously I mentioned that you would be interested to potentially make an acquisition outside of Poland. Just wondering what were your latest thoughts on this?
Laura, the line was quite bad. So just to confirm, on the first questions, We are talking your question regarding the gross margins?
So basically, Examples of measures you put in place to achieve cost savings. That was put number 1. Number 2, are there any categories where you're seeing early signs of inflation coming back in Poland and number 3, thoughts on M and A.
Okay, okay. So on the costs, as I mentioned, the idea is really to put in place some efficiency measures and, of course, also to look at all the cost categories and see how we can take more benefits out of that. We are talking about energy, so energy saving advertising, so not decreasing advertising, but making sure that we use the best means with lower prices. And then on the efficiency level for the operations, I'm talking about a direct automated relationship with suppliers at the supply chain point of view, the self checkout. This all provides more ways and more convenience, as I said, for the consumer without having to put more people in the stores.
And this, of course, helps when it comes diluting the costs in terms of sales. On the inflations, so as you said, we posted, in fact, in all banners, deflation at the basket level this quarter. The EUR 1,300,000,000 was the deflation in Biedronka. What I would expect is, of course, some pressure from the fact that some cost factors, prices are increasing, not only the salaries, but also some raw materials. So I would expect, of course, some increases or some pushing in increases for the prices to be back.
Currently, we are benefiting from a comparable base, which particularly on products relevant like meat, The prices last year were very high in the 1st months of the year. So that will tend, of course, to dilute throughout the year. So I would expect from the country's point of view that there will be some extra pressure for inflation. But currently, we are not seeing that because that is compensated partly by the very competitive environment with food retailers. On the acquisitions.
So we've never we always said that we would be or having the ambition to expand and to take advantage of the procurement basis of Poland and of its sourcing capabilities. Currently, we said it was a little bit on hold due to the pandemic. But this being said, of course, we are not going to close much more on that front.
Thank you.
Thank you, Lara.
We're taking our next question from the line of Antonio Celadas at AS Independent.
Good morning. Thank you for taking my questions and thank you for the presentation. So my question is related with your performance in Poland, Puros Ronke sales performance. So over the last 4 quarters since the pandemic started, you clearly outperformed the market and gained market share. So my question is, do you think that we will keep this we'll be able to keep this performance once The economy of Poland returns to normal life.
So apparently, you benefit with lockdown measures. So what were the points that over the last four quarters You were able to benefit from it. And do you think that now that the economy should start to return to normal life, will be tougher for you to keep market share going as you did in the last 4 quarters.
Thank you, Antonio. So we don't hide that we think we benefited from some of the lockdown measures and from the fact that consumers preferred to continue shopping in proximity. But this being said, it was a benefit that really was deserved because if we hadn't acted not only in making sure that we would provide convenience that we would provide an extended opening hours, and we would continue to craft and design all the promotions and all the adjustments in the assortment to cope with what the consumer needs, we wouldn't have be having this performance. So I don't think it's just the fact that people are, of course, eating more at home or not eating at the school. Is really the fact that Biedronka was there for the consumers, was one of the first to really make sure that It protected their consumers and our teams and our employees, and that was very relevant.
The rest, was a continuous improvement in the offer and continued to make sure that the consumer had access to all the best products with the best price in the market, and that helped a lot. So I would say that it is possible to continue to from the market. It will demand a lot of work for the company, but this is what the company plans to do, to continue never underestimating it's a competition, but continue to be very competitive and continue to serve the consumers. And once they have been shopping at the stores, and we've even gained some new consumers with the pandemic. We believe that they liked what they found in our stores, and they will continue to come.
So in this case, if we continue to provide a better offer, we will be able to continue also to outperform the market. So I think it's possible, but it will give us a lot of work, but I think we are prepared for that.
Okay. Thank you very much.
Thank you, Antonio.
There are no further questions on the line. Please continue.
So thank you all for your questions and for attending this conference call. With Q1 behind us, we are now entering a period where comparisons are against the performance already affected by the COVID-nineteen pandemic. Despite the ongoing uncertainty, our strategic focus will stay unchanged. All our banners will take the necessary actions to grow and to deliver on their efficiency projects to protect profitability. And our people, our consumers, our suppliers and the communities that we serve will remain at the core of our priorities.
Thank you once again, and I wish you all a nice day.