Reduction of margins, cost control, efficient selection and productivity, key for not passing the full impact of cost prices on to the sales price of products.
- The impact of the increase in cost prices has reduced the company’s margin by 0.6 points, leaving profitability at one of its lowest in the company's history: €0.025 profit per euro of sales, compared to €0.027 in 2021.
- This effort to reduce the company's margin and profitability has led to savings of 375 million euros for the over 5.7 million households that shop at Mercadona, which the company has not passed on to the shopping basket.
- Mercadona has achieved net profit of 718 million euros, 5% more than in 2021, and has maintained its policy of sharing profit with employees, increasing the amount shared by 8% to reach 405 million euros.
- Mercadona's tax contribution to public treasuries was historic in 2022: over 2,263 million euros, 12% more than in 2021.
- With regards to its contribution to creating stable, quality employment, it has created 3,000 jobs with permanent contracts (1,000 of them in Portugal), and has guaranteed the purchasing power of the 99,000 people who make up its staff with salary increases in line with the CPIs of Spain and Portugal.
- In 2022, Juan Roig and Hortensia Herrero allocated over 80 million euros of their dividends to reactivating the economy of the Valencian Community and Spain, a figure that they will increase in 2023 “because knowledge and money bring happiness...if you share them”.
Mercadona, a company with physical supermarkets and online sales, increased its consolidated sales in a constant surface area by 11% in 2022, reaching 31,041 million euros. Of this total, 30,304 million corresponds to the business in Spain, the remaining 737 million corresponding to that of Portugal, where the evolution of the 39 stores it now operates allowed its sales to increase by 77%.
During these twelve months, the company has created over 3,000 new stable, quality jobs (1,000 in Portugal), which has allowed it to end the year with a staff of 99,000 people, all with permanent contracts. In addition to this, and in order to guarantee their purchasing power, in the framework of its Total Quality Model, it has improved both the base salary and bonuses existing for all staff, which has led to a salary increase in line with the CPI of each country, specifically of 5.7% in Spain and 9.6% in Portugal, a country where the starting salary at the company has also been increased by an additional 11%.
One of the lowest profitability levels of its historical series:
In 2022, the company worked jointly with the suppliers it collaborates with to adapt to the complex context arising from the increase in energy and raw material prices, with the resulting impact on the cost price of products at the source of 39% in crops (source: Ministry of Agriculture, Fisheries and Food) and 20% in the food industry (source: INE - National Statistics Institute).
To minimise the impact of this inflation on its sales prices to the public, the company has implemented numerous measures to reduce costs and multiply efficiency, which has allowed productivity to be improved by 7% compared to 2021, once again improving the company’s management. Examples of this are the designing of the DPP (Direct Product Profit), a tool that has entailed 5 million euros of investment and which allows the costs incurred by each product in each of its processes and their profitability to be known precisely; and the consolidation of the Store Organisation model so that each sales section or department can be scientifically allocated the staff necessary for each task, which implies significant improvements for the work-life balance of store personnel.
Thanks to all of this, and in particular the mental effort of the company's 99,000 employees and 3,000 suppliers, Mercadona has been able to offer its customers an efficient selection with conclusive quality, as shown by the fact that the average increase of its RRP was approximately 10% in 2022 compared to 12% for food prices. In fact, thanks to this shared effort to curb the impact of cost prices on the shopping baskets of the 5.7 million families who place their trust in Mercadona, through efficiency in costs and productivity the company has managed to save over 375 million euros overall. This has led to a reduction of 0.6 points in its margin, which places the company's profitability at one of the lowest levels in its history, €0.025, compared to €0.027 in 2021.
Historic tax contribution to public treasuries: a 12% increase
Mercadona has made a historic contribution of 2,263 million euros to the public treasuries of Spain and Portugal, a 12% increase. Notable in the breakdown of this contribution are the items corresponding to VAT, which has increased to 418 million euros, a 26% increase; and the 443 million euros in Income Tax for employees, a 12% increase.
Additionally, the company increased its direct contribution to 13%, up to 390 million euros; and has paid a total of 240 million euros of corporate tax, a 22% increase. Likewise, a pioneer in its policy of sharing its profit with its employees, it shared the sum of 405 million euros with its staff, an 8% increase.
The group's net profit amounted to 718 million euros. This figure represents a 5% increase, practically half of the increase in the sales figure (+11%), confirming the effort the company has made to contain inflation via the optimisation and reduction of margins and profitability.
An investment effort of 923 million, from reinvested profit
With the goal of continuously progressing in the consolidation of a more digital, productive and sustainable company model, with “The Boss” (the customer) as its lighthouse, thanks to the profit reinvested year after year, Mercadona has been able to make further investment this year of 923 million euros, of which 140 million euros has been invested in Portugal. Thanks to this, the company ended 2022 with 1,676 supermarkets (39 of which are in Portugal), after having opened 63 supermarkets (10 in Portugal), and closed 49 stores that could not be adapted to its new more efficient and sustainable store model (Store 8).
This effort was also reflected in the opening of two new Hives (warehouses dedicated exclusively to the preparation and distribution of orders for online sales); in the promotion of the Ready-to-Eat department, allowing it to end the year with 972 stores with this new department; the construction, renovation or adaptation of its logistics centres; the company entering five new districts of Portugal during 2022; the opening of the first phase of the new offices in Albalat dels Sorells (Valencia), at which over 250 people now work; and in the innovation and development of new IT tools to continue reinforcing the efficiency of the company.
More “Yes to the planet”
Mercadona has continued to reinforce its commitment to caring for and protecting the environment, promoting specific policies on waste management, carbon footprint and water footprint, to which it has allocated an investment of 40 million euros in 2022. It has thereby managed to reduce its carbon footprint by over 4,200 tonnes of CO2, and has increased its commitment to non-polluting renewable energies with the installation of 38,000 solar panels on its roofs. Additionally, it has continued to collaborate with the most vulnerable through the donation of essential products, with 25,100 tonnes (+22% compared to the previous year) donated to the over 550 charities it collaborates with.
Juan Roig: “The generation of wealth is a shared effort by all of us who make up Mercadona”
Mercadona's President Juan Roig gave thanks for the trust of the “Bosses” who shop at Mercadona each day. He also highlighted “being very proud of the 99,000 people who make up the company, because when faced with exceptional situations, we outdo ourselves more and more every day. All of them share a company model that promotes prosperity with a common purpose: spreading the profit widely through society. 2022 has thus been a year in which the company made a historic tax contribution to public treasuries, and thereby to the running of our welfare state.”
According to Juan Roig, all these facts confirm that “business owners, managers and employees are those that generate wealth and prosperity through the company. Afterwards, if those who must manage it are able to do so well, there is wealth for everyone; and if not, there is conflict.”
Investment of 1.1 billion euros in 2023 and 1,000 new jobs
Mercadona plans to invest 1.1 billion in 2023 to continue promoting its strategic transformation plan, 280 million being invested in Portugal. These resources will mainly be allocated to opening new supermarkets, and to the construction, renovation and expansion of its logistics centres to continue reinforcing its optimisation, for example in Almeirim (Santarém), where what will be its second logistics centre in Portugal and the largest Mercadona has in the chain is under construction. To do all this, the company will be creating more than 1,000 stable, quality jobs in 2023, between Spain and Portugal.
Juan Roig has stated that so far in the month of March “we have lowered the price of 157 products, and we will continue to strive to reduce cost prices, in order to reduce sales prices to the public on the Shopping Trolley Menu so that “The Boss” can do their total shopping at the lowest possible price, without affecting quality and guaranteeing the profitability of all links of the chain.”
Juan Roig and Hortensia Herrero Legacy Project
For another year, Juan Roig and Mercadona's Vice-president, Hortensia Herrero, have reinforced their commitment to society, deciding to reinvest a significant part of the dividends received from their stake in the company. In total, both have allocated 80 million euros of their personal wealth in 2022 to different initiatives in the fields of Entrepreneurship, Training, Sport, Entertainment, Art and Culture, which have been channelled through the Legacy Project.
This commitment, which began over a decade ago and which will continue in 2023 with a further 100 million euros of their personal wealth, came about from their shared conviction that “knowledge and money bring happiness…if you share them”. This took place through various sustainable charitable projects, such as Marina de Empresas, the Fundación Trinidad Alfonso, Valencia Basket Club, L’Alqueria del Basket, Licampa 1617 (Roig Arena) and the Hortensia Herrero Foundation.
Mercadona President Juan Roig following the holding of the 2022 Press Conference.
Mercadona President Juan Roig at the Jarro Co-innovation Centre in Paterna, Valencia.
Juan Roig and members of Mercadona's Management Committee following the holding of the 2022 Press Conference.
Annual Report 2022