EARNINGS PRESENTATION First Quarter 2018 1
Disclaimer The information contained in this document has been prepared by Cencosud SA ( "Cencosud") for informational purposes only and should not be construed as a solicitation or an offer to buy or sell securities and should not be treated as giving investment advice or otherwise. No representation or warranty, express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. The views expressed in this presentation are subject to change without notice and Cencosud has no obligation to update or keep current the information contained herein. The information contained in this document is not intended to be complete. Cencosud and their respective affiliates, officers, directors, partners and employees accept liability for any loss or damage of any kind arising from the use of all or part of this material. This presentation may contain statements that are subject to risks and uncertainties and factors, which are based on current expectations and projections about future events and trends that may affect the business of Cencosud. You are cautioned that such forward-looking statements are not guarantees of future performance. There are several factors that can adversely affect the estimates and assumptions on which these forward-looking statements are based, many of which are beyond our control. 2
Executive Summary • Revenues decreased 4.0% due to the depreciation of currencies against CLP, but in local currency they increased 7.2%. • SSS accelerated in Supermarkets at all countries, Home Improvement and Department Stores in Peru, against 1Q17. • The online channel of the retail businesses posted an increase of 44.0% compared to 1Q17, and reached a penetration of 2.4% over total retail sales compared to 1.6% in 1Q17. • Adjusted EBITDA increased 7.0% with margin expanding 77 bps, driven by higher profitability in Argentina, mainly at Home Improvement and Financial Services. • Making significant progress on financial strengthening plan: • On May 9, 2018 signed agreement with Scotiabank which will strengthen the Financial Services business in Peru. • The sale price for 51% of the financial business in Peru was for USD 100 million and proceeds will be used to reduce Cencosud's debt. 3
• Revenues decreased primarily due to the depreciation of all Progress in Strategy Execution currencies against CLP, and the challenging environment in Brazil: Profitability • Chile achieved higher revenue driven by most of business units. • In Argentina , Home Improvement increased above inflation, 1Q18 1Q17 Chg. YoY Chg. YoY Financial Services posted solid loan portfolio growth and As Constant CLP mn CLP mn Supermarkets accelerated its SSS growth rate. Reported Currency Revenues 2.422.805 2.523.563 -4,0% 7,2% • Greenfield businesses continue to improve their performance, both Department Stores in Peru and Home Improvement in Colombia. Gross Profit 703.948 737.642 -4,6% 8,4% Gross Mg. 29,1% 29,2% -18 bps • SG&A (585.889) (631.209) -7,2% 5,0% Adjusted EBITDA up 7.0% and margin expanded 77 bps: SG&A (% of revenues) -24,2% -25,0% 83 bps • Argentina EBITDA margin expanded driven by Supermarkets, Home Adjusted EBITDA 183.161 171.229 7,0% 19,9% Improvement and Financial Services, as a result of accelerated Adj. EBITDA Mg. 7,6% 6,8% 77 bps revenue growth and operating leverage. Net Profit 52.453 68.077 -23,0% -11,1% • Colombia EBITDA margin benefited from the elimination of the Net Profit Mg. 2,2% 2,7% -53 bps wealth tax 1 and improved results from Home Improvement, partially offset by lower profitability at Supermarkets. • Increase in operating results did not flow through to • Chile EBITDA margin remained stable due to larger profitability at bottom line as net profit decreased 23.0% YoY reflecting Home Improvement & Shopping Centers, partially offset by a lower profit from exchange differences and higher Department Stores & Supermarkets to a lesser extent. taxes. • Peru and Brazil posted an EBITDA margin contraction due to expense deleverage reflecting lower Supermarket sales. 1 In December 2016, the wealth tax determined over equity was eliminated, with last payment made in 1Q17. Additionally, CREE was eliminated, integrating a surtax to the income tax. In 2018 the income tax is 33% with a surcharge of 4%. As of 2019 the surtax is eliminated. 4
Progress in Strategy Execution Omni-channel Strategy • Argentina : • • Supermarkets: Drive-Thru implemented at 15 stores. The online channel of the retail businesses posted an increase of Complementing food delivery thru third party 44.2% (SM +33.1%, DS +44.7%, HI +74.8%) compared to 1Q17, and reached a penetration of 2.4% 1 over total retail sales compared to agreements (Rappi). 1.6% in 1Q17. • Home Improvement: improved conversion rate after the implementation of online payment. Web for suppliers with the objective to increase dropship • Chile : sales. • Supermarkets: Increased coverage in the summer plan and 90 • Peru : minutes delivery services. Robot implemented at 5 Jumbo • Supermarkets: increase in the number of stores with stores and in trial at 5 more stores. C&C (12) and Drive-thru (4) service. Nationwide • Department Stores: Johnson ecommerce platform is live. coverage for non-food thru Wong & Metro. Metro Increase of 600 bps YoY in apparel contribution over total food available in all Metropolitan Lima. Launch of ecommerce sales at Paris.cl. C&C implemented at all Paris almacenes.metro.pe. stores. • Colombia: • Home Improvement: C&C service with picking from store • Supermarkets: Nationwide coverage for non-food e- enabled at 100% of stores since April 2018, which is commerce orders. Implementation of 12 new food complemented with the C&C service implemented in October stores for online shopping, covering 88% of the cities 2017 with supply from the DC. Dispatch from the CD within 24 with Jumbo stores. Complementing food delivery hrs also available since April 2018, within the Metropolitan thru third party agreements (Mercadoni). Region. 1 Considers supermarket formats at all countries with the exception of Brazil and Department Stores considers Chilean Operations. 5
Performance by Business REVENUES ADJUSTED EBITDA & MG. 1Q18 1Q17 Chg. YoY Chg. YoY 1Q18 1Q17 Chg. YoY Chg. YoY As Constant As Constant CLP mn CLP mn CLP mn CLP mn Reported Currency Reported Currency Supermarkets 1.710.678 1.814.359 -5,7% 5,0% 86.900 98.668 -11,9% -6,7% 5,1% 5,4% -36 bps Home Improvement 324.167 331.757 -2,3% 17,0% 37.797 31.187 21,2% 50,4% 11,7% 9,4% 226 bps Department Stores 264.117 262.800 0,5% 1,0% 9.374 13.730 -31,7% -32,6% 3,5% 5,2% -168 bps Shopping Centers 59.348 59.483 -0,2% 9,8% 49.635 47.670 4,1% 13,3% 83,6% 80,1% 349 bps Financial Services 62.969 53.159 18,5% 51,1% 36.435 24.925 46,2% 82,3% 57,9% 46,9% 1.097 bps Others 1.526 2.005 -23,9% -17,1% (36.979) (44.950) -17,7% -5,5% Consolidated 2.422.805 2.523.563 -4,0% 7,2% 183.161 171.229 7,0% 19,9% 7,6% 6,8% 77 bps Note: All figures in CLP million unless indicated otherwise. Segment “Others” includes Corporate expenses, Aventura Entertainment Centers and Loyalty Program. Also includes extraordinary gains from the sale of non-core assets: CLP 1,728 million in 1Q18 and CLP 144 million in 1Q17 from the sale of properties. Additionally, in 1Q17 the loss associated with the fire of Easy.cl Distribution Center was recorded for CLP 1,913 million and the wealth tax in Colombia for CLP 2,222 million. 6
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