EARNINGS PRESENTATION Second Quarter 2018 1
Disclaimer The information contained in this document has been prepared Cencosud and their respective affiliates, officers, directors, by Cencosud SA ( "Cencosud") for informational purposes only partners and employees accept liability for any loss or damage and should not be construed as a solicitation or an offer to buy of any kind arising from the use of all or part of this material. or sell securities and should not be treated as giving investment advice or otherwise. No representation or This presentation may contain statements that are subject to warranty, express or implied, is provided in relation to the risks and uncertainties and factors, which are based on current accuracy, completeness or reliability of the information expectations and projections about future events and trends contained herein. The views expressed in this presentation are that may affect the business of Cencosud. You are cautioned subject to change without notice and Cencosud has no that such forward-looking statements are not guarantees of obligation to update or keep current the information contained future performance. There are several factors that can herein. The information contained in this document is not adversely affect the estimates and assumptions on which these intended to be complete. forward-looking statements are based, many of which are beyond our control. 2
Executive Summary • Revenues decreased 6.9% due to the depreciation of currencies against CLP, mainly ARS and BRL. At constant exchange rate, revenue increased a healthy 8.3%. • Positive SSS trend in Supermarkets Brazil and better performance YoY and QoQ in Peru and Colombia, positively impacted by the Soccer World Cup. SSS accelerated at Home Improvement in the region and Department Stores in Peru, against 1Q18. • The online channel of retail businesses increased 54.1% YoY, and reached a penetration of 3.6% 1 over total retail sales compared to 2.2% in 2Q17. • Adjusted EBITDA increased 6.6% with margin expanding 81 bps, driven by higher profitability in Supermarkets Brazil, Financial Services Argentina, as well as Supermarkets and Home Improvement Chile. 1 Considers supermarket formats at all countries with the exception of Brazil, Department Stores Chilean Operations and Home Improvement in the 3 countries 3
• Revenues decreased primarily due to the depreciation of all currencies Progress in Strategy Execution against CLP, mainly ARS (36.6%) and BRL (16.5%): • Chile achieved higher revenue driven by most business units. Profitability • In Argentina , Home Improvement and Shopping Centers posted growth above inflation, while Financial Services delivered solid 2Q18 2Q17 Chg. YoY Chg. YoY loan portfolio growth YoY. As Constant CLP mn CLP mn Reported Currency • Greenfield businesses continue to improve their performance, Revenues 2.406.517 2.586.037 -6,9% 8,3% both Department Stores in Peru and Home Improvement in Gross Profit 689.705 728.212 -5,3% 13,0% Colombia. Gross Mg. 28,7% 28,2% 50 bps SG&A (596.299) (655.583) -9,0% 8,8% • Adjusted EBITDA up 6.6% and margin expanded 81 bps: SG&A (% of revenues) -24,8% -25,4% 57 bps • Adjusted EBITDA 153.241 143.783 6,6% 22,4% Brazil posted improvements on a YoY and a QoQ basis, based on Adj. EBITDA Mg. 6,4% 5,6% 81 bps better revenue performance and greater operating leverage. Net Profit 3.682 24.046 -84,7% -51,9% • Argentina EBITDA margin expanded driven by Financial Services Net Profit Mg. 0,2% 0,9% -78 bps and Home Improvement, as a result of accelerated revenue growth and operating leverage. • Net profit decreased 84.7% YoY reflecting a non-cash FX • Peru posted an EBITDA margin expansion driven by Department loss due to the CLP devaluation against USD, partially offset Stores, Financial Services and Supermarkets. by lower tax expenses. • Colombia EBITDA margin remained stable driven by improved margins at Home Improvement, Shopping Centers and Supermarkets, partially offset by Financial Services. • Chile EBITDA margin decreased due to lower gains from the sale of properties YoY, and in a lesser extent lower profitability at Department Stores and Shopping Centers. 4
Progress in Strategy Execution Omnichannel Initiatives • Department Stores • • C&C (stock at DC) available at 46 stores compared to 34 Online channel of the retail businesses increased 54.1% YoY (SM as of June 2017. +44.6%, DS +47.3%, HI +105.7%), and reached a penetration of 3.6% 1 • over total retail sales compared to 2.2% in 2Q17. Bopis (buy online pick up in store, stock at the stores) available at 33 stores, compared to 2 stores as of June • Supermarkets (Regional) 2017. • C&C available at 267 stores; Drive thru at 40 stores. • 200 kiosks with PinPad, compared to 99 as of June 2017. • Buy online + delivery available at 108 stores. • Buy in store + delivery available at 133 stores. • Home Improvement Chile • Implementation of C&C with picking at the stores, at all 35 Easy stores. Argentina • Collect from store for large and bulky products available at all stores. Successful first hot sale at Blaisten. Colombia • Migration to new Call Center Atento. • Optimization of Easy.com.co Home page to 3 seconds of load, above its main competitors. 1 Considers supermarket formats at all countries with the exception of Brazil, Department Stores Chilean Operations and Home Improvement in the 3 countries. 5
Progress in Strategy Execution Efficiency Initiatives Supermarkets • • Chile: Peru • • Self Check-out: installed 114 units at 20 stores compared to Self Check-out: installed 9 units at 2 stores YoY. 62 units at 11 stores as of June 2017. • Self Scanning: installed 81 units at 16 stores, • Self Scanning: installed 60 units at 15 stores, similar to June compared to 66 units at 11 stores as of June 2017. 2017. • Self Service scales: installed 62 units at 53 stores as of June • Brazil: 2018, compared to 47 units at 47 stores as of June 2017. • Has installed doors at cold equipment at 130 • Argentina stores by the end of June 2018, compared to 120 • Self Check-out: installed 304 units at 66 stores compared to stores by the end of June 2017. 192 units at 49 stores as of June 2017. • Colombia: • Self Scanning: installed 124 units at 30 stores, compared to • Has installed doors at cold equipment at 21 76 units at 18 stores as of June 2017. stores YoY. • Self Service scales: installed 308 units at 182 stores as of June 2018, compared to 153 units at 90 stores as of June 2017. • Installed doors at cold equipment at 48 stores YoY. 6
Progress in Strategy Execution Efficiency Initiatives • Digital poster: tool which provides the stores the possibility of printing promotional posters by entering Supermarkets the product code and selecting the type of promotion. • Chile: • Colombia: • Robot: Scans more than 20,000 price tags each night and • delivers reports of price differences, product availability and Energy Efficiency project: LED lights, doors in assortment. 4 pilots being tested at 4 stores. refrigerators, renewal of cold equipment to save energy • consumption at store level. Energy consumption reduced Collecting Boxes 1 : 43 more equipment installed YoY reaching a by 10% YoY. total of 100 units installed. • • Receipt alerts: guarantee that once we receive goods Argentina that are sold out, these go thru directly to the selling • Energy consumption (Kwh): Automatically and by remote the space, to ensure availability of products and avoid loss of lights of the store are turned one and off, avoiding unnecessary sales. energy consumption. Implemented at 44 stores. • Availability of products/stock out controls: tool allows to • Peru monitor/have daily control of the stock-outs and • Scales: 249 scales renovated at 28 stores, making them suitable insufficient merchandise, allowing for an adequate to implement the SGB system (scales update perishable prices management of the stock at the store and avoid sale automatically with SAP). SGB implemented at 4 stores. losses. • Brazil: • Shifts Planner: automatically schedules shifts in an • Collectors: implementation of devices to update stock prices, optimized way, taking into account the particularities and supply and availability of products in store. Devices’ functions behavior of the individual store, ensuring compliance reduce the execution time of in store activities by at least 40%. with labor laws and work policies defined by the company. 1 Machine that enables automation of money count at store treasuries. 7
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