EARNINGS PRESENTATION Third Quarter 2019 1
Disclaimer The information contained in this presentation has been Cencosud and their respective affiliates, officers, prepared by Cencosud SA ("Cencosud") for informational directors, partners and employees accept no liability purposes only and should not be construed as a for any loss or damage of any kind arising from the solicitation or an offer to buy or sell securities and use of all or part of this material. should not be treated as giving investment advice or otherwise. No representation or warranty, express or This presentation may contain statements that are implied, is provided in relation to the accuracy, subject to risks and uncertainties and factors, which completeness or reliability of the information contained are based on current expectations and projections herein. The views expressed in this presentation are about future events and trends that may affect the subject to change without notice and Cencosud has no business of Cencosud. You are cautioned that such obligation to update or keep current the information forward-looking statements are not guarantees of contained herein. The information contained in this future performance. There are several factors that presentation is not intended to be complete. can adversely affect the estimates and assumptions on which these forward-looking statements are based, many of which are beyond our control.
Overview of Corporate Structure 3
New organizational model Organizational Structure 1 • New CEO, Matias Videla appointed. • Effective December 1, 2019 Chief Executive Manager • As of November 21, 2019 the Company Matias Videla implemented a new organizational structure. • Appoints Country Managers. SM Chile Peru Manager Argentina Manager Cristian Siegmund • The purpose of the new structure is to: Alfredo Mastrokalos Diego Marcantonio • expedite decision making (such as Dept. Store Chile organic growth), Brazil Manager Colombia Manager Ricardo Bennett • take further advantage of local market Sebastian Los Marta Lucia Henao knowledge as they are close to the daily operation, Home Imp. Chile • Felipe Longo promote efficiencies across each country across the business units. 4 1. Abbreviations are defined as follows: SM: Supermarket manager, Dept. Stores: Department Stores Manager, Home Imp: Home Improvement manager.
Cencosud Financial Strengthening Key financial takeaways Debt Consolidation USD MM • Total gross debt as of December 31, 2018 In August, Cencosud Shopping issued a bond in the local 4.722 variation Brazil debt market for a total of UF 9 million equivalent to USD 347 - 256 variation Chile debt - 132 million. Cencosud Shopping Bonds 742 • As part of the Company’s plan to strengthen the balance Tender Offer - 464 sheet, it executed a Tender offer for the 2023, 2025 and Other bank debt payments - 494 2027 international bonds collecting USD 464 million Other accounting effects 84 during 3Q19. variation of Other countries debt - 5 • Prudent financial policies resulted in stronger credit Total paid debt - 393 metrics on a sustainable basis, leading to a net Total gross debt as of September 30,2019 4.328 Total liabilties per leases (IFRS16) 1.392 debt/Adjusted EBITDA ratio of below 4x times by year Cash and equivalents as of September 30, 2019 - 787 end. Other current financial assets - 476 • Prepayment fees amounted to USD 52 million in the Other non-current financial assets - 243 quarter. Total net debt as of September 30, 2019 4.214 1 Figures converted to USD using end of period exchange rate as of September 30, 2019 5
Cencosud Financial Strengthening • Key Figures 1 Total net debt increased due to adoption of IFRS16 • Excluding this effect, total net debt decreased 28.4% 3Q19 3Q18 YoY. Total Financial Debt (US$ Bn) 5,7 4,7 • Fitch Ratings updated the rating including a negative Cash and equivalents (US$ Mn) 787 202 watch for the Company, due to the uncertainties in Other Financial Assets (US$ Mn) 719 508 Chile and challenges in Argentina. Offset by: Net Financial Debt (US$ Bn) 4,2 3,9 • Net leverage ratio is 3.8x Adj. EBITDA LTM (US$ Mn) 1.119 916 • Adequate liquidity Net Financial Debt / Adj. EBITDA LTM 3,8 4,3 • Good access to capital markets • Manageable debt maturities Adj. Gross Debt/EBITDAR ratio vs Net Financial Debt/Adj. EBITDAR 3 Amortization Schedule (USD mn) 2 5,7 5,5 5,0 987 4,9 4,9 4,2 3,7 3,8 3,3 3,2 605 577 581 424 213 192 156 53 53 48 50 34 14 2015 2016 2017 2018 LTM 3Q2019 19 20 21 22 23 24 25 26 27 28 29 30 41 45 1 Figures converted to USD using end of period exchange rate for each period. 2 Figures converted to USD using end of period exchange rate as of September 30, 2019. Figures are presented net off gains/losses from mark to market of derivatives, overdrafts and Comex debt. 3 EBITDAR does not consider the extraordinary gains from sales of banco Cencosud and Paris or profit of the businesses. Adjusted Debt considers liabilities from leases but excludes the debt of Cencosud and Paris banks. 6
Cencosud Financial Strengthening 3Q19 Debt by Currency 1 Debt by Interest Rate 1 Other Latam; 1% Floating; 4% USD; 13% • 71.2% of cash is held in USD vs 7.3% the previous year • Other LATAM currency exposure reduced due to the payment of Brazilian debt CLP + UF; 86% • Most derivative hold a positive mark to market Fixed; 96% 3Q18 • Chilean peso devaluation didn’t create need for additional assets as collateral Other Latam; 7% Floating; 19% USD; 20% CLP + UF; 73% Fixed; 81% 1 Debt by Currency and Debt by Rate include Cross Currency Swaps. 7
Advances in strategic pillars 8
Strategic Focus: Omnichannel 1 Ov. Tot. Sales Over Tot. • Chile new Jumbo app with express E-commerce Sales VAR % 19/18 3Q19 Sales 3Q18 delivery Supermarkets 40,5% 1,9% 1,2% • Argentina: efforts focused on increasing web page visibility on the Department Stores 25,3% 12,0% 8,5% Supermarket internet Home Improvement 41,1% 4,0% 2,6% • Colombia: increasing Metro website Total 33,9% 3,4% 2,2% coverage. Expanding on Omni-services • Peru : focused on product offer on website. • Chile: focused on post-sale automatization and offering more Omni-services to clients Home • Argentina: focused on payment option Improvement • Colombia: increasing online assortment • Chile: Department • Positive results after the changes Stores made to the lay-out and efficiencies in the picking process Supermarket e-commerce figures considers e-commerce and total sales of Chile, Argentina, Peru and Colombia. Department Stores considers online and total sales of Chile. Home Improvement considers online and total sales of Argentina, Colombia and Chile. 9
Sustainability strategy update • Dow Jones index (10 points improvement) • Improvement in environmental (+18 pts) and social areas (+14 pts) • Moved up three position in the international ranking, 12 th in supermarkets category • Environmental compliance program • Eco-packaging training • Responsible Procurement On-going Projects • Ethics Code for suppliers • Community bond program 10
Chile & Colombia civil unrest Situation & Impacts: • Businesses were impacted due to the experienced civil unrest • Inventory losses, damage to some stores and Support to Micro – and Small Enterprise Chile y loss of earnings are covered by insurances. • shopping centers tenants: To date, in Chile, more than 95% of our stores • Payment of bills in advance to micro and are open small suppliers • amounted to CLP 941 million in November 2019 • Reduction of the monthly minimum value for tenants • equivalent to the number of days our Shopping Centers were closed. 11
Quarterly results 12
Executive Summary Adjusted EBITDA 1 margin expanded 161 bps excluding IAS29 accounting and • increased 164 bps As Reported supported by operational improvements in Brazil, Colombia and to a lesser extent, Argentina as well as lower SG&A due to the adoption of IFRS16 rule 2 . This was partially offset by the softer consumption in Chile, weak macroeconomic environment in Argentina and higher severance payment of almost USD 40 million as we continue to drive efficiencies throughout the business. • At constant exchange rates, revenue increased 7.1% YoY. Under previous accounting standards which excludes IAS29 (hyperinflation accounting in Argentina) effective since 3Q18, revenues decreased 1.1% due to the depreciation of ARS and BRL against the CLP. As reported, and including IAS29, revenues increased 14.7%. • Profit increased to CLP 52.131 million in 3Q19 in comparison to a loss of 15.339 million reported the previous year. The increase is explained by the better results of Brazil and Colombia, lower expenses due to IFRS16 and higher income by function results. 1. Adjusted EBITDA: Gross profit + Other income by function + Other gains (losses) – SG&A + D&A + profit of equity method associate - Asset Revaluation 2. IFRS16 rules states all leases exceeding 12 months in length and not of low value, should be recognized in the balance sheet. 13
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