Fourth Quarter Corporate Presentation Cencosud 2015
Corporate Presentation | www.cencosud.com | 2 The information contained herein has been prepared by Cencosud S.A. (“ Cencosud ”) solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving investment or other advice. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. Any opinions expressed in this presentation are subject to change without notice and Cencosud is under no obligation to update or keep current the information contained herein. The information contained herein does not purport to be complete and is qualified in its entirety by reference to more detailed information included in the preliminary offering memorandum. Cencosud and its respective affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This presentation may contain statements that are forward-looking subject to risks and uncertainties and factors, which are based on current expectations and projections about future events and trends that may affect Cencosud’s business. You are cautioned that any such forward-looking statements are not guarantees of future performance. Several factors may adversely affect the estimates and assumptions on which these forward-looking statements are based, many of which are beyond our control.
Corporate Presentation www.cencosud.com 3 Cencosud snapshot Retailing P etailing Power er Key ey Metrics etrics 2015 • 1,117 Stores + 53 Malls 936 Supermarkets; 2.4 mm sqm • 4,394,604 sqm of Selling Space 53 Shopping Centers; 0.8 mm sqm • 800 MM Customers • 148,700 Employees 94 Home Improvement; 0.8 mm sqm • Over 5.5 MM Cards Issued 88 Department Stores; 0.4 mm sqm 17.353 16.830 CAGR CA R OF 15.8% F 15.8% Revenue E enue Evolution olution (USD D Bn Bn) 16.503 14.601 12.080 9.886 9.785 8.847 6.032 4.974 4.018 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 *
Corporate Presentation www.cencosud.com 4 Cencosud is a leading multi-format retailer in South America Regional Footprint / Market Position Underpenetrated Region Sales Area Per Capita D-Stores (sqm/capita) 3 rd Supermarkets 2 nd Home Improvement Sales Area Per Capita DYS (sqm/capita) 1 st Supermarkets 4 th Department Store 4 th Supermarkets Northeast Region (#2) Minas Gerais (#1) Rio de Janeiro (#3) 2 nd Supermarkets Sales Area Per Capita Food Retail (sqm/capita) 2 nd Home Improvement 2 nd Shopping Centers 2 nd Department Stores 2 nd Supermarkets 1 st Home Improvement 2 nd Shopping Centers Source: ILACAD and US Census Bureau, figures as of December 2013 Source: Euromonitor
Corporate Presentation www.cencosud.com 5 Cencosud a Development and Growth Story 2009 LTM 2015 1,170 180% Acquisitions and Revenue (USD Billion) 10,873,515 192% Colombia 17.4 663,218 16.8 3.6x 89% 16.5 14.6 12.0 9.9 9.7 8.8 6.0 4.9 4.0 2.2 2015 1: this number includes shopping centers 2. EBITDA is calculated as EBITDA minus revaluation of assets, indexation units and foreign exchange variations. Source: ILACAD and US Census Bureau, figures as of December 2013 3: Net Financial Debt does not include debt related to Cencosud ´ s banking activities.
Corporate Presentation www.cencosud.com 6 The Cencosud Roadmap Strong Consumer Team Centric Focus Sustainable Strategic Focus: Healthy Brands Organization, Focus on Consumer Efficiency & Bottom Line & Productivity The Business: Expense Control, Cash Competitiveness Generation Growth & Market Share Main Market Trends, Omni-Channel, Loyalty Loyalty Program, Brand Building Programs Omni-Channel Speeding up E- Competitive Commerce Private Edge Label with Perceived Value
Corporate Presentation www.cencosud.com 7 High Income Brands Low Income Brands Quality in Service Excellence in Perishables Imported Products Promotional Pricing Quality on a Budget Proximity
Corporate Presentation | www.cencosud.com | 8 1Q15 Highlights • Revenue expansion in all divisions mainly fueled by Supermarkets and Home Improvement. • Department Stores SSS back to positive territory with gross profit gains. • Colombia continues to deliver positive SSS in Food retail and Home Improvement. • Significant expansion of gross margin drives Adj. EBITDA growth. • Closed Scotiabank financial services transaction.
Corporate Presentation | www.cencosud.com | 9 Food Retail and D-Stores leading top line growth • Robust SSS in Chile supermarkets. • Santa Isabel repositioning gaining additional speed • Stable gross margin with more efficient pricing strategy • Declining traffic trend broken • Further top line growth curbed by negative currency swings in the COP and BRL. • D-Stores bouncing back from 2014 lows. • Positive SSS from Chile and Peru greenfield • Gross margin recovery following improved currency pass thru and better pricing • Inventories in Check
Corporate Presentation | www.cencosud.com | 10 Food Retail in Brazil Undergoing High Competitive Pressures • Depreciation of BRL and soft demand lead to negative SSS & revenue contraction from Brazilian supermarkets. • Management changes in Brazil laying ground to later develop improved commercial strategy. • Focus on profitability: EBITDA generation at around 2% according to guided by management. • SAP rollout yielding results in gross profit through better performance management • Leaner operations; Additional SG&A curbs & COGs management to come
Corporate Presentation | www.cencosud.com | 11 Consolidated Revenue Consolidated Adjusted EBITDA Evolution Evolution Figures in CLP million • Revenue gains across all division despite • Ebitda expansion on Supermarket improvements unfavorable currency swings in Colombia and in Peru, Brazil and Argentina. Brazil. Department Stores posting Ebitda expansion of • Positive SSS across all markets and businesses over 100% on improved Chile performance. • except Brazil. • Home Improvement booked a reduction in Ebitda • Colombia Home Improvement recovering SSS generation on new store openings across its traction on better product mix and recovering footprint, labor contingencies in Argentina and construction industry in Bogota area. migration to new product mix in Colombia. .
Results By Business
Corporate Presentation | www.cencosud.com | 13 Revenue Evolution Positive SSS in Argentina and stable currency led top • line gains in the division. • 13 Net Store Openings YoY or 1.6% selling space Growth. • Chile recorded outstanding 1Q15 SSS performance Supermarkets on recovering Santa Isabel. • Price investment strategy in Peru continues to yield 303 SSS gains. • Aggressive competitive scenario in Brazil and Figures in CLP million slowing economy lead to negative SSS. SSS evolution by country (local currency) Adjusted EBITDA Evolution Peru Ebitda jumped 85.7% on expanding gross • margin and curbed SG&A. • Brazil Ebitda growth was fueled by expanding gross margin and SG&A cuts. • Ebitda in Argentina posts expansion of 7.4% on positive SSS and stable gross margin. 813 • Chile and Colombia posted lower Ebitda generation on labor contingencies in Chile and higher headcount in Colombia. Colombia margins remained stable
Corporate Presentation | www.cencosud.com | 14 Department Stores Home Improvement Figures in CLP million 34.143 Revenue up 19% on positive SSS across all Gains in revenue on positive SSS in Chile and Peru. • • markets led by Argentina. • Progress in EBITDA on improved pricing and currency • Ebitda for division dropped on greater SG&A management. from Argentina on labor contingencies and • Improved inventory management leading to reduced accounting changes at Blaisten, collective working capital needs. bargaining agreements and one off in Chile. Colombia continues to improve performance. •
Corporate Presentation | www.cencosud.com | 15 Shopping Centers Financial Services 40.243 - 21.1% 36.173 Figures in CLP million 28.542 - 4.6% Revenue growth in all markets; Chile mainly Argentina and Peru lead in top line growth on greater • • explained by retroactive lease collection for portfolio. antenna space and renegotiation of lease • Lower risk in Brazil explains greater contribution to agreements with Ripley. revenues and Ebitda. • Shopping Center EBITDA contracted to higher • Lower EBITDA in most markets was the result of real estate taxes paid in Chile and Argentina higher cost of funding partially offset by higher occupancy rates in Chile, Argentina & Peru.
Corporate Presentation | www.cencosud.com | 16 Effective Tax Rate Conciliation • Chile • Higher income tax rate of 22.5% vs. 20% in 1Q14 • Non- Cash effect of un-claimable tax losses at a HoldCo level of CLP 4,217 million (FUT effect) • Brazil: • Badwill due to corporate reorganization • Non-Cash unrecoverable Tax Losses at our Brazilian Sub • Total Effect of CLP 6,559 million • Colombia • Higher income tax rate of 39% vs. 34% in 1Q14 • Newly created wealth tax (non-deductible tax expense) as a one time effect in the 1Q15 for the next 2 years • Accelerated depreciation of tax goodwill Higher income tax in Colombia due to tax reform • Total effect of CLP 4,010 million
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