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Earnings Presentation
Second Quarter
2013
2
for
Cencosud Highlights
2Q13
Second Quarter 2013
Operational & Financial Highlights
• The Company made further progress in the consolidation and
rebranding of the supermarket operation in Colombia and posted +3.6% SSS
• For the first time since being acquired Johnson posted positive EBITDA and a 573 bps improvement in EBITDA margin
• Cencosud announced a binding agreement with Itaú for the joint development of the financial retail business in Chile and Argentina.
• Key Financials
• Revenues increased 13% YoY
• Adjusted EBITDA grew 17% YoY, consolidated adjusted
EBITDA margin increased from 6.1% in 2Q12 to 6.4% in 2Q13
• Net income decreased 78% YoY
4
Note: All figures and variations are in USD
Revenues evolution (US$bn)
Adjusted EBITDA (US$mm) and margin (%)
6.1%
2Q 2012 2Q 2013
Solid revenue growth and increase in adjusted EBITDA margin
13%
2Q 2012 2Q 2013
17%
6.4%
Adjusted EBITDA by Country
2Q13
2Q12 Colombia 0%
Peru 9%
Brazil 9%
Argentina 26%
Chile 56%
Argentina 21%
Chile 59%
Peru 4%
Colombia 8%
Brazil 8%
5
SG&A: Stable margin despite growing regional presence
Consolidated (USD million) 2Q12 2Q13 Sales 4,379 4,945
SG&A 1,050 1,199
SG&A over sales (%) 24,0% 24,2%
• Argentina had a 20% increase in salaries after the union negotiations with the government
• Supermarket and shopping center Colombia integration increased SG&A by CLP 45,990 million • Start up of Paris in Peru
• Increase in real terms salary expenses in the supermarket division
• Increase in SG&A in the Peruvian shopping center operation after the renewal of its Plaza Lima Norte lease agreements
6
Non-operating Result: Taxation & Exchange variations
Taxation: Colombia • Equity vs. net income • Owner of Colombia is affected by the
devaluation of Col $ vs. Euro: CLP 8,417 MM • Effective tax rate of 35.8% in 2Q12 vs. 71.6%
in 2Q13
Foreign Exchange Variation • Total Debt as of June 2013: USD 5.3 bn. • Short term debt: USD 371 mm. • Exposure to USD: 13% (689 MM after CCS) • CLP vs. USD March 2013 (472,0) to June
2013 (507,2): +7,5%
7
-46.349
(9.226) (5.381)
(20.441)
-55.135
(27.920)
(802)
(21.249)
Net Financial Costs Exchange variations Result of Indexation Units Taxes
2Q122Q13
+19% +203%
- 85% +4%
Note: All figures are in CLP million
Openings 2Q13 vs. 1Q13
Cencosud opened 14 stores and increased selling space 1%
Openings 2Q13 vs. 2Q12
* Includes 96 new supermarkets and 431,040 sq meters from the Colombian operations.
+32% increase in
selling space
+1% increase in selling space +5% increase in
selling space
+8% increase in selling space 10
markets Super
3 Department
Store
169 markets*
Super
4 Shopping Centers
5 Department
Store
8
1 Home Improve
ment 1 Shopping Center 1 Home
Improve ment
Cencosud opened 179 stores and increased selling space 18% LTM
Investor Highlights
Colombia: Integration Yielding Results
• Rebranding effort continues: • 8 Jumbo stores already operating • 4 cash & carry stores closed, will reopen as
home improvement stores
• Positive results in 2Q13: • 2Q13 supermarket SSS 3.6% vs. -7.7% in
1Q13 • 2Q13 Home Improvement SSS 0.4% vs. -
3.5% in 1Q13
10
11
Financial Services
Agreement with Itaú
MOU Close of Deal Close of Transaction
90 days 6- 9 month
JUN13 SEP13 DEC13 JUN14
Subject to regulators approval
• CENCOSUD announced a binding agreement with Itaú for the joint development of the Financial Retail business in Chile and Argentina
• Total up-front cash payment of approx USD$ 1,580 million:
• USD$ 280 mm from the sale of 51% share of CAT Chile • Non cash to CAT Argentina: USD$ 27 mm of capital
contribution • USD$ 1,300 million in the form of payment of the credit
card portfolio funding in both countries
• Itaú will provide funding to finance 100% of the future growth in both countries
12
devaluation Currency
Brazil
Operational:
Non-operational:
• As of June 30, Brazil’s LTM EBIT represented 8.3% of Cencosud EBIT
• After a 9% devaluation of the R$ against CLP, Cencosud EBIT would reduced by 0.8%
Effect on Results
• Debt: 3% of Cencosud debt is in R$ • 9% devaluation reduces Cencosud
total debt in 0.3% • Financial Expenses and Fx Differences:
• 9% devaluation reduces Cencosud Financial Expenses in 1.2%
13
Cencosud World-class
Corporate Governance
• 9 Directors: Well-regarded and experienced group of people
• Elected at the Annual Ordinary Shareholders’ meeting
• Elected every 3 years
• 2 Independent members • David Gallagher: member
since 2011 • Richard Büchi: new
independent member
• International Board Membership: • Erasmo Wong
• Christian Eyzaguirre
• Julio Moura
• Roberto Phillips
• 3 members from the controlling family:
• Horst Paulmann, Chairman • Heike Paulmann • Peter Paulmann
14
Cencosud Strategy
for next 18 months
• Deleverage
• Increase Brazil’s
profitability
• Integrate Colombia
Financial Structure Cencosud
Financial Ratios Net debt evolution (US$bn)
2Q13
2012
2011
2010
2009
Interest coverage
2Q13
2012
2011
2010
2009
Net leverage (net debt/EBITDA)
2Q13
2012
2011
2010
2009
Total debt / equity
2Q13
2012
2011
2010
2009
16
Breakdown by issuer
Amortization schedule (US$mm)
Breakdown by currency Breakdown by interest rate
Source: Cencosud Note: Includes cross-currency swaps Note: Includes cross-currency swaps
Cencosud
Subsidiaries Variable rate
Fixed rate
17
376 512
389 271 219 241
37 35
814
74
1275
92 110 111 95 257
46 17 105
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Results
Business by
Source: Cencosud. Figures converted to USD, exchange rate by the end of June 2012 and 2013
SSS evolution by country in local currency
SUPERMARKETS
Adjusted EBITDA evolution (US$ mm)
Revenue evolution (US$ bn)
+14%
+4%
2Q 2012 2Q 2013
2Q 2012 2Q 2013
19
HOME IMPROVEMENT SSS evolution by country in local currency
Adjusted EBITDA evolution (US$ mm)
Revenue evolution (US$ mm)
+8%
+13%
2Q 2012 2Q 2013
2Q 2012 2Q 2013
2Q12 2Q13
20
1Q13
Adjusted EBITDA evolution (US$ mm)
SHOPPING CENTERS
Revenue evolution (US$ bn)
+34%
2Q 2012 2Q 2013
+25%
2Q 2012 2Q 2013
21
• Revaluation of assets decreased 78.7% in 2Q13 (CLP 14,330 million) as a consequence of:
• Shopping centers started charging parking service in 2Q12 • New shopping centers in Chile positively affected 2012 results
FINANCIAL SERVICES Gross loan portfolio evolution
CHILE ARGENTINA PERU
Provision/ Loans (%) Provision/ Loans (%) Provision/ Loans (%)
22
819 819 881
2Q11 2Q12 2Q13
MM
USD
7,2% 7,6% 7,9%
2Q11 2Q12 2Q13
10,0%
6,0% 4,9%
2Q11 2Q12 2Q13
193 237
279
2Q11 2Q12 2Q13
MM
USD
49
79
2Q12 2Q13
MM
USD
15,5%
15,2%
2Q12 2Q13
DEPARTMENT STORES
* Non comparable figures. Since 1Q13 SSS consolidate Johnson stores.
Adjusted EBITDA evolution (US$ mm)
Revenue evolution (US$ mm)
+8%
+20%
2Q 2012 2Q 2013
2Q 2012 2Q 2013
SSS evolution by country in local currency
2Q12 2Q13
23
1Q13
Department Store Business in Latin America 24
40 Stores 261.799 m2
38 Stores 112.546 m2
3 Stores 16.831 m2
84%
15%
1%
Revenues 2Q '13Paris Chile Johnson Paris Peru
Chile PeruPopulation (mm pop.) 16,8 30,5GDP per cápita (PPC) (MUS$) 19,5 11,4Mt2 Selling Space. TxD / 1.000 Hab. 62,0 11,0
Department Store: Our Strategy 25
Closeness Brand, Low Cost
Modern Brand
53% Apparel – 47% Hard Goods
70% Apparel – 30% Hard Goods
Private Label represent 24% of our Revenues and 37% of our Contribution
Private Label represent 52% of our Revenues and 74% of our Contribution
Service an customer experience, stylish, emotional, surprising
Happy , confidence and convenient
We double our revenues in the last 4 years 26
1.228
1.3621.493 1.554
254268
5
1.000
1.200
1.400
1.600
1.800
2.000
2010 2011 2012 12 LTM 2Q '13
Revenues (MMUS$)
Paris Chile Johnson Paris Peru
+11%+10%
+9%
+10%
+28%1.747
+19%1.827
+21%
28,3% 27,7% 27,8% 28,3% 28,4%23,7% 25,1%
31,7%
21,7% 20,9% 20,7% 21,4% 21,4%
32,4%35,4% 35,2%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
2010 2011 2012 1S '12 1S '13 2012 1S '12 1S '13
Gross Margin and SG&A excluding dep
Gross Margin SG&A
SG&A: Efficiency Efforts 27
• Paris Chile maintains the efficiencies in margin and operating expenses •Johnson improves 6,6 percentage points in margin and keeps looking for expenses efficiencies
EBITDA Composition 28
• Paris Chile increased EBITDA 40% in 2,5 years • Johnson´s breakeven expected to be reached within the next 24 months after the
integration with Paris • Results from Paris Peru reflects start-up costs
-4
8093
107
-22
85
112
-15
93
0
20
40
60
80
100
120
2010 2011 2012 12 LTM 2Q '13
EBITDA by Business
EBITDA Composition 29
12LTM ‘13 2012 2011 2010 80 93 107 112
-22 -15
-4
6,6% 6,8% 7,2% 7,2%
-8,6% -5,5%
-85,0%
• Paris Chile increased EBITDA 40% in 2,5 years • Johnson´s breakeven expected to be reached within the next 24 months after the
integration with Paris • Results from Paris Peru reflects start-up costs
30 • 2Q13 Paris Chile EBITDA is the highest in the Department Store Industry • Johnson achieves its first quarter with Positive EBITDA
Paris Johnson Cencosud Falabella Ripley La Polar HitesRevenues 369.046 64.912 433.958 532.357 305.919 147.910 77.765 Gross Margin 104.659 20.596 125.256 158.110 83.876 38.158 20.437
% Revenues 28,4% 31,7% 28,9% 29,7% 27,4% 25,8% 26,3%SG&A e/dep -79.154 -22.821 -101.974 -130.960 - -40.024 -17.810
% Revenues -21,4% -35,2% -23,5% -24,6% 0,0% -27,1% -22,9%EBITDA 25.506 -2.224 23.281 27.150 - -1.866 2.627
% Revenues 6,9% -3,4% 5,4% 5,1% 0,0% -1,3% 3,4%
Six-Month, ended June 30th
Source: Cencosud and Ripley, Hites, La Polar and falabella earnings report
DEPARTMENT STORE: PERU 31
• 3 first stores are already operating: Arequipa, Plaza Lima Norte y Cajamarca
• Commercial Strategy similar to Paris Chile: focus on the customer service
• Local Team coordinated with Paris Chile
• Goals: • Open 3 more stores this year 2013: Lambramani (Arequipa), Megaplaza
(Lima) and Ica • Close 2014 with 10 stores, to reach 13 to 14 stores by 2015, with 70,000 m2
of selling space.
• Estimated Investment: MMUS$ 100
• Expected Results: • Reach positive EBITDA 1 year after opening the 10th store
DEPARTMENT STORE: DIVISION FOCUS
32
• Become best place to work • Omni-channel full development • Be more efficient and productive in Chilean operations (Paris) • Organic growth with profitable stores from the first year • Lean Program • Improvements in our service experience, new attention models • Leveraging on Cencosud’s Fidelity programm
• Developing a sustainable business model to all stakeholders • Strengthening private label design teams • Integrate Johnson to Cencosud and achieve a profitable brand • New positioning for the brand, as a fashion specialist at a convenient price, with low cost operation • Joint purchase with Paris to lower costs • Close of non-profitable stores (Plaza Oeste y Ahumada) • Close of tailoring factory, local production
• Internationalize Paris brand to Peru based on the successful business model made in Chile
Earnings Presentation
Second Quarter
2013