the journey to cencosud peru - jul 2010

7/31/2019 The Journey to Cencosud Peru - Jul 2010

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The Journey to Cencosud PeruLima, July 2010


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Agenda

Welcome to PERU Full immersion in the Supermarket Industry in Peru Cencosud Peru journey Challenges towards the future


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Some Highlights

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Population of29.5 million habitants (9 million in Lima) which 66% is between 15-64 years old.

Total area comparison to the world: 20th largest country. Boundaries: Bolivia, Brazil, Chile, Colombia, Ecuador 25 regions and 1 province Gross Domestic Product (GDP): US$131 billion Services sectorrepresents 60% of GDP (industry 32%, Agric 8%) Private consumption represents 70% of the GDP Import Partners US 23.4%, China 10.5%, Brazil 8.7% Inflation 2010(e): 2-3 % (food contribution 15%) Public Debt: 25.7% of the GDP Direct foreign investment represents 29% of theGDP


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Source: IMF, World Economic Outlook Database

Stable Macroeconomic Environment (cont.)


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Latin-American 2010

GDP P/C : US$ 8,047 (World US$ 9,068) PPP* P/C : US$ 11,022 (Mundo no data)Fuente: Fondo Monetario Internacional Octubre 2009

ARGENTINA

PPP per Capita: $ 15,030PPP GDP: $ 609.0 billPopulation : 40.5 mill

CHILEPPP per Capita: $ 14,940

PPP GDP: $ 256.8 billPopulation : 17.2 mill

MEXICO

PPP per Capita: $ 14,151PPP GDP: $ 1,537.2 billPopulation : 108.6 mill

PARAGUAYPPP per Capita: $ 4,711


BOLIVIAPPP per Capita:$ 4,576


COLOMBIA

PPP per Capita: $ 9,092PPP GDP: $ 413.8 billPopulation: 45.5 mill

ECUADORPPP per Capita:$ 8,022PPP GDP: $ 114.8 billPopulation : 14.3 mill

URUGUAY

PPP per Capita: $ 13,961PPP GDP: $ 46.9 billPopulation : 3.4 mill

VENEZUELAPPP per Capita: $ 11,727


BRAZILPPP per Capita: $ 11,066PPP GDP: $ 2,138.5 bill

Population : 193.3 mill

PERPPP per Capita:$ 9,108PPP GDP: $ 269.1 bill

Population: 29.6 mill

* PPP = PurchasingPower Parity


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Source: APEIM Peruvian Market Research Association, 2010

SEG - Socioeconomic Groups (Homes, %)

There is a new middle class that has alot of unsatisfied needs. They now haveaccess to high valued products and theconsumer behavior is changing.

5.5

16.5

31.8

30.1

16.1

5.2

17.7

33.1

30.2

13.8

56.0

53.8


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Supermarkets in Peru

We have great opportunities not only in Lima, but also in Provinces

There is a low formal retail penetration. By March 2010, there are 3 supermarkets chains, totaling 135 stores. In July 2009, Makro (Cash and Carry) started operations in Lima with 3 store openings so far. There are many strip and shopping centers projects going on that will boost supermarket growth plans.We outlook migration from traditional retailing (mom & pops, fairs) to supermarkets

(formal retail) because we see: Concentration of a wide variety of products in one place (one stop shopping). Competitive prices, healthy and safety environments. Products Traceability is highly value by customers. Access to credit increase the turn over rate.There are limited room of growth for new players

Current players are achieving scale economies and have heavily.covered the high and medium SEGs, specially in Lima.

The 3 main players in Peru has an Integrated retail strategy. We developed a deep local shopper knowledge.


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Retail Sales Evolution

Source: Apoyo y Asociados, Empresas Mayo 2010

Supermarkets in Peru (cont.)

CAGR : 14%


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Sales Floor Evolution

Thousandso

fSqm


Source: Apoyo y Asociados, Empresas Mayo 2010


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Source: Estimation from Cencosud Commercial IntelligenceSource: Axur

MARKET SHARE, MAR. 2010

Tottus

GSW

SPSA

16%

47%

36%

DISTRIBUTION CHANNELS

190,367

62,627

54,446

150

49%

22%

15%

15%

No RetailsSales %

Supermarkets

Convenience Stores

Traditional Markets

Others

IN CONSUMER MARKET



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Grupo de Supermercados Wong (GSW)

Founded by the Wong family in 1983, it has become the leader inthe Peruvian supermarket industry with the half of the market share. Cencosud SA acquired 100% of GSW SA equity by January 2008.

the acquisition included the whole supermarket business, satellitebusinesses, support areas and the real estate division, includingPlaza Lima Sur Shopping Center.

2009 Net sales were US$1,042 millions and the EBITDA marginwas US$84MM (8,1% of sales). GSW contributes with around 10%of the Cencosud total sales and is expected to be one of the growthengines of the group.

As of June 2010, GSW operates 59 stores, with a total sales area of192 thousands square meters

14 Wong Supermarkets

2 Wong Hypermarkets

32 Metro Supermarkets

11 Metro Hypermarkets


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Cencosud Peru Organizational Chart

General Manager(Juan Manuel Parada)

CencosudPeru

Corp- Areas

Finance.(M. Holzapfel)

FinancialBusiness

(M. Campodnico)

Real Estate(J. P. Escudero)

Logistics(T. Rodrguez)

Legal(M. Moreyra)

IT(F. Los Ros)

HumanResources(Juan C. Justo.)

Int. Auditor(P. Gamm)

CommercialFood

(A. Arruiz)

Commercial NonFood

(F. Bayly)

CommercialPlanning(O. Bonfil)

Operations(W. Ceballos)

Processes(N. Muoz)

Marketing(M. A. Merino)


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1.5351.729

1.982 1.9942.118 2.149

2.406

2.687

3.029 3.014

729 744

0

500

1.000

1.500

2.000

2.500

3.000

3.500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 mar09 mar10

Net Sales

In 2008 we started a journey

CAGR : 12.8%

THE JOURNEY TO CENCOSUD PERUSHAREHOLDERS

VALUE


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A strategy aiming a transformation

CUSTOMER/CONSUMEREnhance client culture & innovationRevitalize the Wong brandImprove price image in Metro

Reinvent the client experiencein Wong

OPERATIONSImprove operating effectiveness& efficiency

Bring best practices from CencosudRevamp our operating model

ORGANIZATIONPolish the diamond

Redefine the Group organizationEnhance company values

TODRIVEPROFIT

TODRIVEGROWTH

FINANCIAL STRATEGYService for the Excellency

Financial FlexibilityCAPEX and OPEX discipline

Achieve Project goalsSynergies

SHAREHOLDERSVALUE


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Financial Business

Financial Business Project in Peru, operated in a

first stage through Cencosud Supermarkets, and in a second stage through aBank owned by Cencosud.

Objetives:

Providing financial solutions to customers of Cencosud formats in Per.

Making Cencosud cards the primary payment through the chain.

Strategy:

Issuing Credit Cards in order to facilitate and increase the marketing of goods

and services in the Metro Wong Supermarkets.

Capture synergies between the financial business and retail business.

Develop Business Insurance.

Deepening Customer focus: Fidelity Program and Metro Credit Card database.

Implement Retail Financial Centers, which integrate into a single space:

Cards, Insurance and New Business related .


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Cencosud best practices implemented and delivering results

Cencosud Peru corporate areas fully integrated to Cencosud S.A.

Knowledge exchange activities taking place

Global sourcing improved Peru's margins

A whole new company within a love mark aura

The Picture after 28 months


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We have an aggressive Investment PlanWe are launching our own private credit cardWe are increasing efficiencies in Working CapitalBalance in the exchange ratio (liabilities in Soles)

Invest more than 230 MM USD Improve of Market Share Increase in Same Store SalesCost Control while we are growingKeep a Solid Financial Position while Minimizing Exchange

Rate Risks.

The Competitive Situation Raises Several Challenges

OBJECTIVES


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the journey to cencosud peru - jul 2010

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