First Quarter 2019 1 Disclaimer The information contained in this - - PowerPoint PPT Presentation

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First Quarter 2019

EARNINGS PRESENTATION

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Disclaimer

Cencosud and their respective affiliates, officers, directors, partners and employees accept no liability for any loss or damage of any kind arising from the use of all or part of this material. This presentation may contain statements that are subject to risks and uncertainties and factors, which are based on current expectations and projections about future events and trends that may affect the business of Cencosud. You are cautioned that such forward-looking statements are not guarantees of future performance. There are several factors that can adversely affect the estimates and assumptions

• n which these forward-looking statements are

based, many of which are beyond our control. The information contained in this presentation has been prepared by Cencosud SA ("Cencosud") for informational purposes only and should not be construed as a solicitation or an offer to buy or sell securities and should not be treated as giving investment advice or

• therwise. No representation or warranty, express or

implied, is provided in relation to the accuracy, completeness or reliability of the information contained

• herein. The views expressed in this presentation are

subject to change without notice and Cencosud has no

• bligation to update or keep current the information

contained herein. The information contained in this presentation is not intended to be complete.

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Executive Summary

• Weak macro environment across the region, with softer consumption and currency

volatility across most of our markets. Despite these headwinds, the Company posted a 544 bps Adjusted EBITDA margin expansion supported by positive results in all countries of operation due to the adoption of new accounting rule regarding

• perating leases1, improvements in Supermarkets Brazil and the sale of a 51%
• wnership stake in Financial Services in Peru.
• At constant exchange rates, revenue increased 7.6%. Under previous accounting

standards which excludes IAS29 (hyperinflation accounting in Argentina) effective since 3Q18, revenues decreased 6.1% due to the depreciation of most currencies against the CLP. As reported, and including IAS29, revenues decreased 7.1%.

• Online channel sales increased 28.4% YoY at constant currency, reaching a

penetration of 2.9%2 of total retail sales, up from 2.0% in 1Q18.

1 IFRS16 rules states all leases exceeding 12 months in length and not of low value, should be recognized in the balance sheet.

• 2. Considers supermarket formats at all countries with the exception of Brazil, Department Stores Chilean Operations and Home Improvement in the 3 countries
• 3. Adjusted EBITDA: Gross profit + Other income by function + Other gains (losses) – SG&A + D&A + profit of equity method associate - Asset Revaluation

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1Q19 Highlights

Consolidated 1Q19 Results

1 Excludes the adjustment by hyperinflation in Argentina 2 As Reported 3 Considers the quarter results with previous accounting methodology, using an average exchange rate per month in Argentina. 4 ‘Inflation effect’ reflects the three months period results from Argentina updated by inflation. 5 ‘Conversion effect’ reflects the translation from ARS to CLP figures of the 3 months period using end of period exchange rate as of March 2019. 6 Includes the adjustment by hyperinflation in Argentina. 7 (A) + (B) + (C) = (D)

(A) (B) (C) (D) CLP mn CLP mn Ex-IAS29 3 Constant Currency CLP mn CLP mn CLP mm (%) Revenues 2.274.737 2.422.805

• 6,1%

7,6% 12.923 (37.360) 2.250.301

• 7,1%

Gross Profit 657.872 703.948

• 6,5%

11,8% (6.134) (14.356) 637.382

• 9,5%

Gross Mg. 28,9% 29,1%

• 13 bps

28,3%

• 73 bps

SG&A (542.202) (585.889)

• 7,5%

8,7% (8.045) 10.436 (539.811)

• 7,9%

SG&A (% of revenues)

• 23,8%
• 24,2%

35 bps

• 24,0%

19 bps Adjusted EBITDA 295.737 183.161 61,5% 77,7% (8.711) (8.489) 278.537 52,1%

• Adj. EBITDA Mg.

13,0% 7,6% 544 bps 12,4% 482 bps Net Profit 177.361 52.453 238,1% 147,0% (22.952) (1.151) 153.258 192,2% Net Profit Mg. 7,8% 2,2% 6,8% Inflation Effect4 Conversion Effect5 As Reported Under Previous Accounting Standards 1Q191 1Q182

• Chg. YoY
• Chg. YoY

IAS29 1Q196

• Chg. YoY

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Update: Cencosud Shopping Centers IPO

 May 6, 2019: Cencosud Shopping was registered on the Financial Market Commission (CMF) under number 1164.  May 17, 2019: UF 10,000,000 structured in Series A for UF 7,000,000 for a term Cencosud Shopping successfully placed its inaugural bond in the local market achieving the lowest rate for 10 year bonds; the largest local transaction during 2019 to-date. The issuance was for a total of 10 years (1.8% yield with a 64 bps spread from reference rate) and Series B for UF 3,000,000 for a term of 25 years (placed at a 2.24% rate representing a 70 bps spread from the reference rate). Funds will be used to refinance liabilities.  May 20, 2019: Extraordinary Shareholders' Meeting Cencosud Shopping approved the incorporation of assets from Peru and Colombia through a capital increase.

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2019 Focus: Omnichannel

Supermarket

• Chile launched Jumbo Ahora App pilot in Santiago

further enhancing picking and delivery services

• Argentina: redesign and new functions in Disco and Vea

as well as mapping the whole process for logistics improvements.

• Colombia:

increased product assortment in Marketplace, closing the quarter with more than 36 thousands sku’s.

• Peru: continued double digit grow in sales, due to

promotional campaigns and increasing the food product assortment at Metro website.

Home Improvement

• Chile & Argentina: Increased online assortment adding

more dropship suppliers

• Colombia: Development of new delivery and picking

services to increase coverage

Department Stores

Chile:

• increased the assortment through the launch of

third-party marketplaces.

• Improved the user experience in check-out (new

delivery alternatives), improve C&C and one-click payment E-commerce Sales

VAR % 19/18

• Ov. Tot.

Sales 1T19 Over Tot. Sales 1T18

Supermarkets

29,0% 1,4%

Department Stores

15,5% 12,9%

Home Improvement

65,7% 3,9%

Total

28,4% 2,9% 2,0%

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Supermarkets

Results1 Supermarket SSS by Country & Food Inflation

Revenues declined YoY by 5.1% in CLP reflecting the depreciation of ARS and BRL against CLP and lower YoY sales in Chile, partially offset by higher revenues in Peru and Colombia. Revenues were affected by the calendar shift of Easter which took place on March last year and, this year, on April (2Q). Adjusted EBITDA increased 28.5% in CLP YoY explained by the adoption of IFRS16 across countries. Excluding this effect, Adjusted EBITDA margin expanded 37 bps as a result

• f

Brazil’s fifth consecutive quarter, EBITDA improvement, the higher profitability in Argentina and Colombia, partially offset by the higher promotional activity in Peru and Chile as well as the increase in minimum wage.

Source: INE, IBGE, BCRP, BanRep 1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

1Q19 1Q18

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 1.623.496 1.710.678

• 5,1%

6,6% Gross Profit 408.955 426.947

• 4,2%

11,5% Gross Mg. 25,2% 25,0% 23 bps SG&A (348.032) (375.973)

• 7,4%

8,0% SG&A (% of revenues)

• 21,4%
• 22,0%

54 bps Adjusted EBITDA 111.639 86.900 28,5% 42,3%

• Adj. EBITDA Mg.

6,9% 5,1% 180 bps

• Chg. YoY
• Chg. YoY

1Q19 1Q18 1Q19 1Q18 1Q19 1Q18 (%) (%) (%) (%) CLP mn CLP mn Chile

• 1,5

5,1 1,4 3,0 660.850 664.651

• 0,6%
• 0,6%

Argentina 30,8 20,3 58,4 n.d. 254.091 345.086

• 26,4%

31,5% Brazil

• 2,0
• 0,7

6,5

• 4,0

331.573 349.893

• 5,2%
• 0,8%

Peru 2,1 1,9 1,6

• 1,0

209.091 186.695 12,0% 3,5% Colombia 1,3

• 3,1

2,9 1,1 167.891 164.354 2,2% 2,2% Same Store Sales Constant Currency Food Inflation Revenues As Reported

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Home Improvement

Results1 Home Improvement Revenues & SSS by Country

Revenues decreased 12.1% YoY and Adjusted EBITDA declined 5.1% in CLP, affected by the depreciation of ARS against CLP, partially offset by the adoption of IFRS16. Excluding this effect Adjusted EBITDA margin expanded 15 bps. By country:

• Chile: revenue growth reflects positive SSS in wholesale, retail and e-
• commerce. Adjusted EBITDA increased and margin expanded supported

by higher SG&A dilution

• Argentina: higher average ticket reflecting increased inflation. Adjusted

EBITDA increased driven by gross profit expansion resulting from longer inventory holdings.

• Colombia: increased traffic and average ticket with growth in retail, e-

commerce and wholesale channels. Positive EBITDA margin driven by lower energy expenses due to implementation of efficiency plans

1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

1Q19 1Q18

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 284.938 324.167

• 12,1%

17,3% Gross Profit 93.038 105.451

• 11,8%

25,3% Gross Mg. 32,7% 32,5% 12 bps SG&A (62.226) (73.509)

• 15,3%

17,9% SG&A (% of revenues)

• 21,8%
• 22,7%

84 bps Adjusted EBITDA 35.859 37.797

• 5,1%

35,3%

• Adj. EBITDA Mg.

12,6% 11,7% 93 bps

• Chg. YoY
• Chg. YoY

1Q19 1Q18 1Q19 1Q18 (%) (%) CLP mn CLP mn Chile 6,8 0,3 146.047 136.116 7,3% 7,3% Argentina 24,8 26,9 121.442 172.612

• 29,6%

25,6% Colombia 13,0 6,2 17.449 15.439 13,0% 13,0% As Reported Constant Currency Revenues Same Stores Sales

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Department Stores

Results Department Stores Revenues & SSS by Country

Revenues decreased 5.5% YoY in CLP, but Adjusted EBITDA increased 11.0% reflecting the adoption of IFRS16. Excluding this benefit, EBITDA margin declined 274 bps:

• Chile: revenues decreased reflecting negative SSS due to higher

promotional activity, partially offset by increased traffic. Adjusted EBITDA decreased due to greater promotional activity and logistics cost resulting from higher e-commerce sales

• Peru: sustained SSS growth with fourth consecutive quarter of

traffic growth, reflecting brand consolidation in the Peruvian

• market. Adjusted EBITDA declined due to higher promotional

activity in electronic products

1Q19 1Q18

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 249.668 264.117

• 5,5%
• 6,1%

Gross Profit 66.495 75.111

• 11,5%
• 11,9%

Gross Mg. 26,6% 28,4%

• 181 bps

SG&A (70.321) (73.993)

• 5,0%
• 5,7%

SG&A (% of revenues)

• 28,2%
• 28,0%
• 15 bps

Adjusted EBITDA 10.404 9.374 11,0% 11,6%

• Adj. EBITDA Mg.

4,2% 3,5% 62 bps

• Chg. YoY
• Chg. YoY

1Q19 1Q18 1Q19 1Q18 (%) (%) CLP mn CLP mn Chile

• 7,6
• 0,7

228.624 246.437

• 7,2%
• 7,2%

Peru 9,8 11,8 21.045 17.680 19,0% 10,0% As Reported Constant Curency Revenues Same Stores Sales

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Shopping Centers

Results1 Shopping Centers Occupancy Rates & Revenues by Country

Revenues decreased 0.4% YoY in CLP while Adjusted EBITDA increased 4.3%, explained by the adoption of IFRS16 partially offset by the depreciation of ARS against CLP. Excluding IFRS16, Adjusted EBITDA margin contracted 176 bps:

• Chile: revenue growth driven by fixed revenues, partially offset

by lower variable sales from tenants. Adjusted EBITDA decreased due to higher personnel, maintenance and contribution (property taxes) expenses

• Argentina: revenues up 33.1% in local currency due to the

inflation adjustment in a portion of contracts. Adjusted EBITDA margin contracted explained by higher salary expenses and land taxes as well as a lower occupancy rate

• Peru: revenue growth related to higher tenant’s sales

and fixed revenues from inflation adjustment in a portion of contracts. Adjusted EBITDA margin expanded driven by greater SG&A dilution reflecting lower uncollectible accounts and lower energy expenses

• Colombia: revenues increased 0.8% YoY reflecting

higher parking revenues. Adjusted EBITDA margin contracted due to higher maintenance and contribution (property taxes) expenses.

1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

• Chg. YoY
• Chg. YoY

1Q19 1Q18 1Q19 1Q18 (%) (%) CLP mn CLP mn Chile 99,4 99,5 40.471 37.498 7,9% 7,9% Argentina 97,9 98,2 11.156 14.945

• 25,4%

33,1% Peru 96,9 96,9 5.331 4.786 11,4% 3,0% Colombia 72,0 72,0 2.134 2.118 0,8% 17,3% As Reported Constant Currency Revenues Occupancy Rate

1Q19 1Q18

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 59.092 59.348

• 0,4%

13,6% Gross Profit 56.474 52.902 6,8% 18,1% Gross Mg. 95,6% 89,1% 643 bps SG&A (7.619) (5.487) 38,8% 45,6% SG&A (% of revenues)

• 12,9%
• 9,2%
• 365 bps

Adjusted EBITDA 51.777 49.635 4,3% 15,7%

• Adj. EBITDA Mg.

87,6% 83,6% 399 bps

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Financial Services

• Peru: Revenues and Adjusted EBITDA decreased as

the business was no longer consolidated as of March 1. Excluding this effect, Adjusted EBITDA Margin contracted due to higher risk from the growth strategy focused on emerging segments

• Colombia: Adjusted EBITDA increase mainly due to

the sale of a written-off portfolio

Financial Services Revenues, Loan Portfolio & Risk by Country

Results2

1 Provisions over past due loan portfolio (with delinquency greater than 90 days). 2 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

Revenues decreased 12.1% YoY in CLP and Adjusted EBITDA was down 25.1%:

• Chile: Adjusted EBITDA was down due to higher risk provision.
• Argentina: Adjusted EBITDA margin decreased due to the higher risk

and expenses indexed to USD.

• Brazil: Adjusted EBITDA margin decreased due to lower credit card

sales, partially offset by lower risk and operational expenses

1Q19 1Q18

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 55.350 62.969

• 12,1%

33,9% Gross Profit 31.159 42.536

• 26,7%

12,9% Gross Mg. 56,3% 67,6% -1.126 bps SG&A (8.954) (12.298)

• 27,2%

2,1% SG&A (% of revenues)

• 16,2%
• 19,5%

335 bps Adjusted EBITDA 27.307 36.435

• 25,1%

11,3%

• Adj. EBITDA Mg.

49,3% 57,9%

• 853 bps
• Chg. YoY
• Chg. YoY
• Chg. YoY

1Q19 1Q18 1Q19 1Q18 1Q19 1Q18

Chile

• N.A.

N.A. 1.182.770 996.412 18,7% 2,5 2,8

Argentina

38.259 43.352

• 11,7%

57,3% 11.306.472 12.453.907

• 9,2%

1,0 1,7

Brazil

896 1.467

• 38,9%
• 36,0%

498.019 531.338

• 6,3%

0,7 0,7

Peru

14.368 16.913

• 15,0%
• 21,0%

849.782 675.856 25,7% 2,1 2,2

Colombia

1.826 1.237 47,6% 47,6% 835.730 831.233 0,5% 3,0 2,7 CLP mn Local Currency (times) Loan Portfolio NPL1 Revenues As Reported Constant Currency As Reported

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Debt Structure

Key Figures1

1 Figures converted to USD using end of period exchange rate as of March 31, 2019. 2 Figures converted to USD using end of period exchange rate as of March 31, 2019. Figures are presented net off gains/losses from mark to market of derivatives, overdrafts and Comex debt. 3 Debt by Currency and Debt by Rate include Cross Currency Swaps.

Amortization Schedule (USD mn)2 Debt by Currency3 Debt by Interest Rate3 1Q19 1Q18

1Q19 1Q18

Total Financial Debt (US$ Bn) 6,3 5,3 Cash (US$ Mn) 377 271 Other Financial Assets (US$ Mn) 531 474 Net Financial Debt (US$ Bn) 5,4 4,6

• Adj. EBITDA LTM (US$ Mn)

1.084 1.180 Net Financial Debt / Adj. EBITDA LTM 5,00 3,86

190 613 186 57 756 35 715 53 1.045 224 41 15 203 350 19 20 21 22 23 24 25 26 27 28 29 30 41 45

Fijo; 83% Variable 17% Fijo; 79% Variable; 21% CLP + UF; 73% USD; 21% Otras Latam; 6% Fijo; 83% Variable; 17%

• Total net debt increased due to IFRS16 adoption
• Excluding this effect, total net debt decreased 14.1% YoY.

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Closing Comments

First Quarter 2019 – Good Performance in Challenging Market

• Adjusted EBITDA – best quarter since 2Q16
• Supported by Supermarkets Argentina, Brazil and Colombia
• Macro and FX volatility persists
• Consumers continue to embrace e-commerce option - up 28.4% YoY
• Adoption of IFRS16 has both positive and negative impact on debt, however

Rating Agencies already included this effect on their total debt calculations. 2019 – Another Challenging Year but with Opportunities

• Shopping Centers IPO progressing on schedule
• Financial flexibility provides support to grow the Company
• Brazil – many levers to pull to further improve profitability
• Continue to strengthen balance sheet
• Working capital optimization
• Debt reduction

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