EARNINGS PRESENTATION First 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. 2
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 operating leases 1 , improvements in Supermarkets Brazil and the sale of a 51% ownership 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 3
1Q19 Highlights Consolidated 1Q19 Results Under Previous Accounting Standards IAS29 As Reported (A) (B) (C) (D) Inflation Conversion 1Q19 1 1Q18 2 1Q19 6 Chg. YoY Chg. YoY Chg. YoY Effect 4 Effect 5 Constant CLP mn CLP mn Ex-IAS29 3 CLP mn CLP mn CLP mm (%) Currency 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% 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) 4
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. 5
2019 Focus: Omnichannel • Chile launched Jumbo Ahora App pilot in Santiago VAR % Ov. Tot. Over Tot. further enhancing picking and delivery services E-commerce Sales • Argentina: redesign and new functions in Disco and Vea 19/18 Sales 1T19 Sales 1T18 Supermarkets 29,0% 1,4% as well as mapping the whole process for logistics Department Stores improvements. 15,5% 12,9% • Colombia: Supermarket increased product assortment in Home Improvement 65,7% 3,9% Marketplace, closing the quarter with more than 36 Total 28,4% 2,9% 2,0% thousands sku’s . • Peru : continued double digit grow in sales, due to promotional campaigns and increasing the food product assortment at Metro website. • Chile & Argentina: Increased online assortment adding Home more dropship suppliers • Colombia: Development of new delivery and picking Improvement services to increase coverage Chile: • increased the assortment through the launch of Department third-party marketplaces. Stores • Improved the user experience in check-out (new delivery alternatives), improve C&C and one-click payment 6
Supermarkets Results 1 1Q19 1Q18 Chg. YoY Chg. YoY Revenues declined YoY by 5.1% in CLP reflecting the depreciation of ARS and BRL against CLP and lower YoY As Constant CLP mn CLP mn Reported Currency sales in Chile, partially offset by higher revenues in Peru Revenues 1.623.496 1.710.678 -5,1% 6,6% and Colombia. Revenues were affected by the calendar shift of Easter which took place on March last year and, Gross Profit 408.955 426.947 -4,2% 11,5% this year, on April (2Q). Gross Mg. 25,2% 25,0% 23 bps SG&A (348.032) (375.973) -7,4% 8,0% Adjusted EBITDA increased 28.5% in CLP YoY explained by SG&A (% of revenues) -21,4% -22,0% 54 bps the adoption of IFRS16 across countries. Excluding this Adjusted EBITDA 111.639 86.900 28,5% 42,3% Adj. EBITDA Mg. 6,9% 5,1% 180 bps effect, Adjusted EBITDA margin expanded 37 bps as a result of Brazil’s fifth consecutive quarter, EBITDA Supermarket SSS by Country & Food Inflation improvement, the higher profitability in Argentina and Same Store Sales Food Inflation Revenues Chg. YoY Chg. YoY Colombia, partially offset by the higher promotional 1Q19 1Q18 1Q19 1Q18 1Q19 1Q18 Constant As Reported activity in Peru and Chile as well as the increase in (%) (%) (%) (%) CLP mn CLP mn Currency minimum wage. 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% Source: INE, IBGE, BCRP, BanRep 7 1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.
Revenues decreased 12.1% YoY and Adjusted EBITDA declined 5.1% in CLP, Home Improvement affected by the depreciation of ARS against CLP, partially offset by the adoption of IFRS16. Excluding this effect Adjusted EBITDA margin expanded Results 1 15 bps. By country: 1Q19 1Q18 Chg. YoY Chg. YoY As Constant • Chile : revenue growth reflects positive SSS in wholesale, retail and e- CLP mn CLP mn Reported Currency commerce. Adjusted EBITDA increased and margin expanded supported Revenues 284.938 324.167 -12,1% 17,3% by higher SG&A dilution Gross Profit 93.038 105.451 -11,8% 25,3% • Argentina : higher average ticket reflecting increased inflation. Adjusted Gross Mg. 32,7% 32,5% 12 bps EBITDA increased driven by gross profit expansion resulting from longer SG&A (62.226) (73.509) -15,3% 17,9% SG&A (% of revenues) -21,8% -22,7% 84 bps inventory holdings. Adjusted EBITDA 35.859 37.797 -5,1% 35,3% • Colombia : increased traffic and average ticket with growth in retail, e- Adj. EBITDA Mg. 12,6% 11,7% 93 bps commerce and wholesale channels. Positive EBITDA margin driven by lower energy expenses due to implementation of efficiency plans Home Improvement Revenues & SSS by Country Same Stores Sales Revenues Chg. YoY Chg. YoY 1Q19 1Q18 1Q19 1Q18 Constant As Reported Currency (%) (%) 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% 8 1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.
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