Second Quarter Results 2015 Second Quarter | www.cencosud.com - - PowerPoint PPT Presentation

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Second Quarter Results 2015 Second Quarter | www.cencosud.com - - PowerPoint PPT Presentation

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Corporate Presentation Second Quarter Results 2015 Second Quarter | 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

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Corporate Presentation

Second Quarter

Results 2015

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Second Quarter | 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

  • r 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.

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2Q15 Operational Highlights

  • Top line growth led by Home Improvement

Department Stores & Shopping Centers

  • Gross margin gains in Supermarket fuel gross

profit growth followed by D-Stores & HI

  • Operating Income jumped on improved

Supermarket, Shopping Center & D-Store performances

  • Food Retail leading Adj EBITDA gains followed

by D-Stores & Shopping Centers

Second Quarter | www.cencosud.com |

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Food Retail in Supermarkets continues to perform well while non-food hurt by currency and high base due to World Cup

Chile

  • Mid-Single digit SSS thrusted by perishable sales
  • Smart promotional strategy helps shield gross margin
  • High comparison basis in electronics due to the 2014 World Cup
  • Corporate restructuring curbs profitability gains

Peru

  • Stable revenue on lower promotions and few openings
  • Smart Pricing and better benchmarking help improve gross margin
  • Lower operating income as a result of higher security & energy costs

Colombia

  • Slower consumption affects spending on non-food items with high comparison

basis due to World Cup

  • Perishables remain as a bright spot with SSS growth of 9.2%
  • Growth in traffic and ticket in food departments
  • Lower electro in sales mix gives gross margin a boost

Second Quarter | www.cencosud.com |

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  • Company-wide initiatives to lower costs and

boost profitability

  • Gross margin: negotiations with suppliers to

maximize margin

  • New business heads in Brazil with mandate to

prioritize profitability

  • SG&A: Headcount and vendor initiatives to

reduce costs

Second Quarter | www.cencosud.com | 5

Cost-control initiatives

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  • Impairment of Brazilian Assets of CLP 116,771 million
  • Reversal of differed taxes in Colombia of CLP 40,632

million

  • Materialization of Scotiabank deal for financial services in

Chile yields extraordinary profit of CLP¨61,373 million

Second Quarter | www.cencosud.com |

Discussion into Operational One-Off Items Discussion into Non-Operational One-Off Items

  • Severance payments in Supermarkets & D-Stores push

SG&A upwards

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  • Further potential deterioration of macro outlook leads to

review of expected cashflows

  • Credit downgrade
  • Rising interest rates
  • Shrinking GDP
  • Debt servicing capacity not to be affected; in compliance

with all financial covenants

  • Cencosud developed an asset impairment model that was

later reviewed by its auditor PWC and reviewed by an independent third party opinion

Second Quarter | www.cencosud.com |

Write-off in Brazil

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  • EBITDA Up 93% YoY
  • New Management Appointed at Prezunic and to Head

Several Key Categories

  • EBITDA Mg Up 213 Bps YoY On:
  • Improved Business Performance
  • Headcount Reductions
  • Lower Service Contracts
  • Improved Pricing Strategy & Category Management

Second Quarter | www.cencosud.com |

Progress in Brazil

  • Future strategy for Brazil to lie on 3 main pillars
  • Commercial planning
  • Price benchmarking and inflation pass-thru
  • Shrinkage
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Consolidated Revenue Evolution

  • Unfavorable currency swings in Brazil and Colombia curb

revenue growth

  • High comparison basis & macro headwinds in the region

for non-food affect SSS and revenue growth

  • Home Improvement at the forefront in revenue gains
  • Greenfield projects continue to post positive SSS

Consolidated Adjusted EBITDA Evolution

  • Supermarket EBITDA generation jumps 18% on better

Argentina; Brazil and Chile performance

  • D-store EBITDA jumps 110% on improved purchasing, better

inventory management and better foreign currency risk management Figures in CLP million

Second Quarter | www.cencosud.com |

2Q14 2Q15

+1.24%

w/D.O. - 0.4%

*This number for Adjusted Ebitda in the quarter includes an extraordinary profit resulting from the sale of the financial services business to Scotiabank in Chile

142.073 97.758 168.330 2Q14 2Q15 SR -2Q15

  • 31.2%

w/D.O. - 36.1% Excluding One-Offs

+19%

2.617.109 2.585.035

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Results

By Business

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Revenue Evolution Adjusted EBITDA Evolution

  • 8 Net Store Openings YoY or 1.5% selling space

Growth.

  • Pacific coast countries displaying healthy SSS

performance when discounting for high comparison base in non food

  • Deteriorating macro and high inflation hurt SSS

performance at supermarkets

Figures in CLP million

SSS evolution by country (local currency)

Supermarkets

  • Better performance in Argentina, Chile & Brazil leads

to EBITDA expansion of 18% in the division

  • Brazil EBITDA generation improved on greater gross

margin resulting from improved negotiation with suppliers; lower shrinkage and headcount reductions

  • Argentina EBITDA jumps with margin gains of 60 bps

Second Quarter | www.cencosud.com |

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12 Figures in CLP million

Home Improvement Department Stores

Second Quarter | www.cencosud.com |

  • Positive SSS particularly

in Argentina & Chile

  • Lower adjusted EBITDA due to higher SG&A
  • Colombia

loss narrows on improved performance at converted stores

  • Top line growth in both Chile and Peru
  • Strong EBITDA performance in Chile
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13 Figures in CLP million

Shopping Centers Financial Services

Second Quarter | www.cencosud.com |

  • All markets show revenue growth and high occupancy
  • Shopping Center Adj EBITDA grows 2.9% on

improved performance in Argentina and Peru

  • Chile profitability

was curbed by higher taxes and

  • ne-off expenses
  • Revenues in Chile consolidate only 1 month of
  • perations in 2015 due to closing of deal with

Scotiabank

  • Revenues from Brazil and Colombia

drop due to currency devaluations

  • All markets but Brazil obtained portfolio

growth in the period

  • Cost of funding increases across the region
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Effective Tax Rate

Conciliation

Second Quarter | www.cencosud.com |

  • CREE Disbursements in Colombia now to be eligible for deferred tax

assets due to new legal precedent with an effect of CLP 40,632 million

  • Materialization of Financial Services deal in Chile deemed non-

taxable resulting in a positive tax effect of CLP 13,051 million

  • Brazil impairment charge results in lower taxable income leading to a

positive tax effect of CLP 39,702 million

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Financial Ratios

Cencosud is actively exploring options to accelerate deleveraging

Net debt evolution (US$ bn) Net leverage (net debt / EBITDA) Breakdown by Rate (After CCS) Breakdown by Currency (After CCS)

Second Quarter | www.cencosud.com |

*

* Calculations made to arrive at this ratio do not include none cashe one-off items such as the Brazil impearment charge

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Debt Amortization Schedule (USD million) as of June 2015

After receiving proceeds from the Financial Services deal with Scotiabank; Cencosud finds itself in a solid financial situation.

FINANCIAL DEBT USD MM

Second Quarter | www.cencosud.com |

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Pacific coast food retail continues to post healthy performance despite high non-food base Corporate restructuring to curb profitability gains in 2Q15 & 3Q15D-Stores posting profitability gains despite flatish SSS in Chile resulting from World Cup effect Healthy EBITDA expansion excluding One-Off Leverage down with further improvements to come from EBITDA growth

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Upcoming Events

Cencosud Day Rio Rio de Janeiro, RJ Sept 1 & 2 BTG Pactual Latin America CEO conference New York, NY Oct 6 thru 8 3Q15 Earnings Release Nov 13, 2015 After market Marisol Fernández León IR Manager Phone +562 2959 0545 mariasoledad.fernandez@cencosud.cl Natalia Nacif Senior IR Analyst Phone +562 2959 0368 natalia.nacif@cencosud.cl Ignacio Reyes Miranda Senior IR Analyst Phone +562 2959 0804 Ignacio.reyesmiranda@cencosud.cl

Second Quarter | www.cencosud.com |