Third Quarter 2018 1 Disclaimer The information contained in this - - PowerPoint PPT Presentation

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Third Quarter 2018

2

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

• The macro environment across the region further weakened during this quarter, with softer

consumer consumption and currency volatility across most of our markets. In addition, results for this quarter reflect the application of IAS 29, treating Argentina as a hyper-inflationary economy.

• New CEO since October 1st and new business regional leaders were appointed.
• The online channel sales increased 24.1% YoY at constant currency, and reached a penetration of

2.5%1 over total retail sales compared to 1.8% in 3Q17. In 9M18, online revenue growth was 41.8% and penetration reached 2.9%, up 100 bps from 1.9% in 9M17.

• At constant exchange rates, revenue increased 8.0%. As previously reported, revenues

decreased 8.1% due to the depreciation of most currencies against CLP. As reported, and including the accounting adjustment (Argentina as hyperinflationary economy) revenues decreased 25.5%.

• At constant exchange rates, Adjusted EBITDA decreased 5.2%. As previously reported Adjusted

EBITDA decreased 22.8%. As reported, Adjusted EBITDA decreased 36.7% mainly due to the hyperinflationary accounting adjustment in Argentina.

1 Considers supermarket formats at all countries with the exception of Brazil, Department Stores Chilean Operations and Home Improvement in the 3 countries

(A) (B) (C) (D) CLP mn CLP mn Ex-IAS29 3 Constant Currency CLP mn CLP mn CLP mm (%) Revenues 2.295.653 2.497.536

• 8,1%

8,0% 175.866 (610.583) 1.860.936

• 25,5%

Gross Profit 641.818 703.081

• 8,7%

12,3% 85.589 (233.078) 494.329

• 29,7%

Gross Mg. 28,0% 28,2%

• 19 bps

26,6%

• 159 bps

SG&A (579.889) (631.083)

• 8,1%

11,0% (61.352) 182.570 (458.671)

• 27,3%

SG&A (% of revenues)

• 25,3%
• 25,3%

1 bps

• 24,6%

62 bps Adjusted EBITDA 113.064 146.521

• 22,8%
• 5,2%

34.224 (54.578) 92.710

• 36,7%
• Adj. EBITDA Mg.

4,9% 5,9%

• 94 bps

5,0%

• 88 bps

Net Profit (15.339) 28.458 N.A. N.A. 39.365 (29.717) (5.691) N.A. Net Profit Mg.

• 0,7%

1,1%

• 0,3%

Inflation Effect4 Conversion Effect5 As Reported As Previously Reported 3Q181 3Q172

• Chg. YoY
• Chg. YoY

IAS29 3Q186

• Chg. YoY

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3Q18 Highlights

Consolidated 3Q18 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 nine months period results from Argentina updated by inflation. 5 ‘Conversion effect’ reflects the translation from ARS to CLP figures of the 9 months period using end of period exchange rate as of September 2018. 6 Includes the adjustment by hyperinflation in Argentina. 7 (A) + (B) + (C) = (D)

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9M18

Consolidated 9M18 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 nine months period results from Argentina updated by inflation. 5 ‘Conversion effect’ reflects the translation from ARS to CLP figures of the 9 months period using end of period exchange rate as of September 2018. 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 mn (%) Revenues 7.124.975 7.607.136

• 6,3%

7,9% 175.866 (610.583) 6.690.259

• 12,1%

Gross Profit 2.035.472 2.168.934

• 6,2%

11,2% 85.589 (233.078) 1.887.983

• 13,0%

Gross Mg. 28,6% 28,5% 6 bps 28,2%

• 29 bps

SG&A (1.762.077) (1.917.875)

• 8,1%

8,3% (61.352) 182.570 (1.640.858)

• 14,4%

SG&A (% of revenues)

• 24,7%
• 25,2%

48 bps

• 24,5%

69 bps Adjusted EBITDA 449.466 461.532

• 2,6%

12,6% 34.224 (54.578) 429.112

• 7,0%
• Adj. EBITDA Mg.

6,3% 6,1% 24 bps 6,4% 35 bps Net Profit 40.796 120.581

• 66,2%
• 46,1%

39.365 (29.717) 50.443

• 58,2%

Net Profit Mg. 0,6% 1,6%

• 101 bps

0,8%

• 83 bps

As Previously Reported As Reported 9M186

• Chg. YoY

IAS29 Conversion Effect5 Inflation Effect4 9M181 9M172

• Chg. YoY
• Chg. YoY

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Progress in Strategy Execution

Omnichannel Roadmap

• The online channel of retail businesses increased 24.1% YoY, and reached a penetration of 2.5%1 over total retail sales compared to 1.8% in
• 3Q17. Considering the nine months period, revenue growth was 41.8% and penetration reached 2.9% up from 1.9% in 9M17.

1 Considers supermarket formats at all countries with the exception of Brazil, Department Stores Chilean Operations and Home Improvement in the 3 countries.

• Omnichannel Strategy

workshop for the 4 countries (excl. Brazil)

• First Business Case Agile Cells

Q2 ‘17

• Go live new website for

Jumbo in Chile

• Chatbot Peru

Q2‘18

• Seller Center Colombia
• Chatbot Colombia & Argentina
• Scan & Go Pilot in Jumbo Chile

Q4 ‘18

• Release of Jumbo App in

Colombia and Wong App in Peru

• Go Live new website for Wong

in Peru

Q3 ‘17

• Unification of food and

non-food websites in Jumbo Colombia

Q1 ‘18

• Go Live new website for Jumbo

in Argentina

• Chatbot Colombia

Q3 ‘18

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Progress in Strategy Execution

IPO Shopping Centers

• Mandate issued to Investment Banks (JP Morgan & Bank of America)
• Transaction Perimeter: Shopping Centers and expansion projects in Chile,

Peru & Colombia

• Capital Structure definition
• Reorganization of Legal Entities to regroup assets

In progress:

• Feedback from Rating Agencies
• Prepare the Prospectus
• Regulatory Filing (registration of the new company in the CMF)
• Roadshow & IPO

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Supermarkets

Results1 Supermarket SSS by Country & Food Inflation

Revenues declined 8.1% in CLP reflecting the depreciation of ARS and BRL against CLP, partially offset by increased revenues in Chile, Argentina & Peru. Adjusted EBITDA decreased 3.3% in CLP YoY explained by:

• In Chile and Argentina Adjusted EBITDA was affected by

lower rebates from suppliers reflecting the focus on working capital. Additionally, in Argentina the increase in Adjusted EBITDA margin reflects the positive effect of higher inflation on inventory.

• Brazil: Adjusted EBITDA improved due to a more efficient

inventory management, lower shrinkage and SG&A.

• Peru: third consecutive quarter of increased traffic.

Adjusted EBITDA decreased

• n

greater promotional activity, higher shrinkage and increased logistic costs.

• Colombia: improved performance in dairy and beauty
• categories. Adjusted EBITDA decreased due to lower SG&A

leverage and increased personnel expenses.

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

3Q18 3Q17

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 1.660.226 1.806.015

• 8,1%

6,4% Gross Profit 403.970 444.149

• 9,0%

9,0% Gross Mg. 24,3% 24,6%

• 26 bps

SG&A (363.185) (406.937)

• 10,8%

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

• 21,9%
• 22,5%

66 bps Adjusted EBITDA 76.843 79.472

• 3,3%

1,6%

• Adj. EBITDA Mg.

4,6% 4,4% 23 bps

• Chg. YoY
• Chg. YoY

3Q18 2Q18 3Q17 3Q18 3Q17 3Q18 3Q17 (%) (%) (%) (%) (%) CLP mn CLP mn Chile 3,6 1,9 3,8 3,2 0,6 697.004 671.518 3,8% 3,8% Argentina 25,6 17,7 17,0 35,0 n.d. 273.238 374.385

• 27,0%

28,1% Brazil

• 1,6

1,6

• 6,7

1,3

• 4,5

307.661 383.283

• 19,7%
• 2,9%

Peru 2,0 2,7 0,5

• 0,6

3,8 203.808 196.852 3,5% 1,8% Colombia

• 2,9

0,3

• 3,3

1,5 1,4 178.516 179.976

• 0,8%
• 3,9%

Constant Currency Same Store Sales Food Inflation Revenues As Reported

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Home Improvement

Results1 Home Improvement Revenues & SSS by Country

Revenues decreased 13.8% and Adjusted EBITDA increased 2.3% in CLP YoY, affected by the depreciation of ARS against CLP.

• Chile: revenue growth reflects a positive SSS with increase in traffic for

the third consecutive quarter. Adjusted EBITDA increased and margin expanded due to lower logistic costs, lower promotional activity in seasonal categories & higher SG&A leverage.

• Argentina: increase in average ticket reflecting increased inflation and

higher e-commerce sales. Adjusted EBITDA expansion from the positive effect of increased inflation on inventory and lower expenses.

• Colombia: traffic increase for the fifth consecutive quarter. EBITDA

margin up driven by the greater operating leverage, lower logistic costs and decreased shrinkage.

3Q18 3Q17

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 269.109 312.287

• 13,8%

18,5% Gross Profit 88.015 98.395

• 10,5%

30,6% Gross Mg. 32,7% 31,5% 120 bps SG&A (71.110) (82.822)

• 14,1%

19,1% SG&A (% of revenues)

• 26,4%
• 26,5%

10 bps Adjusted EBITDA 23.141 22.620 2,3% 61,9%

• Adj. EBITDA Mg.

8,6% 7,2% 136 bps

• Chg. YoY
• Chg. YoY

3Q18 2Q18 3Q17 3Q18 3Q17 (%) (%) (%) CLP mn CLP mn Chile 4,4 7,9 0,5 118.678 114.781 3,4% 3,4% Argentina 25,7 29,8 23,0 133.291 181.703

• 26,6%

29,2% Colombia 5,2 10,5 1,6 17.141 15.803 8,5% 5,2% As Reported Constant Currency Revenues Same Stores Sales

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

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Department Stores

Results Department Stores Revenues & SSS by Country

Revenues decreased 4.4% in CLP and Adjusted EBITDA decreased by CLP 9,169 million YoY.

• Chile: revenues decreased reflecting negative SSS due to

increased promotional activity, partially offset by increased

• traffic. Adjusted EBITDA decreased due to greater promotional

activity & lower SG&A dilution.

• Peru: revenues increased driven by a double-digit SSS growth,

reflecting the brand consolidation in the Peruvian market. Adjusted EBITDA margin decreased as a result of the non- recurring reversal of obsolescence provisions in 3Q17, partially

• ffset by greater expense leverage.

3Q18 3Q17

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 244.952 256.248

• 4,4%
• 4,5%

Gross Profit 62.259 67.698

• 8,0%
• 8,1%

Gross Mg. 25,4% 26,4%

• 100 bps

SG&A (77.699) (73.751) 5,4% 5,2% SG&A (% of revenues)

• 31,7%
• 28,8%
• 294 bps

Adjusted EBITDA (6.260) 2.909 N.A. N.A.

• Adj. EBITDA Mg.
• 2,6%

1,1%

• Chg. YoY
• Chg. YoY

3Q18 2Q18 3Q17 3Q18 3Q17 (%) (%) (%) CLP mn CLP mn Chile

• 6,9
• 1,0

1,4 222.035 236.284

• 6,0%
• 6,0%

Peru 13,2 24,0 1,0 22.917 19.964 14,8% 13,3% As Reported Constant Curency Revenues Same Stores Sales

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Shopping Centers

Results1 Shopping Centers Occupancy Rates & Revenues by Country

Revenues decreased 8.5% in CLP and Adjusted EBITDA decreased 15.5% YoY, affected by the depreciation ARS against CLP.

• Chile: revenues decreased due to lower variable sales from

tenants, partially offset by increased fixed revenues. Adjusted EBITDA decreased due to higher labor contingencies, increased insurance coverage and higher advertising expenses.

• Argentina: revenues increased driven by the regularization of

retroactive collections. Adjusted EBITDA margin decreased reflecting severance payments after the restructuring of the division's administration, higher territorial taxes and higher expenses for utility services.

• Peru:

revenues explained by higher variable revenues related to increased tenant’s sales. Adjusted EBITDA margin increased due to greater SG&A leverage and lower uncollectable.

• Colombia:

lower revenues explained by lower

• ccupancy rate. Adjusted EBITDA margin increased
• n surcharges for fines to tenants, partially offset by

higher coverage level of insurances.

3Q18 3Q17

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 57.895 63.250

• 8,5%

7,1% Gross Profit 51.068 53.892

• 5,2%

8,3% Gross Mg. 88,2% 85,2% 300 bps SG&A (8.506) (6.129) 38,8% 67,9% SG&A (% of revenues)

• 14,7%
• 9,7%
• 500 bps

Adjusted EBITDA 42.901 50.741

• 15,5%
• 4,5%
• Adj. EBITDA Mg.

74,1% 80,2%

• 612 bps
• Chg. YoY
• Chg. YoY

3Q18 3Q17 3Q18 3Q17 (%) (%) CLP mn CLP mn Chile 99,2 99,3 37.034 38.000

• 2,5%
• 2,5%

Argentina 97,8 98,3 13.373 18.095

• 26,1%

29,1% Peru 96,6 96,4 5.281 4.940 6,9% 5,1% Colombia 71,8 72,3 2.207 2.216

• 0,4%
• 3,5%

As Reported Constant Currency Revenues Occupancy Rate

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

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Financial Services

• Peru: higher revenues driven by loan portfolio
• growth. Lower Adjusted EBITDA Margin due to

higher risk from the growth strategy focused on emerging segments – a higher risk group.

• Colombia: Adjusted EBITDA fell mainly due to a

lower expense dilution resulting from lower interests income due to regulatory changes and higher contribution from the credit card sales to encourage installment sales in the retail segment.

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.

• Chg. YoY
• Chg. YoY
• Chg. YoY

3Q18 3Q17 3Q18 3Q17 3Q18 3Q17

Chile

• N.A.

N.A. 1.054.943 867.495 21,6% 2,7 2,6

Argentina

39.438 41.122

• 4,1%

68,6% 12.278.726 9.769.022 25,7% 1,0 2,0

Brazil

69 1.057

• 93,5%
• 92,1%

523.096 557.031

• 6,1%

0,6 0,6

Peru

20.649 13.717 50,5% 48,0% 755.806 543.562 39,0% 1,8 1,7

Colombia

1.124 1.549

• 27,4%
• 28,7%

838.670 782.157 7,2% 3,0 2,3 CLP mn Local Currency (times) Loan Portfolio NPL1 Revenues As Reported Constant Currency As Reported

3Q18 3Q17

• Chg. YoY
• Chg. YoY

CLP mn CLP mn As Reported Constant Currency Revenues 61.281 57.446 6,7% 58,1% Gross Profit 34.691 37.629

• 7,8%

44,4% Gross Mg. 56,6% 65,5%

• 889 bps

SG&A (11.758) (12.431)

• 5,4%

30,6% SG&A (% of revenues)

• 19,2%
• 21,6%

245 bps Adjusted EBITDA 29.164 32.197

• 9,4%

37,6%

• Adj. EBITDA Mg.

47,6% 56,0%

• 846 bps

Revenues increased 6.7% in CLP and Adjusted EBITDA was down 9.4% YoY.

• Chile: Adjusted EBITDA was down explained by non-recurring provision
• adjustments. Excluding these effects, Adjusted EBITDA for the quarter

grew 23.5% YoY.

• Argentina: revenue

growth reflecting increased interest income, partially offset by lower loan portfolio growth YoY. Adjusted EBITDA margin growth on greater expense leverage and lower advertising expenses, partially offset by increased risk & provisions.

• Brazil: Adjusted EBITDA decreased driven by lower charged interest rate

after regulatory changes, lower loan portfolio and higher risk.

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Debt Structure

Key Figures1

1 Figures converted to USD using end of period exchange rate as of 30 September 2018. 2 Figures converted to USD using end of period exchange rate as of 30 September 2018. 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

3Q17 3Q18

Total Financial Debt (US$ Bn) 5,0 5,1 Cash (US$ Mn) 187 188 Other Financial Assets (US$ Mn) 442 391 Net Financial Debt (US$ Bn) 4,4 4,5

• Adj. EBITDA LTM (US$ Mn)

1.044 1.010 Net Financial Debt / Adj. EBITDA LTM 4,18 4,48

Debt by Currency3 Debt by Interest Rate3

CLP + UF; 73% USD; 20% Others Latam; 7% CLP + UF; 70% USD; 21% Others Latam; 9% Fixed; 81% Floating; 19% Fixed; 80% Floating; 20%

3Q18 3Q17

25 343 600 185 59 805 36 727 54 1.085 230 43 16 208 350

18 19 20 21 22 23 24 25 26 27 28 29 30 41 45

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Closing Comments

Mixed Performance in a Challenging Environment

• Ecommerce continues to post YoY growth and increased penetration
• By country – Chile delivered the best revenue performance driven by

Supermarkets and Home Improvement and Argentina and Brazil improved profitability

• Financial Services benefits from higher interest rates

Successfully Executing Strategy

• Consumers embracing ecommerce option – share of total sales increases

100 basis points YoY

• New

technology and process improvements delivering efficiency improvements

• Strengthen Balance Sheet
• Working capital optimization
• Debt reduction – Progress on the IPO of Shopping Centers

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