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RIPLEY CORP
September 2008
Ripley Corp
1.
Ripley Today
2.
Chile: increasing profitability
3.
Peru: leadership on a high growth market
4.
Mexico: the implementation
5.
Conclusion
Department stores50 stores in Chile and Peruselling space: 323,064 sqm
Financial RetailChilean credit card loans: US$ 929 mBanco Ripley Peru loans: US$ 310 mBanco Ripley Chile loans: US$ 461 m
Real Estateownership in 7 malls weighted average leasing space: 101,211 sqmowned stores: 20
Ripley Today
–
current operations
Figures as of June 2008
Ripley Today
‐
52 years of history
First Store opened in
Chile
1956
Credit business starts
San Diego
First Department
Store in Santiago
1976
1985
Barros Arana
First Department
Store outside Santiago
1986
Parque
Arauco
Ripley Chile
begins its new positioning
1993
Ripley Jockey Plaza
First Department Store
in Peru
1997
Alto Las Condes
Insurance brokerage business
starts
2000
Banco Ripley Chile
2002
Ripley Chile Bond issuance
2003
Ripley Corp: IPO
2005
2007
Ripley Punta ArenasRipley AlamedaBanco Ripley PeruRipley Corp Bond issuance in Peru
2008
Mexico:
JV with Palacio de HierroPeru: JV with Mall PlazaRipley Trujillo: first store outside LimaChile: Lease contract with Plaza S.A.Ripley Corp: Capital increase
Corporate Bond
Ripley Today
–
shareholders structure
Calderon Group81.0%
Free Float 19.0%
Source: Ripley.
Figures as of September 1st 2008
Mutual Funds3.9%
Insurance Co3.6%
Pension Funds19.8%
InternationalInvestors
19.0%Others53.7%
Ripley Today
–
department stores
Source: Ripley
LTM Revenues and market share as of June 2008
Selling space as of August 2008.
CHILE40 stores Revenues LTM: US$ 988 mMarket share: 24,1%Selling space: 228,086 sqm
PERU10 storesRevenues LTM: US$ 399 mMarket share: 47%Selling space: 94,978 sqm
Ripley47.0% Falabella
53.0%
Falabella37.9%
Paris25.0%
Ripley24.1%
La Polar12.9%
Ripley Today
–
financial retail
Source: Ripley
Figures as of June 2008.
CHILETarjeta Ripley:Loans: US$ 929 mRevenues LTM Jun ‘08: US$ 382 mProvisions/loans: 9.9%
Banco Ripley ChileLoans: US$ 461 m48 branches
PERUBanco Ripley PeruLoans: US$ 310 mRevenues LTM Jun‐08: US$ 134 mProvisions/loans: 6.7%11 branches
Ripley Today
– real estate business
Source: Ripley
Ownership in 7 Shopping malls
101,211 sqm weighted average selling space
Fully owned malls revenues LTM Jun‐08: US$ 16 m
Chile:
Ripley has an option to buy 22.5% in 3 shopping malls of Mall Plaza.
Peru:
Joint venture with Mall Plaza (20%) and Falabella (40%), to build, operate and manage shopping malls
o
The first one opened in Trujillo on December 2007.
Ripley Today
–
revenues breakdown
Source: Ripley
LTM: Last
Twelve
Months
Ripley Corp revenuesUS$ 1,785 m(LTM as of June‐08)
Chile
78%
Peru
22%
6
Source: Ripley
BRP: Banco
Ripley Perú
Ripley Today
–
Recent developments
Deconsolidation of financial statements of Banco Ripley Peru and reclassification of charges for provisions and write‐offs
Ripley Corp
Consolidated Jun‐08(MU$ of
each
period) Before Proforma Before Proforma ProformaRevenues 1,563.7 1,484.5 1,788.7 1,689.8 865.4Costs
of
sales ‐887.5 ‐941.5 ‐1,006.7 ‐1,081.5 ‐538.4SGAs ‐523.0 ‐412.2 ‐642.4 ‐500.2 ‐264.3Operating
Result 153.1 130.8 139.6 108.0 62.7Result
on
investment
in related
companies 11.1 27.0 5.5 25.6 16.3Net Income 109.8 109.8 28.7 28.7 40.0
EBITDA 187.4 176.9 176.4 150.2 86.6EBITDA Margin 12.0% 11.9% 9.9% 8.9% 10.0%
Ripley Corp
Consolidated Jun‐08(MU$ of
each
period) Before Proforma Before Proforma ProformaLoan Stock 846.6 656.8 1.089.0 830.6 850.0Investment
in relatedcompanies 76.5 116.3 80.5 131.8 159.1
Debt 547.8 397.7 851.6 633.3 649.6Equity 938.4 938.4 1,090.1 1,090.1 1,199.3
Dec‐06 Dec‐07
Dec‐06 Dec‐07
8
Ripley Corp first bond issuance in Peru: August 7th S./ 110.000.000 (US$39 MM) ‐ 9 years bullet ‐ 8.56%Rated AAA by Equilibrium (local Credit Risk Agency)The lowest spread of last comparable issuances: 0.81% over Peruvian Government Bond
US$125 million in 3 new medium term bank loans (2 years bullet)
Chilean credit risk confirmation by Humphreys and Feller‐Rate for Ripley Corp (A+) and Ripley Chile (AA‐), stable outlook
Ripley Today
–
Recent developments
Ripley Corp
1.
Ripley Today
2.
Chile: increasing profitability
3.
Peru: leadership on high a growth market
4.
Mexico: the implementation
5.
Conclusions
Ripley Chile: increasing profitability
Selective square meter increase to follow market growth
New management structure
New distribution center start up
Loans portfolio and controlled risk
Growth on real estate business through Mall Plaza
Ripley Chile results
Ripley Chile: increasing profitability
Selective square meter growth to follow market growth
6 new stores between 2008 – 2009Ripley Punta Arenas ‐ opening April 2008 – selling space 7,297 sqmRipley Alameda ‐ opening April 2008 – selling space 8,262 sqmRipley Agustinas ‐ closing January 2008 – selling space 953 sqm
Ripley Pun
ta Arena
s Store
Ripley Alamed
a Store
Ripley Chile: increasing profitability
Selective square meter increase to follow market growth
New management structure
New distribution center start up
Loans portfolio and controlled risk
Growth on real estate business through Mall Plaza
Ripley Chile results
Ripley Chile: increasing profitability
New management structure
Andrés RoccatagliataCEO
sFinancialProducts
Channelsand
Services
Marketing RiskOperations
& Technology
LogisticsCommercial
CEO
RetailDivision
Financial BusinessDivision
CorporateServices
Current
Before
Ripley Chile: increasing profitability
Selective square meter increase to follow market growth
New management structure
New distribution center start up
Loans portfolio and controlled risk
Growth on real estate business through Mall Plaza
Ripley Chile results
Ripley Chile: increasing profitability
New distribution center start up
Ripley Chile: increasing profitability
Selective square meter increase to follow market growth
New management structure
New distribution center start up
Loans portfolio and controlled risk
Growth on real estate business through Mall Plaza
Ripley Chile results
Ripley Chile: increasing profitability
Loans portfolio & Controlled risk
29.8%
20.6%
593770 929
7.6% 7.7%9.9%
Jun‐06 Jun‐07 Jun‐08
Loans (MU$ Jun‐08) Provisions/ Loans
Source: Ripley
Figures in nominal terms
Ripley Chile: increasing profitability
Loans portfolio & Controlled risk
December 2007
Figures as of December 2007
Source: Ripley based on SBIF data, Banks and more Department Stores are included
Santander20.6%
Chile+Citi16.8%
Falabella+CMR10.8%Estado
8.9%
BCI8.9%
BBVA4.3%
Itau
Chile2.8%
Corpbanca5.1%
Others10.9%
Ripley +Banco Ripley Chile
6.1%
Cencosud4.9%
Sixth player in Chilean consumer loan financial market
Ripley Chile: increasing profitability
Loans portfolio and controlled risk
COLLECTIONSSegmented, massive and with an appropriate technology
Step 1 Initial credit scoring
Step 2 First loans: Only for purchases in the store
Step 3 Behavior scoring: CRM/ risk/ profit
Step 4 Additional credit products (cash, term loans, associated commerce): Only to known costumer profiles
Risk model management
Ripley Chile: increasing profitability
Selective square meter increase to follow market growth
New management structure
New distribution center start up
Loans portfolio and controlled risk
Growth on real estate business through Mall Plaza
Ripley Chile results
Ripley Chile: increasing profitability
Growth on real estate business through Mall Plaza
•
Long term lease contract with Mall Plaza Alameda S.A., Plaza Cordillera S.A. and
Plaza San Bernardo S.A.
•
Option to buy 22.5% of those companies. Due date 2010
•
Ripley
Corp
S.A
hired
Citibank
and
Banchile
to
start
a
selling
process
for
its
shopping malls business in Chile.
Shopping Mall Leasing Space % Ownership
RipleyPanoramico 5,671 100%Mall del Centro 18,917 100%Mall del Centro Rancagua 13,646 100%Calama 44,206 25%Marina Arauco 57,968 33%Mall del Centro Curico 45,911 33%
100%90,000Mall Concepcion(Under construction)
Ripley Chile: increasing profitability
Selective square meter increase to follow market growth
New management structure
New distribution center start up
Loans portfolio and controlled risk
Growth on real estate business through Mall Plaza
Ripley Chile results
Ripley Chile: increasing profitability
EBITDA, Operating margin & result
Source: Ripley
45.8 49.3
63.469.5
1S 2007 1S 2008
Operating Result EBITDA
7.5%
9.8%
Operating Margin
7.0%7.6%
MUS$
Ripley Corp
1.
Ripley Today
2.
Chile: increasing profitability
3.
Peru: leadership on high growth market
4.
Mexico: the implementation
5.
Conclusions
Ripley Peru: leadership on high growth market
Macroeconomic environment
Excellent market positioning
Important store opening plan
Growth on loans portfolio with Banco Ripley Peru
Growth on real estate business with Aventura Plaza
‐0.3%
11.7%
5.5%
2.7%
1996‐1999 2000‐2002 2003‐2005 2006‐2008
Ripley Peru: leadership on high growth market
Macroeconomic environment
Source: Banco Central del Peru
A growing market... Annual Private Consumption Growth
Ripley Peru: leadership on high growth market
Macroeconomic environment
Source: Ripley, Banco Central del Peru, US Census
Figures as of dec‐2002
...There is a lack of department stores...
department sqm
/ 1000 inhabitants
6
49
322
Peru Chile USA
Annual department store sales per Capita (US$)
Ripley Peru: leadership on high growth market
Macroeconomic environment
Figures as of April 2007
894
214
32
USAChilePeru
Ripley Peru: leadership on high growth market
Macroeconomic environment
Excellent market positioning
Important store opening plan
Growth on loans portfolio with Banco Ripley Peru
Growth on real estate business with Aventura Plaza
Ripley Peru: leadership on high growth market
Excellent market positioning
Source: Inmark
PeruMax: Ripley Store but focused in a lower level
Ripley Peru is number 1 on market share in Lima and number 2 in the country
Ripley has the best preference level among retailersJune‐07
Peru
Source: RipleyFigures as of June‐08
Ripley54%
Saga Falabella
46%Ripley47%Saga
Falabella53%
Lima
June‐08
Ripley43%
Max (Ripley)10%
Falabella32%
Others15%
Ripley48%
Max (Ripley)15%
Falabella33%
Others4%
Ripley Peru: leadership on high growth market
Macroeconomic environment
Excellent market positioning
Important store opening plan
Growth on loans portfolio with Banco Ripley Peru
Growth on real estate business with Aventura Plaza
Ripley Peru: leadership on high growth market
Important store opening plan
6 new stores 2008 – 2009
Trujillo: first store outside Lima
Trujillo Store op
ening
3.8%
10.5%13.4%
18.7%
14.1%
8.3%
Mar‐07 Jun‐07 Sep‐07 Dec‐07 Mar‐08 Jun‐08
Ripley Peru: leadership on high growth market
Important store opening plan
Source: Press Release 2Q‐08 of Ripley Corp
Same Store Sales increases (nominal variation in nuevos
soles)
Ripley Peru: leadership on high growth market
Macroeconomic environment
Excellent market positioning
Important store opening plan
Growth on loans portfolio with Banco Ripley Peru
Growth on real estate business with Aventura Plaza
186224
310
4.7% 5.6%6.7%
Jun‐06 Jun‐07 Jun‐08
Ripley Peru: leadership on high growth market
Growth on loans portfolio with Banco Ripley Peru
Source: Ripley
20.4%
38.4%
Loans (MU$ Jun‐08) Provisions/ Loans
BCP 19.6%
Interbank 18.3%
Continental 15.5%Scotiabank Peru 15.4%
Falabella Peru 7%
Banco Ripley Peru 5.9%
Citibank 5.1%
Others 13.6%
Ripley Peru: leadership on high growth market
Growth on loans portfolio with Banco Ripley Peru
Sixth player in Peruvian consumer loans marketJuly 2008
Ripley Peru: leadership on high growth market
Macroeconomic environment
Excellent market positioning
Important store opening plan
Growth on loans portfolio with Banco Ripley Peru
Growth on real estate business with Aventura Plaza
Ripley Peru: leadership on high growth market
Growth on real estate business with Aventura Plaza
Association with Mall Plaza (20%) and Falabella (40%) for the construction and operation of shopping malls in Peru.
One shopping in TrujilloOne shopping under construction in CallaoThree other incoming projects: Santa Anita, Primavera and Arequipa.
Ope
ning of Trujillo Store
Aventura Plaza
Ripley40%
Falabella40%
Mall Plaza20%
Ripley Corp
1.
Ripley Today
2.
Chile: increasing profitability
3.
Peru: leadership on a high growth market
4.
Mexico: the implementation
5.
Conclusion
Mexico: the implementation
Interesting opportunity in medium/low income segment
Grupo Bal: an excellent local partner
Advances in the business plan
Mexico: the implementation
Interesting opportunity in medium/low income segment
RETAIL REVENUES
COMPOSITION (Billon US$)
Source: Planet Retail as of Dec 2006
22%
63%
78%
37%
Non Food Food
Formal retail Traditional
111,8
142,3
Mexico: the implementation
Interesting opportunity in medium/low income segment
Mexican department stores*: revenues and EBITDA margin evolution (US$ m)
Source: Ripley
*Data based on Financial Statements of Coopel, Liverpool, Elektra, Famsa.
4,372 5,104 5,635 6,1207,304
8,472 9,34610,728 11,609
14.9%15.5% 15.0%14.6%14.7%15.6%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Revenues EBITDA margin
Mexico: the implementation
Interesting opportunity in medium/low income segment
Grupo Bal: an excellent local partner
Advances in the business plan
Mexico: the implementation
Grupo
Bal: an excellent local partner
Grupo Bal is one of the most important business group of Mexicoo
It is Controlled by Baillères’s
Family
o
It has participation on the followings businesses: Mining Industry, Industrial
Activity, Financial Market, Agriculture Industry and Retail.
Leading Holding´s enterprise:o
Palacio de Hierro: Is the most exclusive and prestigious department store in
Mexico
o
Peñoles:
Is the world leading company in production of Silver. Its
Market Cap is estimated in about US$ 12,000 million
o
GNP:
Is the leading insurance company in Mexico with a market
share of 20%
o
Profuturo:
Pension Fund Company with more than 3,4 million affiliates
and number one in profits during the past 8 years
o
Valmex:
Brokerage and Rental Company
In addition, Grupo Bal funded and participate in the board of directors of InstitutoTecnologico Autonomo of Mexico (ITAM), one of leading universities in Mexico with more than 5,000 students.
Mexico: the implementation
Positive macroeconomic environment
Grupo Bal: a partner of excellence
Advances in the business plan
Mexico: the implementation
Advances in the business plan
Leaders of the JV are living in Mexico
Second line teams formation
Negotiations with diverse real estate developers
First stores openings: planned for 2009
Ripley Corp1.
Ripley Today
2.
Chile: increasing profitability
3.
Peru: leadership on a high growth market
4.
Mexico: the implementation
5.
Conclusion
ConclusionsChile: increasing profitability
Peru: leadership on high growth market
Mexico: The implementation
First store openings: 2009
Important store opening plan
Excellent market positioning
Growth on loans portfolio with Banco Ripley Peru
Growth on real estate business with Aventura Plaza
Selective square meter increase to follow market growth
New management structure
New distribution center start up
Loans portfolio & Controlled risk
Strength our solid loans position
Growth on real estate business through Mall Plaza
RIPLEY CORP
September 2008