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Soriana reports first quarter 2016 financial ... Soriana reports first quarter 2016 financial results Revenues of $34.793 billion equal to 39.6% increase vs. 1Q15. Same-store sales

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  • Soriana reports first quarter 2016 financial results

    § Revenues of $34.793 billion equal to 39.6% increase vs. 1Q15.

    § Same-store sales indicator of 8.0% in the first quarter.

    § EBITDA growth of 46.0%.

    § 30.9% expansion in cash net income.

    § Operations consolidation of the 143 units of Controladora Comercial Mexicana,

    S.A.B. de C.V. (CCM)

    Monterrey, N.L., April 28th, 2016. Organización Soriana, S.A.B. de C.V. (Soriana) announces the financial results corresponding to 1Q 2016. Figures in this report are shown in nominal terms in accordance with International Financial Reporting Standards (IFRS).

    1Q 2016 Operating Performance

    In the first quarter of the year, we continued having a dynamic consumption despite macroeconomic indicators showed mixed readings. This, and the efforts of the Company to provide enticing sales and promotions to customers and the efficiencies achieved in the four formats where the Transformation Plan was implemented, support the 8.0% same-store sales increase in the first quarter of the year. It should be noted that the 143 units acquired from CCM are not considered in same-store sales calculations, but will be after they have been operating for more than 12 months under the administration of Soriana. Total sales amounting to $34.793 billion pesos imply an annual expansion of 39.6%, considering that starting this quarter we will be consolidating CCM operations. In that regard it should be noted that we continue having good performance in all our store formats, particularly in Soriana Express, City Club and Soriana Hiper formats. As for CCM, performances reported from Comercial Mexicana and Bodega Comercial Mexicana formats stand out. Margin and gross income performance showed an increase of 50 basis points as sales percentage due to the integration of CCM operations. Comercial Mexicana has a higher gross margin. Both companies continue with their own commercial strategies with the purpose of offering customers the best promotions and prices, according to the specific necessities of

  • their customers. Gross income for this first quarter reached $7.543 billion pesos, representing 21.7% margin and annual growth of 42.8%. Operating expenses (without depreciation and amortization) increased 20 basis points as sales percentage. When compared to the same period last year, this line item increased due to the extraordinary expenses that derived from the CCM operations take-over. It should be noted that these expenses by Soriana are not recurrent. We expect the largest proportion of CCM’s integration synergies to be achieved in the second half of the year. Operating expenses at this quarter-end closing amounted $5.088 billion pesos, equal to 14.6% on sales, and representing an increase of 41.8% in relation to the amount shown in the same period last year. The foregoing produced a result at EBITDA(1) level of $2.483 billion pesos, representing a margin of 7.1% on quarter sales. EBITDA increased 46.0% with respect to the same period in 2015. In relation to the financial line items in our income statement, net financial cost of the quarter closed with $386 million pesos, compared to the financial cost of $102 million pesos in the same period of 2015. This variation is mainly due to the gross debt increase to $32.387 billion pesos as a consequence of CCM acquisition. Finally, consolidated net income resulted in $789 million pesos; this amount represents a sales percentage of 2.3% and implies an annual increase of 1.1%. Tax rate in the first quarter is 36% as a consequence of some differences on accounting and fiscal items like the amortization of the intangible asset due to the purchase of CCM, which doesn’t have any consequence in fiscal deduction and inflationary adjustment due to the debt undertaken to purchase CCM which significantly affect the deferred tax provision of the quarter. Cash net income amounted to $1,742 million pesos equal to 5.0% on sales and a growth of 30.9% when compared to the first quarter of 2015. (1) EBITDA is defined as the operating income before depreciation and amortization.

  • Opening of New Stores The integration of Controladora Comercial Mexicana’s 143 stores outstands in the first quarter of the year and has yielded a total of 824 units and a floor-sales growth of 31.2%. In the last 12 months we had a net opening of 10 units under a Soriana store format.

    Store Format 1Q2016 1Q2015 Sales Floor Area as of

    1Q16

    Sales Floor Growth

    Soriana Hiper 272 270 2,001,235 0.6%

    Soriana Super 129 126 266,632 1.8%

    Soriana Mercado 141 139 616,357 1.1%

    Soriana Express 105 105 148,798 0.2%

    City Club 34 34 274,115 0.0%

    Mega 64 - 549,158 -

    Comercial Mexicana 42 - 264,549 -

    Bodega Comercial 34 - 181,368 -

    Alprecio 3 - 3,840 -

    Total 824 674 4,306,097 31.2% Relevant Event

    Last April 15, Organización Soriana, S.A.B. de C.V. reported to investors that it had entered into a Memorandum of Understanding to partner with the Chilean company S.A.C.I. Falabella (Falabella) for the joint development of specialized stores focused on home improvement and construction in Mexico through Sodimac, its affiliate company. Likewise, as part of such association, we will seek the parallel development of a financial business to develop an offer integrated by credit services and products that, together with the stores, strengthen customer benefits. Social Responsibility Activities

    As part of our Corporate Social Responsibility strategy, we have 4 pillars that represent a solid platform of our Corporate Social responsibility before our customers, community in general, vendors, employees and shareholders. Such pillars were supported throughout the first quarter by way of the following actions:

  • a) Soriana Fundación [Soriana Foundation] § In Soriana we are a responsible company committed to our community, hence we

    work with our heart to improve the quality of life of Mexican families. Regarding “Niñez” (childhood) in this first quarter of the year, we supported over 90 institutions focused on several charitable works such as: health, nutrition, rehabilitation and education. We donated $2.6 million pesos on food to several banks and institutions. We also launched “Voluntario de Corazon” program with the purpose of inviting our employees to participate in several social projects in the country and we were able to gather 480 volunteers.

    b) Medio Ambiente [Environment] § Regarding “medio ambiente” in the first quarter of 2016, we have worked mainly to

    obtain synergies with CCM as well as power efficiency after the results from 30 energy audits implemented in CCM stores. From that we have generated projects that imply changing the use of LP gas to natural gas, integration of CCM stores in clean energy contracts with concessionaires, integration of CCM stores in Power, Gas and Water Control System (SICEGA) and reactivation of the monitoring, automation and control system that CCM had. These projects are in the initial phases.

    c) Buenas Prácticas de Negocio [Good Business Practices] § Soriana promotes and recognizes small regional producers are an important factor in

    the economic force of the country. During the first quarter of the year 752 vendors were attended.

    d) Soriana Universidad [Soriana University] § Soriana Universidad supports the development and improvement of its employees. In

    the first quarter of 2016, over 754 thousand training hours were provided. This represents 9.6 hours per employee; that is, an average of 3.2 hours per month per employee.