Transcript
Page 1: Corporate Presentation Cencosud 2014s2.q4cdn.com/.../2014/Corporate-Presentation-2Q14-(ENG).pdf2014 Corporate Presentation 2 The information contained herein has been prepared by Cencosud

Cencosud 2014

Corporate Presentation

Page 2: Corporate Presentation Cencosud 2014s2.q4cdn.com/.../2014/Corporate-Presentation-2Q14-(ENG).pdf2014 Corporate Presentation 2 The information contained herein has been prepared by Cencosud

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 or 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.

2 www.cencosud.com

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2005

Cencosud Cencosud

2014

368 Supermarkets; 0.7 mm m2

19 Shopping Centers; 0.4 mm m2

44 Home Improvement; 0.4 mm m2

22 Department Stores; 0.1 mm m2

926 Supermarkets; 2.4 mm m2

48 Shopping Centers; 0.7 mm m2

91 Home Improvement; 0.8 mm m2

84 Department Stores; 0.4 mm m2

CARG 2005 – 2013: 20.2%

Figures as of March 2014, exchange rates as of the end of each period

Revenue Evolution (USD MM)

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4 Corporate Presentation www.cencosud.com

Cencosud is a leading multi-format retailer in South America

Underpenetrated food retail sector Regional Footprint

Source: ILACAD and US Census Bureau, figures as of December 2013

63%

41% 43%

30%

48%

91%

37%

58% 58%

70%

52%

9%

Chile Argentina Brazil Peru Colombia US

Formal Informal

4th

Supermarkets

• Northeast Region (#1)

• Minas Gerais (#2)

• Rio de Janeiro (#3)

2nd

Supermarket

1st Home Improvement

2nd

Shopping Centers

2nd

Supermarkets

2nd

Home Improvement

2nd

Shopping Centers

2nd

Department Store

1st Supermarkets

3rd

Supermarkets

2nd

Home Improvement

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5 Corporate Presentation www.cencosud.com

Cencosud a Development and Growth Story

Source: ILACAD and US Census Bureau, figures as of December 2013

Colombia

Consolidation in the Chilean Market

IPO Santiago Exchange

Internationalization Process

Consolidation & Synergies Number of Stores

Selling Space (million m2)

Revenue (CLP million)

648

2.5

5,565,246

1,101

3.5

10,439,788

69%

40%

87%

Adj EBITDA (CLP Million) 1 478,976 720,100 50%,

Net Financial Debt/EBITDA 2 3.07x 3.6x 17%

2009 LTM 2Q14 Change (%)

Acquisitions and

Revenue

(USD Billion)

16.6

13.6

11.2

10.0 11.1

6.8

5.6 4.5

2.5

1: Adj. EBITDA is calculated as EBITDA minus revaluation of assets, indexation units and foreign exchange variations. 2: Net Financial Debt does not include debt related to Cencosud´s banking activities.

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The Cencosud Advantage

Market Standing, Scale and Geographic Diversification Unlike that of any Regional Player

Leading Supermarket Player in Chile, Peru, Argentina and Colombia

Present in Underpenetrated Markets with Resilient Consumer Spending

Profitable Operations Combined with Flexible Capex

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Target Shopper Competition

Middle to High Income Consumers Emerging Middle Class Wide Assortment of Imported Goods Marketing Sophistication of the Consumer Excellence in Perishables

Quality of Service Spotless Stores Willing to Pay Extra for Service Looking for the Best Products Looks for a Great Shopping Experience

Supermarkets and hypermarkets Specialty Stores

The Value Proposal: Brands for Quality and Service

Co

nsu

me

r B

ran

ds

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Target Shopper Competition

Middle to Low Income Consumers Quality in Perishables Promotional Pricing Strategy & Intense Marketing Proximity

Shopper Seeks Quality Seeking Clean Stores On a Budget Not looking for long lines at Check out Values the Shopping Experience

Promotionally Oriented Supermarkets Soft Discounters Informal Channel

The Value Proposal: Brands for Quality and Price

Co

nsu

me

r B

ran

ds

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The Cencosud Advantage

Source: Financial Statements 2013

Note: Figures in USD at end of year exchange rates

Cencosud & peers exclude non-food revenue

Clear Leader in Food Retailing in the Region Powerful Multi-format Business Model Combining Business and Scale

75%

2%

11%

10%

3% Supermarkets

Real Estate

HomeImprovement

Dstores

Financial Services

37%

25%

8%

20%

10%

Chile

Argentina

Peru

Brazil

Colombia

B

Y

C

O

U

N

T

R

Y

B

Y

B

U

S

I

N

E

S

S

0,51

4,23

3,40

3,81

13,42

1,42

1,19

1,75

3,42

Colombia

Peru

Brasil

Argentina

Chile

Uruguay

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Looking to Maximize Profitability

• New Joint Venture for Financial Services in Chile

• Divestiture of Non-Core Assets : Gas Stations & Pharmacies • Unlocking Value for the ramp up of existing projects: Appointment of a

Corporate Retail Manager to seek inter-business efficiencies • Creation of Special Task Groups for Underperforming Stores: ICU Stores

Monitored by a seasoned team to speed up store maturity, very successful in Peru.

• Building a lean Organization: Greater Focus on a Lower Cost Structure. • Growth Trilemma: Matching Capex and Dividends with Future Cashflows

Thus minimizing Use of Balance Sheet

• Minimization of Working Capital Needs: Better Inventory Management, Focus on Shrinkage Reduction

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Footprint Rich in profitability and Growth

Opportunities

Synergies, Profitability &

Cash Generation

Organic

Growth

Improvements in

Traffic & Organic

Expansion via

Multi-Format

Cash cow

SAP Stabilization

+ Traffic

Generation

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Corporate Governance & Best Practices

• Minimum dividend pay-out of 30% of distributable net income as per Chilean

regulation

• 2 Board out of 9 Members Nominated by Minority Shareholders

• Integrated Risk Management / On the Path to Sarbarnes-Oxley Compliance

• Enforced Policies for Related Party Transactions

• Code of Business Conduct

Corporate Social Responsibility

• Cencosud is a committed to the development of better working

conditions for its employees.

• Cencosud works in the development of strong ties with the communities

where it develops its business activities with the execution of successful

CSR programs.

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467 20 766 567

3.089

-

868 377

747 1.187

1.290

795 425

2008 2009 2010 2011 2012 2013 2014

Inorganic OrganicCapex (Figures in USD million)

Country Supermarkets HI D-Stores DCs Total m2 Investment

Argentina 3 3 - 1 20,000 USD 25 MM

Brazil 10 - - 1 23,000 USD 41 MM

Chile 15 2 2 - 39,000 USD 64 MM

Colombia 6 2 - - 28,000 USD 38 MM

Peru 5 - 3 - 25,000 USD 42 MM

TOTAL* 39 7 5 2 135,000 USD 210 MM

Note: this total does not include USD 100 MM for IT investments, USD 40 MM for the execution of traffic mitigation works related to Costanera Center and USD 75 MM in maintenance.

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Financial Services Agreement with

Announcement

Bondholder Approval

-

Bank Waivers

Closing

90 days

June 30th

Sept 4th

4Q14

Reception of Regulator approval

Request For SBIF

Approval

Aug 13th

Scotiabank to pay USD 280 million for a 51% stake in the business for the 15 year period of the JV

The operation allows Cencosud to follow through on its strategy to divest from non-core assets

Total debt reduction of USD 1.1 billion. Scotiabank to fund current portfolio & future growth

Deal allows leverage to return to levels seen in comparable peers

The Financial Services business is to benefit from better cost of funding and unlocks value from a more appropriate capital structure

The deal is subject to regulatory approval in Chile & Canada

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