Cencosud 2014
Corporate Presentation
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
3 Corporate Presentation www.cencosud.com
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)
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
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.
Corporate Presentation www.cencosud.com 6
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
Corporate Presentation www.cencosud.com 7
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
Corporate Presentation www.cencosud.com 8
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
Corporate Presentation www.cencosud.com 9
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
Corporate Presentation www.cencosud.com 10
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
Corporate Presentation www.cencosud.com 11
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
Corporate Presentation www.cencosud.com 12
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.
Corporate Presentation www.cencosud.com 13
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.
Corporate Presentation www.cencosud.com 14
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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