Corporate Presentation Second Quarters2.q4cdn.com/.../2015/Earnings-Presentation-2Q15-(ENG).pdfThis presentation may contain statements that are forward-looking subject to risks and

Corporate Presentation

Second Quarter Results 2015

Second Quarter | www.cencosud.com | 2

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.

3

2Q15 Operational Highlights

• Top line growth led by Home Improvement

Department Stores & Shopping Centers

• Gross margin gains in Supermarket fuel gross

profit growth followed by D-Stores & HI

• Operating Income jumped on improved

Supermarket, Shopping Center & D-Store

performances

• Food Retail leading Adj EBITDA gains followed

by D-Stores & Shopping Centers

Second Quarter | www.cencosud.com |

4

Food Retail in Supermarkets

continues to perform well while

non-food hurt by currency and

high base due to World Cup

Chile • Mid-Single digit SSS thrusted by perishable sales

• Smart promotional strategy helps shield gross margin

• High comparison basis in electronics due to the 2014 World Cup

• Corporate restructuring curbs profitability gains

Peru • Stable revenue on lower promotions and few openings

• Smart Pricing and better benchmarking help improve gross margin

• Lower operating income as a result of higher security & energy costs

Colombia • Slower consumption affects spending on non-food items with high comparison

basis due to World Cup

• Perishables remain as a bright spot with SSS growth of 9.2%

• Growth in traffic and ticket in food departments

• Lower electro in sales mix gives gross margin a boost


• Company-wide initiatives to lower costs and

boost profitability

• Gross margin: negotiations with suppliers to

maximize margin

• New business heads in Brazil with mandate to

prioritize profitability

• SG&A: Headcount and vendor initiatives to

reduce costs

Second Quarter | www.cencosud.com | 5

Cost-control initiatives

http://www.cencosud.com/












6

• Impairment of Brazilian Assets of CLP 116,771 million

• Reversal of differed taxes in Colombia of CLP 40,632

million

• Materialization of Scotiabank deal for financial services in

Chile yields extraordinary profit of CLP¨61,373 million


Discussion into Operational

One-Off Items

Discussion into Non-Operational

One-Off Items

• Severance payments in Supermarkets & D-Stores push

SG&A upwards

7

• Further potential deterioration of macro outlook leads to

review of expected cashflows

• Credit downgrade

• Rising interest rates

• Shrinking GDP

• Debt servicing capacity not to be affected; in compliance

with all financial covenants

• Cencosud developed an asset impairment model that was

later reviewed by its auditor PWC and reviewed by an

independent third party opinion


Write-off in Brazil

8

• EBITDA Up 93% YoY

• New Management Appointed at Prezunic and to Head

Several Key Categories

• EBITDA Mg Up 213 Bps YoY On:

• Improved Business Performance

• Headcount Reductions

• Lower Service Contracts

• Improved Pricing Strategy & Category Management


Progress in Brazil

• Future strategy for Brazil to lie on 3 main pillars

• Commercial planning

• Price benchmarking and inflation pass-thru

• Shrinkage

9

Consolidated Revenue Evolution

• Unfavorable currency swings in Brazil and Colombia curb

revenue growth

• High comparison basis & macro headwinds in the region

for non-food affect SSS and revenue growth

• Home Improvement at the forefront in revenue gains

• Greenfield projects continue to post positive SSS

Consolidated Adjusted EBITDA Evolution

• Supermarket EBITDA generation jumps 18% on better

Argentina; Brazil and Chile performance

• D-store EBITDA jumps 110% on improved purchasing, better

inventory management and better foreign currency risk

management

Fig

ure

s in C

LP

mill

ion


2Q14 2Q15

+1.24% w/D.O. -

0.4%

*This

num

ber

for

Adju

ste

d E

bitda i

n t

he q

uart

er

inclu

des a

n e

xtra

ord

inary

pro

fit

resultin

g

from

the s

ale

of

the f

inancia

l serv

ices b

usin

ess t

o S

cotiab

ank i

n C

hile

142.073

97.758

168.330

2Q14 2Q15 SR -2Q15

-31.2% w/D.O. -

36.1%

Excluding

One-Offs

+19%

2.617.109

2.585.035

Results By Business

11

Revenue Evolution

Adjusted EBITDA Evolution

• 8 Net Store Openings YoY or 1.5% selling space

Growth.

• Pacific coast countries displaying healthy SSS

performance when discounting for high comparison

base in non food

• Deteriorating macro and high inflation hurt SSS

performance at supermarkets

Fig

ure

s in C

LP

mill

ion

SSS evolution by country

(local currency)

Supermarkets

• Better performance in Argentina, Chile & Brazil leads

to EBITDA expansion of 18% in the division

• Brazil EBITDA generation improved on greater gross

margin resulting from improved negotiation with

suppliers; lower shrinkage and headcount reductions

• Argentina EBITDA jumps with margin gains of 60 bps


12

Fig

ure

s in C

LP

mill

ion

Home Improvement Department Stores


• Positive SSS particularly in Argentina & Chile

• Lower adjusted EBITDA due to higher SG&A

• Colombia loss narrows on improved

performance at converted stores

• Top line growth in both Chile and Peru

• Strong EBITDA performance in Chile

13

Fig

ure

s in C

LP

mill

ion

Shopping Centers Financial Services


• All markets show revenue growth and high occupancy

• Shopping Center Adj EBITDA grows 2.9% on

improved performance in Argentina and Peru

• Chile profitability was curbed by higher taxes and

one-off expenses

• Revenues in Chile consolidate only 1 month of

operations in 2015 due to closing of deal with

Scotiabank

• Revenues from Brazil and Colombia drop due to

currency devaluations

• All markets but Brazil obtained portfolio growth in the

period

• Cost of funding increases across the region

14

Effective Tax Rate Conciliation


• CREE Disbursements in Colombia now to be eligible for deferred tax

assets due to new legal precedent with an effect of CLP 40,632 million

• Materialization of Financial Services deal in Chile deemed non-

taxable resulting in a positive tax effect of CLP 13,051 million

• Brazil impairment charge results in lower taxable income leading to a

positive tax effect of CLP 39,702 million

15

Financial Ratios Cencosud is actively exploring options to accelerate deleveraging

Net debt evolution

(US$ bn)

Net leverage

(net debt / EBITDA)

Breakdown by Rate

(After CCS)

Breakdown by

Currency

(After CCS)


*

* C

alcu

lati

on

s m

ade

to

arr

ive

at

this

rat

io d

o n

ot

incl

ud

e n

on

e ca

she

on

e-o

ff it

ems

such

as

th

e B

razi

l im

pea

rmen

t ch

arge

16

Debt Amortization Schedule (USD million) as of June 2015

After receiving proceeds from the Financial Services deal with

Scotiabank; Cencosud finds itself in a solid financial situation.

FINANCIAL DEBT

USD MM


Pacific coast food retail continues to post

healthy performance despite high non-food

base

Corporate restructuring to curb profitability

gains in 2Q15 & 3Q15D-Stores posting

profitability gains despite flatish SSS in

Chile resulting from World Cup effect

Healthy EBITDA expansion excluding

One-Off

Leverage down with further improvements

to come from EBITDA growth

18

Upcoming Events

Cencosud Day Rio

Rio de Janeiro, RJ

Sept 1 & 2

BTG Pactual Latin America

CEO conference

New York, NY

Oct 6 thru 8

3Q15 Earnings Release

Nov 13, 2015

After market

Marisol Fernández León IR Manager

Phone +562 2959 0545

[email protected]

Natalia Nacif Senior IR Analyst

Phone +562 2959 0368

[email protected]

Ignacio Reyes Miranda Senior IR Analyst

Phone +562 2959 0804

[email protected]


Documents

Corporate Presentation Second Quarters2.q4cdn.com/.../2015/Earnings-Presentation-2Q15-(ENG).pdfThis presentation may contain statements that are forward-looking subject to risks and