Second Quarter 2019 EARNINGS PRESENTATION
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EARNINGS PRESENTATION
Second Quarter
2019
1
Disclaimer
The information contained in this presentation has been Cencosud and their respective affiliates, officers,
prepared by Cencosud SA ("Cencosud") for informational directors, partners and employees accept no liability
purposes only and should not be construed as a for any loss or damage of any kind arising from the
solicitation or an offer to buy or sell securities and use of all or part of this material.
should not be treated as giving investment advice or
otherwise. No representation or warranty, express or This presentation may contain statements that are
implied, is provided in relation to the accuracy, subject to risks and uncertainties and factors, which
completeness or reliability of the information contained are based on current expectations and projections
herein. The views expressed in this presentation are about future events and trends that may affect the
subject to change without notice and Cencosud has no business of Cencosud. You are cautioned that such
obligation to update or keep current the information forward-looking statements are not guarantees of
contained herein. The information contained in this future performance. There are several factors that
presentation is not intended to be complete. can adversely affect the estimates and assumptions
on which these forward-looking statements are
based, many of which are beyond our control.
Executive Summary
• Softer consumption in Chile and weak macroeconomic environment in Argentina
affected results during the quarter. Despite these headwinds, Adjusted EBITDA1
margin expanded 95 bps supported by operational improvements in Brazil, Peru and
Colombia, as well as lower SG&A as a result of the efficiency plans implemented in
labor costs and basic services and the IFRS16 rule adoption2.
• At constant exchange rates, revenue increased 6.8% YoY. Under previous accounting
standards which excludes IAS29 (hyperinflation accounting in Argentina) effective
since 3Q18, revenues decreased 4.9% due to the depreciation of ARS and BRL
against the CLP. As reported, and including IAS29, revenues decreased 1.8%.
• During the second quarter, the IPO of Shopping Centers was successfully executed,
raising USD 1.055 million. Proceeds will be used to pay down debt at Cencosud.
1. Adjusted EBITDA: Gross profit + Other income by function + Other gains (losses) – SG&A + D&A + profit of equity method associate - Asset Revaluation
2. IFRS16 rules states all leases exceeding 12 months in length and not of low value, should be recognized in the balance sheet.
3
2Q19 Highlights
Consolidated 2Q19 Results
Under Previous Accounting Standards IAS29 As Reported
(A) (B) (C) (D)
Inflation Conversion
2Q191 2Q182 Chg. YoY Chg. YoY 2Q196 Chg. YoY
Effect4 Effect5
3 Constant
CLP mn CLP mn Ex-IAS29 CLP mn CLP mn CLP mm (%)
Currency
Revenues 2.288.196 2.406.517 -4,9% 6,8% 54.869 20.293 2.363.357 -1,8%
Gross Profit 630.842 689.705 -8,5% 5,6% 24.758 7.160 662.760 -3,9%
Gross Mg. 27,6% 28,7% -109 bps 28,0% -62 bps
SG&A (540.501) (596.299) -9,4% 4,4% (20.888) (5.953) (567.342) -4,9%
SG&A (% of revenues) -23,6% -24,8% 116 bps -24,0% 77 bps
Adjusted EBITDA 167.501 153.241 9,3% 19,7% 13 - 167.513 9,3%
Adj. EBITDA Mg. 7,3% 6,4% 95 bps 7,1% 72 bps
Net Profit 9.599 3.682 160,7% 231,6% (28.803) 244 (18.960) n.a.
Net Profit Mg. 0,4% 0,2% -0,8%
1 Excludes the adjustment by hyperinflation in Argentina
2 As Reported
3 Considers the quarter results with previous accounting methodology, using an average exchange rate per month in Argentina.
4 ‘Inflation effect’ reflects the three months period results from Argentina updated by inflation.
5 ‘Conversion effect’ reflects the translation from ARS to CLP figures of the 6 months period using end of period exchange rate as of June 2019.
6 Includes the adjustment by hyperinflation in Argentina.
7 (A) + (B) + (C) = (D)
4
6M19 Highlights
Consolidated 6M19 Results
Under Previous Accounting Standards IAS29 As Reported
(A) (B) (C) (D)
Inflation Conversion
6M191 6M182 Chg. YoY Chg. YoY 6M196 Chg. YoY
Effect4 Effect5
Constant
CLP mn CLP mn Ex - IAS29 3 CLP mn CLP mn CLP mn (%)
Currency
Revenues 4.562.933 4.829.322 -5,5% 5,9% 67.792 (17.067) 4.613.658 -4,5%
Gross Profit 1.288.715 1.393.653 -7,5% 6,6% 18.623 (7.196) 1.300.142 -6,7%
Gross Mg. 28,2% 28,9% -62 bps 28,2% -68 bps
SG&A (1.082.704) (1.182.187) -8,4% 8,7% (28.932) 4.483 (1.107.153) -6,3%
SG&A (% of revenues) -23,7% -24,5% 75 bps -24,0% 48 bps
Adjusted EBITDA 463.238 336.402 37,7% 51,3% 1.594 (2.945) 461.886 37,3%
Adj. EBITDA Mg. 10,2% 7,0% 319 bps 10,0% 305 bps
Net Profit 186.960 56.134 233,1% 151,6% (51.755) (907) 134.299 139,2%
Net Profit Mg. 4,1% 1,2% 2,9% 175 bps
1 Excludes the adjustment by hyperinflation in Argentina
2 As Reported
3 Considers the quarter results with previous accounting methodology, using an average exchange rate per month in Argentina.
4 ‘Inflation effect’ reflects the three months period results from Argentina updated by inflation.
5 ‘Conversion effect’ reflects the translation from ARS to CLP figures of the 3 months period using end of period exchange rate as of March 2019.
6 Includes the adjustment by hyperinflation in Argentina.
7 (A) + (B) + (C) = (D)
5
Update: Cencosud Shopping Centers Completes IPO
May 6, 2019: Cencosud Shopping was registered on the Financial
Market Commission (CMF) under number 1164.
May 17, 2019: Notes Issuance of UF 10,000,000 structured in Series A
for UF 7,000,000 for a term of 10 years and Series B for UF 3,000,000
for a term of 25 years. Funds will be used to refinance liabilities.
June 17-27, 2019: Local, international roadshow and pricing of the
publicly offered shares
June 28, 2019: Cencosud Shopping successfully placed through the
Santiago Stock Exchange, 472 million shares to the public at a price
of $1,521 CLP, raising USD 1,055 million.
6
2019 Focus: Omnichannel
• Chile launched the new Jumbo App with express delivery VAR % Penetration Penetration
in August 2019 Internet Sales 19/18 2Q19 2Q18
• Argentina: efforts focused on increasing web page Supermarkets 11,6% 1,6% 1,4%
visibility on the internet Department Stores 17,6% 20,9% 17,1%
• Colombia: launch of Metro website with national Home Improvement 53,8% 6,3% 3,7%
Supermarket coverage on non-food products and food coverage in Total 22,0% 4,5% 3,5%
Bogota
• Peru: focus centered on increasing the number of sku’s
offered on the website.
• Chile: double digit growth due to Cyber Monday. Good
performance of the recently introduced same day Click
and Collect, improvements to the post-sales systems and
the implementation of systems to automate certain
Home processes in the back-office
Improvement • Argentina: alliances with banks to boost sales in
installments
• Colombia: increasing online assortment and a good
performance on strategic alliances
• Chile:
Department • Successful execution of Cyber Monday campaign
Stores • Positive results after the changes made to the lay-out
and efficiencies in the picking process
7
Supermarkets
Results1 Revenues declined YoY by 3.0% in CLP reflecting the
2Q19 2Q18 Chg. YoY Chg. YoY depreciation of ARS against CLP. Revenue comparisons were
As Constant affected by the World Soccer Cup which took place in June
CLP mn CLP mn
Reported Currency 2018 and higher promotional activity, partially offset by
Revenues 1.645.463 1.695.508 -3,0% 6,9% higher online sales in all countries.
Gross Profit 400.456 423.510 -5,4% 5,8%
Gross Mg. 24,3% 25,0% -64 bps Adjusted EBITDA increased 24,7% in CLP YoY explained by
SG&A (347.428) (377.514) -8,0% 5,5%
the adoption of IFRS16 across countries. Excluding this
SG&A (% of revenues) -21,1% -22,3% 115 bps effect, Adjusted EBITDA margin was flat YoY, reflecting
Adjusted EBITDA 102.690 82.370 24,7% 21,2% higher EBITDA in Brazil and Colombia, partially offset by
Adj. EBITDA Mg. 6,2% 4,9% 138 bps Argentina, Peru and Chile, due to higher promotional activity
in these countries.
Supermarket SSS by Country & Food Inflation
Same Store Sales Food Inflation Revenues Chg. YoY Chg. YoY
2Q19 2Q18 2Q19 2Q18 2Q19 2Q18 Constant
As Reported
(%) (%) (%) (%) CLP mn CLP mn Currency
Chile 0,0 1,9 2,2 2,2 685.717 677.607 1,2% 1,2%
Argentina 35,5 17,7 64,0 23,2 246.533 313.553 -21,4% 35,2%
Brazil -0,2 1,6 5,9 -2,8 333.868 330.362 1,1% 0,0%
Peru -3,3 2,7 2,5 -1,4 206.208 191.471 7,7% -0,3%
Colombia 0,5 0,3 4,6 3,9 173.138 182.515 -5,1% -0,6%
Source: INE, IBGE, BCRP, BanRep
1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina. 8Home Improvement Revenues decreased 9.8% YoY explained by the depreciation of
ARS against CLP. In Argentina revenue growth in local currency is
Results1 explained by the inflation increase, offset by lower wholesale
2Q19 2Q18 Chg. YoY Chg. YoY revenues. This was offset a positive SSS in Chile and Colombia,
As Constant mainly due to the increase in wholesale revenues and online
CLP mn CLP mn
Reported Currency
sales.
Revenues 270.687 300.255 -9,8% 18,1%
Gross Profit 80.321 94.838 -15,3% 16,2% Adjusted EBITDA declined 16.6% in CLP, affected by the
Gross Mg. 29,7% 31,6% -191 bps depreciation of ARS against CLP, partially offset by the adoption of
SG&A (66.511) (76.203) -12,7% 18,5% IFRS16. Excluding this effect Adjusted EBITDA decreased 25,5%.
SG&A (% of revenues) -24,6% -25,4% 81 bps
Gross Margin in Chile and Argentina is explained by lower rebates
Adjusted EBITDA 20.559 24.641 -16,6% 10,5%
Adj. EBITDA Mg. 7,6% 8,2% -61 bps from suppliers and in the case of Colombia due to the liquidation
of obsolete inventory. Nevertheless, in Chile and Colombia EBITDA
margin increased due to efficiency plans.
Home Improvement Revenues & SSS by Country
Same Stores Sales Revenues Chg. YoY Chg. YoY
2Q19 2Q18 2Q19 2Q18 Constant
As Reported
(%) (%) CLP mn CLP mn Currency
Chile 3,2 7,9 138.114 132.539 4,2% 4,2%
Argentina 31,2 29,8 115.973 151.800 -23,6% 31,2%
Colombia 9,2 10,5 16.600 15.917 4,3% 9,3%
1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina. 9Department Stores
Results Revenues decreased 3.9% YoY in CLP reflecting lower sales of
2Q19 2Q18 Chg. YoY Chg. YoY electronic products and higher promotional activity. In Chile
As Constant
SSS was -5.8% affected by a drop in average prices, partially
CLP mn CLP mn offset by the increase of online sales. In the case of Peru,
Reported Currency
Revenues 275.054 286.129 -3,9% -4,5% revenues increased slightly due to higher apparel sales, offset
Gross Profit 73.173 80.415 -9,0% -9,5%
by lower electronic product sales as a result of the Soccer
Gross Mg. 26,6% 28,1% -150 bps World Cup in 2018.
SG&A (75.601) (75.653) -0,1% -0,8%
SG&A (% of revenues) -27,5% -26,4% -105 bps Adjusted EBITDA decreased 9,1% and margin declined 25 bps
Adjusted EBITDA 12.011 13.207 -9,1% -9,2% impacted by the higher promotional activity and lower rebates
Adj. EBITDA Mg. 4,4% 4,6% -25 bps from suppliers, partially offset by decrease in expenses
resulting from the efficiency and process restructuring plans.
Department Stores Revenues & SSS by Country
Same Stores Sales Revenues Chg. YoY Chg. YoY
2Q19 2Q18 2Q19 2Q18 Constant
As Reported
(%) (%) CLP mn CLP mn Curency
Chile -5,8 -1,0 249.447 262.571 -5,0% -5,0%
Peru -0,8 24,0 25.607 23.558 8,7% 0,6%
10Shopping Centers Revenues decreased 5.5% YoY in CLP and Adjusted EBITDA
decreased 3.5% due to higher SG&A explained by the change in the
Results1 accounting for advertising spending, partially offset by the IFRS16
2Q19 2Q18 Chg. YoY Chg. YoY effect.
As Constant
CLP mn CLP mn
Reported Currency
• Chile: revenue growth driven by fixed revenues, partially offset
Revenues 56.019 59.268 -5,5% 7,2%
by lower variable sales from tenants. Adjusted EBITDA
increased driven by the adoption of IFRS16 and higher gross
Gross Profit 50.732 52.360 -3,1% 7,6%
Gross Mg. 90,6% 88,3% 222 bps profit reflecting lower common expenses.
SG&A (5.681) (6.730) -15,6% 0,9% • Argentina: revenues up 23.6% in local currency due to the
SG&A (% of revenues) -10,1% -11,4% 121 bps
inflation adjustment in a portion of contracts. Adjusted EBITDA
Adjusted EBITDA 45.581 47.215 -3,5% 6,3% margin contraction explained by higher salary expenses and
Adj. EBITDA Mg. 81,4% 79,7% 170 bps land taxes, partially offset by the adoption of IFRS16.
Shopping Centers Occupancy Rates & Revenues by Country
Occupancy Rate Revenues Chg. YoY Chg. YoY
• Peru: revenue growth driven by higher fixed revenues
2Q19 2Q18 2Q19 2Q18 Constant
(%) (%) CLP mn CLP mn
As Reported
Currency due to the entry of new tenants. Adjusted EBITDA margin
expanded driven by the adoption of IFRS16 and lower
Chile 99,4 99,5 37.058 36.752 0,8% 0,8%
energy expenses.
Argentina 97,9 98,2 11.259 15.457 -27,2% 23,6%
• Colombia: revenues decreased 4.0% YoY in CLP reflecting
Peru 96,9 96,9 5.684 4.857 17,0% 8,3%
higher vacancy. Adjusted EBITDA margin contracted due
to higher property taxes expenses.
Colombia 72,0 72,0 2.018 2.202 -8,3% -4,0%
1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina. 11Financial Services
Revenues decreased 40.2% YoY in CLP and Adjusted EBITDA was down 36.8%,
Results2 due to the deconsolidation of Peru Financial Service Results.
2Q19 2Q18 Chg. YoY Chg. YoY
CLP mn CLP mn
As Constant • Chile: Adjusted EBITDA declined due to higher risk provision due to the
Reported Currency cross check of client information with the Company’s competition which
Revenues 37.878 63.302 -40,2% -0,8%
published as a bank for the first time.
Gross Profit 23.518 37.584 -37,4% 0,8%
Gross Mg. 62,1% 59,4% 272 bps • Argentina: Adjusted EBITDA margin decreased due to the reduction of
SG&A (5.298) (10.463) -49,4% -15,1% the loan-portfolio and increased risk.
SG&A (% of revenues) -14,0% -16,5% 254 bps
Adjusted EBITDA 20.117 31.827 -36,8% -2,9% • Brazil: Adjusted EBITDA margin increased, explained by the lower risk as
Adj. EBITDA Mg. 53,1% 50,3% 283 bps
a result of a more conservative commercial strategy partially offset by the
Financial Services Revenues, Loan Portfolio & Risk by Country decrease of the loan portfolio.
1
Revenues Chg. YoY Chg. YoY Loan Portfolio Chg. YoY NPL
2Q19 2Q18 As Constant 2Q19 2Q18 As 2Q19 2Q18 • Peru: Revenues and Adjusted EBITDA
Reported Currency Reported
CLP mn Local Currency (times) decreased as the business was no longer
consolidated as of March 1, 2019. Excluding
Chile - - N.A. N.A. 1.205.016 1.021.035 18,0% 2,4 2,8
this effect, Adjusted EBITDA Margin contracted
Argentina 34.134 43.305 -21,2% 36,1% 11.715.409 13.054.240 -10,3% 1,4 1,3 due to higher risk from the strategy focused on
emerging segments.
Brazil 883 339 160,5% 157,5% 507.514 544.536 -6,8% - 0,6
• Colombia: Adjusted EBITDA increased mainly
Peru - 18.537 -100,0% -100,0% 855.825 726.238 17,8% 2,3 1,8 reflecting the sale of a written-off portfolio.
Colombia 2.862 1.121 155,3% 167,5% 847.131 834.699 1,5% 3,2 2,7
1 Provisions over past due loan portfolio (with delinquency greater than 90 days). 12
2 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.Debt Structure
• Total net debt increased due to adoption of IFRS16
• Excluding this effect, total net debt decreased 31.6% YoY. Debt by Currency3 Debt by Interest Rate3
2Q19 Otras
Key Figures1 Latam; 6% Floating;
20%
2Q19 2Q18
Total Financial Debt (US$ Bn) 6,5 5,0 USD;
21%
Cash (US$ Mn) 1.413 216 CLP + UF;
73%
Other Financial Assets (US$ Mn) 675 545
Net Financial Debt (US$ Bn) 4,5 4,2
Adj. EBITDA LTM (US$ Mn) 1.128 1.061 Fixed; 80%
Net Financial Debt / Adj. EBITDA LTM 3,95 3,99
2Q18 Otras
Latam; 8% Floating;
Amortization Schedule (USD mn)2 20%
1.057
USD; 20%
753 719
363 330 350
213 227 205
130 123
57 36 53 15 CLP + UF;
72%
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2041 2044 2045 Fixed; 80%
1 Figures converted to USD using end of period exchange rate for each period.
2 Figures converted to USD using end of period exchange rate as of June 30, 2019. Figures are presented net off gains/losses from mark to market of derivatives, overdrafts and Comex debt.
3 Debt by Currency and Debt by Rate include Cross Currency Swaps. 13Closing Comments
Second Quarter 2019 – Challenging Macro Environment Persists
• Shopping Centers IPO successfully completed
• Proceeds used to repay debt at Cencosud
• Promotional environment persists and tough comps against 2Q18 World Cup
• Adjusted EBITDA margin expands benefiting from cost and efficiency initiatives
• Making Significant progress with omni-channel initiatives
• Consumers continue to embrace e-commerce option - up 22% YoY
2019 – Cautiously Optimistic
• Financial flexibility provides support to grow the Company
• Ongoing cost and efficiency measures to drive margin improvement
• Continue to strengthen balance sheet
• Working capital optimization
• Debt reduction
• Non-core Assets sales
• Brazil and Colombia improving consumptions trends
• Chile and Argentina expected to remain challenging
1415
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