EARNINGS PRESENTATION Second Quarter 2019s2.q4cdn.com/.../Earnings-Presentation-2Q19-(ENG).pdf ·...

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Second Quarter2019

EARNINGS PRESENTATION

Disclaimer

Cencosud and their respective affiliates, officers,directors, partners and employees accept no liabilityfor any loss or damage of any kind arising from theuse of all or part of this material.

This presentation may contain statements that aresubject to risks and uncertainties and factors, whichare based on current expectations and projectionsabout future events and trends that may affect thebusiness of Cencosud. You are cautioned that suchforward-looking statements are not guarantees offuture performance. There are several factors thatcan adversely affect the estimates and assumptionson which these forward-looking statements arebased, many of which are beyond our control.

The information contained in this presentation has beenprepared by Cencosud SA ("Cencosud") for informationalpurposes only and should not be construed as asolicitation or an offer to buy or sell securities andshould not be treated as giving investment advice orotherwise. No representation or warranty, express orimplied, is provided in relation to the accuracy,completeness or reliability of the information containedherein. The views expressed in this presentation aresubject to change without notice and Cencosud has noobligation to update or keep current the informationcontained herein. The information contained in thispresentation is not intended to be complete.

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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 andColombia, as well as lower SG&A as a result of the efficiency plans implemented inlabor costs and basic services and the IFRS16 rule adoption2.

• At constant exchange rates, revenue increased 6.8% YoY. Under previous accountingstandards which excludes IAS29 (hyperinflation accounting in Argentina) effectivesince 3Q18, revenues decreased 4.9% due to the depreciation of ARS and BRLagainst 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 Revaluation2. IFRS16 rules states all leases exceeding 12 months in length and not of low value, should be recognized in the balance sheet.

(A) (B) (C) (D)

CLP mn CLP mn Ex-IAS29 3 Constant

CurrencyCLP mn CLP mn CLP mm (%)

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%

Inflation

Effect4

Conversion

Effect5

As ReportedUnder Previous Accounting Standards

2Q191 2Q182 Chg. YoY Chg. YoY

IAS29

2Q196 Chg. YoY

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2Q19 Highlights

Consolidated 2Q19 Results

1 Excludes the adjustment by hyperinflation in Argentina2 As Reported3 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)

(A) (B) (C) (D)

CLP mn CLP mn Ex - IAS29 3 Constant

CurrencyCLP mn CLP mn CLP mn (%)

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

6M191 6M182 Chg. YoY Chg. YoY

Under Previous Accounting Standards As Reported

6M196 Chg. YoY

IAS29

Conversion

Effect5

Inflation

Effect4

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6M19 HighlightsConsolidated 6M19 Results

1 Excludes the adjustment by hyperinflation in Argentina2 As Reported3 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)

Update: Cencosud Shopping Centers Completes IPO

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May 6, 2019: Cencosud Shopping was registered on the FinancialMarket Commission (CMF) under number 1164.

May 17, 2019: Notes Issuance of UF 10,000,000 structured in Series Afor UF 7,000,000 for a term of 10 years and Series B for UF 3,000,000for a term of 25 years. Funds will be used to refinance liabilities.

June 17-27, 2019: Local, international roadshow and pricing of thepublicly offered shares

June 28, 2019: Cencosud Shopping successfully placed through theSantiago Stock Exchange, 472 million shares to the public at a priceof $1,521 CLP, raising USD 1,055 million.

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2019 Focus: Omnichannel

Supermarket

• Chile launched the new Jumbo App with express deliveryin August 2019

• Argentina: efforts focused on increasing web pagevisibility on the internet

• Colombia: launch of Metro website with nationalcoverage on non-food products and food coverage inBogota

• Peru: focus centered on increasing the number of sku’soffered on the website.

Home Improvement

• Chile: double digit growth due to Cyber Monday. Goodperformance of the recently introduced same day Clickand Collect, improvements to the post-sales systems andthe implementation of systems to automate certainprocesses in the back-office

• Argentina: alliances with banks to boost sales ininstallments

• Colombia: increasing online assortment and a goodperformance on strategic alliances

DepartmentStores

• Chile:

• Successful execution of Cyber Monday campaign

• Positive results after the changes made to the lay-outand efficiencies in the picking process

Internet Sales

VAR %

19/18

Penetration

2Q19

Penetration

2Q18

Supermarkets 11,6% 1,6% 1,4%

Department Stores 17,6% 20,9% 17,1%

Home Improvement 53,8% 6,3% 3,7%

Total 22,0% 4,5% 3,5%

Supermarkets

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Results1

Supermarket SSS by Country & Food Inflation

Revenues declined YoY by 3.0% in CLP reflecting thedepreciation of ARS against CLP. Revenue comparisons wereaffected by the World Soccer Cup which took place in June2018 and higher promotional activity, partially offset byhigher online sales in all countries.

Adjusted EBITDA increased 24,7% in CLP YoY explained bythe adoption of IFRS16 across countries. Excluding thiseffect, Adjusted EBITDA margin was flat YoY, reflectinghigher EBITDA in Brazil and Colombia, partially offset byArgentina, Peru and Chile, due to higher promotional activityin these countries.

Source: INE, IBGE, BCRP, BanRep1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 1.645.463 1.695.508 -3,0% 6,9%

Gross Profit 400.456 423.510 -5,4% 5,8%

Gross Mg. 24,3% 25,0% -64 bps

SG&A (347.428) (377.514) -8,0% 5,5%

SG&A (% of revenues) -21,1% -22,3% 115 bps

Adjusted EBITDA 102.690 82.370 24,7% 21,2%

Adj. EBITDA Mg. 6,2% 4,9% 138 bps

Chg. YoY Chg. YoY

2Q19 2Q18 2Q19 2Q18 2Q19 2Q18

(%) (%) (%) (%) CLP mn CLP mn

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%

Same Store Sales

Constant

Currency

Food Inflation Revenues

As Reported

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Results1

Home Improvement Revenues & SSS by Country

Revenues decreased 9.8% YoY explained by the depreciation ofARS against CLP. In Argentina revenue growth in local currency isexplained by the inflation increase, offset by lower wholesalerevenues. This was offset a positive SSS in Chile and Colombia,mainly due to the increase in wholesale revenues and onlinesales.

Adjusted EBITDA declined 16.6% in CLP, affected by thedepreciation of ARS against CLP, partially offset by the adoption ofIFRS16. Excluding this effect Adjusted EBITDA decreased 25,5%.Gross Margin in Chile and Argentina is explained by lower rebatesfrom suppliers and in the case of Colombia due to the liquidationof obsolete inventory. Nevertheless, in Chile and Colombia EBITDAmargin increased due to efficiency plans.

1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 270.687 300.255 -9,8% 18,1%

Gross Profit 80.321 94.838 -15,3% 16,2%

Gross Mg. 29,7% 31,6% -191 bps

SG&A (66.511) (76.203) -12,7% 18,5%


Adjusted EBITDA 20.559 24.641 -16,6% 10,5%

Adj. EBITDA Mg. 7,6% 8,2% -61 bps

Chg. YoY Chg. YoY

2Q19 2Q18 2Q19 2Q18

(%) (%) CLP mn CLP mn

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%

As ReportedConstant

Currency

RevenuesSame Stores Sales

Home Improvement

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Results

Department Stores Revenues & SSS by Country

Revenues decreased 3.9% YoY in CLP reflecting lower sales ofelectronic products and higher promotional activity. In ChileSSS was -5.8% affected by a drop in average prices, partiallyoffset by the increase of online sales. In the case of Peru,revenues increased slightly due to higher apparel sales, offsetby lower electronic product sales as a result of the SoccerWorld Cup in 2018.

Adjusted EBITDA decreased 9,1% and margin declined 25 bpsimpacted by the higher promotional activity and lower rebatesfrom suppliers, partially offset by decrease in expensesresulting from the efficiency and process restructuring plans.


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 275.054 286.129 -3,9% -4,5%

Gross Profit 73.173 80.415 -9,0% -9,5%

Gross Mg. 26,6% 28,1% -150 bps

SG&A (75.601) (75.653) -0,1% -0,8%

SG&A (% of revenues) -27,5% -26,4% -105 bps

Adjusted EBITDA 12.011 13.207 -9,1% -9,2%

Adj. EBITDA Mg. 4,4% 4,6% -25 bps

Chg. YoY Chg. YoY

2Q19 2Q18 2Q19 2Q18


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%

As ReportedConstant

Curency

RevenuesSame Stores Sales

Department Stores

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Results1

Shopping Centers Occupancy Rates & Revenues by Country

Revenues decreased 5.5% YoY in CLP and Adjusted EBITDAdecreased 3.5% due to higher SG&A explained by the change in theaccounting for advertising spending, partially offset by the IFRS16effect.

• Chile: revenue growth driven by fixed revenues, partially offsetby lower variable sales from tenants. Adjusted EBITDAincreased driven by the adoption of IFRS16 and higher grossprofit reflecting lower common expenses.

• Argentina: revenues up 23.6% in local currency due to theinflation adjustment in a portion of contracts. Adjusted EBITDAmargin contraction explained by higher salary expenses andland taxes, partially offset by the adoption of IFRS16.

• Peru: revenue growth driven by higher fixed revenuesdue to the entry of new tenants. Adjusted EBITDA marginexpanded driven by the adoption of IFRS16 and lowerenergy expenses.

• Colombia: revenues decreased 4.0% YoY in CLP reflectinghigher vacancy. Adjusted EBITDA margin contracted dueto higher property taxes expenses.

1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 56.019 59.268 -5,5% 7,2%

Gross Profit 50.732 52.360 -3,1% 7,6%

Gross Mg. 90,6% 88,3% 222 bps

SG&A (5.681) (6.730) -15,6% 0,9%


Adjusted EBITDA 45.581 47.215 -3,5% 6,3%


Chg. YoY Chg. YoY

2Q19 2Q18 2Q19 2Q18


Chile 99,4 99,5 37.058 36.752 0,8% 0,8%

Argentina 97,9 98,2 11.259 15.457 -27,2% 23,6%

Peru 96,9 96,9 5.684 4.857 17,0% 8,3%

Colombia 72,0 72,0 2.018 2.202 -8,3% -4,0%

As ReportedConstant

Currency

RevenuesOccupancy Rate

Shopping Centers

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• Peru: Revenues and Adjusted EBITDAdecreased as the business was no longerconsolidated as of March 1, 2019. Excludingthis effect, Adjusted EBITDA Margin contracteddue to higher risk from the strategy focused onemerging segments.

• Colombia: Adjusted EBITDA increased mainlyreflecting the sale of a written-off portfolio.

Financial Services Revenues, Loan Portfolio & Risk by Country

Results2

1 Provisions over past due loan portfolio (with delinquency greater than 90 days).2 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

Revenues decreased 40.2% YoY in CLP and Adjusted EBITDA was down 36.8%,due to the deconsolidation of Peru Financial Service Results.

• Chile: Adjusted EBITDA declined due to higher risk provision due to thecross check of client information with the Company’s competition whichpublished as a bank for the first time.

• Argentina: Adjusted EBITDA margin decreased due to the reduction ofthe loan-portfolio and increased risk.

• Brazil: Adjusted EBITDA margin increased, explained by the lower risk asa result of a more conservative commercial strategy partially offset by thedecrease of the loan portfolio.


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 37.878 63.302 -40,2% -0,8%

Gross Profit 23.518 37.584 -37,4% 0,8%

Gross Mg. 62,1% 59,4% 272 bps

SG&A (5.298) (10.463) -49,4% -15,1%


Adjusted EBITDA 20.117 31.827 -36,8% -2,9%


Chg. YoY Chg. YoY Chg. YoY

2Q19 2Q18 2Q19 2Q18 2Q19 2Q18

Chile - - N.A. N.A. 1.205.016 1.021.035 18,0% 2,4 2,8

Argentina 34.134 43.305 -21,2% 36,1% 11.715.409 13.054.240 -10,3% 1,4 1,3

Brazil 883 339 160,5% 157,5% 507.514 544.536 -6,8% - 0,6

Peru - 18.537 -100,0% -100,0% 855.825 726.238 17,8% 2,3 1,8

Colombia 2.862 1.121 155,3% 167,5% 847.131 834.699 1,5% 3,2 2,7

CLP mn Local Currency (times)

Loan Portfolio NPL1Revenues

As

Reported

Constant

Currency

As

Reported

Financial Services

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Debt Structure

Key Figures1

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.

Amortization Schedule (USD mn)2

Debt by Currency3 Debt by Interest Rate3

2Q19

2Q18

CLP + UF; 73%

USD; 21%

Otras Latam; 6%

• Total net debt increased due to adoption of IFRS16• Excluding this effect, total net debt decreased 31.6% YoY.

CLP + UF; 72%

USD; 20%

Otras Latam; 8%

Fixed; 80%

Floating; 20%

Fixed; 80%

Floating; 20%

2Q19 2Q18

Total Financial Debt (US$ Bn) 6,5 5,0

Cash (US$ Mn) 1.413 216

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

Net Financial Debt / Adj. EBITDA LTM 3,95 3,99

130

363 213

57

753

36

719

53

1.057

227 330

15

205 123

350

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2041 2044 2045

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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

Closing Comments

EARNINGS PRESENTATION Second Quarter 2019s2.q4cdn.com/.../Earnings-Presentation-2Q19-(ENG).pdf ·...

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