Earnings Presentation Second Quarter 2012 September 2012
Key Issues First Half 2012 Cencosud Projects Second Quarter Results
Company overview Key metrics (2Q12) Number of stores: 920 Selling space: 3,495,857 sqm Number of customers: 800mm Number of employees: 140,875 Credit cards issued: 4.4mm Market capitalization 1 : US$14,675mm Supermarkets Home Improvement Department Stores Financial Services Shopping Centers 736 stores across 4 countries 82 stores in Argentina, Colombia and Chile Primarily focused in Chile, with expansion plans for Peru Comprises mainly credit card and consumer finance operations, as well as insurance 26 shopping centers in Argentina, Chile and Peru Revenue Breakdown (LTM 3 ) Adjusted EBITDA 2 Breakdown (LTM 3 ) Department Stores 9% Shopping Centers 2% Financial Services 3% Home Improvement 12% Supermarkets 74% Department Stores 6% Shopping Centers 15% Financial Services 11% Home Improvement 13% Supermarkets 55% Total: US$16,790mm Total: US$1,194mm Source: Cencosud Note: Revenue and Adjusted EBITDA breakdown exclude Other Businesses 1 As of August 21, 2012; converted at spot exchange rate of CLP/USD 485.52 2 EBITDA further adjusted to exclude the effect of exchange differences, increase on revaluation of investment properties, results from price level restatement and negative goodwill associated with Johnson s acquisition 3 Last twelve months ended June 2012; figures converted to USD based on end-of-period exchange rate of 501.84, as of 2Q12 3
Cencosud is a leading multi-format retailer in South America Premier portfolio of brands Diversified revenue breakdown 1,2 Colombia Peru 8% Colombia 1% Peru Brazil Brazil 22% 26% Department Stores 9% Home improvement 12% Shopping centers 2% Financial services 3% Supermarkets 74% Chile 40% 38% Chile Argentina 28% 29% Diversified adjusted EBITDA breakdown 1,2,3 Argentina Department Stores 6% Financial Services 11% Home Improvement 13% LTM 2012 Revenues of US$16,790 million 4 LTM 2012 Adjusted EBITDA 3 of US$1,194 million 4 Shopping Centers 15% Supermarkets 55% 1 Breakdown by business exclude Other segment, calculated on last-twelve months figures as of June 30, 2012 2 Breakdown by country excludes Colombia s Adjusted EBITDA of -US$7mm, calculated for the three months ended June 30, 2012 3 EBITDA, further adjusted to exclude the effect of exchange differences, increase on revaluation of investment properties, results from price level restatement and negative goodwill associated with Johnson s acquisition 4 Last twelve months ended June 2012; figures converted to USD based on end-of-period exchange rate of 501.84 as of 2Q12 4
with a well-recognized brand portfolio Formats Supermarkets Market position # 2 Chile # 1 Peru and Argentina # 1 Minas Gerais, # 2 Northeast Region and # 3 Rio de Janeiro (Brazil) Brands Department stores # 1 Chile Home Improvement # 1 Argentina # 2 Chile Shopping Centers # 2 Chile # 2 Argentina Financial Services Chile: 2.1 million cards Brazil: 0.9 million cards Argentina: 0.9 million cards Peru: 0.3 million cards Note: Ranking based on revenues, except department stores ranking which is based on selling space, including Johnson s (in terms of revenues it ranks as #2) and shopping centers ranking, which is based on gross leasable area 5
Cencosud Quarterly Performance Revenues evolution (US$bn) Adjusted EBITDA (US$mm) and margin (%) CAGR +17% +14% CAGR +22% (12%) Supermarket CLP 301 bn Brazil CLP 140 bn after the consolidation of Prezunic Argentina CLP 73 bn after the 19% increase in sss and 7,8% in selling space Department Store CLP 46 bn Johnson CLP 33 bn Paris CLP 13 bn due a 5,5% in SSS Home Improvement CLP 39 bn Argentina represents 79% increase due to 31% sss Financial Service Division CLP -12,452 MM 47% increased charges related to risk higher loan portfolio in Chilean peso and a slight increase in risk 36% Banco Paris restructuring after a one time charge of CLP 4,532 MM 10% an extraordinary write off related with Mis Cuentas Supermarket Division CLP -11,225 MM Argentina increase in 100 bps its gross margin that was offset by the increase of 25% in the nominal wages Brazil was affetcted by the consolidation of Prezunic and the implementation of SAP in Gbarbosa Chile improved its performance after an increase in its gross margin Departmente Stores CLP -489 MM Johnson impacted the result in CLP 3,970 M Source: Cencosud Note: Figures in IFRS; Growth rates calculated in local currency; figures converted to USD at exchange rates of 501.84 for end of period 2Q12 6
Composition of Net Income in the First Half 2012 265.745 250.050 40% Operating income Net Financial Income -63.370-14.029-16.777 Result of indexation units 60% 2012 2011 Tax -48.752-52.098 Net Income drop 30%: Lower non operating income explains 60% of the net income drop due to higher net financial expenses due to higher debt 21% Lower Operating income explains 40% of Cencosud net income drop after lower results in Supermarket and Financial Service offset by a better performance in Shopping center and Paris Store -93.326 Source: Cencosud, Public filings Note: Figures in IFRS; Growth rates calculated in local currency; figures converted to USD at exchange rates of 501.84 for end of period 2Q12 7
EBITDA 2012 2011 Variation MM Ch$ MM Ch$ (%) Operating Income 116.960 132.483-11,7% Depreciation 31.254 25.888 20,7% Amortization 3.281 2.580 27,1% Operating Income + Dep + Amort 151.494 160.952-5,9% Adjusted EBITDA 134.429 153.242-12,3% EBITDA 138.027 152.658-9,6% Source: Cencosud, Public filings Note: Figures in IFRS; Growth rates calculated in local currency; figures converted to USD at exchange rates of 501.84 for end of period 2Q12 8
Quarter Results by Business Supermarkets Revenues evolution (US$bn) Adjusted EBITDA evolution (US$mm) +18% CAGR +22% CAGR +23% -11% SSS evolution by country in local currency Prezunic sss: 1Q12: 11,5% 2Q12: 10,0% Overall performance in Brazil affected by SAP Implementation 3 stages project: 1st stage ends on September 2nd stage ends on March 2013 (Bretas) 3rd stage ends on June 2013 (Prezunic) Source: Cencosud, Public filings Note: Figures in IFRS; Growth rates calculated in local currency; figures converted to USD at exchange rates of 501.84 for end of period 2Q12 9
Quarter Results by Business Home Improvement Revenues evolution (US$mm) +19% CAGR Adjusted EBITDA evolution (US$mm) +31% CAGR +18% +1% SSS evolution by country in local currency Source: Cencosud, Public filings Note: Figures in IFRS; Growth rates calculated in local currency; figures converted to USD at exchange rates of 501.84 for end of period 2Q12 10
Quarter Results by Business Department Stores Revenues evolution (US$mm) Adjusted EBITDA evolution (US$mm) +16% +103% CAGR CAGR +28% Johnson s revenues: US$65mm Johnson s operating loss: US$7.9mm (3%) Shopping Centers Revenues evolution (US$mm) Adjusted EBITDA evolution (US$mm) +10% CAGR +14% CAGR +19% +44% Source: Cencosud, Public filings, ABRAS, INDEC Note: Figures in IFRS; Growth rates calculated in local currency; figures converted to USD at exchange rates of 507, 468, 519, 479 and 487 for end of period 2009, 2010, 2011, 1Q2011 and 1Q2012, respectively; Market share in terms of net revenues, as of 2011; Peru market share estimated based solely on reported sales from the three main competitors 11
Quarter Results by Business Financial Services Credit card penetration by division 2Q 2012 Gross loan portfolio evolution by country (US$mm) Chile Argentina Loan loss allowance as % of all loans 1 Brazil Peru Source: Cencosud Note: Figures in IFRS; Assumes CLP per USD exchange rates of 507, 468, 519 and 487 for end of period 2009, 2010, 2011 and 1Q2012, respectively 1 Allowance % does take into account anti-cyclical provisions 12
Second Quarter Results Cencosud Projects Key Issues First Half 2012
Costanera Center, About the Project Construction Started in July 2005 Constructed area: 712,166 sq meters in a 47,000 sq meter area Infrastructure: Tower 4: 41 floors, 172 meters high, 64,769 sq meters. Offices, 5 Star Hotel and heliport. Tower 1: Skyline of 63 floors, 300 meters high, 107,100 sq meters. Offices. Tower 2: 41 floors, 166 meters high, 77,169 sq meters. Offices Tower 3. 28 floors, 112 meters high, 35,736 sq meters. 4 Star Hotel and Offices. Shopping Center: 6 floors and 202,325 sq meters Parking Space: 121,000 sq meters.
Costanera Center, Shopping 6 floors arranged thematically Ground floor: Services and more 1st Floor: Gifts 2nd Floor: Female 3rd Floor: Men and Children 4th Floor: Deco, Technology and Sport 5th Floor: Food and Entertainment 251 opened stores (77%), 326 total stores 60 Restaurants Wide variety of brands, including hypermarket Jumbo, the 3 large Department Stores Paris, Falabella and Ripley, a large food court, Restaurants and 12 cinemas. 27 million visits estimated per year 87% of stores leased
Second Quarter Results Key Issues First Half 2012 Cencosud Projects Financial Services Easy Brazil Supermarkets Actions
Financial Services Cencosud New Card Delivers a unique value proposition at a regional level, allows access to Cencosud world and eliminates the psychological barrier to cross-use in different Cencosud formats. Strengthens the relationship between the customers & Cencosud, generating cross proposals achieving greater loyalty. The project also involves an approval in service models and operations, generating synergies and efficiencies in internal processes. Johnson Integration Integrating Johnson and its Multichoice Credit Card, increases our customer base and expands the possibilities to develop the financial business in department stores, currently the most profitable format for cards and insurance, complementing our efforts in Paris stores. It has a focus in the C3D segment, and a wide coverage with 41 stores throughout Chile, reaching new cities and regions unexplored by our business in this format. With this integration we streamline our headquarter expenses and central operations. 17
Financial Services Cencosud Bank in Peru Represents the first financial vehicle of Cencosud outside Chile Along with the Bank comes the launch of its credit card, which allows the clients to buy in all of our formats present in Peru with the same card. Financial benefits of this new vehicle: diversification of funding and increased revenue generation from the wider range of products to be developed. Conversion to bank includes a further integration with retail with consequent efficiencies in areas such as procurement, marketing, and trade. Financial Retail Expansion in Brazil Currently Financial Retail Brazil countinues accompanying Cencosud s expansion in Brazil, in the Gbarbosa and Bretas formats contributing to the customers loyalty and value offer. In 2011 was launched Cencosud credit card in Bretas located in central Brazil (Mina Gerais/Goias) and during 2012 we have been working on the supermarket integration. We are standardizing systems and consolidating teams to harness the synergies, capitalize on business efficiencies, innovate and offer vanguard services, aiming to position ourselves as leaders in the regions of Brazil where Cencosud has a presence. Bradesco continues participating actively as a strategic partner in developing business plans and providing knowledge widely recognized in the Brazilian market. 18
Financial Services Management proactivity to mitigate a deterioration in Argentina The Financial Retail business administration in Argentina has launched initiatives that allows greater and better control against possible scenarios of economic downturns in this country. Improvements have been implemented in the process of acquisitions directing it to better quality customers with lower quotas for new openings and gradually increase the minimum wage, among others. Additionally, we have strengthened the collection and recovery processes with stricter control of operating expenses. 19
One Easy One Easy: Regional integration project Lays the foundation for a unique business model, replicable and scalable for the Home Improvement Division, Easy. Addressed to processes of assortment, procurement, logistics, pricing and promotions, among others. Implemented on SAP's technology platform, which will be the only platform for the three countries where Easy operates. Currently operates in Chile. Argentina and Colombia are in the process of roll out in 2012, establishing a model "plug & play" for the expansion of the Division. 20
More Easy Projects Operational Efficiency Project : 3 pilot stores ready in Chile Second roll-out of four additional stores in Chile in 3Q12 and 4 in Argentina Project led by McKinsey WMS implemented in Chile (with 20% of productivity in Chile) and Argentina begins operations in 4Q12. 2nd half openings in Colombia: Los Andes and Fratelares Go Live of the Easy Argentina webite and the start of sales on the Internet without telephone intervention (before it was started on the web and closed by telephone). Culture umbrella for operational excellence and value (strategic project with McKinsey) 21
Actions taken in Brazil Supermarket Monthly Board Committee in Brazil Implementation of SAP Fully implemented in GBarbosa Integration and consolidation of Prezunic FICO by the end of 2012 and Retail (end of 2013) Negotiations with Suppliers Inventory Management Drop of 10 days after the full implementation of SAP retail on GBarbosa 22
Q&A