Corporate Presentation Cencosud Second Quarter 2011

Transcription

1 Corporate Presentation Cencosud Second Quarter 2011

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 appearing elsewhere, if any. 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.

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4 Real GDP growth Unemployment rate Gross debt / GDP Source: IMF

5 5 countries 753 stores 25 shopping centers 122,000 employees 2.8 mm sq2 selling space

6 Revenues evolution (USD bn) + 20% + 37% 5,0 5,9 8,1 9,4 10,5 12,2 2,58 2,5 2,8 3, Q Q 2011 Strong increase in sales supported by: The consolidation of Bretas in Cencosud (represents 39% of the increase) As of 2Q11 the Company added 103 supermarkets (including 66 Bretas stores), 3 Home Improvements, 5 Department Stores and 1 shopping center in Chile High inflation and strong consumption levels in Argentina (sss for Home Improvement +26% and Supermarkets +23%) In all countries the Supermarket and Home Improvement Divisions achieved positive levels of SSS Source: Cencosud Note: figures in Chilean Gaap while 2Q10 and 2Q11 figures in IFRs

7 Sales breakdown by business 2Q 2011 Sales breakdown by country 2Q 2011 Department Stores 9% Shopping Centers 2% Financial Services 4% Home Improvement 12% (31%) (47%) Supermarkets 73% (10%) (%) 2Q 2010 (12%) The sales breakdown by divisions has been stable to 2010 and the previous quarter Brazil was the country with further growth of the group, due to the incorporation of Bretas in October 2010 (5 th largest operator of supermarkets in Brazil at that time) Chile remains the largest country in term of sales Fuente: Cencosud Note: cifras en GAAP Chileno, en el 2 trimestre 2010 y 2011 están en IFRs

8 EBITDA evolution (USD mm) + 20% 39% Mg 8.6% Mg. 8.6% Growth in EBITDA reflects an improved performance in the five divisions, despite 2010 bases of comparison very high due to both, the effect of Chilean earthquake and World Cup The EBITDA in 2011 includes expenses associated with the expansion of our operations : Start-up expenses of shopping center division (Chile and Peru) Expenses related to building up the credit card operation in Peru Fuente: Cencosud Note: cifras en GAAP Chileno, en el 2 trimestre 2010 y 2011 están en IFRs

9 EBITDA by Business Units¹ 2Q 2011 EBITDA by country ² 2Q 2011 Department Stores 9% Shopping Centers 14% Financial Services 16% Home Improvement 14% Supermarkets 53% 8% 6% (%) 2Q % Department Stores achieved an Ebitda margin of 9.3% in 2Q11, confirming its focus on improving the efficiency, which occurs in a context of sharp increase in selling space coupled with cost-cutting Brazil increased its EBITDA contribution from 6% in 2Q10 to 13% in 2Q11, reflecting the consolidation of Bretas and its fast improve in margins Source: Cencosud ¹ Other businesses which account for (10%) are not included. ² Colombia EBITDA (1%) is not included.

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11 #1 66 stores 137 stores North East Region (34%) #2 Minas Gerais (23%) #1 172 stores #2 27% 17% #1 256 stores 736 tiendas 20% 20% 12% 10% * Cencosud Carrefour Coto Wal-Mart * Dia Stores not include In the last 12 months the Supermarket division added 103 stores (66 stores after the acquisition of Bretas) Peru in 2011 has achieved positive and increasing SSS (+1.7% in 1Q11 and +4.5% in 2Q11) reflecting the positive effects of adjustment in their business strategy Source: Cencosud and AC Nielsen

12 Sales evolution (US$ bn) +21% CAGR EBITDA evolution (US$ mm) +23% CAGR +41% +19% Mg 7.0% Mg 6.9% EBITDA breakdown by country, YTD 2Q 2011 SSS evolution by country 2Q 2011 Fuente: Cencosud Note: cifras en GAAP Chileno, en el 2 trimestre 2010 y 2011 están en IFRs

13 Sales evolution (USD mm) EBITDA evolution (USD mm) +20% CAGR +22% +29% CAGR +18% Mg 6.7% Mg 6.5% Market position 4 stores 82 stores SSS evolution per country - 2Q stores #2 Fuente: Cencosud Note: cifras en GAAP Chileno, en el 2 trimestre 2010 y 2011 están en IFRs 49 stores #1

14 Sales evolution (USD mm) EBITDA evolution (USD mm) CAGR +9% +44% CAGR +22% % Q Q Q 20102Q 2011 Mg 9.1% Mg 9.3% Market Share 1Q11 SSS evolution per country - 2Q 2011 La Polar 13% Paris 26% 35 stores Ripley 23% Falabella 39% Source: Company reports. Considers only department stores that disclose retail sales Fuente: Cencosud Note: cifras en GAAP Chileno, en el 2 trimestre 2010 y 2011 están en IFRs

15 Sales evolution (US$ mm) EBITDA evolution (US$ mm) (1) +5% CAGR +18% +10% CAGR +52% Mg 60% Mg 77% High occupancy rates in our malls 25 Shopping Centers 2 Shopping Centers 65,763 m 2 96% occupancy rate #2 9 Shopping 55% Centers 487,927 m 2 45% 97% occupancy rate #2 14 Shopping Centers 582,241 m 2 99% occupancy rate 39% Fuente: Cencosud Note: cifras en GAAP Chileno, en el 2 trimestre 2010 y 2011 están en IFRs

16 Gross loan porfolio per country (USD mm) Loan loss allowances as % of total porfolio Penetration of Credit Card by Division 2Q 2011 Active credit Cards Total cards 4.0 MM JV with Bradesco 0.9 MM Cencosud¹ 0.3 MM Source: Cencosud Note: figures in Chilean GAAP while 2010 and 2011 figures in IFRS. ¹ Since July 2010 Cencosud 2 MM Cencosud 0.8 MM

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18 Capex (US$ mm) excl. acquisitions +83% +82% Total debt evolution (US$ bn) Net debt evolution (US$ bn) Bretas was financed with internal funds and additional debt (USD 290 MM). Bretas added USD 70 MM debt The procedures of the international bond are being used to prepay debt due in and 2013 Source: Cencosud Note: figures in Chilean GAAP while 1Q 2010 and 1Q 2011 figures in IFRS.

19 Total debt / EBITDA - 18% Net debt / EBITDA - 22% EBITDA / Interest expenses + 75% Financial debt / Equity - 13% Source: Cencosud Note: figures in Chilean GAAP while figures in IFRS. Multiples calculated in local currency.

20 Duration 4.67 Y Duration 4.85 Y " Duration 5.01 Y Duration 7.44 Y Source: Cencosud

21 Revenues : USD 14 bn EBITDA : 9% Capex : USD 1.0 bn Revenues by country 2009 Revenues by country (e)

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24 Cencosud had an increase in its Financial Expenses in the first half of 2011 compared to the first half of 2010 due to: Higher financial debt and less cash available (used to fund the acquisition of Bretas in 10/2009) Higher interest rates (due to the increase in the TAB and ICP rates in Chile as 33% of the Company s debt is indexed to those rates) The acceleration of capitalized costs as a consequence of the refinancing program of the company funded with the issuance of a 750 MMUSD 144A/Reg S bond in January this year. #$%&'#()*+, -. '/0'1 "#$%& "#'(%)* FLOATING RATES EVOLUTION + ( #()*+,0*%'0%2')3 + " )%,( + ( ","(,# )%,( -. /0 / /0 /0

25 Oppening of 10 stores in 3 years Capex of USD 70 million First opening: 4Q 2012 Agreement with Parque Arauco for rental in its Peruvian shopping centers $%

26 In August 2011 Cencosud signed an agreement with Bradesco to operate their credit card at Brazil Is expected to triple over the next few years the business cards in Brazil, and support the development of wholesale electronics It contemplates a up front payment to Cencosud of USD125 million

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28 Conservative risk management and collections Risk management and control department is independent of the commercial side of the business, with decision-making independence but working integrated with the business *, 2(16 + $3( 741,--3 Control of credit and collection policies are defined and approved by the Chile s risk management of and authorized by Corporate Risk Management Office Management processes are supported by statistical information and are controlled in their application by both internal control and internal audit areas Management and risk management have the world-class standards and are based on a World Class technology platform There is no lending authority in the commercial area, any exception to approved policies are channeled to risk areas specialists Refinancing policies are intended to give payment options to clients Mainly renegotiating debts from 60 days in default Refinancing policies require the client to make an upfront payment to show his/her intention of payment (15% of the total amount owed) and in addition his/her written consent to renegotiation is requested Renegotiated clients can no longer use their card, only after showing a good payment behavior (6 paid installments or 50% of the debt paid off depending on the clients profile) the client can be enabled again, usually lowering their previous credit limit

29 We have a conservative strategy Our card is one value attribute of the Cencosud retail value proposal It allows us to achieve a greater customer loyalty by establishing long term relationships We are conservative in our credit policies and we are careful in the collections management, seeking to maintain customers satisfaction and loyalty We have the lower average debt per cardholder (37% less than average) and 76% less than La Polar, reflecting our conservative strategy. Source SBIF (debt total/clients with movements). The average debt of Cencosud s cardholders is $239,000 and has remained stable in recent years

30 Lowest loan porfolio of the industry Cencosud has the lowest loan portfolio versus sales in the industry (1) Porfolio as monthly retail sales (in months) $ (2. 8%501 We maintain a healthy portfolio, with an excellent payment performance: over 81% are current and only 4% of our clients and 5% of our outstanding are 90 days ore more overdue. Only 6% of our clients have debt renegotiation, leading to higher provision rates to cover the higher risks Renegotiated clients are provisioned extra, reflecting their increased risk profile Provisiones Base por Tipo de Carteras 30% 25% 20% Riesgo Cartera Renegociada 20,3% 15% 10% 5% Riesgo Cartera Normal 5,0% 0% dic-08 feb-09 abr-09 jun-09 ago-09 oct-09 dic-09 feb-10 abr-10 jun-10 ago-10 oct-10 dic-10 feb-11 abr-11 jun-11

31 Impacts of the international financial crisis to Cencosud Prior to the Crisis situation Since the end of 2007 Cencosud has being adjusting its risk policies in the Financial Division. Higher requirements for the opening of new accounts and credit limit restrictions increased. Investment in technology to improve collection (Cyber Financial) Technology transfer project through Model Builder of FairIsaac Score models for the circuit of credit and collection development. Crisis Cencosud continued adjusting its lending policies, abolished the offering of financial products and eliminated the three installments no interest product. This is shown by the decline in the outstanding volume (-10% from March 2009 to March 2011) Post Crisis Post Crisis Significant improvement in our clients portfolio and ratios of late payments, from 14.1% in June 2009 to 9.5% in June 2011 (more than 30 days late payment). The net write-off rate of the total portfolio decreased from 15.9% to 7.6% in the same period and continues its downward trend. Renegotiated portfolio decreased from 10.2% in June 2009 to 5.6% of the total number of customers in June 2011.

32 Stock loans / GDP ( % ) $ 3105 During the crisis and the 4Q08 Falabella and Cencosud reduced their outstanding, on the other hand La Polar continued to grow its loan portfolio. Since 4Q09, all retailers restarted the growth pace of their portfolios, but Cencosud did it at a slower rate.

33 Model of Provisions Model to estimate the losses from uncollectable accounts, gathers world class practices and is in line with Basel II standards (associated to banks), allows to establish the required provisions The model is based on: Portfolio segmentation (252 customer clusters): business (channel of account opening) default (sections of delinquency) quota (sections of lines of credit) tenure (new/old) portfolio type (normal/renegotiated) Statistical modeling: Model group assessment, customer segment in homogeneous groups. Probability of failure is estimated according to the punishment rates net of provision Estimated for 7 sections of default all customers exceeding 180 days are written-off, recognizing 100% loss. Additional and voluntary provisions: Additional provisions to reflect future changes in the behavior of the portfolio not reflected in the history. Voluntary provisions are determined when exogenous factors that will affect the behavior of the clients; are for example earthquake Feb 2010.

34 Provisions evolution and GDP ( ) 80% 70% 60% 50% Crecimiento Provision nes 40% 30% 20% 10% 3,7% 5,0% 5,2% 0,9% -2,5% -4,8% -1,4% 2,1% 1,7% 6,4% 6,9% 5,8% 9,8% PIB 0% 0% -10% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11-20% PIB CMR CENCOSUD LA POLAR During the crisis and the 4Q08 Falabella and Cencosud reduced their outstanding, on the other hand La Polar continued to grow its loan portfolio. Since 4Q09, all retailers restarted the growth pace of their portfolios, but Cencosud did it at a slower rate.

35 Avolution of Risk Figures as of June 2011 Late payments > 30 days Renegotiated porfolio (% total) Write-offs Revoveries All the main indicators has excellent trends, with reductions in late payments, low participation of renegotiated loans in the portfolio, low write-offs and higher recoveries of write of

36 The tendency in Credit Card Operation in Cencosud High rate of payments in cash; more than 95% of payments are in cash, only 5% are renegotiations of 15% down payments The volume of payments on the portfolio stock continues to rise in volumes and as a percentage of the stock: more than CLP 95,000 mm are pay during a month, about 23% of the stock. On the other hand, more than 95% of these payments corresponds to payments in cash, and 5% for debt rollovers or renegotiations. Percentages that are down for the years of the crisis of 2009.

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