CORPORATE PRESENTATION

Transcription

1 CORPORATE PRESENTATION 2018

2 InRetail Overview Peruvian multi-format retailer, with presence in the Andean region through the pharma business Leading positions in Peru in its 3 segments #1 supermarket chain #1 pharmacy chain and distributor in Peru, with presence in the Andean region #1 shopping center operator Controlled by Intercorp Peru, one of Peru s largest business groups 2

3 InRetail is part of one of Peru s leading business groups Education Float 1/ 28.8% 2/ BVL: INRETC1 1/ Includes 6.3% of Nexus. 2/ On January 26, 2018, InRetail announced the acquisition of Quicorp for an equity value of US$583 million. Nexus holds a ~13% participation in InRetail Pharma. 3

4 Q2 18 Financial and Operational Snapshot Million Soles (S/ mm) Food Retail Pharma Shopping Malls Q2 18 figures (S/ mm; %) + + = 1/ Revenues % Revenues Contribution 1,223 39% 1,777 57% 123 4% 3,095 Adj. EBITDA 2/ % EBITDA Contribution 76 27% % 74 27% 272 Adj. EBITDA Margin 6.2% 7.1% 79.8% 8.8% Market Position 1 st 1 st 1 st _ # of Stores 312 2, _ # of Employees 14,186 22, ,348 1/ Consolidated figures for InRetail include intercompany eliminations and consolidation adjustments. 2/ Shopping Malls EBITDA adjusted for mark to market gains from valuation of investment properties. 4

5 KEY INVESTMENT HIGHLIGHTS SIGNIFICANT UPSIDE POTENTIAL MARKET LEADERSHIP WITH CLEAR STRATEGY STRONG FINANCIAL RESULTS CAPEX

6 1 SIGNIFICANT UPSIDE POTENTIAL

7 Fastest growing economy boosts emerging middle class ( CAGR) Real GDP Growth Population by Socio-Economic Category 3.6% ~1.9x 1.7% SEC Annual Income % of total population Perú Latin America 1/ A $ 49,614 1/ Average Real GDP growth of Colombia, Brazil, Chile, Mexico Source: IMF World Economic Outlook B $ 25,433 8% 15% +14% (2017, US$ 000) GDP per Capita C $ 14,987 18% 26% Average: US$10.3 D $ 7,578 29% 24% % E $ 4,951 45% 36% Source: APOYO Consultoría 2017 Chile Argentina Brazil Mexico Peru Colombia Source: IMF World Economic Outlook Estimates 7

8 Significant upside potential for modern retail Food Retail Pharmacies Shopping Malls Penetration as a % of Total Sales Sales of Retail Pharma per capita US$ Malls per million people Sales area per capita: Peru 0.25 sqm vs Mexico 0.42 sqm Mean ex-peru: 59.2% ~2.4x 52% 56% 59% 70% Mean ex-peru: Mean ex-peru: ~1.6x ~2.2x 25% Peru Brazil Ecuador Chile Mexico Peru Colombia Mexico Brazil Chile Peru Brazil Ecuador Colombia Chile Source: Euromonitor, 2018 Source: Business Monitor, 2018 Source: Accep

9 Retail market in Peru in early stage of development Global Retail Development Index Opportunities Opening Peaking Maturing Closing Peru top-ranked LatAm country in the GRDI 2017 Ranking Peru (2015) Brazil (2013) Mexico (2009) 1. India 6. Indonesia 9. Peru 10. Colombia 19. Paraguay 29. Brazil Brazil (2005) Chile (1998) Mexico (2003) Peru (2002) Growing middle class Consumers willing to explore organized formats Consumers seek organized formats and global brands Real estate affordable and available Consumer spending has expanded Sophisticated local competition Real estate difficult to secure Chile (2016) Mexico (2016) Consumers used to modern retail Higher discretionary spending High competition Real Estate expensive and not readily available Peru: Increase consumer spending, growing middle class and strong consumer confidence Free-trade agreements with strategic markets will keep investment and trade flows strong Hot spot for international retailers to invest in the apparel and specialty sector The market is showing signs of consolidation Source: ATKearney The 2017 Global Retail Development Index TM 9

10 2 MARKET LEADERSHIP WITH CLEAR STRATEGY

11 Largest nationwide footprint of premier retail locations Food Retail Pharmacies Shopping Malls 104 Spmkts 1/ 208 Mass 2,087 Stores 3/ 21 Malls (6) (1) (2) (5) (3) (1) (1) (73) (2) (208) (3) (1) (2) (2) (1) (1) (16) (96) (11) (91) (65) (133) (41) (63) (35) (58) (12) (29) (943) (77) (57) (4) (88) (10) (25) (128) (8) (31) (14) (31) Piura (2) Chiclayo Trujillo Chimbote Lima (9) Cajamarca Huánuco Huancayo Arequipa Only modern shopping mall in the city Ucayali Cusco Juliaca First mover in 17 out of the 23 cities outside of Lima Total sales area (sqm): 324,598 55% of stores are owned 2/ Present in all of Peru s 24 departments 100% of stores are rented 45% in Lima / 55% in Provinces First mover in 6 out of the 12 cities Total GLA (sqm): 671,160 1/ 107 stores (338k sqm) including 3 temporary closings 2/ Owned by Supermercados Peruanos or through a related party 3/ Includes Mimarket and Bolivia pharmacy stores 11

12 Openings and SSS by Segment Openings Same Store Sales (SSS) Food Retail Sales Area ( 000 sqm) Food Retail 2017: 5.9% YTD 18: 6.8% % Mass Spmkts % 3.9% 6.0% 4.7% Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 N o Spmkts 1/ 107 N o Mass Mifarma Inkafarma Pharmacies N o Stores 1,149 1,155 1,153 1,051 Q2 17 Q3 17 Q4 17 Q1 18 2,186 2,087 1,006 1,135 1,081 Q2 18 Pharmacies -5.6% -4.5% Q2 17 Q % 2017: -3.6% YTD 18: 5.9% 4.5% 7.4% Q4 17 Q1 18 Q2 18 Shopping Malls GLA ( 000 sqm) Shopping Malls 2017: 2.6% YTD 18: 6.0% % 6.9% 5.1% 1.3% 1.8% Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 N o Malls / 107 (338k sqm) stores including 3 temporary closings Note: Shopping Malls SSS includes anchor stores 12

13 Food Retail Segment Formats Format Sales area range (sqm) # of Stores % of Revenues 1/ Every-Day-Low-Price strategy for Plaza Vea stores New discount format Mass to capture untapped demand and accelerate penetration of traditional trade Compact Hypermarket 2,000 5, % Fastest growing chain with largest presence across Peru Secured access to landbank and Real Estate development team to sustain growth Supermarket 500 2, % Launched e-commerce platforms for Plaza Vea and Vivanda brands High-end Supermarket 900 1, % Ranked 1 st in Great Place to Work ranking and 12 th among the most valuable brands in Peru (Brandz) Hard Discount % 1/ Considers LTM Q2 18 Revenues of S/ 4,857 million. 13

14 Pharma Segment: Pharmacies Every-Day-Low-Prices Discounts and promotions Focused on offering the lowest prices to a wider audience Ranked #1 top of mind pharmacy chain in Peru Targeted discounts to loyal customers. i.e. 10% discount on Mondays and 10% discount for people aged 50+ Supported by the successful Monedero del Ahorro loyalty program with over 7 million subscribers Focused on assisted sales Mixed formats: Assisted sales and drugstores 22% Drugstore Counter 1/ 78% 1/ Assisted sales model 14

15 Pharma Segment: MDM 1/ Best-in-class distribution network Vertical integration with Pharmacy chains (% of sales) Leading pharmaceutical distributor in Peru with presence in other LatAm countries Vital link between manufacturers and healthcare providers Pharmacy chains 32% Other channels 68% of MDM sales are to alternative sales channels (2) Robust network density reaching +26k POS through all channels Partner of choice for leading pharma companies Brand Development CIPA 1 Access to market intelligence 2 Manufacturing capabilities 3 Instant access to own +2,100 pharmacies 4 Best-in-class distribution to other channels 1/ Manufacturing, Distribution & Marketing 2/Includes government, independent pharmacies, private hospitals, wholesalers and others. 15

16 Shopping Malls Segment Sales (S/ millions) 2017 Shopping Malls Sales 5,830 Nationwide premium portfolio of 21 locations, with 671k sqm of GLA 4,392 Preferred partner for local and international tenants: 3,153 2,456 2,190 High tenant renewal rates and low concentration of renewal per year 1,178 1,041 High occupancy levels 1/ Secured access to landbank to sustain growth Ranked 4 th in Great Place to Work ranking for companies from 251 to 1,000 employees and 4 th among most valuable brands in Peru (Brandz) Source: ACCEP / On June 2018, Parque Arauco combined businesses with the Wiese Family, owner of Mega Plaza. Parque Arauco holds 70% ownership of the combined operations, which is not included in this figure.. Occupancy Rates 97% 93% 94% 97% 97% 95% 96% Q1 18 Q

17 3 STRONG FINANCIAL RESULTS

18 Q2 18 Consolidated Financial Results Million Soles (S/ mm) Highlights Revenues +53.6% Significant growth in Revenues and Adjusted EBITDA mainly due to the acquisition of Quicorp at the end of January and a solid growth in the food retail and pharma segments Gross and Adjusted EBITDA margins impacted by the incorporation of the MDM unit within the pharma segment that operates with lower margins 1, % 3,095 3,779 5,805 Net Income affected by one-time expenses related to the acquisition, and to the liability management associated to the acquisition financing Q2 17 Q2 18 YTD 17 YTD % 28.4% 30.3% 28.6% Adj. EBITDA Net Income +32.8% % % Q2 17 Q2 18 YTD 17 YTD 18 Q2 17 Q2 18 YTD 17 YTD 18-6 Margin 10.0% 8.8% 9.9% 8.6% Margin 2.6% 0.5% 3.2% -0.1% Note: YTD 18 consolidated figures include five months of Quicorp s operation and one-time expenses related to the acquisition. 18

19 Revenues Financial Results by Segment Million Soles (S/ mm) +9.7% +3.9% 4,241 4,652 4, % 4, % 2,624 2, % 1, % 1,101 1, Gross Margin Adj. EBITDA 1/ Q2 17 Q LTM Q2 18 Q2 17 Q LTM Q2 18 Q2 17 Q LTM Q % 26.0% 26.7% 26.4% 26.2% 33.6% 27.6% 32.7% 33.0% 29.8% 65.8% 66.8% 68.8% 67.0% 67.8% % % % % % % Q2 17 Q LTM Q2 18 Q2 17 Q LTM Q2 18 Q2 17 Q LTM Q2 18 Margin 5.8% 6.2% 6.5% 6.7% 6.7% 8.2% 7.1% 9.2% 8.4% 7.2% 81.0% 79.8% 82.1% 81.7% 81.9% 1/ InRetail Shopping Malls calculated as Net Rental Margin 19

20 Consolidated Net Income Million Soles (S/ mm) Net Income Net Income Breakdown % Q2 17 Q2 18 YTD 17-6 YTD Net Income Q2 17 EBITDA Growth Higher Net Financial Expenses 13 Higher Mark to Market -20 Higher FX Loss -14 Higher D&A 14 Lower Tax 15 Net Income Q2 18 Margin 2.6% 0.5% 3.2% -0.1% Net Income excluding one-time financial expenses, FX and mark-to-market 1/ % % 173 Q2 17 Q2 18 YTD 17 YTD 18 S/ 112 mm in higher financial expenses, explained by: S/ 73 mm of one-time expenses associated to the acquisition of Quicorp and subsequent liability management: i. S/ 34 mm of structuring costs of US$ 1 bn Bridge Loan ii. S/ 24 mm from tender offer premiums of InRetail Shopping iii. Malls 2014 bonds S/ 15 mm of expenses related to mark-to-market and unwinding of Call Spreads S/ 36 mm from additional debt S/ 3 mm from other expenses Margin 2.6% 3.0% 2.8% 3.0% 1/ Net income adjusted for (i) one-time financial expenses related to the acquisition and associated liability management of S/ 102 mm in Q1 18 and S/ 73 mm in Q2 18, (ii) FX loss/gain and (iii) mark-to-market income from the valuation of investment properties. 20

21 Consolidated CAPEX and Free Cash Flow Million Soles (S/ mm) Consolidated CAPEX Cash-Flow Breakdown 2/ 2017: S/541 mm YTD 18: S/531 mm 335 1/ ,874 1, Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Starting Cash Balance 2018 Operating Cash Flow CAPEX Quicorp Debt Acquisition Increase Nexus Equity Financial Expenses Other Non- Operating Investing Activities Ending Cash Balance Q2 18 Free Cash Flow LTM Q2 18: S/372 mm 1/ Q1 18 CAPEX includes ~S/180 mm of the acquisition of Real Plaza Pucallpa and Estación Central, disclosed in the previous Earnings Report. 2/ Debt increase is presented net of structuring costs. 21

22 Consolidated financial Debt Million Soles (S/ mm) Consolidated Financial Debt 1/ USD Exposure Net Debt/EBITDA Debt/EBITDA 4.8x 4.5x 4.0x 3.6x 3.6x 3.2x 3.3x 3.3x 2.8x 2.5x 4.3x 4.0x 39% 42% 40% 23% 23% 22% 49% 4% 38% 35% 38% 47% LTM Q1 18 LTM Q2 18 Dec-15 Dec-16 Dec-17 Jun-18 Hedge USD PEN Debt 2,446 2,670 2,659 2,704 5,089 5,010 Cash Net Debt 2,160 2,344 2,227 2,105 4,592 4,445 1/ LTM Q1 18 are proforma ratios. LTM Q1 18 and LTM Q2 18 consider a normalized EBITDA, which includes LTM EBITDA for Quicorp and excludes one-time expenses related to the acquisition of Quicorp. Since 2015, ratios are adjusted for currency hedge affects 22

23 Debt by Segment Million Soles (S/ mm) Net Debt/EBITDA Debt/EBITDA Total Consolidated Debt: S/5,010 mm Debt / EBITDA: 4.5x Net Debt / EBITDA: 4.0x 2.5x 1.8x 2.7x 2.2x 3.2x 3.2x 2.9x 2.8x 5.0x 4.5x 4.6x 3.9x 4.3x 3.7x 4.0x 3.1x 5.8x 5.5x 5.4x 5.1x 0.2x 0.1x LTM Q1 18 LTM Q x -0.3x LTM Q1 18 LTM Q LTM Q1 18 LTM Q2 18 Debt ,022 1, ,303 2,281 1,257 1,193 1,764 1,696 Cash Net Debt ,083 1,930 1, ,627 1,596 1/ LTM Q1 18 are proforma ratios. LTM Q1 18 and LTM Q2 18 consider a normalized EBITDA, which includes LTM EBITDA for Quicorp and excludes one-time expenses related to the acquisition of Quicorp. Since 2015, ratios are adjusted for currency hedge affects 23

24 4 CAPEX

25 CAPEX Key Investments Projected CAPEX of S/2 B for Opening of ~15,000 sqm of sales area Reconversion of 3 Plaza Vea stores to new Cash & Carry format Food Retail Continue expanding Mass Finished construction of our new distribution center in Q1 18 Finish construction and start operations of our new production facility and fresh food warehouse in Q4 18 Pharma Closed 160 stores to optimize network post acquisition of Quicorp By Type of Investment Shopping Malls Acquired Real Plaza Pucallpa and Estación Central (+37,483 sqm of GLA) Started construction of Puruchuco mall (+120k sqm of GLA) to be opened in Q4 19 ~+8k sqm of GLA from mall expansions 25

26 5 APPENDIX

27 Composition of Stores by Age Supermarkets 1/ 9% 6% 5% 7% 6% 4% 8% 10% 9% 10% 10% 9% 11% 14% 8% 9% 6% 4% 5% 10% 10% 10% 10% 9% 12% 14% 8% 9% 7% 4% 6% 5% 2% 12% 5% 5% 4% 14% 11% 10% 7% 4% 6% 5% 5% 5% 3% 2% 4% 4% 1% 2% 2% 73% 72% 72% 70% 72% 72% 72% 75% 78% 77% 78% 83% 84% 85% 88% 90% 91% 90% Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Mature 2-3 years 1-2 years 0-1 years Pharmacies 2/ 17% 16% 14% 14% 13% 13% 11% 10% 10% 9% 11% 15% 16% 17% 14% 21% 21% 21% 18% 15% 14% 13% 13% 12% 11% 10% 9% 9% 8% 9% 5% 7% 9% 16% 19% 18% 19% 16% 13% 13% 11% 11% 10% 9% 9% 6% 7% 4% 14% 11% 12% 8% 11% 10% 57% 56% 56% 53% 54% 55% 58% 62% 65% 67% 68% 66% 66% 66% 68% 72% 71% 74% Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Mature 2-3 years 1-2 years 0-1 years 1/ Includes only supermarkets and hypermarkets. 2/ Since Q1 18 includes Mifarma stores. 27

28 Cash Cycle Food Retail Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2' Days Acc Payables Inventory Turnover Days Acc Receivables Cycle Pharma 1/ Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2' Days Acc Payables Inventory Turnover Days Acc Receivables Cycle 1/ Q1 18 considers only two months of Quicorp s operations. 28

29 This material does not constitute an offering document. This material was prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities. Any offering of securities will be made solely by means of an offering memorandum, which will contain detailed information about the company and its business and financial results, as well as its financial statements. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended. This presentation includes forward-looking statements or statements about events or circumstances which have not yet occurred. We have based these forward-looking statements largely on our current beliefs and expectations about future events and financial trends affecting our businesses and our future financial performance. These forward-looking statements are subject to risk, uncertainties and assumptions, including, among other things, general economic, political and business conditions, both in Peru and in Latin America as a whole. The words believes, may, will, estimates, continues, anticipates, intends, expects, and similar words are intended to identify forward-looking statements. We undertake no obligations to update or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Therefore, our actual results could differ substantially from those anticipated in our forward-looking statements. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. We and our affiliates, agents, directors, employees and advisors 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 material does not give and should not be treated as giving investment advice. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any information in this material.

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