2Q18 Highlights. Consolidated Net Revenue of R$6.5 billion, advancing 5.1% on the same quarter last year.

Transcription

1 2Q18 1

2 July 23, 2018 Via Varej S.A., Brazil s largest electrnics, hme appliance and furniture retailer, annunces its cnslidated results fr the secnd quarter f 2018 (2Q18). On January 1, 2018, the Cmpany adpted the standard IFRS 9, which affected hw we recgnize ur impairment lsses and cnsequently ur prvisin fr dubtful accunts (PDA). The fllwing figures already include the impact frm the new standard and the figures fr 2017, which were adjusted in ur Quarterly Financial Statement (ITR). Fr mre infrmatin, please see Nte 2 t the ITR. 2Q18 Highlights Cnslidated Net Revenue f R$6.5 billin, advancing 5.1% n the same quarter last year. Net revenue frm Brick-and-mrtar Stres came t R$5.2 billin (+6.5% vs. 2Q17), with samestre sales grwing 5.8%. Grss Inviced GMV in the Online Business was R$1.6 billin, fr grwth f 9.4%, and marketplace penetratin reached 29% (vs 24,9% in 2Q17). Click&Cllect accunted fr 30.7% f Online sales in key categries 1, demnstrating the cnsistent imprvement in ur multichannel strategy. Grss margin std at 28.9%, decreasing 2.3 p.p. frm 2Q17, reflecting the seasnal sales mix fr the Wrld Cup (higher penetratin f TVs). Adjusted EBITDA amunted t R$394 millin (+25.1% vs. 2Q17), with margin f 6.1%, marking the sixth straight quarter f margin expansin (+97bps vs. 2Q17). Net Incme amunted t R$20 millin, cmpared t the net lss f R$85 millin in the same quarter last year. We clsed the quarter with net cash, including unsld credit card receivables, f R$2 billin. ¹Main Categries: Cell phnes, Televisins, Lng Tail Technlgy and Lng Tail Prtables. Penetratin ver quarters: 1Q17: 12.2%, 2Q17: 19.1%; 3Q17: 26.1% and 4Q17: 27.0%. 2

3 Management s Cmments This quarter ur sales cntinued t grw in bth channels. With ur brick-and-mrtar stres psting samestre sales grwth f 5.8%, while inviced GMV advanced 9.4%. Cnslidated net revenue grew 5.1% t R$6.5 billin. Adjusted EBITDA came t R$394 millin, up 25.4% n 2Q17, with margin f 6.1%, expanding 97bps and marking the sixth straight quarter f margin expansin frm a year earlier. We ended the quarter with net incme f R$20 millin, reversing the net lss f R$85 millin psted last year. On the peratinal frnt, we began the quarter with MOVVE 2.0 already implemented and 100% f ur sales team wrking under the new cmpensatin mdel. This imprtant tl will imprve cnsumers shpping experience, maximize the cmpany s prfitability. Mrever, the tl is ging t make a greater impact n ur results fllwing the implementatin f Via+, which will be implemented in all stres in July Via+, as ur new stre sales system is called, bring tgether nt a mre agile and intuitive platfrm all f the tls that we have develped in recent mnths (cmpensatin mdel, Via Única (Single Path)/CRM and Online channel catalg) t transfrm ur salespeple int sales cnsultants. Via+ als will allw us t expand ur payment bk peratin fr the Online channel catalg, which previusly was limited t the SKUs available in stres. With the rllut f Via+, we take the first step twards including a new segment f the public in the Online market and hpe t attract them t ur websites with the autmatin f payment bk transactins (the pilt prject shuld be launched by end-2018). Tday, a segment f the public is unable t use the Online channel because they have n access t payment means and because there are n financing mdels t meet their needs. We believe Via Varej can prmte this imprtant market thrugh its wn cnsumer credit system. In additin t the new stre system, this quarter we bserved a significant increase in ur mbile traffic, which already accunts fr 60% f Online visits and 35% f sales, and we expect t further leverage this channel with the launch f ur new app under the Casas Bahia banner (sft launch was in July 20, 2018). Tgether with Via Única (CRM), the new app will allw us t enhance even mre ur custmer experience by cnducting persnalized activatins mre efficiently and with a higher cnversin rate. Still n the peratinal frnt, we expect t cnclude the back-ffice integratin prcess by September, allcating new purchases t the inventry f Via Varej and cmpletely drawing dwn the inventry at Cnva. With a unified inventry, we will sn gain advantages in ur inventry management given the ttal number f 26 distributin centers. In 2Q18, we pened 11 stres in this perid, 10 f which in the Smart frmat and ne Kisk. It is imprtant t nte that the stres pened since Nv/17 are delivering results abve ur prjectin. We cntinue t 3

4 cnstantly analyze the prfitability f ur stres and take the necessary crrective actins fr the lssmaking stres - t make them prfitable r, when it is nt pssible, t clse them. Mrever, given the perfrmance f the kisk pened in April 2018, we are accelerating the expansin f this mdel t end the year with 20 units. In this quarter, we reached 18 Hub Stres (last-mile stre delivery) and 1,000 Pstal agencies with Retira Rápid (Click&Cllect), with these develpments representing a significant imprvement in custmerservice quality as well as a reductin in lgistic expenses. We remain fcused n accelerating the rllut t the ther stres targeted, and t expand the Retira Rápid t mre Crrei s agencies and t ther pick-up lcatins. We cntinue t expand ur full-cmmerce platfrm, adding a new exclusive partner that will start t use, in additin t ur websites, ur lgistic infrastructure (DCs and delivery), and the stres base that includes Retira Rápid peratin and mre than 20,000 salespeple. We als frged a partnership with Linx S.A. (B3:LINX3), which will help us t implement and expand ur platfrm. Lastly, we tk yet anther imprtant step in Via Varej s digital transfrmatin by pting t strengthen the COO psitin by unifying the Cmmercial, Lgistics and Furniture areas. Cnsequently, the Executive Bard will be cmprised as fllws: Flavi Dias as CEO, Paul Naliat as COO, Felipe Negrã as CFO, Izabel Branc as CHR, and the psitin f Chief Digital Officer (CDO), the executive fr which will be annunced sn. We are certain that this new structure will expedite ur decisin-making and encurage all ur teams t be mre practive, making Via Varej a reference in Omnichannel retailing and a business platfrm that delivers excellence in custmer experience and functins as the ideal partner fr suppliers and sellers. The Management 4

5 Operating Perfrmance Highlights 2Q18 2Q17 % 1S18 1S17 % Net Revenue ,1% ,8% Grss Margin 28,9% 31,2% (232bps) 30,7% 31,2% (53bps) Adjusted EBITDA¹ ,1% ,4% Adjusted EBITDA Margin 6,1% 5,1% 97bps 6,1% 5,3% 82bps Net Earnings 20 (85) na ,3% Net Cash with receivables nt discunted² (¹) Excluding ther peratinal revenues and expenses (¹) 2017 Adjusted by IFRS 9 Operatin 2Q18 2Q17 % 1S18 1S17 % Bricks and Mrtar - SSS (%) 5,8% 10,8% 7,2% 5,4% Net GMV (y/y % grwth) 9,4% 26,4% 8,4% 14,4% Net GMV (B2C+MP) ,4% ,4% Net Marketplace GMV ,5% ,6% Marketplace Penetratin (% Net GMV) 29,0% 24,9% 413bps 28,3% 24,2% 406bps Click'n Cllect Penetratin² (% Net GMV) 30,7% 20,6% 1.007bps 29,6% 20,6% 900bps (²) Main Categries Net Sales Net Sales - R$ millin 2Q18 2Q17 % 1S18 1S17 % Bricks and Mrtar ,5% ,0% Online (0,3%) ,9% Net Revenue ,1% ,8% Brick-and-Mrtar Stres In 2Q18, same-stre sales grwth std at 5.8%. Net sales at brick-and-mrtar stres advanced 6.5% in 2Q18 cmpared t 2Q17. Fr the first time since 2014, televisin sales utperfrmed ther categries, including smartphnes, which registered the strngest sales grwth since The truckers strike in late May and early June, ended up affecting sales at stres, with this effect partially minimized by ur Retira Rápid service, which registered high penetratin in the perid. Online Inviced GMV grew 9.4% t R$1.6 billin in the perid. In additin t the impact frm the truckers strike, imprtant prjects, such as Via Única and the new apps, have yet t cntribute their full ptential t the results in this perid. GMV inviced in the marketplace accunted fr 29% f Ttal Inviced GMV in 2Q18, registering significant grwth f 27.5% in the quarter. Net sales frm the Online business, which includes nt nly merchandise and marketplace, but als ur services (ehub) and sales in the whlesale segment, registered a slight reductin f 0.3% in 2Q18 cmpared t 2Q17. 5

6 Services In 2Q18 we cntinued t implement ur sales and prfitability strategy using ur prtfli f prducts and financial services. Revenue frm payment bks, cards, services, assembly and freight increased 6.6% frm 2Q17. R$ millin 2Q18 2Q17 % 1S18 1S17 % Merchandise ,9% ,8% Freight and Assembly Services ,2% ,3% Services ,7% ,1% CDC/Credit Cards ,1% ,5% Net Revenue ,1% ,8% Freight, Services, CDC/Credit Card and Assembly ,6% ,8% % Ttal Net Revenue 12,3% 12,1% 17bps 12,3% 12,3% 1bps Breakdwn f sales by payment means: Sales by means f payment 2Q18 2Q17 % Cash/Debit Card 23,4% 26,7% (330bps) CDC (Payment Bk) 10,7% 10,6% 10bps C-branded Credit Card 11,7% 12,4% (70bps) Third-party Credit Card 54,3% 50,3% 400bps Grss Prfit R$ millin 2Q18 2Q17 % 1S18 1S17 % Grss Prfit (2,7%) ,0% Grss Margin 28,9% 31,2% (232bps) 30,7% 31,2% (53bps) Grss margin ended 2Q18 at 28.9%, 230bps lwer than in 2Q17 (31.2%), significantly affected by the grwth in televisin sales, which have a lwer sales margin, within the Cmpany s prtfli. Selling, General and Administrative Expenses R$ millin 2Q18 2Q17 % 1S18 1S17 % SG&A (1.496) (1.628) (8,1%) (3.258) (3.196) 1,9% % Net Revenue (23,2%) (26,5%) 334bps (24,9%) (26,3%) 143bps In 2Q18, ur expenses as a rati f net sales imprved by 334bps t 23.2%, dwn frm 26.5% in 2Q17. We cntinue t seek pprtunities fr ptimizing and reducing perating expenses, withut lsing peratinal and administrative efficiency, in ur structure. We have reduced ur expenses with persnnel, ur estimated lsses frm dubtful accunts and ur legal expenses. In the case f the latter, Legal Transfrmatin prject started in 2017 begins t present results. With this prject, we seek (i) excellence in the management f legal prceedings, (ii) revisited the interactin 6

7 between the peratinal areas, aiming t mitigate the rt causes f cmplaints, (iii) prmted systemic integratin between legal and financial systems, and (iv) we implemented a digital claim- mapping tl, which autmatically identifies prcess clsure and settlement, as well as capture mre than 70% f claims at beginning, expediting ur defense prcedure. Adjusted EBITDA EBITDA - R$ millin 2Q18 2Q17 % 1S18 1S17 % EBITDA ,3% ,6% EBITDA Margin 5,1% 2,4% 273bps 5,5% 3,7% 173bps Other Operatinal (Expenses) Revenues (62) (167) (62,9%) (83) (188) (55,9%) Adjusted EBITDA ,1% ,4% Adjusted EBITDA Margin 6,1% 5,1% 97bps 6,1% 5,3% 82bps Adjusted EBITDA came t R$394 millin, advancing 25.1% n the prir year. Adjusted EBITDA margin std at 6.1% in 2Q18, expanding 97bps frm 2Q17 and marking the sixth straight quarter f margin gains. Financial Perfrmance Net Financial Results - R$ millin 2Q18 2Q17 % 1S18 1S17 % FinancialRevenues 7 12 (41,7%) (59,3%) Financial Expenses (207) (258) (19,8%) (367) (423) (13,2%) Debt Financial Expenses (16) (15) 6,7% (35) (45) (22,2%) CDC Financial Expenses (65) (91) (28,6%) (137) (190) (27,9%) Credit Card Receivables' Discunting Expe (126) (152) (17,1%) (195) (188) 3,7% Financial Results pre mnetary (200) (246) (18,7%) (343) (364) (5,8%) % Net Revenue (3,1%) (4,0%) 91bps (2,6%) (3,0%) 38bps Mnetary Variatin (14) 51 na (28) 29 na Net financial results (214) (195) 9,7% (371) (335) 10,7% % Net Revenue (3,3%) (3,2%) (14bps) (2,8%) (2,8%) (8bps) In 2Q18, the net financial result befre updates std at 3.1% as a rati f net sales, dwn 91bps cmpared t 2Q17, reflecting the lwer financial expenses with bth cnsumer credit - CDCI (-28.6%) and sales f receivables (17.1%). 7

8 Net Incme R$ millin 2Q18 2Q17 % 1S18 1S17 % EBT 30 (123) na 175 (38) na % Net Revenue 0,5% (2,0%) 247bps 1,3% (0,3%) 165bps Taxes (10) 38 na (84) 49 na Net Earnings 20 (85) na na Net Margin 0,3% (1,4%) 169bps 0,7% 0,1% 60bps The Cmpany psted net incme f R$20 millin in 2Q18, cmpared t a net lss f R$85 millin in 2Q17. The result is explained by the grwth in sales and EBITDA and by ur leveraged financial expenses. Wrking Capital R$ millin (+/-) (+/-) Inventry Days f Inventry dias (+/-) Suppliers¹ Ttal Days f Suppliers dias Wrking Capital Change (¹) Suppliers + Suppliers ('Frfait') We clsed 2Q18 with an increase in wrking capital cmpared t 2Q17. Our strategy is t cntinue hlding high inventries (financed by ur suppliers) as a way t minimize the effect frm the weaker Brazilian real and the ptential reductin in the estimated prductin f ur suppliers. Debt R$ millin (+/-) Availability On Balance Credit Card Receivables Nt Discunted¹ (100) Financial Debt (434) (476) +42 Net Debt with CC Receivables nt Discunted LTM Adjusted EBITDA Net cash/ltm EBITDA 1,2x 1,4x (¹) Credit Card Receivables Shrt Term and Lng Term, 2017 Adjusted by IFRS 9 We ended the quarter with a slid Adjusted Net Cash psitin f R$2,007 millin, including the unsld receivables prtfli f R$1,496 millin. 8

9 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 2Q18 Delinquency in payment bk prtfli (% f Prtfli) 16,3% 7,7% 16,3% 13,9% 13,3% 11,6% 9,1% 7,6% 7,2% 7,5% 14,4% 9,5% Over 90 days Over days Delinquency in ur payment bks prtfli exceeding 90 days is within ur parameters f a sustainable business. We cntinue t invest in ur risk cntrl prcesses and systems and in imprving ur custmer experience. In May 2018, we adpted a new credit plicy with new analysis and segmentatin mdels that enable us t mitigate risks and reduce apprval/denial time. In 2Q18, we reached ~65% f decisins made autmatically, with ~72% in July Investments In 2Q18, Via Varej s investments amunted t R$157 millin, brken dwn as fllws: R$ millin 2Q18 2Q17 % 1S18 1S17 % Lgistics ,0% 14 3 na New Stres 21 1 na 33 1 na Stres Renvatin ,8% ,0% IT ,9% na Others ,0% 15 3 na Ttal ,8% na 9

10 Stre Activity by Frmat Casas Bahia Opening Clsure Street Shpping Malls Kisk Cnslidated (ttal) Sales Area ('000 m2) Ttal Area ('000 m2) Pntfri Opening Clsure Street Shpping Malls Kisk Cnslidated (ttal) Sales Area ('000 m2) Ttal Area ('000 m2) Cnslidated Opening Clsure Street Shpping Malls Kisk Cnslidated (ttal) Sales Area ('000 m2) Ttal Area ('000 m2)

11 Accunting Infrmatin Audited Incme Statement R$ millin 2Q18 2Q17 1S18 1S17 Grss Sales ,3% ,6% Net Sales ,1% ,8% Cst f Gds Sld (4.578) (4.207) 8,8% (9.040) (8.310) 8,8% Depreciatin (Lgistic) (16) (20) (20,0%) (33) (42) (21,4%) Grss Prfit (2,7%) ,0% Selling Expenses (1.270) (1.449) (12,4%) (2.769) (2.845) (2,7%) General and Administrative Expenses (226) (179) 26,3% (489) (351) 39,3% Equity Incme ,0% ,0% Other Operating Incme (Expenses) (62) (167) (62,9%) (83) (188) (55,9%) Ttal Operating Expenses (1.552) (1.791) (13,3%) (3.329) (3.374) (1,3%) Depreciatin and Amrtizatin (72) (56) 28,6% (138) (116) 19,0% Earnings befre Interest and Taxes - EBIT na ,8% Financial Revenue (79,1%) (69,0%) Financial Expenses (237) (305) (22,3%) (434) (538) (19,3%) Net Financial Incme (Expense) (214) (195) 9,7% (371) (335) 10,7% Earnings befre Incme Tax 30 (123) na 175 (38) na Incme Tax (10) 38 na (84) 49 na Net Incme 20 (85) na na Earnings befre Interest, Taxes, Depreciatin, Amrtizatin-EBITDA¹ ,3% ,6% Adjusted EBITDA ,1% ,4% % f Net Sales Revenue 2Q18 2Q17 1S18 1S17 Grss Prfit 28,9% 31,2% (2,3 p.p.) 30,7% 31,2% (0,5 p.p.) Selling Expenses (19,7%) (23,6%) 3,9 p.p. (21,2%) (23,4%) 2,2 p.p. General and Administrative Expenses (3,5%) (2,9%) (0,6 p.p.) (3,7%) (2,9%) (0,8 p.p.) Equity Incme 0,1% 0,1% 0,0 p.p. 0,1% 0,1% 0,0 p.p. Outras Despesas e Receitas Operacinais (1,0%) (2,7%) 1,7 p.p. (0,6%) (1,5%) 0,9 p.p. Ttal Operating Expenses (24,0%) (29,1%) 5,1 p.p. (25,4%) (27,8%) 2,4 p.p. Depreciatin and Amrtizatin (1,1%) (0,9%) (0,2 p.p.) (1,1%) (1,0%) (0,1 p.p.) Earnings befre Interest and Taxes - EBIT 3,8% 1,2% 2,6 p.p. 4,2% 2,4% 1,8 p.p. Net Financial Incme (Expense) (3,3%) (3,2%) (0,1 p.p.) (2,8%) (2,8%) 0,0 p.p. Earnings befre Incme Tax 0,5% (2,0%) 2,5 p.p. 1,3% (0,3%) 1,6 p.p. Incme Tax (0,2%) 0,6% (0,8 p.p.) (0,6%) 0,4% (1,0 p.p.) Net Incme 0,3% (1,4%) 1,7 p.p. 0,7% 0,1% 0,6 p.p. EBITDA 5,1% 2,4% 2,7 p.p. 5,5% 3,7% 1,8 p.p. Adjusted EBITDA 6,1% 5,1% 1,0 p.p. 6,1% 5,3% 0,8 p.p. (¹) EBITDA, Ajdusted EBITDA and EBIT are nt revised by External Audit. 11

12 Balance Sheet Assets R$ millin Current Assets Cash and Cash Equivalents Accunts Receivables Credit Card Payment Bk Others Accunts Receivables B2B Allwance fr dubtful accunts (604) (588) Inventries Recverable Taxes Amunts Receivable frm Related Parties Expenses in Advance and Other Accunts Receivable Nncurrent Assets Lng-Term Assets Accunts Receivables Credit Card Payment Bk Allwance fr dubtful accunts (35) (20) Recverable Taxes Deferred Incme Tax and Scial Cntributin Amunts Receivable frm Related Parties Judicial Depsits Expenses in Advance and Other Accunts Receivable Investments Prperty and Equipment Intangible Assets TOTAL ASSETS Liabilities and Sharehlders' Equity R$ millin Current Liabilities Taxes and Scial Cntributin Payable Suppliers Suppliers ('Frfait') Lans and Financing Payment Bk (CDCI) Fiscal Obligatins Debt with Related Parties Advanced revenues Onlending f third parties Other Lng-Term Liabilities Lans and Financing Payment Bk (CDCI) Debt with Related Parties - 19 Deferred Incme Tax and Scial Cntributin 6 11 Prvisin fr lawsuits Anticipated Revenue Tax Obligatins 39 8 Other 8 - Sharehlders' Equity LIABILITIES AND SHAREHOLDERS' EQUITY

13 Audited Cash Flw (R$ millin) R$ millin Net Incme Adjustment fr Recnciliatin f Net Incme Deferred Incme Tax 52 (127) Depreciatin and Amrtizatin Interest and Exchange Variatin Equity Incme (12) (10) Prvisin fr lawsuits Gain (lss) with fixed and intangible assets 51 7 Share-based Payments 8 5 Allwance fr dubtful accunts Prvisin fr Obslescence and Retail Lss Deferred Revenue (138) (118) Others 2 (3) Asset (Increase) Decreases Accunts Receivable (89) (1.271) Inventries (1.065) (777) Taxes t Recver (408) (268) Net Related Parties - 44 Other Assets (47) (36) Net Related Parties (51) 112 Judicial Depsits 1 (116) (1.659) (2.312) Liabilities (Increase) Decreases Suppliers (603) (862) Payrll and Charges (112) 15 Lawsuits (393) (177) Deferred Revenue 100 (10) Other demandability (81) (73) (1.089) (1.107) Asset and Liabilities - Others (Increase) Decreases Incme Tax Paid (154) - (154) - Net Cash (used) in Operating Activities (1.804) (2.562) Cash Flw frm Investment Activities Acquisitin f fixed and intangible assets (263) (120) Sale f Prperty and Equipment 21 4 Net Cash (used) in Operating Activities (242) (116) Cash Flw frm Financing Activities Prceeds frm brrwings Repayments f brrwings (2.822) (2.885) Payments f Interest (188) (229) Payments f Dividend (15) - Net Cash (used in) Financing Activities (568) (602) Cash and Cash equivalents at the Beginning f the Perid Cash and Cash equivalents at the End f the Perid Change in Cash and Cash Equivalents (2.614) (3.280) 13

14 EARNINGS CONFERENCE CALL AND WEBCAST: July 24, p.m. (Brazil) / 1 p.m. (New Yrk) / 6 p.m. (Lndn) Prtuguese / English (simultaneus translatin): +55 (11) / +1 (646) Webcast: Replay +55 (11) Cde: Via Varej Glssary: GMV (Grss Merchandise Value): Amunt transacted in Brazilian real n ur website, including the marketplace (third-party prducts). Marketplace: Prducts frm partners ffered fr sale n ur websites. MOVVE (Via Varej Excellence Operatinal Mdel): Stre management mdel implemented in 2016.Versin 1.0 is respnsible fr the new management mdel and versin 2.0 is respnsible fr the new cmpensatin mdel. Digital Stre: Stre mdel with apprximately 150 m 2 that we use t test new technlgies t imprve the custmer experience. Kisk Stre: Stre mdel that nt nly enables the testing f new regins, but als the penetratin f Via Varej in mre cmpetitive areas. Smart Stre: Stre mdel that emplys mre technlgy and spaces ranging frm 500m 2 t 1,000m 2. Click&Cllect (Retira Rápid): Prducts purchased Online that are picked by custmers up frm ur stres r frm partner stres. Same-Stre Sales: Revenue frm stres perating fr mre than 12 mnths. Via Única/CRM Single Path : Prject develped in partnership with Accenture t create a single database (Brick-and-Mrtar Stres, Online and Payment Bk), segmented by the prfiles f ur 60 millin custmers. Via+: Web-based Sales System that unifies all f the tls we have develped in recent mnths (cmpensatin mdel, Via Única/CRM and Online channel catalg). 14

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