Good afternoon and welcome to the Walmart de Mexico y Centroamérica earnings call for the third quarter of the year 2010.

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Abigail Daniels
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1 RAFAEL MATUTE SPEAKING: Good afternoon and welcome to the Walmart de Mexico y Centroamérica earnings call for the third quarter of the year I would like to start this presentation by saying that we have been able to deliver good year to date results in a still challenging economic environment, and that we continue as always to invest and improve our competitive position for the long term, in order to take advantage of the multiple growth opportunities that we clearly have in the region. 1

2 I will start with third quarter results for Mexico. 2

3 Third quarter was a challenging quarter for Mexico. Total sales were up 9.7% and 2.8% at comparable stores. Sales in September were affected by flooding in Nuevo Leon, Veracruz, Oaxaca and Tabasco. Gross margin for the third quarter 2010 was 21.7% this year vs. 21.9% last year. The decline compared to last year is related to the recognition of the timing of supplier allowances and is a one time event. Expenses, were the greatest tchallenge in the quarter. We have done a good job in maintaining our discipline in expenses and even improving our distribution and store productivity measures, but our costs have been impacted by increases in electricity tariffs, and depreciation. If we take out utilities, expenses would have grown less than sales. 3

4 Our effective Every Day Low Prices strategy, based on having the lowest cost structure t in the market, allows us to consistently tl lower prices. Our price gap vs. the rest of the market increased during the quarter as well as year to date. This has certainly been well received by our customers, as reflected in our sales continuing to grow at a faster rate than the market, both at comparable stores and for total stores, and in our case, on top of a much stronger growth last year. We don t have yet the numbers for September for the industry, but for the first eight months of the year Walmex comp store sales for self-service formats in Mexico grew 3.0%, more than double the rate of growth of the industry as measured by the ANTAD, which increased 1.3% excluding Walmex. And in terms of total sales, our self-service formats in Mexico grew 10.1%, which very positively compares with the 5.6% growth of ANTAD excluding Walmex. 4

5 Now, as I said before, expenses were the greatest challenge of the quarter. We have done a good job on expenses, but they have been impacted by two important line items: utilities and depreciation. Our utility expense grew 25.6%. This is specifically related to an increase of electricity cost. Tariffs in August were 17.2% higher than last year. If we take out the increases in utilities, expenses would have grown 9.5% compared with the 9.7% increase in total income; and if we also exclude depreciation that increased 13.2%, the increase in expenses was 8.9%. We continue with our discipline with regards to expenses, and it should allow us to continue to improve our leadership position. 5

6 Now let s move from Mexico into Central America. 6

7 Central America clearly had a very strong quarter at every line: sales, gross margin, expenses, and thus Operating margin and EBITDA. Total income was up 7.6%, with a very solid growth in sales at comparable stores of 6.8%. Gross margin had a very good performance, increasing 30 basis points from last year. Expenses increased only 3.4%, which very positively compares with the 7.6% increase in totalt income. Expenses improved 70 basis points and represented 17.7% of total income vs. 18.4% last year. The combination of good sales growth, improvement in gross margin and discipline in expenses allowed for Central America s EBITDA to grow at a rate of 27%, more than three times faster than sales. EBITDA margin was 6.4% compared to 5.5% last year. 7

8 I am very pleased with the continuous improvements that we ve had in Central America. Results have been good for the first nine months of the year, and third quarter growth rates represent an improvement over the growth rates achieved during the first half. - Total income for the third quarter increased 7.6%, a nice improvement compared to the 5.3% growth of the first half. - Gross margin continued to grow faster than sales. - General expenses grew less than sales, and less than during the first half of the year. - As a result, EBITDA for the third quarter grew 27.2%, a significant improvement vs. the already strong 12.8% increase of the first half of the year. 8

9 Now let s move into the consolidated results for Mexico and Central America. 9

10 Total income reached 82 billion pesos, 70.8 billion for Mexico and 11.4 billion for Central America. Gross margin is 70 basis points higher in Central America than in Mexico. Expenses as a percentage of sales are 370 basis points higher in Central America. Operating Margin, and EBITDA margin are higher in the Mexican Operation than in Central America, 300 and 320 basis points respectively. Operating margin is 7.7% for Mexico, 4.7% for Central America, and 7.3% for Walmex. EBITDA is 9.6% for Mexico, 6.4% for Central America, and 9.2% for Walmex. 10

11 Consolidation has a clear positive effect in growth rates. During the third quarter we had a total income growth of 27%. Consolidated gross margin grew 27%, and went from 21.9% last year to 21.8%. The toughest effect of consolidation is reflected in general expenses as a percentage to total income, that as we consolidate both regions increased 70 basis points compared to last year s level that only include Mexico. Consolidated EBITDA increased 18%, and Net Earnings increased 10%. 11

12 We have a strong balance sheet with no debt, and our cash position is continuously generated by our operation, and allows us to invest in new stores, remodel existing ones, invest in distribution, and aggressively invest in prices, all at the same time, and with a long term view. As of September 2010 our cash position amounted to $15.3 billion pesos. Now I leave you with Scot Rank to share with you his views on some highlights that have to do with our three main priorities. 12

13 SCOT RANK SPEAKING Thank you Rafael. Starting with our Store Expansion Plans. I d like to highlight that so far this year we have opened 120 stores and restaurants in Mexico and 13 stores in Central America. We are on target to meet our expansion program for the full year, which contemplates an increase in installed capacity of 12% for self-service formats in Mexico, 11% increase for total capacity in Mexico and 3.5% in Central America. As of today we have 2,122 stores and restaurants in Mexico and Central America. 13

14 Another key to our continuous profitable growth is our efficient i logistics network, and it continues to improve. This year we opened a new distribution center in Villahermosa, Tabasco with automated sorters. We also automated an existing distribution center in Mexico City. Automated sorters allow us to increase case throughput up to 40%, and total DC productivity up to 31%. At the same time we increased 33% the number of stores served, allowing us to postpone future investments in distribution. 14

15 Now moving into our people, a few weeks ago Eduardo Solorzano, President of Walmart Latin America announced that Marcos Samaha has been named President and CEO of Walmart Brazil. Marcos, previous President of Walmart Central America, is a very talented executive who as head of Central America has been key in the success of the initial steps for the integration process. Marcos will undoubtedly be successful in his new responsibilities in Brazil. We have named Alberto Ebrard as Executive Vice President and Managing g Director for Central America. Alberto was Senior Vice President for Bodega Aurrera in Mexico and he has been with the company for 17 year. His knowledge of the company, vision and leadership will certainly be key to strengthening Central America operations and drive synergies between the two regions. 15

16 Regarding Corporate SociaI Responsibility, I am very proud to share with you that Walmart de Mexico Foundation has been honored as a winner of the World Business and Development Awards 2010 presented by the United Nations Development Program (UNDP), the International Chamber of Commerce (ICC) and the International Business Leaders Forum (IBLF). The Foundation s Indigenous Product Commercialization Program was selected as one of ten winners, out of 170 initiatives submitted from around the world. The indigenous Product Commercialization Program offers training, funding, and the opportunity to sell products from indigenous communities in our stores. 16

17 Our commitment to sustainability continues, and last month we organized a Sustainability Forum, with our suppliers to exchange best practices in: energy efficiency, water savings, waste, and sustainable strategy execution. More than 120 companies presented best practices and new technologies. We had very active participation from the CEOs of leading companies in Mexico, and we also had the presence of the Minister of Economy o and the Minister of the Environment. 17

18 Our strongest season is starting, and although we expect the economic environment to be challenging, we are ready with a very good assortment of unique products in all of our different formats, and with excellent prices for our customers. On example is Walmart Supercenter: We have prepared with a very good assortment for different purchasing occasions related to Christmas season including: At home entertaining; Travel; cold weather; decoration; gifts; Christmas trees and nochebuenas; and holiday time dinners. 18

19 With this we are ending this earnings call. Thanks again for joining us today, and I remind you that the presentation we just finished is available at our website. And as always, a we are availableailable to receivee calls with questions that you may have. Thank you. 19

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Wal-Mart de México, S.A.B. de C.V. (WALMEX) Webcast Results for the First Quarter 2014 Mexico City, April 22, 2014 RAFAEL MATUTE: Good afternoon everyone and thank you for joining us today for our first