Corporate Presentation October 2018

Transcription

1 Corporate Presentation October 2018

2 GPA Overview Strategy CSR: Corporate Social Responsibility 2Q18 Results Company Structure Glossary 2

3 GPA Food in numbers Gross Sales Number of Stores Sales Area ('000 sqm) Capex 1H17 R$23.1bn 1,108 1,771 R$554m 1H18 R$25.1bn 1,074 1,802 R$659m Total Employees (1) Distribution Centers & Depots Tickets Footprint in Brazil 1H k 23 R$ 1, MM bilhão 19 Estados 17 States + DF H18 91K 23 R$ 1, MM bilhão 19 States In Brazil: 1 st Largest traditional retailer 2 nd Second largest player in cash & carry (1) On a full-time equivalent (FTE) basis 3

4 Our History Always seeking to identify consumer trends that allow customers to anticipate their needs Opened the 1st hipermarket Store in Brazil 1st Delivery of Brazilian Retail Association with Assaí to operate in the cash and carry segment Opened the 1st Convenience Store Opened the 1st Pão de Açúcar Store in São Paulo Period of important supermarket chains acquisitions Start of the financial partnership called FIC with Itaú Unibanco With the acquisition of Pontofrio and association with Casas Bahia, comes Via Varejo Digital Transformation Era: Creation of My Discount App 4

5 GPA Food Overview Diversity of formats to meet different consumer needs Multivarejo Extra Pão de Açúcar Proximity Other Businesses Assaí Cash & Carry Hypermarkets and Supermarkets Supermarkets Premium Commercial Centers Drugstores and Gas Stations 32.9% Sales 14.5% Sales 2.4% Sales 4.9% Sales 45.3% Sales #Stores Hypermarkets: 113 Supermarkets: 187 #Stores Supermarkets: 186 Food Delivery #Stores Minuto: 82 Minimercado Extra: 183 #Stores Drugstores: 123 Gas stations: 70 GLA~ million 2 #Stores Assaí: 131 Net sales 1H18, number of stores on July 31,

6 Multi-format food player Focused on meeting the needs of clients related to different necessities and occasions, with the following formats: hypermarkets, supermarkets, drugstores and gas stations. Extra banner offers food, electronics and home appliances and apparels. The Pão de Açúcar banner refers to the Company's premium supermarket chain. It is considered the benchmark for innovation in the retail sector and promotes the concepts of healthy living and sustainability. The Cash & Carry segment focuses on customers from small and midsized companies and also on the end customer who looks for products at more competitive prices. It offers groceries, food, perishables, beverages, packaging, personal care and cleaning products, among others. 300 Stores* 186 Stores 131 Stores Convenience format that offers differentiated assortment and a practical and cozy environment, in stores measuring about 300 m 2. Prioritizes client comfort through customized services and initiatives. Convenience format to meet day-to-day needs, mainly commodities and perishables. In stores measuring about 300 m 2, its value proposition is to offer convenience at the best price. 82 Stores 183 Stores * It also operates 123 drugstores and 70 gas stations as of July 31,

7 Our Footprint is a differential competitive advantage Stores located in 19 of the 27 Brazilian States* Brazil s GDP: 5.4% GPA Sales**: 2.2% Brazil s GDP: 13.4% GPA Sales**: 18.2% Region Super Hyper Cash&Carry Proximity Total North Midwest Southeast Northeast South Total Brazil s GDP: 9.6% GPA Sales**: 8.4% Brazil s GDP: 55.4% GPA Sales**: 69.7% Centralization rate: 87% Food Business (Excl. Assaí) *Stores as of June, Gas station and drugstores are not included. ** Share of Food Businesses net sales in 2Q18. GDP as of 03/31/2018 Brazil s GDP: 16.2% GPA Sales**: 1.5% 7

8 Key Figures Historic - Business Units Food Business (Multivarejo + Assaí) R$ '000 1H18 1H17 Change vs. 1H17 Net Sales 23,118 21, % Adj. EBITDA (1) 1,475 1, % Adj. EBITDA Margin (1) 5.2% 4.6% +60 bps Net Income (Loss) -continuing and discontinued operations % Multivarejo R$ '000 1H18 1H17 Change vs. 1H17 Net Sales 12,783 12, % Adj. EBITDA (1) % Adj. EBITDA Margin (1) 5.5% 5.0% +50bps Assaí R$ '000 1H18 1H17 Change vs. 1H17 Net Sales 10,336 8, % Adj. EBITDA (1) % Adj. EBITDA Margin (1) 5.5% 4.8% +70bps (1) EBITDA and Net income (loss) adjusted for Other Operating Income and Expenses and excluding non-recurring effects 8

9 Key Figures Historic -CAPEX and ROCE INFRASTRUCTURE AND OTHERS 23% 40% 2017 CAPEX (1) Distribution 26% NEW STORES, LAND ACQUISITIONS 44% AND COVERSIONS 34% N CAPEX e ROCE Evolution 22,8% V 1,110 1,383 40% 33% REFORMS AND MAINTENANCE 1,241 1,

10 GPA Overview Strategy CSR: Corporate Social Responsibility 2Q18 Results Company Structure Glossary 10

11 KPIs 11 INNOVATION PROJECTS: Impact the internal culture, improve the customer experience and increase operational efficiency. 1 OPPORTUNITIES 2 TESTS AND PROJECTS Opportunity sourcing Proximity to the BUs. Weekly internal newsletter on innovation. 3 CULTURE YTD Status By July 31, 2018 More than 200 news shared Engagement with startups: o Ecosystem events Participation in 20 events Incentivized tests Innovations o o Retail League Startup acceleration program focused on retail Over 330 Start-Up inscrition. Pão de Açúcar Pitch Day POCs with 3 winners in Internal competition of ideas Proof of Concept (POC) Budget dedicated to encourage the launch of proofs of concept 2 completed POCs + 6 POCs in progress Projects Untapped opportunities in line with strategic priorities 5 completed projects, 6 projects in progress More than 400 ideas submitted, 6 award-winning ideas Foster the internal culture of innovation Lectures, Training Programs, Innovation Sprints, Pitch Sessions, Meetings/ Workshops, Ecosystem Events, Activities for Employees 43 activities, impacting more than 2,000 employees

12 Conversions of some stores: Private Label Store in Store My Discount App Financial Services: : rollout of Passaí credit card, FIC strengthening and new service platform at Via Varejo SMART 12

13 Strategic priorities for 2018 will continue in line with projects initiated in 2017 CONTINUOUS ORGANIC EXPANSION AND OPTIMIZATION OF STORE PORTFOLIO FOCUS ON ACCELERATING HIGHER-RETURN FORMATS AND CONCEPTS: OPENING OF APPROXIMATELY 20 ASSAÍ STORES (INCLUDING CONVERSIONS); COMPRE BEM: PILOT PROJECT INVOLVING THE CONVERSION OF 20 EXTRA SUPER STORES; MERCADO EXTRA: PROJECT THAT PROVIDES THE REVITALIZATION OF 10 EXTRA SUPER STORES; GRADUAL IMPLEMENTATION OF NEW CONCEPT AT PÃO DE AÇÚCAR STORES; EXPANSION OF STORE-IN-STORE AT EXTRA HIPER AND PÃO DE AÇÚCAR. ACCELERATION OF THE ADJUSTMENT AND REPOSITIONING OF THE OFFERINGS IN THE RETAIL FORMATS INNOVATION AND CONTINUATION OF DIGITAL TRANSFORMATION RELATED TO CUSTOMER CONTACT AND OUR OPERATIONS EXPANSION OF THE FINANCIAL SERVICES OFFERING, ESPECIALLY AT ASSAÍ, LEVERAGING THE EXPERTISE OF OUR JOINT VENTURE WITH BANCO ITAÚ 13

14 131 stores in 2017 ~ Data:12/31/2017 As of 07/31/

15 JUST 9 MONTHS IN OPERATION: 131 Stores ~335 Thousand 50% Higher As of 06/30/

16 CAGR: 16% 18% 16% 16% 19% Player B CAGR: 31% 13% 13% 12% 11% 10% 10% 9% 9% 8% 9% 6% 4% 5% 2% 1% 0% Q18 2Q Player A Assaí Player B Assaí Nominal Assaí Real 16

17 17

18 Optimize portfolio of assets Operate better Buy better STRATEGIC PLAN Conversion of Extra Hiper in Assaí Extra Super Conversion into Compre Bem or Extra Market New formats of Proximity stores Reforms and repositioning of stores Stores Productivity: Flexible work agreements, Program to promote Productivity, Integrated Multifunctionality Program, New working hours arrangement (new labor laws) Supply Chain Productivity - DCs: Cross dock implementation, Back-haul, collaborative platform with the industry and optimization of our logistic network Energy Efficiency Projects Partnership with major grocery brands Being a specialist at every stage of the value chain Private label brands: review and expansion of portfolio Sell better My Discount and My Prizes: - Infrastructure: 100% digital system, zero transactional cost Digital Transformation Reinforce BU s core value A hardware-free Digital Transformation model, designed just for customers cell phones Extra Hiper: Store in Store project launch and Roll-out of Grupo Exito s textile concept Extra Super: Compre Bem and Mercado Extra Projects Pão de Açúcar: Upgrade 30 stores to a Premium level and continuity of the store refurbishment project. Store in Store project launch Proximity: management changes brought higher focus and agility E-commerce: Leverage our store reach and complementary business offerings 18

19 Strategy driven by 5 principles 19

20 Group strategy: Synergies in Latin America Synergies that create value and develop cross opportunities Textile Fresh Market Concept Loyalty Program Efficiency Gains Sharing of good practices Sharing of know-how Joint procurement and development Use of Colombian brands, such as Arkitect and Bronzini New concept Implemenation: #modaextra Implementation of the FreshMarket concept in the new renovations of Pão de Açúcar stores Expansion and consolidation of the healthfulness portfolio Development of brand loyalty programs through the use of the function My Discount in the app, being a pioneer of the digital transformation LATAM platform of efficiency gains in the procurement of products and services and greater automation in the Shared Service area Sharing of good practices and knowledge in the prevention of losses and the logistics chain through travel schedules and periodic meetings between teams 20

21 Group strategy: Synergies in Latin America Synergies that create value and develop cross opportunities Opening of 9 stores in Colombia based on the Assaí operating model and expected conversion of 8+ stores Colombia Colombian textile business model: implementation of 32 stores in 2017 Sinergies throughout 2017 US$70 million Brazil 5 refurbished Pão de Açúcar stores with layout inspired by the Uruguayan Fresh Market model Colombian textile business model: 15 stores implemented in 2017 Argentina Uruguay Colombian textile business model: 10 stores implemented in 2017 In 2018, synergies will generate US$85 million 21

22 GPA Overview Strategy CSR: Corporate Social Responsibility 2Q18 Results Company Structure Glossary 22

23 GPA CSR Policy Since 2001, GPA has been a signatory to the Global Compact from United Nations. Pão de Açúcar launched recycling stations GPA conducts a Carbon Emissions Inventory since 2010, based on the methodology of the Brazilian GHG Protocol Program Publication of Charter of Commitments to Diversity of GPA GPA signed the adhesion to the Business Coalition for Racial and Gender Equity, the LGBT Companies and Rights Forum and the Women's Empowerment Principles of UN Women Launching of Taeq cage free eggs. Restructuring of the strategy of GPA Institute. Launching the Ethical Charter to all suppliers Materiality Matrix Reviewed Publication of the 1st Sustainability Report and implementation of Sustainable Development Committee Materiality Matrix and validation of strategic priorities. Gender Equity Committee CSR criteria are included in the calculation of Management's variable Compensation 23

24 GPA CSR Policy: 5 Strategic Values Become a leading and reference company in the promotion of diversity, inclusion and sustainability with our people t Increase the supply of healthy and sustainable products as a strategic value of our private labels and businesses VALUING OUR PEOPLE CONSCIOUS CONSUMPTION AND SUPPLY Sustainability for GPA TRANSFORMING THE VALUE CHAIN TRANSFORMING THE VALUE CHAIN MANAGING ENVIRONMENTAL IMPACTS Engage actors in our value chain to increase responsibility for the environment, people and animal welfare Minimize and prevent environmental impacts of GPA operations ENGAGEMENT WITH THE SOCIETY Strengthen relationship among clients, suppliers, employees and local social organizations to develop joint actions as change makers 24

25 GPA Overview Strategy CSR: Corporate Social Responsibility 2Q18 Results Company Structure Glossary 25

26 The multi-format and multi-regional portfolio supported a recovery at Multivarejo and a solid performance in Assaí Solid Revenue Growth Performance 2Q18: Multivarejo: strong acceleration at Pão de Açúcar and continued improvement at Extra Hiper, following adjustments in promotional dynamics Assaí: Strong and continuous sales growth coupled with solid results, with emphasis on the performance of the new stores Market-Share Gains at all Banners Higher Profitability Key Initiatives: Compre Bem Project: inauguration of first wave of 13 stores slated for 4Q18 Mercado Extra: four stores reformulated, which already are delivering encouraging results. In total there will be 10 pilot stores. Pão de Açúcar Premium: new management model bringing innovations and improvement in service quality for the banner Private-label brands: Expansion of portfolio and consequent increase in sales share Digital Transformation: Expansion of loyal customer base from 55% to 64% 1 in every 4 identified customers who shop in our stores are users of the apps 26

27 2Q18 Highlights - GPA Food Food Business R$ million 2Q18 2Q17 D % Gross Sales 12,772 11, % Net Revenue ex. tax credits 11,730 10, % Gross Profit ex. tax credits 2,684 2, % Gross Margin ex. tax credits 22.9% 23.3% -40bps SG&A -2,037-1, % SG&A (% net sales) 17.4% 18.5% -110bps Adjusted EBITDA ex. tax credits (1)(2) % Adjusted EBITDA Margin ex. tax credits 5.8% 5.1% 70bps Net Income - Controlling Shareholders - continuing operations % Net Margin- continuing operations 3.9% 1.8% 210bps Net Income (Loss) - Controlling Shareholders - continuing operations ex. tax credits Net Margin - continuing operations ex. tax credits n.a 1.6% -1.3% 290bps +5.1% same-store sales growth, driven by stronger growth at Multivarejo and the solid performance of Assaí Growth of +7.8%, despite strong impact from food deflation, with successful expansion and maturation at Assaí Increased dilution of expenses due to efficiency gains at Multivarejo Strong growth with margin expanding from 5.1% to 5.8% R$462 million 2.4 times higher than 2Q17 profit. Ex-tax credits profit reached R$ 185 million, reversing the loss of the same period of the previous year (1) Earnings before interest, tax, depreciation and amortization. (2) Adjusted for Other Operating Income and Expenses. 27

28 Financial Performance Financial Result Net Debt (1) % CDI 10.9% 6.4% Net Debt (1) / EBITDA (2) -1.16x -1.03x V -50 bps (R$ million and % of net sales) (R$ million) Financial Result 1.3% of net sales, reduction of 50 bps vs. 2Q17. Main variations: Reduction in debt cost, accompanying the decline in CDI rate Higher expenses with sales of receivables due to sales volume growth and larger share of non-food goods Net Debt (1) Cash & Equivalents Contingencies Net debt to EBITDA ratio fell to -1.03x from -1.16x V Solid financial position, with R$3.1 billion in cash and equivalents Cash balance of R$3.0 billion and not discounted receivables balance of R$88 million R$1.3 billion in pre-approved/confirmed credit facilities Reduction of R$340 million in the quarter, due to favorable decisions concerning tax contingencies and fewer labor claims CAPEX R$330 million, +15.1% vs. 2Q17. (1) Includes unsold credit card receivables. (2) EBITDA in last 12 months. 28

29 Multivarejo: sales growth with market share gains and operating efficiency gains Gross Sales SG&A (Growth vs. 2Q17) (R$ million and % of net sales) -80 bps Samestore Calendar effect Same-store ex calendar effect Expansion/ Closures Total Stores (R$ million and % of net sales) EBITDA (1)(2) +90 bps Highlights Gross Sales: R$7.0 billion, +1.2%. SSS ex calendar: +5.3%. Stronger sales at all banners: market share gain of 100 bps in the quarter. SG&A: higher dilution (80 bps) compared to 2Q17 due to: Implementation of efficiency initiatives, with focus on productivity gains at stores Closure of hypermarket stores EBITDA Margin (1)(2) : 5.6%, +90 bps vs. 2Q17 (1) EBITDA adjusted for Other Operating Income and Expenses. (2) Excluding tax credits. 29

30 Multivarejo: success of commercial strategies supported progressive volume growth at all banners EXTRA HIPER 113 Stores EXTRA SUPER 187 Stores PÃO DE AÇÚCAR 186 Stores PROXIMITY 265 Stores (*) Non-food categories: doubledigit growth Commercial activation: more horizontal promotions and focus on enlarging categories and events (Eg: Labor Day, Pink Friday) Evolution of the performance of private label: improvement of sales participation Launch of "Collect & Win" campaign Mercado Extra: o pilot project involving 10 stores with the goal of reinvigorating Extra Super o 4 stores opened: double-digit growth in sales, tickets and volume. Continuous gain of market share with maintenance of profitability Stores renovated in 2017: significantly higher growth vs. other stores Success of marketing campaigns "Collect & Win My Discount: 6% of total sales My awards: 500 thousand clients have already reached their goals E-commerce: Evolution of performance after site and application renewal Significant reversal in growth trend Reactivation of promotions, adjustments of assortment, operational suitability and prices by region and better alignment of promotions across banners * Does not include 123 drugstores and 70 gas stations 30

31 Assaí: solid performance and continuous improvement in profitability due to successful expansion plan Gross Sales Gross Profit (D% vs. 2Q17) (R$ million and % of net sales) +50 bps Samestore Calendar effect Same-store ex calendar effect Expansion Total Stores (R$ million) Q17 Net Income Q18 Published Tax Credits after Income Tax Ex Tax Credits Highlights Gross sales revenue of R$5.7 billion, +22.8%. SSS ex calendar: +4.7%, with sales recovering in late 2Q18 to high single digits Gross Margin: 16.4%, +50 bps Gain supported by successful expansion and rapid maturation of stores opened in recent years EBITDA Margin (1)(2) : 6.1%, +50 bps vs. 2Q17 Net Income: R$412 million (R$ 168 million ex tax credits), registering strong growth of 4.3 times (or 1.8 times ex tax credits) (1) EBITDA adjusted for Other Operating Income and Expenses. (2) Excluding tax credits 31

32 Assaí: Strong market share gain of around 200 bps in quarter 131 stores Presence in 18 states 45% of GPA sales, +480 bps vs 2Q17 Revenue growth of over R$1 billion driven by store expansions 3 stores inaugurated in 2Q18, bringing to 20 the openings in the last 12 months, in 9 different states of Brazil Currently, 9 stores are under construction and 1 is undergoing conversion For 3 rd straight year, elected "Best Wholesaler in São Paulo" by newspaper Folha de São Paulo Passaí Card reached 335,000 clients, with average monthly issuance of around 45,000 cards Sales increased by around 2.5x after conversion 32

33 2018 Outlook 1 1 Same-store sales growth: Assaí above inflation and Multivarejo in line with food inflation, with continued market share gains 2 2 Adjusted EBITDA margin: 5.5%-5.6% at Multivarejo and 5.8%-5.9% at Assaí 3 Financial income/expenses: around 1% of net sales 4 LATAM synergies: should reach US$85 million in savings for the Brazil perimeter (*) EBITDA adjusted for Other Operating Income and Expenses, excluding non-recurring effects. 33

34 GPA Overview Strategy CSR: Corporate Social Responsibility 2Q18 Results Company Structure Glossary 34

35 Ownership Structure 55,3% 50,0% 50,0% HoldCo 37,4% 4,1% 58,5% Free Float CB Founders Klein Family 34,1% 43,3% 26,1% E-commerce in França Brick and mortar stores and e- commerce 30,6% Free Float July 31, 2018 *Participação indireta do Casino através de outras companhias. Participação total do Casino no GPA: 33,2% 35

36 GPA Overview Strategy CSR: Corporate Social Responsibility 2Q18 Results Company Structure Glossary 36

37 Glossary Business units of the Company: The Company's business is divided into two segments - Retail and Cash & Carry (Slide 10) Food Segment: Represents the combined results of Multivarejo and Assaí, excluding equity income (loss) from Cdiscount, which is not included in the operating segments reported by the Company. It includes retail and wholesale activities of products in general, including - but not limited to - food products, clothing, hygiene, medicines, fuels, furniture, consumer electronics and domestic utilities. Such activities are carried out both in physical and virtual establishments. Growth and changes: The growth and changes reported in this document refer to changes from the same period last year, except when stated otherwise. EBITDA: EBITDA is calculated in accordance with Instruction 527 issued by the Securities and Exchange Commission of Brazil (CVM) on October 4, Adjusted EBITDA Measure of profitability calculated by excluding Other Operating Income and Expenses from EBITDA. Management uses this measure in its analyses as it believes it eliminates nonrecurring expenses and revenues and other nonrecurring items that could compromise the comparability and analysis of results. Adjusted Net Income: Measure of profitability calculated as Net Income from continuing operations excluding Other Operating Income and Expenses and excluding the effects of Income and Social Contribution Taxes. Also excluded are the effects of nonrecurring direct income tax. Management uses this metric in its analyses given its belief that it eliminates any nonrecurring expenses and revenues and other nonrecurring items that could compromise the comparability and analysis of results. 37

38 Investor Relations Team Tel.: +55 (11) Fax: +55 (11) About GPA: GPA is Brazil s largest retailer, with a distribution network comprising over 2,000 points of sale as well as electronic channels. Established in 1948 in São Paulo, it has its head office in the city and operations in 19 Brazilian states and the Federal District. With a strategy of focusing its decisions on customers and better serving them based on their consumer profile in the wide variety of shopping experiences it offers, GPA adopts a multi-business and multi-channel platform with brick-and-mortar stores and e-commerce operations divided into three business units: Multivarejo, which operates the supermarket, hypermarket and Minimercado store formats, as well as fuel stations and drugstores under the Pão de Açúcar and Extra banners; Assaí, which operates in the cash-and-carry wholesale segment; GPA Malls, which is responsible for managing the Group's real estate assets, expansion projects and new store openings; and Via Varejo s discontinued operations, with its bricks and mortar electronics and home appliances stores under the Casas Bahia and Pontofrio banners, and the e-commerce segment. Forward-looking statements: The forward-looking statements in this presentation are based on current assumptions and projections of the Company's management, which could differ materially from actual results, performance and future events. These projections include future results that could be influenced by historical results and investments. Actual results, performance and events may differ significantly from those expressed or implied by these forward-looking statements due to a variety of factors, such as general economic conditions in Brazil and other countries, interest and exchange rate variations, future renegotiations or prepayments of liabilities or loans denominated in foreign currency, legal and regulatory changes and general competitive factors at the regional, national or global levels. 38