CORPORATE PRESENTATION

Transcription

1 CORPORATE PRESENTATION 2018

2 InRetail Overview Peruvian multi-format retailer, also present in Ecuador, Colombia and Bolivia through the pharma business Leading positions in Peru in its 3 segments #1 supermarket chain #1 pharmacy chain and distributor in Peru, with strong 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 100.0% 77.6% 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 Q1 18 Financial and Operational Snapshot Million Soles (S/ mm) Food Retail Pharma 1/ Shopping Malls Q1 18 figures (S/ mm; %) + + = Revenues % Revenues Contribution 1,234 45% 1,379 50% 121 4% 2,711 Adj. EBITDA 2/ % EBITDA Contribution 76 33% 78 34% 76 33% 226 Adj. EBITDA Margin 6.2% 5.7% 81.4% 8.3% Market Position 1 st 1 st 1 st 1 st # of Stores 286 2, Total Sales Area / GLA (sqm) 329 K K - # of Employees 14,070 23, ,056 Countries 1/ Includes two months of Quicorp s operation and one-time expenses related to the acquisition. 2/ Shopping Malls EBITDA was 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 Real GDP Growth Population by Socio-Economic Category ( CAGR) 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 GDP per capita B $ 25,433 8% 15% +14% (2017, US$ 000) C $ 14,987 18% 26% Average: US$10.3 D $ 7,578 29% 24% E $ 4,951 45% 36% -14% Source: APOYO Consultoría 2017 Chile Argentina Brazil Mexico Peru Colombia Source: IMF World Economic Outlook Estimates 7

8 Significant upside potential for modern retail Supermarkets Pharmacies Shopping Malls Penetration as a % of Total Sales Sales of Retail Pharma per capita US$ Malls per million people Mean ex-peru: 58.8% ~2.4x Sales area per capita: Peru 0.23 sqm vs Mexico 0.40 sqm 52% 56% 59% 68% Mean ex-peru: ~2.6x 208 Mean ex-peru: 3.9 ~1.7x % Peru Brazil Ecuador Chile Mexico Peru Colombia Mexico Brazil Chile Peru Brazil Colombia Ecuador Chile Source: Euromonitor, 2016 Source: Business Monitor, 2015 Source: Accep

9 Peru: Rising Retailing Market in Peaking Stage 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 106 Spmkts 180 Mass 2,186 Stores 21 Malls (7) (1) (5) (2) (3) (1) (1) (15) (100) (11) (96) (73) (42) (137) (61) Piura (2) Chiclayo Trujillo Chimbote Cajamarca Huánuco Ucayali (73) (180) (3) (2) (2) (2) (1) (2) (1) (68) (36) (29) (13) (979) (4) (94) (82) (24) (65) (11) (136) (14) (8) (33) Lima (9) Huancayo Cusco Juliaca Arequipa Only modern shopping mall (32) First mover in 17 out of the 23 cities outside of Lima Total sales area (sqm): 329,169 62% of stores are owned 1/ 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/ Owned by Supermercados Peruanos or through a related party 11

12 Openings and SSS by Segment Openings Same Store Sales (SSS) Food Retail Sales Area ( 000 sqm) Food Retail 2017: 5.9% Mass Spmkts % 5.7% 3.9% 6.0% 4.7% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 N o Spmkts 106 N o Mass Pharmacies N o Stores Pharmacies 2017: -3.6% 2, % Mifarma Inkafarma 1,125 1,149 1,155 1,153 Q1 17 Q2 17 Q3 17 Q4 17 1,051 1,135 Q % Q % Q % Q % Q4 17 Q1 18 Shopping Malls GLA ( 000 sqm) Shopping Malls 2017: 2.6% % 3.1% 4.6% 1.3% 1.8% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 N o malls Note/ Shopping Malls SSS includes anchor stores 12

13 Food Retail Segment Formats Differentiated price positioning through Every Day Low Price strategy Brand Sales area range (sqm) # of Stores Total / Provinces Revenues LTM Q1 18 S/4,735 MM Fastest growing chain with largest presence across Peru Secured access to landbank and Real Estate team to sustain growth 2,000 5, / 28 Compact Hypermarkets 78% Launched e-commerce platforms for Plaza Vea and Vivanda brands Ranked 1 st in Great Place to Work and 12 th among the most valuable brands in Peru (Brandz) 500 2, / 6 Supermarkets 12% 900 1,200 8 / 0 High-end 6% / 0 Hard Discount 4% 13

14 Discount Model Low CAPEX, low cost, every day low price format to capture untapped demand and penetrate traditional trade 180 stores between 100 and 300 sqm in Lima Testing value proposition (assortment, price, store size, etc.) Ensuring cost structure through store productivity and efficient supply chain 14

15 Pharma Segment: Retail Every-Day-Low-Price strategy Every-day-low-price strategy focused on offering the best value proposition and being the #1 top of mind pharmacy chain in Peru Strategy targets a wider audience Discounts and promotions Targeted discounts to loyal customers. For example, 10% discounts 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 Drugstore 21% Counter (1) 79% 1/ Assisted sales model 15

16 Pharma Segment: MDM 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 28% Other channels 72% of MDM sales are to alternative sales channels (1) 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 +2,200 pharmacies 4 Best-in-class distribution to other channels 1/ Includes government, independent pharmacies, private hospitals, wholesalers and others. 16

17 Shopping Malls Segment Shopping Malls Sales Sales (S/ millions) ,206 Nationwide premium portfolio of 21 locations, with 671k sqm of GLA 5,458 4,135 Preferred partner for local and international tenants: High tenant renewal rates and low concentration of renewal per year High occupancy levels despite recent important additions in GLA Secured access to landbank to sustain growth 2,580 2,173 2,167 Source: ACCEP 2017 Falabella includes Open Plaza and 60% of Mall Aventura Plaza Parque Arauco includes its malls and 50% of Mega Plaza 1/ 6 additional malls, 40% of Aventura Mall and 50% of Mega Plaza Occupancy Rates Otros 1/ Ranked 4 th in Great Place to Work for companies from 251 to 1,000 employees and 4 th among most valuable brands in Peru (Brandz) 92% 93% 94% 97% 97% 97% 95% Q

18 3 STRONG FINANCIAL RESULTS

19 Q1 18 CONSOLIDATED FINANCIAL RESULTS Million Soles (S/ mm) Highlights Revenues Double-digit growth in Revenues and Adjusted EBITDA mainly due to the acquisition of Quicorp at the end of January 7, % 7,810 8,607 Gross and EBITDA margins mainly impacted by the acquisition of Quicorp due to the incorporation of the MDM unit, that operates with lower margins 1, % 2,711 Net Income decreased, mainly due to one-time expenses related to the acquisition and to the prepayment of the InRetail Consumer bonds issued in 2014 Gross Margin Q1 17 Q LTM Q % 28.8% 31.0% 30.7% 30.3% Adj. EBITDA Net Income % % % Q1 17 Q LTM Q Q1 17 Q LTM Q1 18 Margin 9.8% 8.3% 10.9% 10.6% 10.0% Margin 3.8% -0.8% 3.7% 3.7% 2.2% Note: Q1 18 consolidated figures include two months of Quicorp s operation and one-time expenses related to the acquisition. 19

20 Revenues FINANCIAL RESULTS BY FORMAT Million Soles (S/ mm) +9.7% +3.9% 4,241 4,652 4, % +4.2% 2,624 2,734 3, % 1, % 1,151 1, Adj. EBITDA 1/ Gross Margin: Q1 17 Q LTM Q1 18 Q1 17 Q LTM Q1 18 Q1 17 Q LTM Q % 25.3% 26.7% 26.4% 26.3% 32.1% 29.3% 32.7% 33.0% 31.7% 65.5% 67.6% 68.8% 67.0% 67.5% +11.8% +3.8% -4.5% % % % Q1 17 Q LTM Q1 18 Q1 17 Q LTM Q1 18 Q1 17 Q LTM Q1 18 Margin: 6.1% 6.2% 6.5% 6.7% 6.7% 7.8% 5.7% 9.2% 8.4% 7.4% 79.3% 81.4% 82.1% 81.7% 85.6% 1/ InRetail Shopping Malls calculated as Net Rental Margin 20

21 CONSOLIDATED NET INCOME Million Soles (S/ mm) Net Income Net Income Breakdown +6.7% Q1 17 Q LTM Q1 18 Net Margin 3.8% -0.8% 3.7% 3.7% 2.2% Net Income Q1 17 EBITDA Growth Higher Net Financial Expenses 0 Flat Mark to Market -18 Lower FX Gain -10 Higher D&A Flat Tax -21 Net Income Q1 18 Net Income excluding FX and mark-to-market +3.0% Q1 17 Q LTM Q1 18 S/ 102 mm in higher financial expenses, explained by: S/ 52 mm in premiums related to the repurchase of the 2014 InRetail Consumer Bonds S/ 18 mm in interest expense from the bridge loan for the Quicorp acquisition S/ 12 mm in write-off of structuring costs related to 2014 InRetail Consumer Bonds S/ 20 mm in unwinding of 2015 Call Spreads and other financial expenses Net Margin 3.1% -0.9% 3.5% 3.3% 2.1% 21

22 CONSOLIDATED CAPEX AND FREE CASH FLOW Million Soles (S/ mm) Consolidated Capex Cash-Flow Breakdown 2017: S/ 541 mm 1, / ,874 2, Q1 17 Q2 17 Q3 17 Q4 17 Q1 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 Q1 18 Free Cash Flow LTM Q1 18: - S/ 274 mm 1/ Q1 18 CAPEX includes ~S/180 mm for the acquisition of Real Plaza Pucallpa and Estación Central, disclosed in previous earnings report. 22

23 CONSOLIDATED FINANCIAL DEBT Million Soles (S/ mm) Proforma Leverage (Net Debt / LTM Mar 18 EBITDA) 1 USD Exposure Net Debt / EBITDA: 4.3x Debt: ~ S/ 5.1 b Cash: ~ S/ 0.5 b Net Debt: ~ S/ 4.6 b 39% 42% 40% 45% Net Debt / EBITDA: 5.4x Net Debt / EBITDA: 0x 23% 23% 22% 6% 51% 38% 35% 38% Net Debt / EBITDA: 2.9x Net Debt / EBITDA: 4.5x Dec-15 Dec-16 Dec-17 Proforma Mar-18 Hedge USD PEN 1/ Proforma leverage calculated considering: (i) Net Debt to reflect the full prepayment of the bridge loan, new bond issuances and call spreads, and (ii) Normalized EBITDA for LTM Mar 18 which includes LTM EBITDA for Quicorp and excludes S/ 18 million of one-time expenses related to the acquisition of Quicorp. 23

24 4 CAPEX

25 CAPEX Key Investments Projected CAPEX of S/2 B for Opening of +7,600 sqm of sales area Supermarkets Start operations of our new distribution center in 1H18 Finish construction and start operations of our new production facility and fresh food warehouse Continue expanding Mass Pharmacies Closure of 160 stores as part of a store optimization initiative post acquisition of Quicorp By Type of Investment Shopping Malls Start construction of Puruchuco mall (+120k sqm of GLA) ~+8k sqm of GLA from mall expansions Acquisition of Real Plaza Pucallpa and Estación Central (+37,483 sqm of GLA) 26

26 5 APPENDIX

27 Composition of Stores by Age Food Retail 9% 12% 6% 5% 10% 9% 11% 14% 8% 9% 6% 4% 10% 10% 10% 10% 9% 12% 14% 8% 9% 7% 4% 6% 5% 14% 11% 10% 7% 4% 6% 5% 5% 5% 3% 2% 4% 4% 2% 2% 5% 5% 7% 6% 4% 8% 10% 9% 10% 73% 72% 72% 70% 72% 72% 72% 75% 78% 77% 78% 83% 84% 85% 88% 90% 91% 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 Mature 2-3 years 1-2 years 0-1 years Pharmacies 18% 17% 16% 15% 14% 14% 12% 11% 11% 10% 12% 18% 15% 15% 14% 14% 13% 12% 11% 24% 23% 23% 16% 14% 13% 12% 20% 6% 8% 10% 17% 20% 20% 18% 19% 19% 16% 9% 9% 8% 10% 11% 10% 10% 9% 7% 6% 16% 13% 8% 11% 53% 52% 52% 49% 50% 52% 55% 60% 63% 65% 66% 62% 62% 63% 65% 69% 70% 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 Mature 2-3 years 1-2 years 0-1 years 28

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' Days Acc Payables Inventory Turnover Days Acc Receivables Cycle Pharmacies 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' Days Acc Payables Inventory Turnover Days Acc Receivables Cycle 29

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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