2Q10 Results July 28, 2010
Disclaimer The numbers related to Grupo Pão de Açúcar s operating and financial performance commented on below are presented: (i) on a consolidated basis, which includes the full operating and financial results of Sendas Distribuidora (a joint venture with the Sendas chain in Rio de Janeiro), Assaí (Rede Atacadista Assaí) and, as of the third quarter of 2009, Globex Utilidades S.A. (Ponto Frio); and (ii) on a comparable basis, which entirely excludes the operating and financial results of Globex Utilidades S.A. 2
2Q10 Highlights Sales growth (net sales) (1) 12.7%, totaling R$ 5.642 million, on comparable basis (excluding Globex) 39.4% on consolidated basis (including Globex) 9.9 %, in same-store terms, real growth of 4.6% EBITDA R$ 360 million on comparable basis (excluding Globex) R$ 395 million on consolidated basis (including Globex) Net Income of R$ 82.5 million on comparable basis, due to the non-recurring impact of adherence to the tax installment payment program, totaling R$ 44.5 million (R$70.1 million gross). Investments focused on the opening of 13 new stores and conversion of 2 stores into the Extra Supermercado format, amounting to R$182.4 million. On July 1, 2010, GPA and Globex executed an addendum to the Joint Venture Agreement with Casas Bahia. Redefinition of the Organizational Structure with the Implementation of an Integrated Management Model at Grupo Pão de Açúcar. (1) In comparison with 2Q09. 3
Integrated Management Model 2008 Back to Basics 2010 Integrated Management Model Concept Integrated Business Management Fundamentals: Simplicity, Agility, Empowerment and Accountability Goals Transformation from a food retailer into a Distribution Company GPA s more strategic Agenda Regional approach to all businesses controlled by GPA Capture of synergies Focus on each business Clear understanding of personal traits and profiles (right people in the right place) 4
Integrated Management Model HEAD OFFICES Retail Wholesale Specialized Businesses Eletro.Com Indicators Market Strategy Expansion Sales Strategy Sales Margin Corporate Relations Image Supply Chain Corporate Services, Finance / IT Human Resources Logistics Result Financial Costs Retention and Succession 5 Retail Results Wholesale Results Specialized Businesses Results Eletro Results.Com Results
Integrated Management Model ORGANIZATIONAL CHART Boards CEO Enéas Pestana CEO Eletro Raphael Klein CEO.Com German Quiroga FIC Luis Staub Market Strategy Commercial Strategy Corporate Relations Corp. Serv. Finance and IT People & Management Supply Chain Retail Business Specialized Businesses Wholesale Director Claudia Elisa Ramatis Rodrigues Hugo Bethlem José Filippo Sylvia Leão Marcelo Lopes José Tambasco Caio Mattar Mauricio Cerrutti Food Com. and Loss Prevention Paulo Gualtieri 6
Sales Performance Gross Sales (R$ million) (excluding Globex) 11.5% 10,932.7 15.5% 12,630.2 Net Sales (R$ million) (excluding Globex) 12.7% 9,648.3 17.7% 11,357.9 5,641.3 6,287.3 5,006.9 5,641.9 [Comparable-basis comments - excluding Globex] In the quarter - same-store terms: Gross and net sales: 9.9% (real growth* of 4.6%) and 11.3% increases, respectively; and Food and non-food sales: 7.9% and 16.2% increases, respectively. In 1H10 - same-store terms: In 1H10: Gross and net sales: 12.4% (real growth* of 7.0%) and 14.6% increases, respectively. [Consolidated comments - including Globex] In the quarter: Gross and net sales: 38.5% and 39.4% increases, respectively; and In 1H10: Gross and net sales: 42.7% and 44.6%, respectively. 7 * Deflated by the IPCA General Consumer Price Index
Gross Profit and Gross Margin [Comparable-basis comments - excluding Globex] Gross Margin impacts in 2Q10: Gross Profit (R$ million) (excluding Globex) (-) increased share of Assaí s sales (-40 bps); (-) the expansion of the ICMS tax substitution regime (-20 bps.); and Partially offset by: (+) more advantageous negotiations with suppliers and a more profitable product mix (+10 bps). 14.8% 10.3% 2,443.7 2,804.7 Gross Income in 1H10: R$ 2,804.7 million and gross margin of 24.7%. 1,267.5 1,398.2 25.3% 24.7% [Consolidated comments - including Globex] 25.3% 24.8% % of Net Sales Gross Income: R$ 1,635.3 million and gross margin of 23.4% in 2Q10. R$ 3,307.1 million and gross margin of 23.7% in 1H10. 8 *bps: basis points
[Comparable-basis comments - excluding Globex] Total Operating Expenses R$ 1,038.4 million in 2Q10, 18.4% of net sales, increased by 12.6% year-on-year, chiefly due to: (i) the opening of 62 stores in the last 12 months; and (ii) higher expenses with advertising, marketing and IT. Total Operating Expenses % of Net Sales (excluding Globex) Total Operating Expenses -30 bps 18.4% 18.4% 18.5% 18.2% 2.8% 2.7% 2.8% 2.9% [Consolidated comments - including Globex] 15.6% 15.7% 15.7% 15.3% 0,0% Total Operating Expenses R$ 1,240.4 million in 2Q10, 17.8% of net sales, less than the 18.4% recorded in 2Q09. Selling Expenses Gen. and Adm. Expenses 9 *bps: basis points
[Comparable-basis comments - excluding Globex] EBITDA R$ 359.7 million in 2Q10, 4.2% up year-on-year, while the EBITDA margin stood at 6.4%, down by 50 bps in comparison with 2Q09. R$ 737.0 million in 1H10, 12.1% more than the same period last year, while the EBITDA margin stood at 6.5% in 1H10, down by 30 bps in comparison with 1H09. EBITDA (R$ million) (excluding Globex) EBITDA and EBITDA Margin 12.1% [Comentários consolidados com Globex] 801 601 4.2% 657.4 737.0 EBITDA 401 345.1 359.7 R$ 394.9 million in 2Q10, 14.4% up on 2Q09, with a margin of 5.7%. Globex s margin stood at 2.6%, identical to the 1Q10 figure. R$ 805.3 million in 1H10 and margin of 5.8%. 201 1 6.9% 6.4% 6.8% 6.5% % of Net Sales 10 *bps: basis points
[Comparable-basis comments - excluding Globex] Net Financial Result grew by 50.2%, totaling an expense of R$91.8 million in 2Q10, due to: (i) the period increase in the average gross debt investments to support growth; and advertising expenses. (ii) the mark-to-market of financial instruments; and (iii) the monetary restatement of tax installment payments. Net Debt/EBITDA ratio of 0.97x. Financial Result (R$ million) (excluding Globex) 250 200 150 Financial Result 27.9% (169.2) 50.2% (132.3) [Consolidated comments - including Globex] 100 (61.1) (91.8) 50 Net Financial Result was an expense of R$169.0 million in 2Q10. Net Debt/EBITDA ratio stood at 1.1x. 0 11
FIC: Financeira Itaú CBD Equity Income (R$ million) Highlights (FIC + BINV): Accounted for 15% of the Group s total sales; 7.4 million clients; and Receivables portfolio of R$ 3.1 billion. In the quarter: 332.3% 232.4% 24.2 FIC s equity income was R$14.6 million, of which: R$ 10.7 million went to GPA; and R$ 3.9 million went to Globex. 1 14.6 7.3 3.4 This performance is a result of the rigorous creditgranting policy and the acceptance of the Ponto Frio Flex Card in GPA stores. In 1H10: FIC s equity income was R$24.2 million, of which: R$ 16.9 million went to GPA; and R$ 7.3 million went to Globex. 12
Net Income and Net Margin Net Income in 2Q10 R$ 82.5 million and net margin of 1.5% on comparable basis (excluding Globex). R$ 62.3 million and net margin of 0.9% on consolidated basis (including Globex). Adjusted Net Income in 2Q10 (excluding the non-recurring impact of adherence to the tax installment payment program) 250 200 150 100 50 0 Net Income (R$ million) (excluding Globex) 131.7 2.6% -37.4% 82.5 1.5% 226.6 2.4% -6.3% 212.4 1.9% % of Net Sales R$ 127.0 million and net margin of 2.3% on comparable basis (excluding Globex). R$ 103.1 million and net margin of 1.5% % on consolidated basis (including Globex). 250 200 Adjusted Net Income (R$ million) (excluding Globex) 226.6-3.6% 13.4% 256.9 150 131.7 127.0 100 50 2.6% 2.3% 2.4% 2.3% 0 % of Net Sales 13
Assaí Atacadista (consolidated) Gross Sales (R$ mm) 47.1% Gross Margin (%) Total Operating Expenses (% of Net Sales) EBITDA Margin(%) 504.8 742.5 15.5% 15.5% -50 bps 12.6% 12.1% +50 bps 2.9% 3.4% 2Q09 2Q10 2Q09 2Q10 2Q09 2Q10 2Q09 2Q10 In the quarter: Gross and net sales: R$ 742.5 million (+47.1%) and R$ 668.0 million (+46.7%), respectively; Gross profit: R$ 103.3 million with gross margin of 15.5%; Total operating expenses: R$ 80.5 million, 40.3% up on 2Q09; and EBITDA amounted to R$22.8 million, thanks to substantial sales growth, more advantageous negotiations with suppliers and the rationalization of expenses. 14 *bps: basis points
Ponto Frio Results (1) Excluding non recurring effects. Gross Sales Margin (R$(%) mm) Gross Margin (%) Total Operating 55.8% +90 bps 1,528.2 Expenses (% of Net Sales) -1280 bps EBITDA Margin(%) +1360 bps 980.7 16.9% 17.8% 27.9% (1) 2T09 2T10 15.1% 2.6% 2Q09 2Q10 2Q09 2Q10 2T09 2T10-11.0%( (1) 1) (1) Excluding non recurring effects. In the quarter: Gross sales R$ 1,528.2 million (+55.8%) and net sales R$ 1,336.0 million (+71.6%); Gross profit: R$ 237.2 million, 80.5% up on the same period last year; Total operating expenses: 15.1% of net sales in 2Q10, 1280 bps down on the same period last year; EBITDA: positive R$ 35,2 million and margin of 2.6%. 15 *bps: basis points
Ponto Frio EBITDA Margin (%) 10,0% 8,0% 6,0% 4,0% 2,0% 0 0,0% -2,0% -4,0% -6,0% -8,0% -10,0% EBITDA Margin Evolution (%)* 0.4% 0 2.6% 1H09 2H09 1H10-7.4%* The recovery of the EBITDA margin is related to: Sales leverage; Increased credit in the stores; Better negotiations with suppliers; A more appropriate product mix; and Greater control over expenses. * excluding the restructuring and convergence of accounting practices effects 16
Ponto Frio Net Income and Net Margin Net Income R$ 36.0 million and net margin of 2.7% in 2Q10. Net Income 200 (R$ million) 150 100 R$ 32.3 million and net margin of 1.2% in 1H10. 50 0 2Q09 36.0 2.7% 1H09 32.3 1.2% Adjusted Net Income Excluding the non-recurring effects of the right to indemnification by CBD of certain recognized contingencies owed by Globex (Joint Venture Agreement with Casas Bahia) -50-100 -150-200 -12.1% (94.0) (1) 2Q10-8.5% (129.5) (1) % of Net Sales 1H10 Net Loss of R$ 23.9 in 2Q10. Net Loss of R$ 27.6 in 1H10. 200 Adjusted Net Income (R$ million) 150 100 50 0-1.8% -1.1% -50-100 -150-12.1% (94.0) (1) (23.9) (1) -8.5% (129.5) (1) (27.6) (1) -200 (1) Excluding non recurring effects. % of Net Sales 17
2Q10 Investments Breakdown R$ 182.4 million in investments: 2Q10 CAPEX R$ 46.7 million in the opening and construction of new stores and the acquisition of strategic sites : CAPEX (R$ million) 389.4 8 new Extra Fácil stores; 2 new Ponto Frio stores; 1 new Pão de Açúcar 1 new Assaí; and 113.8 182.4 214.1 1 new Extra Hipermercado. R$ 84.2 million in store renovations and conversions: 2 CompreBem stores converted into Extra Supermercado. R$ 51.5 million in infrastructure (technology and logistics) and others. Jun/2010 146 153 67 43 15 69 105 47 457 1,102 1,767,133 m 2 18
Dividends Dividend Policy: Quarterly prepayments : R$ 0.08 per class A preferred share R$ 0.07 per common share Total distributed in 2Q10: R$ 19.6 million. Date of payment: August 17, 2010. Shares to be traded ex-dividend as of: August 4, 2010. As for the 4Q10, the Company will pay shareholders the minimum mandatory dividends, calculated in accordance with Corporate Law, less the amounts prepaid throughout 2010. Declared Dividends (R$ million) and Dividend Yield 1 (%) 0.3% 50.1 61.9 1 Source: Economatica 0.7% 0.7% 140.5 0.7% 1.1% 31.0 38.8 2007 2008 2009 1H09 1H10 2,0% 1,5% 1,0% 0,5% 0,0% -0,5% -1,0% -1,5% -2,0% 19
Forward-looking Statements The forward-looking statements contained herein are based on ourmanagement s current assumptions and estimates, which may result in material differences regarding future results, performance and events. Actual results, performance and events may differ substantially from those expressed or implied in these forwardlooking statements due to a variety of factors, such as general economic conditions in Brazil and other countries, interest and exchange rate levels, legal and regulatory changes and general competitive factors (whether global, regional, or national). Grupo Pão de Açúcar (GPA) Investor Relations Team Phone: +55 (11) 3886 0421 Fax: +55 (11) 3884 2677 gpa.ri@grupopaodeacucar.com.br www.grupopaodeacucar.com.br/ir/gpa 20