CENCOSUD DAY BUENOS AIRES 2016 CONSOLIDATING OUR STRATEGY
AGENDA 1. CENCOSUD INDICATORS 2. STRATEGIC THRUSTS AND PROGRESS OF THE LAST 12 MONTHS 3. VISION FOR THE FUTURE 4. OPPORTUNITIES PER COUNTRY
1. CENCOSUD MAIN INDICATORS
STRONG REGIONAL PRESENCE AND HIGH ACKNOWLEDGMENT BY CLIENTS 3 SUPERMARKETS 2 HOME IMPROVEMENT 4 SUPERMARKETS NORDESTE (#2) MINAS GERAIS (#1) RIO DE JANEIRO (#3) 137,400 Collaborators 16B P&l 1st SUPERMARKETS 4th DEPARTMENT STORES 220 MM Clients 60 MM Monthly Tickets 2 SUPERMARKETS 2 HOME IMPROVEMENT 2 MALLS 2 DEPARTMENT STORES 2 SUPERMARKETS 1 HOME IMPROVEMENT 2 MALLS 1,113 Retail stores & 53 Malls Cencosud jun-2016 15 Brands
GROWTH PER DIVISION LAST 5 YEARS jun 2010 jun 2016 / Thousand M2 GLA +70% +19% +77% 1.405 2.386 Supermarkets 672 799 Home Improvement 234 416 Department Stores 2010 2016 2010 2016 2010 2016 1.136 +77% 2.007 3.656 +61% 5.881 Malls 2010 2016 2010 2016
INCOME EVOLUTION (US$ MM) and Mg. EBITDA Aj (%) Income 20 15 10 5 0 8,5% 9,4 8,3% 11,4 Income 13,8 7,1% Margin EBITDA Aj 15,3 16,2 16,6 7,2% 6,9% 6,2% Mg. EBITDA Aj 9,0% 8,5% 16,2 8,0% 7,5% 7,6% 7,0% 6,5% 0,0% 2010 2011 2012 2013 2014 2015 2016 LTM EBITDA Aj/m 2 (US$) 279 303 268 260 254 234 Note: Data in Chilean pesos (CLP) for each year converted to the dollar as of June 2016 ($661.4) EBITDA 2016 LTM jun would be 7.1% if eliminating the effect of Marina Arauco divestiture 281
MAIN INDICATORS 13,8 Income (US$Bn) 15,3 16,2 16,8 16,2 Margin (% Income) 28,4% 28,7% 27,9% 28,9% 29,2% 2012 2013 2014 2015 2016 LTM Jun 2012 2013 2014 2015 2016 LTM Jun Expense (% Income) EBITDA Aj.(% Income) 23,0% 23,9% 23,5% 24,3% 24,3% 7,1% 7,2% 6,9% 6,2% 7,6% 2012 2013 2014 2015 2016 2012 2013 2014 LTM Jun 2015 2016 LTM Jun Note: Data in Chilean pesos (CLP) of each year converted to the dollar as of June 2016 ($661.4)
MAIN INDICATORS EBITDA (US$MM) 979 1.101 1.115 1.035 1.231 Debt/ EBITDA Aj 2012 2013 2014 2015 2016 LTM Jun 4,6 3,4 3,7 3,3 3,2 Market Cap (US$Bn) 10,7 8,4 6,7 7,4 8,2 2012 2013 2014 2015 2016 LTM Jun 2012 2013 2014 2015 2016 LTM Jun Note: Data in Chilean pesos (CLP) of each year converted to the dollar as of June 2016 ($661.4)
2. STRATEGIC THRUSTS AND PROGRESS DURING THE LAST 12 MONTHS
IN 2015 WE DEFINED OUR ROADMAP 3 STRATEGIC CORES CLIENTS TRENDS - PROFITABILITY
CLIENTS
INTERNAL CLIENT HAPPINESS AT WORK AND PRODUCTIVITY CENCOSUD DNA WE DEFINE 6 KEY COMPETENCES THAT BUILD A CULTURE 1. CLIENT IS THE FIRST IN MIND 2. INDIVIDUAL TALENT AT THE TEAM SERVICE 3. PERMANENT EVOLUTION AND CHALLENGES 4. STRONG CULTURE FOCUSED ON INDIVIDUALS 5. OWNER S MENTALITY 6. SEEKING ACCOUNTABILITY
INTERNAL CLIENT HAPPINESS AT WORK AND PRODUCTIVITY LEADERSHIP & TRAINING. 5,000+ LEADER S ESSENCE. 140,000+ E-LEARNING, SCHOOL SHOPS IN MOST OF FORMATS, FOCUS ON CLIENT EXPERIENCE WOMAN & TRENDS. MQDH CAMPAIGN (1,000 NOMINEES), STUDY ON MAN-WOMAN SALARY GAPS. HEALTHY FEEDING. INCLUSION POLICIES. HAPPINESS & CONFIDENCE. +19 POINTS IN 4 YEARS, 6 FLAGS IN GPTW RANKING.
CONSUMER FROM TRANSACTION TO EMOTION 1. PROMISES GENERATION 2. FOCUS ON EXPERIENCE AS THE CORE IDEA 3. AUTHORITY IN SIGNIFICANT CATEGORIES / AVAILABILITY 4. SPEEDY CHECK OUT 5. SPEEDY AND IMPECABLE POST SALES 6. CRM: LOYALTY PROGRAM AND KNOWLEDGE
TRENDS
SUSTAINABILITY A NEW MANNER OF BUILDING ENTREPRENEURSHIP 1. DEFINITION OF A SUSTAINABLE ENTREPRENEURSHIP POLICY AND STRATEGY FOR ALL BUSINESSES IN CHILE, PERU AND COLOMBIA 2. SUSTAINABILITY REPORTS AND CARBON FOOTPRINT MEASUREMENT 3. DIVERSITY AND INCLUSION NEW POLICY 4. CENCOSUD ENTERS DJSI 5. 3 BRANDS IN PROHUMANA CHILE 2016 RANKING
HEALTHY LIFE PIONEERS AND LEADERS OF HEALTHY FOOD IN THE REGION 1. WE INTEND TO TRAIN THE CONSUMER IN THE CORRECT USE OF FOOD 2. DEVELOPMENT OF FOOD TRENDS AND SPECIFIC NEEDS 3. EAT HEALTHY AND EAT FREE CAMPAIGNS BY JUMBO, LIVE HEALTHY AT WONG, HEALTHY WORLD BY JUMBO COLOMBIA 4. TEAM CHILE SPONSORSHIP 5. ORGANIC AND FUNCTIONAL FOODS
PURCHASE ONLINE AND WE DELIVER IT TO YOUR HOME PURCHASE AT THE STORE AND WE DELIVER IT TO YOUR HOME PURCHASE ONLINE AND WITHDRAW IT IN YOUR CAR PURCHASE BY TELEPHONE AND WE DELIVER IT TO YOUR HOME PURCHASE ONLINE AND WITHDRAW IT AT YOUR CLOSEST LOCKER PURCHASE ONLINE AND WITHDRAW IT AT YOUR JUMBO OMNICHANNEL & ECOMMERCE MAIN CHANGE TO THE MODEL 1. INVESTMENT PROJECTS / 30% TOTAL IT. 2. ECOMMERCE HIGH GROWTH RATE THROUGHOUT THE REGION 3. FULL PROCESS TO DEVELOP ASSETS, CLICK & COLLECT, DRIVE THROUGH 4. CENCOSUD CAPILLARITY AS DIFFERENTIATION CORE 5. SELECTION AS A KEY FOR BRANDING AND PURCHASE AT THE STORE 6. WE INTEND TO BECOME THE MAIN FOOD OPERATOR IN THE REGION
LOYALTY AND DATAMINING MAXIMIZING THE VALUE OF EACH CLIENT WITHIN THE GROUP OVER 16 MILLION CLIENTS REGISTERED IN 5 LOYALTY PROGRAMS AT EACH COUNTRY WHERE WE OPERATE
MOBILITY TO BE AT THE RIGHT SPOT 1. DEVELOPMENT OF NEW RESPONSIVE SITES 2. MOBILE FIRST DESIGN 3. NEW BUSINESS APPS 4. CENCO WALLET
PROFITABILITY
CORPORATE STRATEGIC PLANNING REVIEWING EACH BUSINESS ROAD AND EACH BUSINESS ROLE IN OUR PORTFOLIO ENSURING ALIGNMENT OF CAPITAL ALLOCATION WITH OUR STRATEGY THE SAME WORKING METHODOLOGY FOR THE ENTIRE ORGANIZATION
EFFICIENCY & PRODUCTIVITY 1. REVIEW OF STRUCTURES AND HEADCOUNT 2. ASSETS AND LANDBANK NONCORE DIVESTITURE 3. MERCHANDISE HEALTH ( AGING ) 4. ENERGY EFFICIENCY 5. NO M&A 6. SG&A GROWING BELOW INCOME 7. PRODUCTIVE PROCESSES CENTRALIZATION 8. TECHNOLOGY AT THE SERVICE OF STORE AND CLIENTS
STORES WITH NEGATIVE EBITDA A MULTIDISCIPLINARY TASK 1. 173 INTERVENED STORES 2. 20 STORES CLOSED 3. 1,000 PLANS CARRIED OUT 4. ADAPTATION OF SELECTION & LAYOUT
OWN BRANDS DIFFERENTIATION & PROFITABILITY 1. 50 BRANDS AT SUPERMARKETS, DEPARTMENT STORES AND HOME IMPROVEMENT 2. 5 MARGIN POINTS IN EXCESS OF THE CORRESPONDING CATEGORY 3. HIGH DEVELOPMENT AND GROWTH POTENTIAL
REGIONAL COMMERCIAL SYNERGIES CENCOSUD JOINT NEGOTIATION/PURCHASE TOP 50 SUPPLIERS COMMODITIES FOOD RETAIL DIVISIONS JOINT PURCHASE LINE REVIEWS IMPORTED FOOD POTENCIAL SYNERGIES
THE ACTIONS DESCRIBED HAVE HAD A SUCCESSFUL OUTCOME, WHICH IS REFLECTED IN RESULTS AND SHARE PRICE +57 bps +288 bps +49% 28,6% 29,1% 7,9% 392.224 Mg Bruto (%Vta) EBITDA Aj. (%Vta) 5,0% EBITDA Aj. ($MM) 262.518 2.000 1.500 2Q Acum 2015 2Q Acum 2016 +55,9% 2Q Acum 2015 2Q Acum 2016 2Q Acum 2015 2Q Acum 2016 Last year s evolution of Cencosud Share Price 1.000 Ago 15 Sep 16 Dic 15
3- VISION FOR THE FUTURE
COMPANY FIT AUSTERITY AND GREATER ACCOUNTABILITY CULTURE 1. EXPENSES GROW LESS THAN SALES 2. STOCKS GROW LESS THAN SALES 3. DECREASED AGING 4. FOLLOW UP AND STRICTNESS TO WATCH WORKING CAPITAL
STRONG CULTURE FOCUSED ON INDIVIDUALS 1. LEADERSHIP AS A PERFORMANCE AND BUSINESS SUSTAINABILITY DRIVER 2. TALENT REVIEW TOP EXECUTIVES 500 3. MANAGEMENT 6 KEY COMPETENCES 4. RELEVANCE OF WOMEN, HEALTH & WELLBEING AND LABOR INCLUSION 5. TRAINING AND PRODUCTIVITY 6. LABOR ENVIRONMENT
TRENDS / CONSUMER (LEADING NEW TRENDS IN THE REGION) INTERNET AND OMNICHANNELING SUSTAINABLE COMPANY HEALTHY FOOD TAKE AWAY MEALS WOMEN AND BEAUTY WORLD EASY AND FAST PAYMENT FRESH
GROWTH ACCELERATING ORGANIC MULTIFORMAT GROWTH BECOMING LEADERS IN EVERY AREA POSITIVE SSS IN ALL FORMATS QUALITY AND SERVICE FORMATS AS CORNERSTONES LANDBANK DEVELOPMENT E-COMMERCE HIGH EXPECTATIONS ACCELERATING REMODELLING PROCESS SELECTIVE DEVELOPMENT OF NEW STORES
FINANCIAL DISCIPLINE I Decreasing Debt/ EBITDA 4,6 3,4 3,7 3,3 3,2 2012 2013 2014 2015 2016 II Non-core assets divestiture Divestiture of improductive, non strategic land Divestiture of Marina Arauco Mall Viña del Mar Divestiture of Pharmacies in Colombia and Perú Gas stations in Colombia III Stable Outlook Fitch Ratings BBB - Moody s Baa3
4- OPPORTUNITIES PER COUNTRY
ARGENTINA WE EXPECT A CHANGE IN THE ECONOMY TREND FOR 2017: A GOOD PROJECT PIPELINE, ON ITS OWN LAND CLOSENESS FORMAT AT JUMBO THE MARKET IS INCREASING ITS FORMALITY LEVEL THE MARKET IS OPENING TO IMPORT WE ARE LEADERS IN E-COMMERCE CONSOLIDATED TEAM / STRONG LOCAL PLAYER
BRAZIL END OF RECESSION, GROWTH AS FROM 2018 RENOWNED BRANDS, WITH A HISTORY AND PRESTIGE IN THEIR MARKETS WE HAVE A SUCCESSFUL ATACAREJO FORMAT, WITH A POSITIVE GROWTH WE HAVE BUILT A LOCAL TEAM OF EXCELLENT LEVEL, ACKNOWLEDGED BY THE MARKET TRANSFORMATION INITIATIVES IN SUPPLY CHAIN, PRICING, SELECTION AND EFFICIENCY COMMERCIAL SYNERGIES, IMPROVING MARGIN AND COMPETITIVENESS
CHILE A COUNTRY WITH A SOLID ECONOMY, GROWING BELOW ITS POTENTIAL KEY OPENINGS FOR OUR MAIN BRANDS LANDBANK OF 2.7 MM SQM FULL MULTIFORMAT, 6 RETAIL FLAGS + SHOPPING + FINANCIAL RETAIL STRONG GROWTH OF THE FINANCIAL BUSINESS TOGETHER WITH SCOTIABANK LEADERS IN E-COMMERCE FOOD, STRONG GROWTH IN NON-FOOD COSTANERA PROJECT EXPANSION
COLOMBIA WE GROW MORE THAN OUR MAIN COMPETITORS OMNICHANNEL, E-COMMERCE AND TELEPHONE SALES DEVELOPMENT OPTIMISM BY INVESTORS ON THE PEACE PROCESS CONSOLIDATED TEAM WITH EXPERIENCE IN THE LOCAL MARKET PROFITABILITY OPPORTUNITY FOR OUR CURRENT ASSETS OUR BRANDS ARE CONSOLIDATING GREAT DEVELOPMENT POTENTIAL TOGETHER WITH LANDBAK AND UNRIVALLED LOCATIONS 2-DIGIT GROWTH AT EASY FOR THE LAST 2 QUARTERS
PERÚ POLITICAL CHANGE, CONFIDENCE IN THE COUNTRY S ECONOMY HIGHER GROWTH AND LOWER INFLATION EXPECTATIONS YOUNG COUNTRY: 2/3 OF THE POPULATION WITH FULL PRODUCTION, SAVINGS AND INVESTMENT CAPACITY LOW PENETRATION OF THE MODERN CHANNEL POTENTIAL FOR A 3 TIMES GROWTH OF PARIS SHARE EXCELLENT LAND PORTFOLIO WONG WITH AN UNBEATABLE POSITIONING IN THE HIGH SEGMENT THE BEST LOYALTY PROGRAM - BONUS STRONG DEVELOPMENT OF OWN BRAND
CONFIDENCE
FINALLY We are in a better position than 15 months ago We have started actions that are yielding profits We are going to address the future with an ambitious but responsible growth And always faithful to the DNA that has characterized Cencosud: our clients are our main concern for any decision 41
THANK YOU VERY MUCH