Almacenes Exito SA · BVC:EXITO
Almacenes Exito SA — Grupo Éxito — Q3 2017 Earnings Presentation
38 slides from Almacenes Exito SA's earnings presentation, Nov 15, 2017
Slide 1: 3Q17 Financial Results
3Q17 Financial Results Nov 15th, 2017 “The Issuers Recognition -IR granted by the Colombian Stock Exchange is not a certification about the quality of the securities listed at the BVC nor the solvency of the issuer”.
Slide 2: Agenda
Agenda 3Q17 Financial and Operating Highlights Performance by Country Consolidated Financial Results International Strategy Follow-up Q&A Session 2
Slide 3: 3Q17 Financial Highlights
3Q17 Financial Highlights Solid performance in Brazil and Uruguay validates Éxito diversification strategy LatAm Net result and EPS improved levels. GPA increasing contribution to results ratifies the strategic decision to diversify within the region. Growth of top line and EBITDA despite a lo
Slide 4: 3Q17 Operational Highlights
3Q17 Operational Highlights Expansion in key retail formats and real estate across the region Consolidated CapEx COP$626,000 M (60% expansion, 40% maintenance). CapEx Colombia: COP$92,000 M (40% real estate expansion, including Viva Malls Envigado and Tunja). Food Retail Expansion 3Q17: 18 Ope
Slide 5: Drivers for Growth by Country
Drivers for Growth by Country Building up profitable differentiation in each market through innovation Colombia Brazil Uruguay Argentina Assaí expansion and Dual model in Cash & Carry Fresh Market and conversions commercial galleries expansion Home concepts “My Discount” Strengthening
Slide 6: Net Sales Performance: Colombia
3Q17 Net Sales Performance: Colombia Adverse effects from negative food inflation deceleration Adjusted by Adjusted by 3Q17 9M 2017 calendar (1) calendar (1) % Var. %Var. % Var. Var. Var. Var. Net Var. In COP M Net Sales % Var. Total Net Sales Net Sales SSS SSS Net Sales SSS Sales SSS Total Colombia
Slide 7: Initiatives in Colombia
Initiatives in Colombia Unbeatable products Private Label Wide portfolio of basic products Improved portfolio with differentiated brands 200 SKUs at the lowest price Food and non-food categories Quality at the best price Unbeatable products at Éxito stores Fresh Market Model Quality, dif
Slide 8: Cash and Carry Expansion
Cash and Carry Expansion Proven model to penetrate the discount market and cover institutional buyers Synergy from Brazil, adapted to Colombia and launched in 2016. 4 stores YTD, 8 stores in 2017E, 8 to 10 openings expected on a yearly basis. Sales area 1,500 sqm on average, 2K to 3K SKU´s.
Slide 9: Omnichannel Strategy
Omnichannel Strategy Clear leadership in non-food and consumer goods Web + 36 million visits/year + 837.000 orders/year Click and Collect Mobile App In 300 stores 55% of the traffic and 22% of éxito.com sales -Focus on food Digital Catalogs Express logistic Market place Customer in the In 136 stores
Slide 10: Traffic monetization through Complementary Businesses
Traffic monetization through Complementary Businesses A model to increase profitability Viva Malls 14 assets. Loyalty Program Total GLA over 434,000 sqm by 2018. Optimization of retail assets. To maximize shareholder value. An alliance with Grupo Bancolombia. Creation of the largest ecos
Slide 11: Net Sales Performance: Brazil
3Q17 Net Sales Performance: Brazil Outstanding sales performance in all banners despite food deflation Assaí (1): Brazil Net Sales +25.2% (1) in 3Q17 and SSS +7.7% (1) driven by 13.33% -1547 bps the strongest traffic and volume growth of recent quarters. 8.48% Converted stores registered 3.0x
Slide 12: Operational Results: Colombia
3Q17 Operational Results: Colombia(1) Quarterly expense improvement YTD from operational efficiencies Colombia 3Q17 3Q16 9M17 9M16 In COP M In COP M 3Q17/16 In COP M In COP M 9M17/16 Net Sales 2,573,838 2,671,908 -3.7% 7,688,960 7,914,555 -2.9% Other Revenues 122,865 99,684 23.3% 347,120 308,547 12.
Slide 13: Operational Results: Brazil
3Q17 Operational Results: Brazil Solid performance driven by operational and financial efficiencies Net Sales growth driven by the outstanding performance of Assaí and Extra Hiper and the recovery of the Pão de Açúcar banner. Gross Profit benefited from accurate commercial strategies, maturity o
Slide 14: Net Sales & Operational Results: Uruguay
3Q17 Net Sales & Operational Results: Uruguay Healthy margins despite lower inflation and weak consumption Net sales (1) +5.7%, in line with inflation. Uruguay 9.20% SSS (1) +4.0% driven by Geant and Devoto Express sales. 8.90% -710 bps Gross margin affected by increased promotional activity,
Slide 15: Net Sales & Operational Results: Argentina
3Q17 Net Sales & Operational Results: Argentina First signs of macro and retail sales recovery Net Sales (1) and SSS (1) +26.1%, above inflation despite still complex macro Argentina -1890 bps and the strongest CPI deceleration in LatAm. 43.50% Top line improvement from increased volumes at hype
Slide 16: Consolidated Financial Results
3Q17 Consolidated Financial Results Improved top line and net result mainly driven by the solid performance of Brazil Top line growth driven mainly by Brazil and strong contribution of real estate in Colombia and Argentina. Improved net result from: o The solid performance of Brazil. o Productiv
Slide 17: 3Q17 and 9M17 Net Group Share Result
3Q17 and 9M17 Net Group Share Result Net result benefited mainly by Brazil and lower financial expenses The Net Group Share result in 3Q17 was COP$-31,331 M, an improvement of near COP$70,000 M over the 3Q16 derived from: Strong operational performance of Brazil. Better financial result as inter
Slide 18: Net Debt & Cash at Holding Level
3Q17 Net Debt & Cash at Holding (1) Level Showing deleveraging vs 3Q 2016 -4.6% -1.3% NFD at holding level: o COP$3.9 Bn as of Sept 30th, 2017 improved by COP$190,000 M (-4.6% vs 3Q16). o 12M average NFD balance shows a path of progressive deleveraging. o Interest rates below IBR3M + 3.5% in COP a
Slide 19: International Strategy and Synergy Process
International Strategy and Synergy Process Run rate in 3Q17 exceeded yearly target of USD$50 M Benefits in the region to double 2016 gains 4 18 countries initiatives 19
Slide 20: Growing Purchasing Power From Solid Integration
Growing Purchasing Power From Solid Integration Joint commodity purchases Fruits, fish, garlic, 540 meat, wine, others Containers 5%-15% Coffee Saving at cost level x1.6 2016 volume LatAm Business Encounters Organic fruits Wine Purchasing • Joint purchase of +USD 730.000 16 Food and non food vendors
Slide 21: Unified Textile Proposal Across Operations
Unified Textile Proposal Across Operations Store Implementation vs target 41 / 65 15 / 15 24 / 40 2 / 10 Parque Roosevelt - Uruguay Nuevo Centro - Uruguay 21
Slide 22: Exchange of Best Practices
Exchange of Best Practices To capture significant synergies at cost and expense Level Shrinkage Supply Chain Indirect purchasing IT Costs Reduced shrinkage Lower out of Joint negotiation of goods, of perishables stock levels services and technology - 131 - 29 - 178 - 61 bps bps bps Savings at cost l
Slide 23: Replication of Successful Formats
Replication of Successful Formats Cash & Carry 4 stores operating Growing sales by 2.7x/sqm vs previous banner 8 expected year-end 23
Slide 24: Leadership Consolidation in the Proximity Format
Leadership Consolidation in the Proximity Format N°28 World Trade Center store 74sqm 1300SKU´s Sept. 27 24
Slide 25: 3Q17 Conclusions
3Q17 Conclusions Quarterly and year-to-date Net Result improvement. Strong performance and contribution from operations in Brazil and Uruguay confirms the rationale behind diversification within the region. GPA solid performance continues to benefit consolidated results and Net Income recovery
Slide 26: Share Valuation
Share Valuation Increased valuation of Via Varejo and GPA started to be reflected in Éxito´s share price. Stock Performance 250% Local Currency Stock Market 200% Evolution Nov 14th Final Price 2016 - Nov 150% 14th 2017 100% Grupo Éxito 16,260 16.0% GPA 69.12 29.8% 50% Via Varejo 19.35 134.5% 0% -5
Slide 27: Appendices
Appendices 27
Slide 28: 2017 Outlook
2017 Outlook Latam Platform Run rate benefits from synergies exceeding USD $50 M. Gradual decrease of the interest rates in Colombia and Brazil to lower financial expenses and help drive consumption. Mid-term economic recovery expected in Colombia, Brazil and Argentina. Focus on cost and exp
Slide 29: 2017 Outlook
2017 Outlook Brazil Assaí openings (5 stores) and conversions (15 stores). Focus on food segment. Colombian textile business model to be implemented in 40 stores by year-end. Continued Market share gains at both Multivarejo and Assaí. Recurring EBITDA Margin around 5.5% in the Food segment
Slide 30: Debt by Country and Maturity
3Q17 Debt by Country and Maturity (1) Debt without contingent warranties and letters of credit. (2) Debt at the nominal amount. (3) Loans in USD converted to COP using the Central Bank's closing exchange rate as September 30th, 2017 (2,936.67). (4) With option to extend up to November 2018 30
Slide 31: P&L and CapEx by Country
3Q17 P&L and CapEx by Country Colombia Brazil Uruguay Argentina Consolidated In COP M 3Q17 3Q17 3Q17 3Q17 3Q17 Net Revenues 2,696,703 10,251,138 615,898 362,987 13,919,543 Gross Profit 640,437 2,228,082 204,549 122,058 3,193,655 % Net Revenues 23.7% 21.7% 33.2% 33.6% 22.9% SG&A Expenses -525,332 -1,
Slide 32: SOTP Analysis
3Q17 SOTP Analysis _— LTM net LTM recurring Net debt (Last AD Market Value of (COP Millions) a) LTM ROI e) Exito stake ts revenues’ EBITDA quarter)” the Stake” Colombia 11,248,373 695,225 452,980 3,867,836 100% Brazil 40,434,685 2,487,016 1,780,602 3,226,311 18.72% 3,471,854 Uruguay 2,561,875 197,83
Slide 33: Consolidated Balance Sheet
3Q17 Consolidated Balance Sheet Consolidated Balance Sheet Sep 2017 Dec 2016 Var % (In Millions of COP) ASSETS 57,234,833 61,024,095 -6.2% Current Assets 28,151,980 32,628,094 -13.7% Cash & Cash Equivalents 2,059,010 6,117,844 -66.3% Inventories 5,977,547 5,778,173 3.5% Accounts receivable 1,505,420
Slide 34: Consolidated Cash Flow
3Q17 Consolidated Cash Flow 34
Slide 35: Holding P&L
3Q17 Holding (1) P&L Sales contraction and macro winds offset productivity efforts Income Statement Almacenes Éxito 3Q17 3Q16 9M17 9M16 In COP M In COP M 3Q17/16 In COP M In COP M 9M17/16 Sales 2,563,439 2,663,461 -3.8% 7,666,684 7,880,451 -2.7% Other Revenues 80,545 69,634 15.7% 220,034 213,000 3.3
Slide 36: Holding Balance Sheet
3Q17 Holding (1) Balance Sheet (1) Holding: Almacenes Exito Results without Colombian subsidiaries . 36
Slide 37: Note on Forward-Looking Statements
Note on Forward-Looking Statements This document contains certain forward-looking statements. This information is not historical data and should not be interpreted as guarantees of the future occurrence of such facts and data. These statements are based on data, assumptions and estimates that the Gr
Slide 38: Investor Relations Contact
María Fernanda Moreno R. Investor Relations Director +574 339 6156 + 574 339 6560 maria.morenorodriguez@grupo-exito.com Cr 48 No. 32B Sur – 139, Av. Las Vegas Envigado, Colombia www.grupoexito.com.co exitoinvestor.relations@grupo-exito.com •“The Issuers Recognition -IR granted by the Colombian Stock