Almacenes Exito SA · BVC:EXITO
Almacenes Exito SA — Grupo Éxito — Q2 2017 Earnings Presentation
35 slides from Almacenes Exito SA's earnings presentation, Aug 15, 2017
Slide 1: 2Q17 Financial Results
2Q17 Financial Results Aug 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: Disclaimer
Disclaimer Consolidated statements of income as of June 30, 2016 include the effects of the restatement of the discontinued operation relevant to Via Varejo S.A. and Cnova N.V. for comparison purposes to 2017. They also include the effects of the restatement of the results of Companhia Brasileira de
Slide 3: Agenda
Agenda 2Q17 Financial and Operating Highlights Performance by Country Consolidated Financial Results International Strategy Follow-up 2017 Outlook Q&A Session 3
Slide 4: 2Q17 Financial Highlights
2Q17 Financial Highlights Net Income recovery derived from strong performance in Brazil LatAm Strong contribution from GPA positively influenced consolidated results and Net Income recovery, ratifying the strategic decision of the investment diversification within the region. Solid consolidated Ne
Slide 5: 2Q17 Operational Highlights
2Q17 Operational Highlights Expansion in key retail formats and real estate across the region Consolidated CapEx COP$400,000 M (30% expansion, 70% maintenance). CapEx Colombia: COP$85,000 M (58% real estate expansion, including Viva Envigado and Viva Tunja projects). Food Retail Expansion 2Q17
Slide 6: Innovative Drivers by Country
Innovative Drivers by Country • “Meu Desconto” (My Discount) • Loyalty Program Coalition program • Market Place • Prepaid Mobile Bonus • Digital Catalogues • New non-food concepts: • Improving Queuing at Improved assortment and Hypermarkets Colombia Brazil shopping experience • Fresh Market concep
Slide 7: Net Sales Performance: Colombia
2Q17 Net Sales Performance: Colombia Performance reflected strong inflation deceleration trend and macro winds Adjusted by calendar Adjusted by calendar 2Q17 (1) 1H17 (1) Var. Var. Var. Net Var. Var. Var. Var. Net Var. In COP M Net Sales Net Sales Net Sales SSS Sales SSS Net Sales SSS Sales SSS Tota
Slide 8: Initiatives in Colombia
Initiatives in Colombia Focused Profitable Expansion • Cash & Carry: 8 stores by the end of 2017. • Éxito compact stores: in intermediate cities with low cannibalization risk. • Low-cost Supermarkets: profitable openings of Super Inter and Surtimax stores. • Allies business model: light CapEx, pro
Slide 9: Net Sales Performance: Brazil
2Q17 Net Sales Performance: Brazil Food business excelled offsetting the effect of lower inflation 2Q17 1H17 Var. Net Var. Var. Net Var. In COP M Net Sales Net Sales Sales (1) SSS (1) Sales (1) SSS (1) Total Brazil 9,620,287 9.0% 5.4% 19,362,595 9.2% 5.5% Assaí(1): Net Sales + 29.2%. SSS accel
Slide 10: Operational Results: Colombia
2Q17 Operational Results: Colombia(1) Margins affected by lower sales, a non-comparable basis and inflationary decoupling Colombia 2Q17 2Q16 1H17 1H16 In COP M In COP M 2Q17/16 In COP M In COP M 1H17/16 Net Sales 2,513,016 2,577,468 -2.5% 5,115,122 5,242,647 -2.4% Other Revenues 130,219 118,077 10.3
Slide 11: Operational Results: Brazil
2Q17 Operational Results: Brazil Strong Margin Performance and Operational Efficiencies Brazil 2Q17 2Q16 1H17 1H16 Food Segment In COP M In COP M 2Q17/16 In COP M In COP M 1H17/16 Net Sales 9,620,287 8,251,492 16.6% 19,362,595 16,435,749 17.8% Other Revenues 67,615 52,783 28.1% 135,218 107,778 25.5%
Slide 12: Net Sales & Operational Results: Uruguay
2Q17 Net Sales & Operational Results: Uruguay Net Sales growth and healthy profitability levels Uruguay 2Q17 2Q16 1H17 1H16 In COP M In COP M 2Q17/16 In COP M In COP M 1H17/16 Net Sales 603,961 526,031 14.8% 1,272,338 1,156,481 10.0% Other Revenues 6,140 6,551 -6.3% 11,264 13,872 -18.8% Net Revenues
Slide 13: Sales & Operational Results: Argentina
2Q17 Sales & Operational Results: Argentina Operational and margin improving despite macro winds Argentina 2Q17 2Q16 1H17 1H16 2Q17/1 In COP M In COP M In COP M In COP M 1H17/16 6 Net Sales 319,385 323,855 -1.4% 640,867 652,337 -1.8% Other Revenues 11,016 9,637 14.3% 37,743 31,924 18.2% Net Revenues
Slide 14: Consolidated Financial Results
2Q17 Consolidated Financial Results Net Income result mainly derived from strong performance in Brazil and increased productivity 2Q17 2Q16 1H17 1H16 In COP M In COP M 2Q17/16 In COP M In COP M 1H17/16 Net Revenues 13,267,721 11,865,074 11.8% 26,793,634 23,845,589 12.4% Gross Profit 3,569,347 3,003,
Slide 15: Net Income Group Share
2Q17 Net Income Group Share Net Income Result benefited mainly by Brazil and lower financial expenses The Net Income Group Share in 2Q17 was COP$69,263 M, an improvement of over COP$117,000 M over the 2Q16 derived from: Strong operational performance of Brazil. Better financial result as rates a
Slide 16: Net Debt & Cash at Holding Level
2Q17 Net Debt & Cash at Holding (1) Level Deleveraging QoQ improvement -12.2% -2.2% NFD at holding level: o COP$3.6 Bn as of June 30st, 2017 improved by COP$501,000 M (-12.2% vs 2Q16). o Interest rates below IBR3M + 3.5% in COP and below LIBOR3M + 1.75% in USD. o Repo rate was 125 bps lower in 2Q1
Slide 17: International Strategy and Synergy Process
International Strategy and Synergy Process Synergy Plan Run rate exceeding USD$50 M by the end of 2017 Benefits in the region to double 2016´s gains 4 18 countries initiatives 17
Slide 18: Synergy Follow Up: Joint Commodity Purchases
International Strategy and Synergy Process Follow Up Joint commodity purchases Savings at 313 Containers Fruits, fish, meat, garlic, olive oil, wine, others 95% of 2016 volume cost level 3% to 15% Agreements negotiated in 2016 already providing recurring benefits in 2017 As a result of LatAm Busines
Slide 19: Synergy Follow Up: Textile Model
International Strategy and Synergy Process Follow Up Textile Model Unified product sourcing across retail platform in all 4 countries 11 stores as oftextile 2Q17 displayed the new proposal new +120 bps +4 included in 2Q17 in the sale mix Importation quota approved over non- rollout stores Guaranteei
Slide 20: Synergy Follow Up: Allies and Cash & Carry
International Strategy and Synergy Process Follow Up Allies 236 Partner stores in Sao Paulo Positive sales performance vs budget Cash & Carry 2,7X Sales / sqm after conversion 3.100 Active SKU 8 Surtimayorista Corabastos Store count year-end 20
Slide 21: Synergy Follow Up: Tangible Synergies
InternationalStrategy International Integration andwith Synergy Tangible Follow –Up Synergies Process Back office Back Office Shrinkage Best practices exchange Supply Chain positively contributing to the reduction of Best practices exchange perishables’ shrinkage contributing to lowering levels, mak
Slide 22: Synergy Follow Up: Premium Express Format
International Strategy and Synergy Process Follow Up Premium Express format in Argentina Gavier Store 156 sqm 3,280 SKU Premium Express format in Uruguay Portal Américas store 450 sqm 5,000 SKU Biggest store in the convenience format 22
Slide 23: 2Q17 Conclusions
2Q17 Conclusions Strong consolidated result confirm the importance of Grupo Éxito´s diversification strategy and its presence in South America. Solid quarterly and year-to-date consolidated results mainly driven by the performance in Brazil and increased productivity. Consolidated Net Sales po
Slide 24: 2017 Outlook
2017 Outlook Latam Platform Run rate benefits from synergies exceeding USD $50 M. Gradual decrease in interest rates in Colombia and Brazil might lower financial expenses and drive consumption. Mid-term economic recovery expected in Colombia, Brazil and Argentina. Focus on cost and expense c
Slide 25: 2017 Outlook
2017 Outlook Brazil Optimization of store portfolio by focusing on Assaí openings (6-8 stores) and conversions (16 stores). Focus on food segment with continuous investments in high-return formats. Colombian textile business model to be implemented in over 30 stores by year-end. Aliados Comp
Slide 26: Share Valuation
Share Valuation Share Valuation: Strong increase in valuation of Via Varejo and GPA still not fully reflected in Éxito´s share price. Stock Market Local Currency Evolution Px % Var LTM 11/08/2017 Grupo Éxito 14,860 6.1% GPA 72.39 41.7% Via Varejo 15.25 121.0% 26
Slide 27: 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 28: 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
Slide 29: Debt by Country and Maturity
2Q17 Debt by Country and Maturity 30 June 2017, (millions of COP) Colombia Uruguay Brazil Argentina Consolidated Short-term debt 1,083,714 390,523 1,382,243 52,593 2,909,074 Long-term debt 3,572,423 - 0 3,364,779 - 6,937,203 Total gross debt (1) 4,656,138 390,523 4,747,022 52,593 9,846,276 Cash and
Slide 30: P&L and CapEx by Country
2Q17 P&L and CapEx by Country Colombia Brazil Uruguay Argentina Consolidated In COP M 2Q17 2Q17 2Q17 2Q17 2Q17 Net Revenues 2,643,235 9,687,902 610,101 330,401 13,267,721 Gross Profit 647,472 2,614,471 201,965 106,307 3,569,347 % Net Revenues 24.5% 27.0% 33.1% 32.2% 26.9% SG&A Expenses -524,148 -1,7
Slide 31: SOTP Analysis
2Q17 SOTP Analysis LTM net LTM recurring Net debt (Last Market Value of (COP Million) LTM ROI Éxito stake revenues(1) EBITDA quarter)(2) the Stake (3) Colombia 11,321,710 752,847 515,354 -3,596,083 100% Brazil 43,924,220 2,492,019 1,764,465 -2,560,910 18.71% 2,990,040 Uruguay 2,515,676 189,995 167,6
Slide 32: Consolidated Balance Sheet
2Q17 Consolidated Balance Sheet 32
Slide 33: Consolidated Cash Flow
2Q17 Consolidated Cash Flow Summary Consolidated Cash Flow Statetement 1H17 1H16 % Var (in millions of COP) Profit (loss) 469,460 - 491,413 -195.53% Adjustment to reconciliate Net Income - 4,269,896 - 6,401,758 -33.3% Cash Net provided (used) in Operating Activities - 3,735,445 - 7,028,641 -46.9% Ca
Slide 34: Holding P&L
2Q17 Holding (1) P&L Performance reflected retail sales contraction and macro winds that offset productivity efforts 2Q17 2Q16 1H17 1H16 In COP M In COP M 2Q17/16 In COP M In COP M 1H17/16 Net Revenues 2,593,084 2,643,907 -1.9% 5,242,734 5,360,356 -2.2% Gross Profit 607,741 642,367 -5.4% 1,252,335 1
Slide 35: Holding Balance Sheet
2Q17 Holding (1) Balance Sheet (1) Holding: Almacenes Exito Results without Colombian subsidiaries . 35