Slide 1: Investor Presentation September 2012
INVESTOR PRESENTATION September, 2012
Slide 2: 1. Sonae Overview
Slide 3: Group Structure
1. SONAE OVERVIEW Group Structure A RETAIL COMPANY SONAE 100% 100% 100% 50% 53% SONAE MC SONAE SR SONAE RP SONAE SIERRA SONAECOM Food Retail Specialised Retail Shopping Telco Retail Properties Centres • Market leader in Portugal in food and specialized Sports goods, Retail real Shopping centre Integ
Slide 4: Breakdown Turnover per Business
1. SONAE OVERVIEW Group Breakdown BREAKDOWN TURNOVER BREAKDOWN % Total Turnover (1H12) RECURRENT EBITDA MARGIN % Turnover 1H11 2011 1H12 PER BUSINESS Sonae Sonae MC 9.7% 5.2% 10.7% 7.0% 10.6% 6.2% Sonae SR -2.0% 0. 1% -3.6% Sonae RP 90.4% 87.2% 91.1% Sonaecom 27.6% 27.3% 30.6% Investment Management
Slide 5: Shareholdings
1. SONAE OVERVIEW Shareholdings A STABLE 25.9% FREE FLOAT SHAREHOLDER STRUCTURE 53.1% OF CIRCA Efanor 47% Reference shareholder, Bestinver * including BPI equity swap Efanor, a family holding 2.5% BPI company Norges Bank 2.0% Fundação Berardo 8.9% Others 7.5% SHARE CAPITAL AVERAGE DAILY MARKET BPI s
Slide 6: Corporate Strategy
1. SONAE OVERVIEW Corporate Strategy VALUE CREATION CORPORATE STRATEGIC PILLARS THROUGH GO INTERNATIONAL DIVERSIFY LEVERAGE INTERNATIONAL INVESTMENT STYLE EXCEPTIONAL ASSET EXPANSION BASE IN PORTUGAL AND THE • KEY STRATEGIC PRIORITY • ADOPT THE MOST APPROPRIATE • INNOVATE STRENGTHENING • PROFIT FROM
Slide 7: Strategy by Business
1. SONAE OVERVIEW Strategy CORPORATE SONAE MC SONAE SR SONAE RP STRATEGY REFLECTED FOCUS ON LEADERSHIP FOCUS ON ACTIVE ASSET AND PROFITABILITY INTERNATIONAL GROWTH MANAGEMENT IN EACH RETAIL BUSINESS • Consolidate market leadership • Configure an international operation, • Plan to release invested ca
Slide 8: 2. Operational Review
Slide 9: Strengthening of Food Market Leadership and Continuous Assessment of New Adjacent Business Opportunities
2. OPERATIONAL REVIEW STRENGHENING OF FOOD MARKET LEADERSHIP AND CONTINUOUS ASSESSMENT OF NEW ADJACENT BUSINESS OPPORTUNITIES 9
Slide 10: Market Share Growth
2. OPERATIONAL REVIEW - SONAE MC Market Share Growth REINFORCEMENT FOOD RETAIL MARKET SHARES - YTD12 OF LEADERSHIP IN THE PORTUGUESE CONTINENTE YTD LfL SALES ABOVE FOOD RETAIL +0.5 pp MARKET AVERAGE MARKET +1.9 pp despite prevaling trading down and -0.1 pp competitors’ -0.7 pp +0.1 pp -0.5 pp promot
Slide 11: Brand Recognition
2. OPERATIONAL REVIEW - SONAE MC Brand Recognition CONTINENTE SINGLE BRANDING OF SONAE MC STORES A LEADING BRAND UNDER “CONTINENTE” COMPLETED DURING 2011 IN PORTUGAL Cost and revenue Continente is repeatedly #1 in Marktest’s synergies now being considered one of the “Reputation Índex explored most t
Slide 12: Retail Area
2. OPERATIONAL REVIEW - SONAE MC Retail Area 569,000 M2 SONAE MC RETAIL SPACE BY FORMAT (1H12) OF RETAIL SPACE, DISTRIBUTED STORES (total = 431) ‘000 M2 (total = 550 thousand) BETWEEN HYPERS 258 286 210 AND SUPERS 106 39 28 25 28 ** Mainly parapharmacy and Continente C. Modelo C. Bom dia o ther** Co
Slide 13: Formats
2. OPERATIONAL REVIEW - SONAE MC Formats EXPOSURE TO CONTINENTE CONTINENTE CONTINENTE DIVERSE MODELO BOM DIA FOOD FORMATS HYPERS SUPERS SUPERS • First mover advantage, prime • Typically located in medium • Location and convenience locations sized population centres (urban) • 39 stores (of which 24 a
Slide 14: Loyalty Card
2. OPERATIONAL REVIEW - SONAE MC Loyalty Card PERFORMANCE SUPERIOR CUSTOMER INSIGHT IN PORTUGAL LEVERAGES • Targeted promotions, with discounts ON THE VALUE provided as “credit” in repeated purchase AND SUCESS • Superior customer profiling and know-how of consumer habits OF THE LOYALTY PROGRAM NUMBE
Slide 15: Private Label
2. OPERATIONAL REVIEW - SONAE MC Private Label PERFORMANCE # OWN REFERENCES AND % FMCG SALES REFLECTS THE STRONG OW N LABEL PROGRAMME IS MANAGED INTERNALLY AND CONTINUOUS 3,500 AND NOW COMPRISES MOST PRODUCT CATEGORIES 3,400 INVESTMENT 3,100 INVESTMENT IN OWN BRANDS IN PRIVATE LABEL • Broadening of
Slide 16: Growth
2. OPERATIONAL REVIEW - SONAE MC Growth GROWING LEADING SALES ON A LIKE FOR LIKE BASIS IN 1H12 (-2%) A BOVE MARKET 1H12 EBITDA MARGIN ABOVE ‘11, thanks to a rigorous cost contro l, high effectiveness MARKET POSITION, Benefiting from a clear value focused offering of promotions through the loyalty ca
Slide 17: New Adjacent Business Opportunities
2. OPERATIONAL REVIEW - SONAE MC New adjacent business opportunities LEVERAGE ON KNOW-HOW IN RETAIL • Coffe shops and small • Health and well-being • Book Shop, Stationery snack-bars • Parapharmacy, beauty and Tobacco • Tipically next to Sonae MC products, health • 300 m2 of average store size super
Slide 18: New Adjacent Business Opportunities: Franchising and Wholesale
2. OPERATIONAL REVIEW - SONAE MC New adjacent business opportunities LEVERAGE ON KNOW-HOW Wholesale IN RETAIL • Franchised local food retail • Leverage the existing stores wholesale business • Convenience business (since 2008 Sonae is the supplier • Between 150 m2 and 999 m2 to a a number of petrol
Slide 19: International Opportunities
2. OPERATIONAL REVIEW - SONAE MC International Opportunities EXPLORED WITH AN APROPRIATE RELEVANT OPORTUNITY STRUCTURE • 6th biggest economy in Africa • JV with local partners (49% Sonae MC) • Expected to grow at a CAGR of • Sonae MC responsible for managing the operations JV to explore +7.2% betwee
Slide 20: International Expansion and Consolidation of Market Leadership in Portugal
2. OPERATIONAL REVIEW INTERNATIONAL EXPANSION AND CONSOLIDATION OF MARKET LEADERSHIP IN PORTUGAL 20
Slide 21: Formats and Store Portfolio
2. OPERATIONAL REVIEW - SR Formats and store portfolio 1H12 Stores Total Average REVENUES FY11 - % of total Sonae SR ’000m2 StoreSize BREAKDOWN (1,235 M€) WORTEN; Portugal 189 130 680 V OBIS OF SONAE SR PER 67% Spain 41 93 2,277 RETAIL FORMAT SPORTZONE Portugal 86 67 765 LOOP Spain 35 42 1,197 MODAL
Slide 22: Sonae SR EBITDA
2. OPERATIONAL REVIEW - SR Constrained discretionary consumption CONSUMER RETRACTION AND EBITDA (M€; Years) +71 +72 SONAE SR EBITDA INTERNATIONAL +45 REFLECTING: EXPANSION EFFORT 48 Negative trading environment IMPACTING ST 45 +6 in Iberian markets, particularly felt in PROFITABILITY 0 discretionary
Slide 23: Leading Position in Portugal
2. OPERATIONAL REVIEW - SR Leading position in Portugal SUSTAINING TURNOVER Portugal (M€) EBITDA Portugal (M€) STORES TREND: 12 months to 1H12 PROFITABILITY IN PORTUGAL DESPITE DIFICCULT TRADING 1,042 918 72 - 4 stores CONDITIONS 45 - 1 k m2 Strengthening of leadership -12% position in the consumer
Slide 24: International Expansion
2. OPERATIONAL REVIEW - SR International Expansion STORES INTERNATIONAL SPORTZONE = 35 (+2) | WORTEN = 41 (+9) | ZIPPY = 60 (+11 ) GROWTH, WITH FINANCIAL y.o.y y.o.y y.o.y PERFORMANCE IMPACTED BY NEGATIVE CONSUMER INTERNATIONAL TURNOVER STORES TREND: ORGANIC GROWTH International (M€) 12 months to 1H
Slide 25: International Expansion Models
2. OPERATIONAL REVIEW - SR International Expansion INTERNATIONALI- JOINT-VENTURES FRANCHISING > 136 STORES CONTRACTS 18 COUNTRIES ZATION MOSTLY BASED ON NEW Worten Canary Islands Zippy Canary Islands Spain (*) Turkey(*) EXPANSION MODELS: SportZone Canary Islands Zippy Middle East Saudi Arabia (*) Eg
Slide 26: Active Management of Retail Real Estate Assets
2. OPERATIONAL REVIEW ACTIVE MANAGEMENT OF RETAIL REAL ESTATE ASSETS 26
Slide 27: Retail Properties
2. OPERATIONAL REVIEW - RP Retail Properties FOOD RETAIL GENERAL RETAIL Despite transactions carried REAL ESTATE % of space owned freehold % of space owned freehold out in the last 2 years, NOW SEEN Sonae still had at the end AS A “DEFENSIVE 100% 100% of1H12 a level of freehold retail real estate we
Slide 28: Assets Portfolio
2. OPERATIONAL REVIEW - RP Assets Portfolio FOCUSED ON THE INVESTED CAPITAL HYPERMARKETS 8 SALE & LEASE BACK (1H12) TRANSACTIONS MANAGEMENT Continente COMPLETED (2010/2011) AND 1.4 billion Euros 33 stores owned 83% total sales area Total Cash-In = 153 M€ ENHANCEMENT (Net book value) Capital Gains =
Slide 29: 3. Core Partnerships
3. CORE PARTNERSHIPS SONAE SIERRA (Shopping Centres) 50% ownership – Equity Consolidated SONAECOM (Telecoms) 53% ownership – Fully Consolidated
Slide 30: Sonae Sierra: Positive Performance
3. CORE PARTNERSHIPS - SONAE SIERRA Positive Performance OMV BREAKDOWN A SELF INTERNATIONAL SHOPPING CENTRE SPECIALIST, 50% OWNED JOINT-VENTURE (100% basis) – YE11 SUSTAINABLE WITH GROSVENOR 44% | Portugal 21 % | Brazil COMPANY • With presence in Portugal, Brazil, Spain, Italy, Germany, Greece and R
Slide 31: Sonae Sierra: Growth Avenues
3. CORE PARTNERSHIPS - SONAE SIERRA Growth Avenues GROW GROW IN PROMISING CONTINUE TO PURSUE NEW APPROACH MARKETS: OPERATIONAL TOWARDS EUROPEAN IN EMERGENT • Speed up expansion IMPROVEMENTS, ASSET PORTFOLIO MARKETS in Brazil, so as to capitalize in spite of the fall • Shift to a more capital light A
Slide 32: Sonaecom: Positive Performance
3. CORE PARTNERSHIPS - SONAECOM Positive Performance • Reference mobile EBITDA margins • Comfortable capital structure A SOLID • Improving competitive position, whilst • Strong management team • Cost control policies BUSINESS, sustaining margins • Strict investment management WITH GROWING • Fully in
Slide 33: Sonaecom: Focus Going Forward
3. CORE PARTNERSHIPS - SONAECOM Focus going forward PUSH 4G/LTE SETTING THE PACE FOCUS IN THE MARKET On the deployment of a On cash-generation, reinforcing THROUGH leading-edge 4G network efficiency programs INOVATION AND On mobile growth QUALITY OF On delivering the best SERVICE On convergent solut
Slide 34: 4. Recent Financial Performance
4.. RECENT FINANCIAL PERFORMANCE
Slide 35: Overview: Key Financials 1H12
4. RECENT FINANCIAL PERFORMANCE Overview Turnover sustained by Efficiency gains allowing for market share gains and increased operational international growth profitability KEY FINANCIALS 1H12 TURNOVER RECURRENT EBITDA REC. EBITDA MARGIN NET GEARING 2.5bn +7% +1.0pp 58% 35
Slide 36: Turnover
4. RECENT FINANCIAL PERFORMANCE Turnover DESPITE THE SHARP … THANKS TO MARKET SHARE GAINS AND A 20% GROWTH IN DECLINE IN PRIVATE INTERNACIONAL SALES (SONAE SR) CONSUMPTION FELT IN IBERIA CONSOLIDATED TURNOVER (Ex f uel) TURNOVER PER BUSINESS Million Euros CONSOLIDATED 5,573 5,521 1H11 1H12 VAR TURNO
Slide 37: Ebitda
4. RECENT FINANCIAL PERFORMANCE Ebitda IN A DIFFICULT …. SUPPORTED BY THE IMPLEMENTATION OF OPERATIONAL MACRO EFFICIENCY PROGRAMMES ENVIRONMENT, GROUP’S RECURRENT EBITDA Million Euros RECURRENT EBITDA % of Turnover RECURRENT 1H11 1H12 VAR EBITDA GROWS 582 593 SONAE 9.7% 10.6% + 1.0 pp BY 7% AGAINST
Slide 38: Net Income
4. RECENT FINANCIAL PERFORMANCE Net Income NET RESULTS … BELOW 1H11 MAINLY AS A RESULT OF NON-RECURRENT GAINS IN THE 1H12 RELATED TO ASSET SALES (16 M€ IN 1H11) TOTALLED 36M€, NET INCOME OF WHICH Million Euros NET RESULTS OF CORE PARTNERSHIPS (M€) THE SHARE ATTRIBUTABLE 128 1H11 1H12 VA R 104 S. SIE
Slide 39: Capital Structure: Net Debt
4. RECENT FINANCIAL PERFORMANCE Capital Structure CONSOLIDATED FINANCIAL SONAE HAS NET DEBT FINANCIAL NET DEBT ACHIEVED A SIGNIFICANT 2,182 M€ with refinancing DELEVERAGE needs secured until SINCE 2009 LTE spectrum payment by Sonaecom: 83 M€ 2014 2,322 2,259 2,265 2,233 2,192 2,264 1,989 2,182 1,931
Slide 40: Capital Structure by Business
4. RECENT FINANCIAL PERFORMANCE Capital Structure AN APPROPRIATE RETAIL AND TELECOM HOLDING NET DEBT/REC. EBITDA CAPITAL LOAN –TO-VALUE(*) STRUCTURE 3.8x IN EACH BUSINESS 3 .5 x 2.8x 3.5x 3.6x 3.6x 2.9x 3.6x 3.2x TO SUPPORT ACTIVITIES AND 1.8x 1 .7 x 1 .6x 17 % 17 % 18% 19% 21% 1.7x 1.6x INVESTMENTS
Slide 41: Shareholder Remuneration
4. RECENT FINANCIAL PERFORMANCE Shareholder Remuneration DIVIDEND PAYER The resilience of the cash flows generated gives confidence ON A REGULAR on the ability to maintain shareholder remuneration policy BASIS OBJECTIVE 3.31 Cents 7.2% 51% TO MAINTAIN DIVIDEND PER DIVIDEND YIELD PAY-OUT RATIO AN ADE
Slide 42: Valuation
4. RECENT FINANCIAL PERFORMANCE Valuation SIGNIFICANT Macroeconomic concerns and sovereign risks DISCOUNT VS influencing share price performance “SUM-OF-THE- PARTS” + 21% € 1.6bn € 0.4 VALUATION Upside analysts’ SONAE MC EV based Market value of Core average PT vs share on European food Partnerships
Slide 43: An Attractive Investment Opportunity
CONCLUSION AN ATTRACTIVE • Resilience and fast adaptation of offers to the adverse INVESTMENT trading conditions in Iberia OPPORTUNITY • Growing leading market position in the core businesses, while protecting profitability • A clear internationalisation strategy that will enable for future growth a
Slide 44: Safe Harbour and Contacts
INVESTOR PRESENTATION SAFE HARBOUR September 2012 This document may contain forward-looking information and statements, based on management’s current expectations or beliefs. Forward-looking statements are statements that should not be regarded as historical facts. These forward-looking statements a