Inretail Peru Corp. · BVL:INRETC1

Inretail Peru — Q4 2019 Earnings Presentation

37 slides from Inretail Peru's earnings presentation, March 2020

  1. Slide 1: Corporate Presentation

    The leading Peruvian retailer CORPORATE PRESENTATION March 2020

  2. Slide 2: Agenda

    1 INRETAIL OVERVIEW 2 INVESTMENT THESIS 3 Q4’19 FINANCIAL RESULTS 4 CAPEX GUIDANCE 2020-2022 5 APPENDIX

  3. Slide 3: InRetail Overview

    InRetail Overview  Peruvian multi-format retailer, with presence in the Andean region through the Pharma business  Leading positions in Peru in its 3 segments  #1 food retail chain  #1 pharmacy chain and distributor in Peru, with presence in the Andean region  #1 shopping center operator  Cont

  4. Slide 4: InRetail is part of one of Peru's leading business groups

    InRetail is part of one of Peru’s leading business groups Education Float 28.8% 1/ BVL: INRETC1 2019 Intercorp metrics: a  More than USD 6.6 billion in sales in 2019  2 listed companies with a combined market capitalization of ~ USD 6.3 billion as of December, 2019  More than 82,000 employees 1/

  5. Slide 5: 2019 Financial and Operational Snapshot

    2019 Financial and Operational Snapshot Million Soles (S/ mm) Food Shopping Pharma Retail Malls 1/ 2019 figures (S/ mm; %) + + = Revenues 5,762 6,852 543 13,070 % Revenues Contribution 44% 52% 4% Adj. EBITDA (Pre-IFRS 16) 2/ 400 711 325 1,427 % EBITDA Contribution 28% 49% 23% Adj. EBITDA Margin 6.9%

  6. Slide 6: Agenda

    1 INRETAIL OVERVIEW 2 INVESTMENT THESIS 3 Q4’19 FINANCIAL RESULTS 4 CAPEX GUIDANCE 2020-2022 5 APPENDIX

  7. Slide 7: Investment Thesis

    Investment Thesis The leading multi-format retailer in a growing and underpenetrated Peruvian market 1 Proven track record  Consistent organic growth and successful integration of acquisitions for delivering  Seasoned management team with broad industry experience sustainable and profitable growth

  8. Slide 8: Proven track record of profitable growth

    Proven track record of profitable growth Revenues (S/ million) 13,070 SPSA TURNAROUND PERIOD 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Acquisition of SPSA Plaza Vea Agreement Acquisition InRetail’s Strategic Opening of Mass format Plaza Vea Quicorp Opening of SPSA fr

  9. Slide 9: Investment Thesis

    Investment Thesis The leading multi-format retailer in a growing and underpenetrated Peruvian market 1 Proven track record  Consistent organic growth and successful integration of acquisitions for delivering  Seasoned management team with broad industry experience sustainable and profitable growth

  10. Slide 10: Fastest growing economy boosts emerging middle class

    Fastest growing economy boosts emerging middle class Real GDP Growth Population by Socio-Economic Category CAGR 2012 - 2018 CAGR 2018 - 2021 1.8% 1.1% Annual SEC 2007 2018 Income 3.7% 3.9% 2.8% % of total population 1.9% A $ 46,992 Perú Latin America 1/ Perú Latin America 1/ 8% 12% Source: IMF – Wor

  11. Slide 11: Significant upside potential for modern retail

    Significant upside potential for modern retail Food Retail Pharmacies Shopping Malls Penetration as a % of Total Sales - 2018 Healthcare Expenditure as % of GDP - 2018 Malls per million people - 2018 Sales area per capita: Peru 0.25 sqm vs Mexico 0.40 sqm 70% 8.0 Mean ex-Peru: 62% 9.7% 54.4% 59% 9.2

  12. Slide 12: Retail market in Peru in early stage of development

    Retail market in Peru in early stage of development Global Retail Development Index Opportunities Peru top-ranked LatAm country in the GRDI Opening Peaking Maturing Closing 2019 Ranking Mexico (2009) 1. China 13. Peru Brazil (2013) 5. Indonesia 16. Brazil Peru (2015) 10. Colombia 21. Paraguay Brazil

  13. Slide 13: Investment Thesis

    Investment Thesis The leading multi-format retailer in a growing and underpenetrated Peruvian market 1 Proven track record  Consistent organic growth and successful integration of acquisitions for delivering  Seasoned management team with broad industry experience sustainable and profitable growth

  14. Slide 14: Largest nationwide footprint of premier retail locations

    Largest nationwide footprint of premier retail locations Food Retail Pharmacies Shopping Malls 108 Spmkts 5 Economax 2,077 Stores 2/ 21 Malls 405 Mass 19 Mimarket (16) (58) (97) (11) (6) Piura (2) (2) (83) (64) Chiclayo (1) Cajamarca (2) (1) (44) (131) Trujillo (5) (63) (34) Chimbote (3) (1) (13) (2

  15. Slide 15: Quarterly Openings and SSS By Segment

    Quarterly Openings and SSS By Segment Openings Same Store Sales (SSS) Food Retail Food Retail 2018: 7.9% Sales Area (‘000 sqm) 2019: 4.1% 372 375 380 395 9.5% 361 47 53 56 61 66 7.8% 23 23 23 23 Mass 4.1% Economax 296 296 296 296 306 2.0% 1.5% Spmkts Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q4’18 Q1’19 Q2’19 Q

  16. Slide 16: Food Retail Segment

    Food Retail Segment Formats Sales area # of % of Format range (sqm) Stores Revenues 1/  Every-Day-Low-Price strategy for Plaza Vea stores Compact Hypermarket 2,000 – 5,000 70 73% 2/  New discount formats Mass and Mimarket to capture untapped demand and accelerate penetration of traditional trade S

  17. Slide 17: Pharma Segment: Pharmacies

    Pharma Segment: Pharmacies  Leading pharmacy player in Peru with +2,000 stores  Strong cash flow generation in a Capex light business model  Solid track record in a resilient consumer non-discretionary industry Every-Day-Low-Prices Discounts and promotions  Focused on offering the  Targeted dis

  18. Slide 18: Pharma Segment: Manufacturing, Distribution and Marketing

    Pharma Segment: Manufacturing, Distribution and Marketing Best-in-class distribution network Vertical integration with Pharmacy chains (% of sales) Leading pharmaceutical Pharmacy chains distributor in Peru with presence in the Andean region 46.0% Other channels Vital link between manufacturers 54%

  19. Slide 19: Shopping Malls Segment

    Shopping Malls Segment Shopping Malls Sales Sales (S/ millions) 2018  Nationwide premium portfolio of 21 locations, with 807k sqm of GLA 6,232 4,756  Preferred partner for local and international tenants: 3,505  High tenant renewal rates and low concentration of renewal per 2,761 2,686 2,597 year

  20. Slide 20: Agenda

    1 INRETAIL OVERVIEW 2 INVESTMENT THESIS 3 Q4’19 FINANCIAL RESULTS 4 CAPEX GUIDANCE 2020-2022 5 APPENDIX

  21. Slide 21: Q4'19 Consolidated Financial Results

    Q4’19 Consolidated Financial Results Million Soles (S/ mm) Highlights Revenues  Low single-digit growth in Revenues, mainly explained by a +6.8% contraction in the MDM unit of our Pharma segment 13,070 12,243  Solid growth in Adjusted EBITDA in our three segments +2.9%  Consolidated Gross Margin,

  22. Slide 22: Food Retail

    Food Retail S/ mm Q4'19 Q4'18 Var % 2019 Var % Revenues 1,573 1,459 7.8% 5,762 12.0% Gross Profit 424 403 5.2% 1,516 11.4% Adj. EBITDA 1/ (Pre-IFRS 16) 134 117 14.7% 400 16.3% Gross Mg 26.9% 27.6% -68 bps 26.3% -14 bps Adj. EBITDA Mg 1/ (Pre-IFRS 16) 8.5% 8.0% 52 bps 6.9% 25 bps Net opening of 34k s

  23. Slide 23: Pharma

    Pharma Pharmacies 1/ MDM 1/ Total S/ mm Q4'19 Var % Q4'19 Var % Q4'19 Var % 2019 Var % Revenues 1,275 1.9% 633 -11.7% 1,740 -1.7% 6,852 2.2% Gross Profit (Pre-IFRS 16) 481 5.1% 87 22.7% 561 11.5% 2,130 10.1% Adj. EBITDA 2/ (Pre-IFRS 16) 176 23.1% 31 30.1% 206 23.0% 711 31.7% Gross Mg 37.7% 36.6% 13.

  24. Slide 24: Shopping Malls

    Shopping Malls S/ mm Q4'19 Q4'18 Var % 2019 Var % Revenues 154 138 11.2% 543 6.9% Gross Profit (Pre-IFRS 16) 104 93 11.3% 362 5.8% Adj. EBITDA 1/ (Pre-IFRS 16) 93 85 9.1% 325 4.7% Gross Mg 67.4% 67.4% 4 bps 66.8% -70 bps Net Rental Mg 2/ (Pre-IFRS 16) 79.6% 80.0% -41 bps 78.5% -118 bps Revenue growt

  25. Slide 25: Consolidated Net Income

    Consolidated Net Income Million Soles (S/ mm) Net Income (Pre-IFRS 16) 1/ Net Income Breakdown (Pre-IFRS 16) 1/ 624 5 21 -82 99.8% 124 260 -0 225 62 260 130 130 Q4’18 Q4’19 2018 2019 Net EBITDA Flat Net Higher Net FX Lower Higher Net Income Growth Financial Mark to Effect D&A Tax Income Q4’18 Expens

  26. Slide 26: Capex and Cash-Flow Breakdown

    Capex and Cash-Flow Breakdown Million Soles (S/ mm) Consolidated CAPEX Cash-Flow Breakdown 2018: S/998 mm 2019: S/847 mm 1/ 335 -847 263 243 249 1,533 180 -35 223 196 -400 183 152 -132 740 -22 643 155 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Starting Operating CAPEX Financial Financial Divide

  27. Slide 27: Consolidated Financial Debt

    Consolidated Financial Debt Million Soles (S/ mm) Consolidated Financial Debt 1/ USD Exposure Net Debt/Adj. EBITDA Debt/Adj. EBITDA 4.8x 4.0x 4.0x 4.0x 3.9x 3.8x 3.6x 3.6x 39% 42% 40% 4.3x 47% 3.3x 3.3x 49% 3.6x 3.5x 3.5x 3.4x 3.4x 3.2x 3.1x 2.8x 23% 3% 2% 2.5x 23% 22% 48% 51% 38% 35% 38% 2014 2015

  28. Slide 28: Debt By Segment

    Debt By Segment 1/ Million Soles (S/ mm) Total Consolidated Debt: S/5,250 mm Debt / Adj. EBITDA: 3.6x Net Debt / Adj. EBITDA: 3.1x 3.4x 3.4x 3.4x 3.7x 5.6x 5.7x 5.7x 5.8x 5.8x 3.5x 3.0x 3.1x 3.2x 3.1x 2.7x 3.1x 2.9x 3.1x 3.0x 5.1x 5.1x 5.2x 2.8x 4.0x 5.1x 4.9x 2.6x 2.8x 2.6x 2.6x 2.2x 2.4x 2.0x 3.1x

  29. Slide 29: IFRS 16 EBITDA Bridge

    IFRS 16 EBITDA Bridge Million Soles (S/ mm) 1/ Q4’19 Accounting Operating Profit Q4’19 501.5 102.7 182.9 249.6 Excluded rental expenses of assets -92.6 -34.3 -67.9 -2.4 with right-of-use as per IFRS 16 D&A of PP&E 2/ -64.4 +41.1 +25.2 -156.4 Additional depreciation of assets with +85.0 +24.9 +65.9 +

  30. Slide 30: IFRS 16 Net Income Reconciliation

    IFRS 16 Net Income Reconciliation Million Soles (S/ mm) 1/ Q4’19 Accounting Net Income Q4’19 271.0 Rental expenses of assets with right-of-use as per IFRS 16 -92.6 Financial expenses from debt of assets with right-of-use as per IFRS 16 +26.0 Exchange rate income from debt of assets with right-of-use

  31. Slide 31: Agenda

    1 INRETAIL OVERVIEW 2 INVESTMENT THESIS 3 Q4’19 FINANCIAL RESULTS 4 CAPEX GUIDANCE 2020-2022 5 APPENDIX

  32. Slide 32: CAPEX Guidance 2020-2022

    CAPEX Guidance 2020-2022 Projected CAPEX of S/2.1 B for 2020-2022 Food Retail By Segment Plaza Vea:  2 new Plaza Vea stores in 2020 (+6.9k sqm of sales area) Shopping  2 to 3 new Plaza Vea stores per year in 2021 and 2022 (avg. of 3.5k Malls 33% sqm of sales area per store) Economax: 55% Food Reta

  33. Slide 33: Appendix

    1 INRETAIL OVERVIEW 2 INVESTMENT THESIS 3 Q4’19 FINANCIAL RESULTS 4 CAPEX GUIDANCE 2020-2022 5 APPENDIX

  34. Slide 34: Composition of Stores by Age

    Composition of Stores by Age Food Retail 5% 8% 9% 8% 8% 8% 10% 11% 6% 14% 16% 14% 12% 6% 5% 4% 4% 7% 9% 4% 6% 5% 8% 6% 5% 7% 7% 8% 12% 5% 7% 3% 4% 6% 7% 6% 81% 81% 82% 82% 82% 79% 77% 76% 74% 73% 73% 71% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Mature 2-3 years 1-2 yea

  35. Slide 35: Cash Cycle

    Cash Cycle Food Retail Pharma 1/ 141 121 120 119 121 117 110 108 114 105 104 106 84 89 90 83 77 75 76 79 78 72 66 70 35 28 27 25 25 25 23 25 3 3 3 4 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 -16 -10 -13 -13 -4 -14 -23 -24 -22 -19 -29 -32 Days Acc Payables Inventory Turn

  36. Slide 36: Disclaimer

    This material was prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities. This presentation may include forward-looking statements or statements about events or circumstances which have not yet occurred. We have based these f

  37. Slide 37: For more information contact

    For more information contact: ir@inretail.pe www.inretail.pe

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