Third QuarterResults 2014
Corporate Presentation
2Third Quarter www.cencosud.com
The information contained herein has been prepared by Cencosud S.A.
(“Cencosud”) solely for informational purposes and is not to be construed as
a solicitation or an offer to buy or sell any securities and should not be
treated as giving investment or other advice. No representation or warranty,
either express or implied, is provided in relation to the accuracy,
completeness or reliability of the information contained herein. Any opinions
expressed in this presentation are subject to change without notice and
Cencosud is under no obligation to update or keep current the information
contained herein. The information contained herein does not purport to be
complete and is qualified in its entirety by reference to more detailed
information included in the preliminary offering memorandum. Cencosud
and its respective affiliates, agents, directors, partners and employees accept
no liability whatsoever for any loss or damage of any kind arising out of the
use of all or any part of this material.
This presentation may contain statements that are forward-looking subject
to risks and uncertainties and factors, which are based on current
expectations and projections about future events and trends that may affect
Cencosud’s business. You are cautioned that any such forward-looking
statements are not guarantees of future performance. Several factors may
adversely affect the estimates and assumptions on which these forward-
looking statements are based, many of which are beyond our control.
3www.cencosud.com
3Q
14
Hig
hlig
hts
•Revenues Pushed Higher by Supermarkets, Home Improvement, Financial Services & Shopping Centers
• Supermarket Sales continue to Gain Traction in Chile, Peru, Argentina & Colombia
•Operating Income Remained Flat while including D.O.
•Adjusted EBITDA Grew 0.6% YoY.
•Net Income Fell on 35% on a Higher Non-Operating Loss Partially Offset by Lower Tax Expenses.
• Jaime Soler, Corporate Retail Manager Takes Over as CEO after Daniel Rodriguez Exits
Third Quarter
4www.cencosud.comThird Quarter
Revenue by Country (CLP mm)Revenue Evolution (CLP mm)
• Revenue gains in Supermarkets, Financial Services, HI andShopping Centers Pushed Revenue up by 6.8%
• Department Store Business Affected by Lower DiscretionarySpending
• Devaluation of 18.4% of the ARS Curbed Further Revenue Gains
• Colombia SSS Reached Breakeven, According to Budgeted. BrazilSSS posted sequential narrowing
5www.cencosud.comThird Quarter
EBITDA by Country (CLP mm)Adjusted EBITDA Evolution (CLP mm)
• Double digit growth in Home Improvement EBITDA
• Lower Contribution From D-Stores, Shopping Centers and Supermarkets.Argentina´s EBITDA Contribution Fell (CLP 10,018 MM) due to the SecondInstallment of Collective Bargaining Agreements and ARS Depreciation
• Department Stores Posted a Weaker Performance in Chile consequence of WeakerConsumer Spending & Our Peru Greenfield
• Supermarkets EBITDA Fell in Argentina & Brazil; EBITDA Rose in Chile, Colombiaand Peru
www.cencosud.com 6Third Quarter
Stro
ng
Pe
rfo
rman
ce
in C
hile • Strong SSS Performance from Chile Supermarket on Santa Isabel
Refocus. Adjusted EBITDA Mg expansion of 200 Bps
• SG&A Control Helps Drive 32% Growth in Adjusted EBITDA Chile
•Well Positioned to Compete in Slowing Retail Environment
7Third Quarter 7Third Quarter
Supermarkets
Revenue evolution (CLP mm) Adjusted EBITDA evolution (CLP mm)SSS evolution by country in local currency
8www.cencosud.com
• Revenue was boosted by SSS Improvements in all Markets v 3Q13
• 9 Net Store Openings YoY or 1.5% Selling Space Growth
• Colombia Reached Positive SSS in the Period According to Guidance
• Argentine operations posted a 64% EBITDA Contraction YoYmainly as a result of the second instalment of Collectivebargaining agreements.
• Brazil posted a weak EBITDA generation due to Lower GrossMargin; partially explained by Greater Shrinkage. The above waspartially offset by SG&A Dilution
• Chile, Colombia & Peru Posted EBITDA 28% on increasedpromotional Activity and SG&A Dilution
Third Quarter
www.cencosud.com 9Third Quarter
Eye
On
Co
lom
bia
Cencosud has Successfully Positioned its Brands in Colombia as Market Leaders in Perishables
SG&A Dilution as a Result of an Improved
Sales Performance
Jumbo Brand in Particular Gaining Strong Momentum Among Consumers
www.cencosud.com 10Third Quarter
Brazil Remains a Challenge
Revenue evolution (CLP mm) Adjusted EBITDA evolution (CLP mm)SSS evolution by country in local currency
11
Home Improvement
www.cencosud.com
• Stronger sales across all markets; Following 6 new openings and positiveSSS in Argentina and Chile
• ARS depreciation curbed revenue expansion for Argentine operations
• Colombia SSS reflect the effect of competing stores opening over a smallbase for SSS
• Gross Margin Expanded in All Operations; 34.2% in 3Q14 v. 32.7% in 3Q13. InChile this is partially explained by a greater Retail component to our Sales mix
• Chile EBITDA Jumped Due to Lower SG&A Over Sales Resulting from GreaterProductivity
• Profitability in Argentina was Affected by the Second Instalment of CollectiveBargaining Agreements
• EBITDA loss in Colombia Narrowed despite negative SSS trends
Third Quarter
Revenue evolution (CLP mm) Adjusted EBITDA evolution (CLP mm)2014 SSS evolution in local currency
12
Department Store
www.cencosud.com
• Focus on Promotions to Spark Recovery of Durables as aNegative Knock on Effect of Demand Shifting to 1H14 onthe World Cup
• New Fast Fashion Proposal to Revive Sluggish ApparelSales on Slower Discretionary Spending
• Greater Degree of Promotions in Face of ChileanConsumer Spending Affected by Weaker Confidence
• Peruvian Increase in Sales Mainly Explained by SellingSpace Growth
Third Quarter
• Chile EBITDA Dropped 49% and EBITDA Margin Narrowed110 bps. This follows a move to protect the profitability ofthe operation in a seasonally weaker quarter, improvingthe trend seen in 2Q14 (-520 bps).
• Softer Apparel Sales Weighed on Margins at Paris Chile
• Clearance Sales at Our Paris Stores Vying to KeepInventories in Check Eroded Profitability
• Negative Effects of FX a Thing of the Past as of Sept.
Chile EBITDAPeru EBITDA
13
Shopping Centers
www.cencosud.comThird Quarter
Revenue evolution (CLP mm) Adjusted EBITDA evolution (CLP mm)
• Revenue Growth Fueled by High Occupancy rates in Chile & Peru
• Costanera Center Posts Great Traffic Figures and Resiliency to Slowdown
• EBITDA in Chile Affected by Refunding of Building Expenses to Tenants
• Margins in Argentina Affected by Weaker Consumption
• Peru Gross Margin Gains partially Offset Drops in Chile andArgentina on Greater Occupancy
14
Costanera Center
www.cencosud.comThird Quarter
• Cencosud is Currently On Track to Deliver on Traffic and Environmental MitigationWorks in Late 1Q15
• Jones Lang & LaSalle Has Been Hired to Consult on the Leasing Process for CostaneraCenter Tower
• Demand for Office Space Continues to be Strong in the “Sanhattan” Area,
• Currently Leasing Out Low Rise Section of Costanera Center. Process to Go on For1Q14.
• Focus Right Now on Closing Anchor Tenants
• 15,000 m2 of Office Space
• Commercial strategy in Line with That of Comparable Developments in the Area
15
Financial Services
www.cencosud.com
• Revenue Growth was Mainly Led by Argentina, Peru & Colombia due to increased portfolios
• Results Improved in Argentina, Peru & Colombia on the back of lower risk and a larger portfolio
• Regulatory Changes at our banking operations and a CLP 3,902 million charge in anticyclical provisions in Chile Pushing Operating Income Downward
Third Quarter
All
po
rtfo
liova
lues
are
MM
inlo
calc
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ency
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Financial Ratios
www.cencosud.com
Breakdown by Issuer
Third Quarter
Net debt evolution (US$ bn) Net leverage (net debt / EBITDA)
Breakdown by Rate
(after CCS)
Breakdown by Currency
(after CCS)
17
Amortization Schedule
www.cencosud.com
• This chart does not incorporate any pay down of debt with funds to be received from the announced JV in financialservices in Chile
• Amortization data as of September 30, 2014
FIN
AN
CIA
L D
EB
TU
SD
MM
Third Quarter
16
Financial Services
Update
www.cencosud.com 18Third Quarter
www.cencosud.com 19
Timeline for Closing
• *: SBIF stands for “Superintendencia de Bancos e Instituiciones Financieras”. This is a Chilean government agencycharged with the supervising of commercial banks and other financial institutions, safeguard depositors and or creditorsand the public interest.
Third Quarter
20
Early Redemption of Domestic Bond Issuance
www.cencosud.comThird Quarter
• Proposed covenant change on bondholder meeting held on September 4th. The amendment to the issuance was only passed for line 530.
• Bondholders of issuance 530 were paid a fee for the covenant amendment of 0.25% of the issuance´s outstanding amount.
• On October 17th the company announced the early redemption of bonds issued under domestic line 443.
• Issuance 443 has an outstanding amount of UF 10,000,000 or USD 410 MM and is callable at par.
• The early redemption of said bonds is to be carried out on November 19, earliest coupon date, in CLP according to the value of the UF on the redemption date.
• On October 20th, the Company received regulatory approval from the Canadian regulator for this transaction
• The Company expects that the redemption of such bonds would pave the way, pending regulatory approval in Chile, for the full implementation of the Joint Venture Framework Agreement entered into with Scotiabank.
• The company entered into a bridge-loan facility to finance the early redemption of the aforementioned bonds
21
Tax Reform
www.cencosud.comThird Quarter
Cencosud book on the adoption of the partially integrated taxation system an increase of c. CLP 24,900 million in net deferred tax liabilities.
• CLP 1,200 million booked on 2014 results related to the increase in the corporate income tax rate, from 20% to 21%
• Additional tax provisions could be made if Cencosud´s shareholders were to choose an attributed income regime
• SEC fillings incorporate the effect of the tax reform on net differed liabilities on the Company's P&L following IFRS rules
• The effect on revaluation of assets of the Tax Reform was already included in 2Q14 results.
• The aforementioned effects are non-cash
A reconciliation of SVS and SEC financial statements is available on Cencosud´s 3Q14 Earnings Release.
Chilean positioning remains strong,
even in weakening environment
Manage impact of Argentina, drawing
on decades of experience
Brazil Remains a Challenge
Scotiabank transaction to
provide additional financial flexibility
Build on improved performance in
Colombia
22
Positioning
for 2015
www.cencosud.comThird Quarter
23
Marisol Fernández León
IR Manager
Phone +562 2959 0545
Natalia Nacif
Senior IR Analyst
Phone +562 2959 0368
Ignacio Reyes
Senior IR Analyst
Phone +562 2959 0804
Upcoming Events
Jan 2015
CNCO Full Year 2015 Guidance Release
March, 27th – 2015
4Q14 Earnings Report