earnings presentation third quarter...

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Third Quarter2019

EARNINGS PRESENTATION

Disclaimer

Cencosud and their respective affiliates, officers,directors, partners and employees accept no liabilityfor any loss or damage of any kind arising from theuse of all or part of this material.

This presentation may contain statements that aresubject to risks and uncertainties and factors, whichare based on current expectations and projectionsabout future events and trends that may affect thebusiness of Cencosud. You are cautioned that suchforward-looking statements are not guarantees offuture performance. There are several factors thatcan adversely affect the estimates and assumptionson which these forward-looking statements arebased, many of which are beyond our control.

The information contained in this presentation has beenprepared by Cencosud SA ("Cencosud") for informationalpurposes only and should not be construed as asolicitation or an offer to buy or sell securities andshould not be treated as giving investment advice orotherwise. No representation or warranty, express orimplied, is provided in relation to the accuracy,completeness or reliability of the information containedherein. The views expressed in this presentation aresubject to change without notice and Cencosud has noobligation to update or keep current the informationcontained herein. The information contained in thispresentation is not intended to be complete.

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Overview of Corporate Structure

New organizational model

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Chief Executive ManagerMatias Videla

Brazil ManagerSebastian Los

Peru ManagerAlfredo Mastrokalos

Colombia ManagerMarta Lucia Henao

SM ChileCristian Siegmund

Dept. Store ChileRicardo Bennett

Home Imp. ChileFelipe Longo

Argentina ManagerDiego Marcantonio

• New CEO, Matias Videla appointed.• Effective December 1, 2019

• As of November 21, 2019 the Companyimplemented a new organizational structure.• Appoints Country Managers.

• The purpose of the new structure is to:• expedite decision making (such as

organic growth),• take further advantage of local market

knowledge as they are close to the dailyoperation,

• promote efficiencies across eachcountry across the business units.

Organizational Structure1

1. Abbreviations are defined as follows: SM: Supermarket manager, Dept. Stores: Department Stores Manager, Home Imp: Home Improvement manager.

Cencosud Financial Strengthening

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• In August, Cencosud Shopping issued a bond in the localmarket for a total of UF 9 million equivalent to USD 347million.

• As part of the Company’s plan to strengthen the balancesheet, it executed a Tender offer for the 2023, 2025 and2027 international bonds collecting USD 464 millionduring 3Q19.

• Prudent financial policies resulted in stronger creditmetrics on a sustainable basis, leading to a netdebt/Adjusted EBITDA ratio of below 4x times by yearend.

• Prepayment fees amounted to USD 52 million in thequarter.

Key financial takeaways

1 Figures converted to USD using end of period exchange rate as of September 30, 2019

Debt Consolidation USD MM

Total gross debt as of December 31, 2018 4.722

variation Brazil debt 256 -

variation Chile debt 132 -

Cencosud Shopping Bonds 742

Tender Offer 464 -

Other bank debt paym ents 494 -

Other accounting effects 84

variation of Other countries debt 5 -

Total paid debt 393 -

Total gross debt as of September 30,2019 4.328

Total liabilties per leases (IFRS16) 1.392

Cash and equivalents as of September 30, 2019 - 787

Other current financial assets - 476

Other non-current financial assets - 243

Total net debt as of September 30, 2019 4.214

53 48 156

53

605

34

577

50

987

213

424

14

192

581

19 20 21 22 23 24 25 26 27 28 29 30 41 45

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Key Figures1

1 Figures converted to USD using end of period exchange rate for each period.

2 Figures converted to USD using end of period exchange rate as of September 30, 2019. Figures are presented net off gains/losses from mark to market of derivatives, overdrafts and Comex debt.

3 EBITDAR does not consider the extraordinary gains from sales of banco Cencosud and Paris or profit of the businesses. Adjusted Debt considers liabilities from leases but excludes the debt of

Cencosud and Paris banks.

Amortization Schedule (USD mn)2

• Total net debt increased due to adoption of IFRS16• Excluding this effect, total net debt decreased 28.4%

YoY.• Fitch Ratings updated the rating including a negative

watch for the Company, due to the uncertainties inChile and challenges in Argentina. Offset by:• Net leverage ratio is 3.8x• Adequate liquidity • Good access to capital markets • Manageable debt maturities


Adj. Gross Debt/EBITDAR ratio vs Net Financial Debt/Adj. EBITDAR3

5,0 4,9 4,9 5,5 5,7

3,3 3,23,7

4,2 3,8

2015 2016 2017 2018 LTM 3Q2019

3Q19 3Q18

Total Financial Debt (US$ Bn) 5,7 4,7

Cash and equivalents (US$ Mn) 787 202

Other Financial Assets (US$ Mn) 719 508

Net Financial Debt (US$ Bn) 4,2 3,9

Adj. EBITDA LTM (US$ Mn) 1.119 916

Net Financial Debt / Adj. EBITDA LTM 3,8 4,3


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Debt by Currency1 Debt by Interest Rate1

CLP + UF; 73%

USD; 20%

Other Latam; 7%

Fixed; 96%

Floating; 4%

Fixed; 81%

Floating; 19%

3Q19

3Q18

• 71.2% of cash is held in USD vs 7.3% the previousyear

• Other LATAM currency exposure reduced due tothe payment of Brazilian debt

• Most derivative hold a positive mark to market• Chilean peso devaluation didn’t create need for

additional assets as collateral

1 Debt by Currency and Debt by Rate include Cross Currency Swaps.

CLP + UF; 86%

USD; 13%

Other Latam; 1%

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Advances in strategic pillars

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Strategic Focus: Omnichannel1

Supermarket

• Chile new Jumbo app with expressdelivery

• Argentina: efforts focused onincreasing web page visibility on theinternet

• Colombia: increasing Metro websitecoverage. Expanding on Omni-services

• Peru: focused on product offer onwebsite.

Home Improvement

• Chile: focused on post-saleautomatization and offering moreOmni-services to clients

• Argentina: focused on payment option

• Colombia: increasing onlineassortment

DepartmentStores

• Chile:

• Positive results after the changesmade to the lay-out andefficiencies in the picking process

E-commerce Sales VAR % 19/18

Ov. Tot. Sales

3Q19

Over Tot.

Sales 3Q18

Supermarkets 40,5% 1,9% 1,2%

Department Stores 25,3% 12,0% 8,5%

Home Improvement 41,1% 4,0% 2,6%

Total 33,9% 3,4% 2,2%

Supermarket e-commerce figures considers e-commerce and total sales of Chile, Argentina, Peru and Colombia. Department Stores considers online and total sales of Chile. Home Improvement considers online and total sales of Argentina, Colombia and Chile.

Sustainability strategy update

• Dow Jones index (10 points improvement)• Improvement in environmental (+18 pts) and social

areas (+14 pts)

• Moved up three position in the international ranking, 12th in supermarkets category

• Environmental compliance program

• Eco-packaging training

• Responsible Procurement On-going Projects• Ethics Code for suppliers

• Community bond program

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Chile & Colombia civil unrest

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Situation & Impacts:• Businesses were impacted due to the

experienced civil unrest• Inventory losses, damage to some stores and

loss of earnings are covered by insurances.• To date, in Chile, more than 95% of our stores

are open

Support to Micro – and Small Enterprise Chile yshopping centers tenants:• Payment of bills in advance to micro and

small suppliers• amounted to CLP 941 million in

November 2019• Reduction of the monthly minimum value for

tenants• equivalent to the number of days our

Shopping Centers were closed.

Quarterly results

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Executive Summary

• Adjusted EBITDA1 margin expanded 161 bps excluding IAS29 accounting andincreased 164 bps As Reported supported by operational improvements in Brazil,Colombia and to a lesser extent, Argentina as well as lower SG&A due to theadoption of IFRS16 rule2. This was partially offset by the softer consumption in Chile,weak macroeconomic environment in Argentina and higher severance payment ofalmost USD 40 million as we continue to drive efficiencies throughout the business.

• At constant exchange rates, revenue increased 7.1% YoY. Under previous accountingstandards which excludes IAS29 (hyperinflation accounting in Argentina) effectivesince 3Q18, revenues decreased 1.1% due to the depreciation of ARS and BRLagainst the CLP. As reported, and including IAS29, revenues increased 14.7%.

• Profit increased to CLP 52.131 million in 3Q19 in comparison to a loss of 15.339million reported the previous year. The increase is explained by the better results ofBrazil and Colombia, lower expenses due to IFRS16 and higher income by functionresults.

1. Adjusted EBITDA: Gross profit + Other income by function + Other gains (losses) – SG&A + D&A + profit of equity method associate - Asset Revaluation2. IFRS16 rules states all leases exceeding 12 months in length and not of low value, should be recognized in the balance sheet.

In million of chilean pesos as of September 30,

Local

Currency

9M19 9M18 Var % 9M19 9M18 Var % Var%

Revenues 6.748.874 6.690.259 0,9% 6.833.030 7.124.975 -4,1% 6,3%

Gross Profit 1.881.157 1.887.983 -0,4% 1.915.943 2.035.472 -5,9% 8,9%

Gross Margin 27,9% 28,2% -35 bps 28,0% 28,6%

SG&A -1.622.044 -1.640.858 -1,1% -1.633.080 -1.762.077 -7,3% 5,9%

Operational Result 554.698 317.652 74,6% 575.311 342.541 68,0% 79,8%

Non Operational Loss -253.642 -175.979 44,1% -237.194 -222.020 6,8% 10,3%

Taxes -120.577 -91.229 32,2% -99.026 -79.725 24,2% 23,0%

Profit 180.478 50.443 257,8% 239.091 40.796 486,1% 367,2%

Adjusted EBITDA 603.248 429.112 40,6% 611.604 449.466 36,1% 49,8%

Adjusted EBITDA Margin 8,9% 6,4% 252 bps 9,0% 6,3%

Comparable

-53 bps

264 bps

As reported

In million of chilean pesos as of September 30,

Loc.

currency

3Q19 3Q18 Var % 3Q19 3Q18 Var % Var %

Revenues 2.135.217 1.860.936 14,7% 2.270.097 2.295.653 -1,1% 7,1%

Gross Profit 581.015 494.329 17,5% 627.228 641.818 -2,3% 9,2%

Gross Margin 27,2% 26,6% 65 bps 27,6% 28,0%

SG&A -514.891 -458.671 12,3% -550.376 -579.889 -5,1% 4,6%

Operational Result 166.065 47.823 247,3% 175.158 72.712 140,9% 140,4%

Non Operational Loss -115.257 -26.003 343,2% -122.040 -72.044 69,4% 69,6%

Taxes -4.628 -27.510 -83,2% -987 -16.007 -93,8% -130,7%

Profit 46.180 -5.691 n.a 52.131 -15.339 n.a n.a

Adjusted EBITDA 141.362 92.710 52,5% 148.366 113.064 31,2% 45,4%

Adjusted EBITDA Margin 6,6% 5,0% 164 bps 6,5% 4,9%

ComparableAs reported

-33 bps

161 bps

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3Q19 & 9M19 Highlights1,2,3,4

Consolidated 3Q19 Results

1 As Reported includes hyperinflation per IAS29 rule in Argentina, using the end of the period accumulated inflation and ARS against CLP conversion rate.3 Comparable: considers quarter and accumulated results with previous accounting methodology, using an average exchange rate per month to CLP of all currencies.3 Local currency reported in local currency for each country and converted to CLP at constant exchange rate4 Further details of IAS29 (inflation and conversion effect) are available at the end of the 3Q19 Earnings Report.

Consolidated 9M19 Results

Supermarkets

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Results1

Supermarket SSS by Country & Food Inflation

Revenues increased YoY by 0.6% in CLP and 6.9% in localcurrency reflecting the depreciation of ARS and COP againstCLP. Revenues in local currency increased driven by revenuesin Argentina, Chile and Colombia partially offset by Braziland Peru.

Adjusted EBITDA increased 21.6% in CLP YoY explained bythe adoption of IFRS16 across countries. Excluding thiseffect, Adjusted EBITDA margin contracted YoY, reflectinglower EBITDA in Argentina, Chile and Peru, due to higherpromotional activity and increased severance expenses (inArgentina, Chile and to a lower extent Brazil). This waspartially offset by better performance in Brazil andColombia, which are seeing the benefits from controlexpenses the control in expenses.

Source: INE, IBGE, BCRP, BanRep1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

3Q19 3Q18 Chg. YoY Chg. YoY

CLP mn CLP mn

Av.

Exchange

rate

Constant

Currency

Revenues 1.670.327 1.660.226 0,6% 6,9%

Gross Profit 399.835 403.970 -1,0% 7,2%

Gross Mg. 23,9% 24,3%

SG&A (356.828) (363.185) -1,8% 7,3%

SG&A (% of revenues) -21,4% -21,9% 51 bps

Adjusted EBITDA 93.414 76.843 21,6% 21,7%

Adj. EBITDA Mg. 5,6% 4,6%

-39 bps

96 bps

Chg. YoY Chg. YoY

3Q19 3Q18 3Q19 3Q18 3Q19 3Q18

(%) (%) (%) (%) CLP mn CLP mn

Chile 1,1 3,6 2,2 2,8 711.484 697.004 2,1% 2,1%

Argentina 37,5 25,6 33,9 35,0 251.982 273.238 -7,8% 37,1%

Brazil -2,0 -1,6 4,3 1,3 323.572 307.661 5,2% -0,8%

Peru -4,5 2,0 1,7 -0,6 207.976 203.808 2,0% -2,7%

Colombia 5,3 -2,9 4,6 3,9 175.313 178.516 -1,8% 4,4%

Same Store Sales

Constant

Currency

Food Inflation Revenues

As Reported

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Results1

Home Improvement Revenues & SSS by Country

Revenues decreased 2.1% YoY explained by the depreciation ofARS against CLP. In Argentina, revenue growth in local currency isexplained by inflation increase and the Procrear programinstituted by the government. Chile and Colombia posted positiveSSS mainly due to the increase in wholesale revenues and onlinesales.

Adjusted EBITDA increased 14.9%% in CLP, affected by thedepreciation of ARS against CLP, offset by the adoption of IFRS16.Excluding this effect Adjusted EBITDA increased 4.0% explained bythe higher gross profit in Chile and Argentina partially offsethigher expense savings in Colombia.

1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

Home Improvement


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 263.407 269.109 -2,1% 20,5%

Gross Profit 87.915 88.015 -0,1% 28,1%

Gross Mg. 33,4% 32,7% 67 bps

SG&A (67.267) (71.110) -5,4% 17,9%


Adjusted EBITDA 26.589 23.141 14,9% 52,6%

Adj. EBITDA Mg. 10,1% 8,6% 150 bps

Chg. YoY Chg. YoY

3Q19 3Q18 3Q19 3Q18

(%) (%) CLP mn CLP mn

Chile 1,9 4,4 122.622 118.678 3,3% 3,3%

Argentina 37,6 25,7 123.891 133.291 -7,1% 37,8%

Colombia 4,9 5,2 16.895 17.141 -1,4% 5,0%

As ReportedConstant

Currency

RevenuesSame Stores Sales

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Results

Department Stores Revenues & SSS by Country

Revenues decreased 3.6% YoY in CLP reflecting higherpromotional activity. In Chile, SSS was affected by a drop inaverage prices, partially offset by higher online sales. In Peru,revenues increased due to higher apparel sales partially offsetby lower sales of electronic products.

Adjusted EBITDA decreased 92,4% and margin declined 235bps impacted by higher severance payments and promotionalactivity in Chile, partially offset by a decrease in expensesresulting from the lower lease expenses.

Department Stores


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 236.187 244.952 -3,6% -4,1%

Gross Profit 59.428 62.259 -4,5% -5,0%

Gross Mg. 25,2% 25,4% -26 bps

SG&A (74.893) (77.699) -3,6% -4,1%


Adjusted EBITDA (478) (6.260) -92,4% -91,8%

Adj. EBITDA Mg. -0,2% -2,6% 235 bps

Chg. YoY Chg. YoY

3Q19 3Q18 3Q19 3Q18


Chile -4,4 -3,2 211.293 222.035 -4,8% -4,8%

Peru 2,1 19,6 24.894 22.917 8,6% 3,6%

As ReportedConstant

Curency

RevenuesSame Stores Sales

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Results1

Shopping Centers Occupancy Rates & Revenues by Country

Revenues increased 1.0% YoY in CLP and Adjusted EBITDAincreased 5.7% due to greater gross profit and expense savings

• Chile: revenue growth driven by fixed revenues and slightimprovement in variable revenues. Adjusted EBITDAincreased driven by the adoption of IFRS16 and higher grossprofit reflecting liquidation of common expenses partiallyoffset by higher maintenance expenses.

• Argentina: revenues up 29.0% in local currency reflectinginflation adjustment in a portion of contracts. AdjustedEBITDA margin expanded driven by higher liquidation ofcommon costs by tenants and lower severance paymentsYoY.

• Peru: revenue growth supported by higher fixedrevenues due to the entry of new tenants. AdjustedEBITDA margin expanded driven by the adoption ofIFRS16, partially offset by higher uncollectible accounts.

• Colombia: revenues increased 2.3% YoY in COP due tohigher parking revenues. Adjusted EBITDA margincontracted due to higher property taxes expenses andvacancy.

1 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

Shopping Centers


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 58.469 57.895 1,0% 10,5%

Gross Profit 52.204 51.068 2,2% 10,7%

Gross Mg. 89,3% 88,2% 108 bps

SG&A (7.408) (8.506) -12,9% -9,4%


Adjusted EBITDA 45.355 42.901 5,7% 15,3%

Adj. EBITDA Mg. 77,6% 74,1% 347 bps

Chg. YoY Chg. YoY

3Q19 3Q18 3Q19 3Q18


Chile 99,3 99,4 39.002 37.034 5,3% 5,3%

Argentina 96,2 97,8 11.625 13.373 -13,1% 28,9%

Peru 95,3 92,9 5.719 5.281 8,3% 3,3%

Colombia 94,9 97,6 2.123 2.207 -3,8% 2,3%

As ReportedConstant

Currency

RevenuesOccupancy Rate

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• Peru: Revenues and Adjusted EBITDAdecreased as the business was no longerconsolidated as of March 1, 2019. Excludingthis effect, Adjusted EBITDA Margin expandeddue to lower risk and uncollectible.

• Colombia: Adjusted EBITDA increased mainlyreflecting lower risk charge and highercontribution from credit card partners.

Financial Services Revenues, Loan Portfolio & Risk by Country

Results2

1 Provisions over past due loan portfolio (with delinquency greater than 90 days).2 For comparative purposes and business performance analysis, figures exclude the effect of hyperinflation in Argentina.

Revenues decreased 36.0% YoY in CLP and Adjusted EBITDA was down 14.9%,due to the deconsolidation of Peru Financial Service Results.

• Chile: Adjusted EBITDA declined due to higher funding cost and higherrisk charge resulting from the increase loan portfolio

• Argentina: Adjusted EBITDA margin decreased due to higher expensesdue to inflation.

• Brazil: Adjusted EBITDA margin increased, explained by the lower risk asa result of a more conservative commercial strategy, lower YoY provisionsand uncollectible accounts.

Financial Services


CLP mn CLP mnAs

Reported

Constant

Currency

Revenues 39.227 61.281 -36,0% -7,7%

Gross Profit 26.197 34.691 -24,5% 7,4%

Gross Mg. 66,8% 56,6% 1.017 bps

SG&A (5.957) (11.758) -49,3% -27,0%


Adjusted EBITDA 24.810 29.164 -14,9% 14,2%

Adj. EBITDA Mg. 63,2% 47,6% 1.566 bps

Chg. YoY Chg. YoY Chg. YoY

3Q19 3Q18 3Q19 3Q18 3Q19 3Q18

Chile - - N.A. N.A. 1.211.923 1.054.943 14,9% 2,0 2,7

Argentina 35.640 39.438 -9,6% 34,2% 12.662.725 12.278.726 3,1% 1,7 1,0

Brazil 613 69 788,9% 718,4% 514.052 523.096 -1,7% 0,6 0,6

Peru - 20.649 -100,0% n.a 862.094 755.806 14,1% 3,1 1,8

Colombia 2.975 1.124 164,6% 177,9% 854.570 838.670 1,9% 3,1 3,0

CLP mn Local Currency (times)

Loan Portfolio NPL1Revenues

As

Reported

Constant

Currency

As

Reported

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Challenging Macro Environment Persists

• Uncertainties in Chile and Colombia due to social unrest, however moreresilient due to strong position as supermarkets

• Challenges in Argentina due to political uncertainty offset by localmanagement with prior experiences in these processes.

Financial Strengthening• The Company considers the investment grade key and will continue to reduce

debt and strengthen the balance sheet

Changes in Management• The new organizational structure and changes in management will provide a

leaner organization, faster decision making process and closer knowledge oflocal market.

Closing Comments

earnings presentation third quarter...

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