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CORPORATE PRESENTATION
Grupo Pão de Açúcar and Viavarejo
April, 2012
ABOUT GRUPO PÃO DE AÇÚCAR
2
Data as of December 31, 20112 In the past 14 quarters, according to Brazilian Supermarket Association (ABRAS)
> Key figuresR$ 52.7 bi Sales
#1 Retailer in Brazil
Growth higher than
the 2nd player’s2
> Operational > 1.8k points of sales, located in
19 States and the Federal District
> Multi-format distribution
> 635 million tickets per year
> 2.8 million m² of sales area
NEW MANAGEMENT MODEL ADJUSTED IN 2011
3
MetricCommercial/Supply Chain
and IT
Corporate Services / Finance
People
Retail Cash & Carry
Metric Metric Metric Metric Metric
Metric
Metric
Metrics:1. Net Income2. Valuation/EVA3. ROCE4. Growth/Expansion5. Customer satisfaction6. Our people satisfaction
Corporate RelationsMarket Strategy
Management Control
CEONova
PontoComSpecialized Electronics
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GPA STORES AND FORMATS
Stores as of 4Q11.
# StoresG
PA F
OO
DEL
ECTR
ON
ICS
/ H
OM
E A
PPLI
AN
CE
Supermarkets
Cash & Carry
Hypermarket
Proximity
Gas stations andDrugstores
Specialized Stores
B2C
B2B
363
59
132
72
232
945
-
-
RETAIL MOMENTUM IN BRAZILRETAIL MOMENTUM IN BRAZIL
Rise of the Purchasing Power
Focus on Middle Class Population
Informality Reduction
Distribution Channels Diversification
2014 World Cup
2016 Olympic Games
BRAZILIAN SCENARIO
ECONOMIC SCENARIOECONOMIC SCENARIO
GDP Growth
Social Rise
Greater Credit Offer
2014: 5th largest consumermarket of the world
2020: expense of Brazilianhomes: R$ 5,000 bn
MACROECONOMIC ENVIRONMENT PROSPECTS UNTIL 2014
Source: IBGE / Forecast of Treasury Department of Brazil SPE – Márcio Holland (Julho 2011), Tendências Consultoria , Exame Magazine (June 29, 2011) and GPA Strategic Planning Analysis
Brazilian economy is going through a unique moment of stable growth and income distribution;It is expected that growth will continue despite recent uncertainty in the global market place;Interest and inflation should fall in the long term after monetary tightening of 2011;Continuity of income distribution with a significant migration of families to the higher-income groups;
HIGHLIGHTSHIGHLIGHTS
STABILITY INFLATION & INTEREST RATES
STABILITY INFLATION & INTEREST RATES
GROWTHGROWTH INCOME DISTRIBUTIONINCOME DISTRIBUTION
25,6 23,1 21,9 20,7 19,4
29,2 30,3 31,0 30,8 30,8
29,3 31,4 31,7 32,4 32,8
15,9 15,1 15,4 16,2 17,0
20142012201020082006
Class D / EClass C
Class BClass A
20142012201020082006
5.5%5.5%5.0%
4.5%
7.5%
‐0.6%
5.2%
6.1%
4.0%
GNP Growth(% Actual Growth)
Evolution of Total Income (%)
Projection Projection
Projection
4,5%5,9%
4,3%
5,9% 5,9%4,8% 5,0%
15,2%
12,4% 12,0%13,1%
11,7%
10%
8%
6%
16%
14%
12%
4%
2%
0%20142012201020082006
9.8%
3.1%
12.0%
10.0%
Nominal Interest Rate (Selic)Inflation (IPCA)
Social Class
Income(monthy)
A Above R$9,050
B From R$6,941 to R$9,050
C From R$1,610 to R$6,941
D From R$1,008 to R$1,610
E Below R$1,008
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MACROECONOMIC ENVIRONMENT EMPLOYMENT AND INCOME
HIGHLIGHTSHIGHLIGHTS
5,1%5,7%6,2%6,4%6,7%8,1%7,9%
9,3%10,0%
0%
2%
4%
6%
8%
10%
12%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Analysts expect an unemployment level of around 5% for 2014;
Income and total payroll continue to follow an expansion path, but at a more modest pace than in 2010;
Increase in the minimum wage in 2012, estimated at 14%, will boost total income growth;
2013
1.568
2012
1.488
2011
1.409
2010
1.332
2009
1.235
2008
1.197
2007
1.122
2006
1.074
2014
1.659
Unemployment rate (IBGE %)
Projection
Projection CAGR 10-14 = 5.6%CAGR 06-10 = 5.5%Year Base 2009 Value (R$ Bn)
EMPLOYMENT EMPLOYMENT
REAL INCOME GROWTHREAL INCOME GROWTH
Source: Tendências Consultoria and GPA Strategic Planning analysis7
MACROECONOMIC ENVIRONMENTDEBT AND INCOME AVAILABLE FOR CONSUMPTION
HIGHLIGHTSHIGHLIGHTS
60%54%
49%46%41%
37%34%27%
24%
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011 2012 2013 2014
In the medium term the rate of granting credit shall resume previous levels with the reduction of interest rates after the monetary tightening cycle of 2011;
Thus, the level of debt shall rise significantly;
Even so, the income available for consumption should not be affected due to a change in the profile of this debt -more stretched, due to the expansion of mortgage credit, and cheaper because of the decline in interest rates;
874 929 987
2014
1.333
2013
1.261
2012
1.201
2011
1.154
2010
1.105
2009
1.020
200820072006
= Total Income Less Interest and Principal
ProjectionCAGR 10-14 = 4.8%CAGR 06-10 = 6.0%
Debt level = Debt stock as % Income
DEBTDEBT
REAL GROWTH OF INCOME AVAILABLE FOR CONSUMPTION
REAL GROWTH OF INCOME AVAILABLE FOR CONSUMPTION
Year Base 2009 Value (R$ Bn)
Projection
Source: Tendências Consultoria and GPA Strategic Planning analysis
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COMPANY CHANGES AS THE ENVIRONMENT MOVES
9Population in each social class (in million)
GPA: limited offering (only Food, 556 stores)
GPA: limited offering (only Food, 556 stores)
GPA: multiformat business for both Food and Electro, 1,647 stores
GPA: multiformat business for both Food and Electro, 1,647 stores
92,9MM
26,4MM
62,7MM 101,7MM
C
A/B
42,2MM
47,9MM
D/E
20052005 20102010
32mnEmerged only
in 2010
CA
SH &
CA
RRY
E-C
OM
MER
CE
CHANGE IN STORES FORMAT WITH IMPROVED ASSORTMENT OF HIGHER VALUE-ADDED PRODUCTS
10
New layout favors categories with higher value-added
New layout favors categories with higher value-added
MerchandiseMerchandise PerishablesPerishables
Jun/10: conversion process begins
• 221 stores
Aug/11
• Increased exposure of higher value-added products
• 93 converted stores in July-August
• SSS >15% since 4Q10
Bakery
Checkouts
Groceries
FruitsVeg.
DairyProtein
Frozen Fish
Checkouts
Groceries
FruitsVeg.
DairyProtein
Fish
Bakery
Coffee
Froz
en
Conversion
11
Sales Area : from 200 to 300m²Bakery : services and broaden assortmentof productsSliced cheese/meat : sliced at thepurchase moment , self-service exposureand broaden assortmentButchery : customized servicesGroceries : refined products lineFruits/Vegetables : day-by-day productsbetter exposed.Differentiation AB/CD income classesSKUs: 3,600
Groceries: 2,600Perishables: 1,000
Sales Area: from 150 to 200m² Bakery: baken product (self-service)
Sliced cheese/meat: ready-to-go (fromindustry)
Butchery: vacuum packedGroceries: day-by-day productFruits/Vegetables: day-by-day product
Low differentiation AB/CD income classesSKUs: 3,600
Groceries: 2,800Perishables: 800
Previous Format(Focus: groceries, self-service)
Previous Format(Focus: groceries, self-service)
New modelNew model
Conversion
CHANGE IN STORES FORMAT WITH MORE PERISHABLES AND SERVICES
RETAIL INNOVATION AND PIONEERING GOES ON
Fashion in Extra• New positioning: near to specialized stores in terms of collection, communication and suppliers, but with hypermarket pricing strategy
Private Label Development• Strategic approach due to higher margin, profitability and customer loyalty
• Focus to increase share, with product life cycle management, quality control and more innovation
Perfumery • Scenario: Competition against Pharmacy, D2D and Beauty Salons• Actions: Exclusive products and exposition, reference for New product launch, beauty Consultant, growth in high penetration categories
GROWTH HIGHER THAN THE 2ND PLAYER
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Same Store Sales
2nd player
14 Quarters
8.5%
4.3%
10.3% 10.4%
4.6%
13.2%
9.7%
10.6%
15.0%
9.9%
12.5%
11.5%
6,8%
10.1%9.5% 8.7%
7.1%
8.6% 8.4%
7.8%
2.3%
7.2%
3.9%4.8%
8.7%
2.9%
5.2% 5.6% 5.0%
7.1%5.7%
4.8%
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
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GPA STORES CHARACTERISTICS
GPA FOOD Public Stores
Avg Sales Area (m2)
ABCD classes 132 6,000
AB classes 159 1,500
BCD classes 204 1,500
TransformersFood service 59 4,000
ABCD classes 72 300
Public Stores
ABC classes 401
CD classes 544
VIAVAREJO
REGIONAL PRESENCE (STORES)
Stores as of 4Q11.Gas station and drugstores are not included.
NorthHyper: 1
Cash & Carry: 1
Total: 2
Middle-WestSuper: 13
Hyper: 12
Electro: 82
Cash & Carry: 3
Total:11017
North-EastSuper: 29
Hyper: 17
Electro: 35
Cash & Carry: 6
Total: 87
South-EastSuper: 317
Hyper:100
Electro: 741
Cash & Carry: 49
Proximity: 72
Total: 1,279
SouthSuper: 4
Hyper: 2
Electro: 87
Total: 93
51 Distribution Centers in the country
GDP: 5.1%GDP: 5.1%
GDP: 9.2%GDP: 9.2%
GDP: 13.1%GDP: 13.1%
GDP: 56.0%GDP: 56.0%GDP: 16.6%GDP: 16.6%
REGIONAL PRESENCE (STORES)
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OWNERSHIP STRUCTURE
37%
63%
47%53%
50% 6%
44%
FICFinancial JV 14%
36%
Banco Itaú
50%
Free Float
Controlling Group
Casas Bahia FoundersKlein Family
Management
As of January 31, 2012.
4Q11 AND 2011 HIGHLIGHTS – GPA CONSOLIDATED
Conclusion of the conversion of 221 stores from CompreBem and Sendas;
Review of Assaí’s management model;
Review of management and positioning model of proximity format (Extra Fácil Mini Mercado Extra);
Intensification of the integration between Ponto Frio and Casas Bahia;
Adjustment in all formats’ assortment
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Operational EvolutionOperational Evolution
GPA CONSOLIDATED – HIGHLIGHTS 2011
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>GROSS SALES: R$ 52.7 bi +45.8% vs. 2010
>GROSS PROFIT: R$ 12.7 bi +61.3% vs. 2010
>EBITDA: R$ 3.0 bi +49.6% vs. 2010
GPA Food: R$ 28.4 bi – SSS: 8.0%Viavarejo: R$ 24.2 bi – SSS: 10.1% (inclusion of Casas Bahia in comparison base)
GPA Food: R$ 6.6 bi – Margin: 25.9%Viavarejo: R$ 6.0 bi - Margin: 28.8%
GPA Food: R$ 1.9 bi - Margin: 7.6% / Retail: 9.7% in 4Q11Viavarejo: R$ 1.1 bi – Margin: 5.2%
GPA FOOD: 4Q11 AND 2011 HIGHLIGHTS
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New layoutGreater participation of perishablesAssorment adjusted to the new consumer habits of the middle income class
New target: distributors and users Reduction of services renderedReformatting of sales area for inventory optimization (overground)
Before conversion: focus on groceriesAfter conversion: more perishable items and more services (bakery, butchery)Onset of accelerated expansion
Evolution ResultsGrowth in customer trafficTwo-digit growth in ‘same-store’ sales
Accelerated turnover and increased return on capital employedTwo-digit growth in same-store salesMargin gain from model adequacy
Increase in average ticket due to the addition of new categories and better assortmentIncreased frequency of purchaseTwo-digit growth in same-store sales
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Growth significantly above marketIncrease in sales, traffic and conversion rate
Net profit of R$ 27 million, up 1 p.p. in net margin
Stronger reliability in deliveryClassification Diamond and “Reclame Aqui” award
Evolution ResultsNew record – Black FridaySales mix improvement, with higher margin items – increase in participation of strategic categories
All e-commerce guidancesreached
Incremental sales and customer relationshipBest use of brand in social network – Social Media Week
Reputation
Growth
Profitability
NOVA PONTOCOM: 4Q11 AND 2011 HIGHLIGHTS
Consolidated Net Debt (R$ bi)
4,4 3,8
3T11 4T11
Net Debt/EBITDA1
1.6x 1.2x
Net debt/EBITDA ratio: 1.2x
> 4Q11 net debt below 3Q11
1 Debt calculated through adding of debentures, loans and financing and paymentbook (CDCI). 12 months ended Dec. EBITDA
Adjusted Net Profit (R$ mi)
569,6
898,7
1,8%1,9%
2010 2011
57.8%
618,5718,2
1,9%1,5%
2010 2011
Accounting Net Profit (R$ mi)16.1%
GPA CONSOLIDATED: NET PROFIT AND DEBT
21
% of net sales
4Q113Q10
INVESTOR RELATIONS CONTACTS
Grupo Pão de Açúcar (GPA) | Viavarejo
Investor Relations TeamPhone: +55 (11) 3886‐0421 Fax: +55 (11) 3884‐2677
FORWARD‐LOOKING STATEMENTS> The forward‐looking statements contained herein are based on our management’s currentassumptions and estimates, which may result in material differences regarding future results,performance and events. Actual results, performance and events may differ substantially from thoseexpressed or implied in these forward‐looking statements due to a variety of factors, such as generaleconomic conditions in Brazil and other countries, interest and exchange rate levels, legal andregulatory changes and general competitive factors (whether global, regional, or national).
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