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Cencosud Reports Fourth Quarter 2013 Results

-Revenues rose 11% on selling space growth and addition of Colombian supermarkets

SANTIAGO, Chile, March 28, 2014 /PRNewswire/ -- Cencosud S.A. (BCS: CENCOSUD; NYSE: CNCO), a leading multi-format Latin American retailer with presence in five countries, announced today its consolidated financial results for the fourth quarter of 2013. All figures are in Chilean pesos (CLP), except where indicated otherwise, and in accordance with International Financial Reporting Standards (IFRS). Variations refer to the comparison between 4Q12 and 4Q13.

  • Cencosud revenue increased 11% YoY in 4Q13. Full year 2013 revenue rose 13% to CLP 10,341,040 million, with the consolidation of supermarkets in Colombia, new openings in the supermarkets division and the launch of department store operations in Peru.
  • Cencosud opened net 46 stores, with an increase of 4.7% in selling space versus 4Q12, totaling 4.3 million of m2. Larger growth in selling space was driven by 33 new supermarket stores in the region, which added 72,773 m2, 5 Home Improvement openings in Colombia, which added 38,672 m2, and the launch of department stores division in Peru, which added 6 new stores and 32,222 m2.
  • Gross profit rose 13% in CLP, with a double-digit increase in every division except Department Stores which showed single digit growth. Gross margin improved from 29.0% in 4Q12 to 29.6% in 4Q13, despite the ongoing integration of the lower-margin Colombian supermarket business and the growth of Department Stores and Financial Services in Peru.
  • Operating Income increased 23.1% in 4Q13 vs. 4Q12 due to double-digit growth in Home Improvement and in the Shopping Centers division in every country. This effect was partially offset by lower operating income from the Supermarket division in Brazil, Peru and Colombia, and Financial Services division.
  • Net income increased 40% versus 4Q12, from CLP 112,876 million in 4Q12 to CLP 158,087 million in 4Q13. This was a result of higher operating result (+23%), partially offset by higher income taxes (+16%).
  • Adjusted EBITDA[1] reached CLP 252,652 million, up 18.3% YoY due to higher adjusted EBITDA from the Others[2], Home Improvement and Shopping Centers divisions, partially offset by a lower contribution from the Peruvian, Colombian and Brazilian Supermarket operations and Financial Service division.

Management Comment

"Our results for the fourth quarter of 2013 highlight the strength of our position as a leading supermarket retailer in Chile and Argentina, as well as our expertise in Home Improvement, Department Stores, Shopping Centers and Financial Services right across South America. Together these areas represent 71% of our total revenues, and contributed to an 11% growth in revenues and an adjusted EBITDA margin that grew to 8.8%, from 8.3% in 4Q12.

Results from our Colombian and Brazilian supermarket divisions were below expectations, due to marketing and logistical reasons respectively.  Plans are in place to improve these results, including a focus on same store sales, where we have already seen signs that we are on the right track. 

In 2014, our focus will be on improving results in Colombia and Brazil while also lowering our leverage through operational excellence, reduced capex and the strategic monetization of non-core assets. We remain well-positioned in the South American retail market, with unique scale and diversity, and are confident that 2014 will be a successful year."

Consolidated Revenues

Consolidated revenues were CLP 2,863 billion in the fourth quarter of 2013, compared with CLP 2,581 billion in the fourth quarter of 2012, an 11% increase YoY. This increase was driven by higher revenues from all the business units, most notably Home Improvement and Department Stores. These factors were partially offset by the impact of currency movements, which reduced the CLP revenue from Argentina and Brazil.

  • Supermarket revenues in 4Q13 increased 10.4% YoY, reaching CLP 2,081 billion, driven by the consolidation of the Colombian supermarket division (CLP 134,446 million of higher revenues vs. 4Q12), the net opening of 33 new supermarkets in the region since December 2012 and positive 3.3% SSS in Chile and 21.5% in Argentina. Total supermarket selling space rose 3.2% to 2.3 million m2.
  • Home Improvement revenues increased 16.2% YoY, reaching CLP 335 billion in 4Q13. Cencosud saw stronger sales across various countries, with a 7.1% SSS increase in Chile, 38.6% SSS increase in Argentina, and the net opening of 7 Easy stores in the region compared to December 2012. These factors more than offset the negative effect of 17.6% currency devaluation in Argentina.
  • Department Store revenues totaled CLP 316 billion, up 10.0% YoY, driven by the continued strong performance of the Chilean operation and the contribution from the Peruvian stores opened in 2013. In Chile, Paris and Johnson had sales growth of 5.8% and 16.3% respectively, with SSS growth of 4.4% in Paris and 21.6% in Johnson, demonstrating Cencosud's success in integrating this business with Paris stores. Paris Peru contributed CLP 6,920 million of sales in 4Q13, reflecting the sales of six stores, three of them opened in November and December.
  • Shopping Center revenues expanded 10.9% YoY, reaching CLP 57,904 million, driven by higher revenues from Peru related to the opening of Cerro Colorado shopping center in Arequipa in May 2013, as well as higher revenues from Colombia due to the addition of the real estate operations which contributed CLP 2,232 million, and higher revenues from Chile and Argentina, despite currency devaluation.
  • Financial Services revenues increased 4.4% YoY, to CLP 69 billion. This reflected higher revenues from the Peruvian operations (CLP 3,674 million of higher revenue vs. 4Q12), the integration of Colombian financial services (CLP 2,630 million of higher revenue vs. 4Q12) and higher revenues from Argentina, partially offset by lower revenues from Chile as a result of the reduction in the average portfolio over the last twelve months.

Please visit www.cencosud.com/inversionistas.htm to obtain the full fourth quarter earnings release.

The company will hold a conference call to review the 4Q13 results on Tuesday, April 1, 2014 at 12:00 pm Santiago/Eastern Time with a live webcast available through its website.  Please use the following link to pre-register for this conference call.  Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. You may pre-register at any time, including up to and after the call start time.

To pre-register please go to: http://dpregister.com/10042476

To participate on the day of the call, dial (866) 652-5200 or (412) 317-6060 approximately ten minutes before the call and tell the operator you wish to join the Cencosud Conference Call.  A webcast of the conference call will be available online at http://www.cencosud.com/eng/inversionistas.html.

About Cencosud S.A.

Cencosud is a leading multi-brand retailer in South America, headquartered in Chile and with operations in Chile, Brazil, Argentina, Peru and Colombia. The company, founded by Chairman Horst Paulmann, operates in supermarkets, home improvement stores, shopping centers and department stores', always aiming to deliver the right product at the right price to Latin America's growing middle class. In 2012, the Company listed American Depositary Receipts (ADRs) on the New York Stock Exchange.

 

CONSOLIDATED BALANCE SHEETS

(In millions of Chilean pesos as of December 31st, 2013)








Dec-13

Dec-12


MM Ch$

MM Ch$

Current Assets:




Cash and cash equivalents


171,712

237,721

Other financial assets, current


49,584

68,167

Other non-financial assets, current


11,605

10,474

Trade receivables and other receivables


1,133,448

1,058,627

Receivables from related entities, current


432

324

Inventory


1,044,907

910,230

Current tax assets


22,797

31,270

TOTAL CURRENT ASSETS


2,434,485

2,316,812

Non-Current Assets




Other financial assets, non-current


92,405

41,007

Other non-financial assets, non-current


38,263

38,280

Trade receivable and other receivables, non current


155,840

142,306

Equity method investment


49,942

42,260

Intangible assets other than goodwill


571,622

555,284

Goodwill


1,696,041

1,728,263

Property, plant and equiptment


3,101,884

3,134,528

Investment property


1,568,432

1,471,344

Current Tax assets, non-current


53,727

4,826

Deferred income tax assets


302,594

268,680

TOTAL NON-CURRENT ASSETS


7,630,749

7,426,778





TOTAL ASSETS


10,065,234

9,743,590

Current Liabilities:




Other financial liabilities, current


739,106

1,179,132

Trade payables and other payables


1,957,993

1,901,057

Payables to related entities, current


556

974

Provisions and other liabilities


46,406

31,552

Current income tax liabilities


63,131

46,798

Current provision for employee benefits


96,697

78,800

Other non-financial liabilities, current


47,809

84,317

TOTAL CURRENT LIABILITIES


2,951,699

3,322,630

Non-current liabilities




Other financial liabilities


2,218,035

2,362,414

Trade accounts payable


8,955

7,411

Provisions and other liabilities


88,223

121,057

Deferred income tax liabilities


471,481

446,958

Current tax liabilities


-

-

Other non-financial liabilities, non-current


65,475

70,909

TOTAL NON-CURRENT LIABILITIES


2,852,168

3,008,748





TOTAL LIABILITIES


5,803,867

6,331,378

Equity:




Paid-in Capital


2,321,381

1,551,812

Retained earnings (accumulated losses)


2,049,483

1,866,746

Issuance premium


526,633

477,341

Other reserves


-636,231

-484,364

Net equity attributable to controlling shareholders


4,261,267

3,411,534

Non-controlling interest


100

678

TOTAL NET EQUITY


4,261,367

3,412,212





TOTAL NET EQUITY AND LIABILITIES


10,065,234

9,743,590









 

CONSOLIDATED INCOME DATA

(In millions of Chilean pesos as of December 31st, 2013)


Fourth Quarter


Twelve-Month, ended December 31st


2013

2012


2013

2012


CLP MM

CLP MM


CLP MM

CLP MM







Net revenues

2,863,289

2,580,648


10,341,040

9,149,077

Cost of sales

-2,016,661

-1,832,012


-7,371,549

-6,547,832

Gross profit

846,629

748,635


2,969,491

2,601,245

Selling and administrative expenses

-664,276

-581,140


-2,480,441

-2,101,821

Other income by function

64,497

45,183


108,714

107,110

Other gain (Losses)

16,086

938


26,382

-7,369

Operating income

262,936

213,616


624,146

599,165

Participation in profit or loss of equity method associates

6,310

2,153


10,289

5,640

Net Financial Income

-66,809

-63,380


-252,830

-202,912

Income (loss) from foreign exchange variations

-7,923

-6,560


-34,723

-2,680

Result of indexation units

-8,876

-9,235


-20,960

-25,915

Non-operating income (loss)

-77,298

-77,022


-298,224

-225,867







Income before income taxes

185,638

136,594


325,923

373,297

Income taxes 

-28,184

-24,276


-96,158

-100,488







Profit (Loss)

158,087

112,876


229,930

269,959







Profit (Loss) Attributable to Equity Holders of Parent

157,454

112,319


229,765

272,809

Profit (Loss) Attributable to Minority Interest

633

558


166

-2,851







Net income per share

54.4

48.5


83.8

116.0

Number of shares outstanding (in millions)

2,743,483

2,327,519


2,743,483

2,327,519







Cash Flow Data






Net cash provided by (used in):






Operating activities

282,031

407,192


364,782

718,715

Financing activities

-116,794

1,059,217


-107,029

1,488,759

Investing activities

-100,864

-1,330,064


-320,507

-2,116,249

Other Financial Information






Organic Capex

-68,733

-114,163


-318,597

-584,817

Acquisitions

0

0


0

-362,083

Depreciation

38,096

35,545


173,650

131,470

Amortization

5,085

2,961


15,387

9,980

Revalue of Assets

-59,775

-40,666


-95,110

-98,633

EBITDA

295,627

238,480


767,790

717,659

Adjusted EBITDA

252,652

213,609


728,363

647,621

Financial Ratios






Gross margin

29.6%

29.0%


28.7%

28.4%

Operating margin

9.2%

8.3%


6.0%

6.5%

Net margin

5.5%

4.4%


2.2%

3.0%

EBITDA margin

10.3%

9.2%


7.4%

7.8%

Adjusted EBITDA

8.8%

8.3%


7.0%

7.1%













[1] Please see "Reconciliation of Non-IFRS measures" starting on page 4 for a reconciliation of EBIT, EBITDA and Adjusted EBITDA to Profit/Loss. EBIT represents profit attributable to controlling shareholders before net interest expense and income taxes. EBITDA is defined as EBIT plus depreciation and amortization expense. Adjusted EBITDA represents EBITDA as further adjusted to reflect foreign exchange differences, increases (decreases) on revaluation of investment properties and gains or (losses) from indexation. Adjusted EBITDA margin and Adjusted EBIT margin are calculated as a percentage of revenues.

[2] The "Others" segment was modified in 4Q12, mainly due to the separation of the Peruvian Corporation expenses from the Supermarket division, the separation between the supermarket, real estate and financial retail businesses in Colombia and the reclassification from "Other gains (losses)" to "Income Tax" of CLP 8,702 million. FUT disbursements have been wrongfully classified as "Other gains (losses)". This has been rectified and following IFRS rules are now included in "Income Tax".

SOURCE Cencosud S.A.

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