Cencosud Reports Second Quarter 2017 Results

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Revenue growth across all businesses, mainly driven by Chile and Argentina; Adjusted EBITDA down 28% and Adj. EBITDA margin of 5.6% impacted by one-offs and currency depreciation

SANTIAGO, CHILE / ACCESSWIRE / August 24, 2017 / Cencosud S.A. CENCOSUD, a leading South American retailer with operations in Chile, Argentina, Brazil, Peru and Colombia, today announced its consolidated financial results for the second quarter of 2017. All figures are in Chilean pesos (CLP), except where indicated otherwise, and in accordance with IFRS.

  • For the second quarter, revenues increased 3.2% YoY to CLP 2,586,037 million reflecting growth in Supermarkets in Chile (+3.9%) and Argentina (+5.0%), Home Improvement in Argentina (+9.1%), Department Stores in Chile (+5.2%) and Financial Service in Argentina (+47.0%).
  • Adjusted EBITDA of CLP 143,783 million reflects Argentine peso depreciation and one-offs. Excluding these effects, Adjusted EBITDA fell 7.8% with Adjusted EBITDA margin of 5.3%.
  • Gross Profit fell 0.3% YoY reflecting margin contraction of 100 bps.
  • Net Debt to LTM Adjusted EBITDA stood at 4 times. This reflects lower EBITDA and growth in the loan portfolio in Argentina, though the Company's working capital position has been improving on a quarterly basis.
  • In July 2017, Cencosud issued US$ 1 billion of Senior Unsecured Notes due 2027 at 4.419% yield. The issue was more than four times oversubscribed, achieving the lowest yield and coupon ever by the Company.

Please visit www.investors.cencosud.com to obtain the full second quarter earnings release, including financial results and tables.

Management Comment

Cencosud continues to strengthen its position as a leading South American retailer through the execution of its "three strategic pillars" to generate long-term profitable growth. We had modest revenue growth for the period, driven by Chile and Argentina, despite the overall challenging conditions in some of our markets and continued depreciation of the Argentine peso.

In Chile, our operations show increased stability, with strong performance from Supermarkets, Department Stores, Financial Services and Shopping Centers. In Argentina, we had accelerated same store sales growth in Supermarkets and Home Improvement, and growth in Financial Services.

Gross margins contracted 100 basis points YoY, reflecting higher promotional activity in Brazil and moderate gains in Argentina from lower inflation.
Adjusted EBITDA fell 28% YoY due to peso devaluation and previous positive one-offs. Excluding non-recurring gains of CLP 54 billion in the year-ago quarter, and a one-time gain of CLP 8 billion this quarter and the currency impact, Adjusted EBITDA declined 7.8%, with Adjusted EBITDA margin of 5.3%, versus 6.1% in 2Q16.

Net Profit reflects lower proceeds from non-core asset sales, currency movements and higher deferred taxes.

Going forward, we expect to continue strengthening our Net Debt to Adjusted EBITDA position as demand recovers and our strategic initiatives impact results.

We remain focused on driving efficiencies and profitability as we execute on our strategy. Our strong value proposition is resonating with customers, while we invest further in innovation and omni-channel development.

Looking to the second half, we expect macro improvements in Peru and Chile to support stronger performance, along with easier comps for Argentina. We look to the remainder of the year with optimism, and reaffirm our full year guidance.

Conference Call

The Company will host a conference call to discuss these results on Friday, August 25, 2017 at 12:00PM Chilean time/ 11:00AM EST. To participate on the day of the call, dial (866) 682-6100 or (862) 255-5401 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.investorcalendar.com/event/19254.

The archived version of the webcast and a telephone replay of the conference call will be available until November 25, 2017. Callers can access the telephonic replay by dialing (877) 481-4010 or 919-882-2331 and utilizing the passcode 19254 when prompted.

Forward-Looking Statements:

In addition to historical information, this release contains "forward-looking statements" that reflect management's expectations for the future. The forward-looking statements included herein represent Cencosud's views as of the date of this release. A variety of important factors could cause results to differ materially from such statements. These factors are laid out in Cencosud's filings with the SVS in Chile and the SEC in the United States. The Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law.

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Corporate Communications

Renato Fernandez
Phone +5622959 0905
renato.fernandez@cencosud.cl

Investor Relations

Maria Soledad Fernandez
Phone +5622959 0545
mariasoledad.fernandez@cencosud.cl

Natalia Nacif
Phone +5622959 0368
natalia.nacif@cencosud.cl

SOURCE: Cencosud S.A.

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