Cencosud reports second quarter 2013 results

SANTIAGO, Chile, Aug. 30, 2013 /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 second 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 the 2Q2012 and 2Q2013.

• Cencosud revenue increased 14% YoY to CLP 2,508 billion in 2Q13 in CLP, with the consolidation of supermarkets in Colombia and positive SSS in almost every division and country.
• Cencosud added 175 stores and 4 shopping centers versus 2Q12, with an increase of 18% in selling space. Excluding the Colombia acquisition, Cencosud added 79 stores and 3 shopping centers.
• Gross profit rose 14.8% to CLP 716,166 million in 2Q13, with a double-digit increase in every division except Home Improvement. Gross margin was flat at 28.6%, from 28.4% in 2Q12, despite the addition of the lower-margin Colombian supermarket business which is undergoing a rebranding process.
• Operating Income decreased 4.1% to CLP 112,138 million in 2Q13 vs. 2Q12, due to lower income from the revaluation of assets. Excluding this revaluation, operating income increased 9.6% in 2Q13.
• Net income decreased 78% versus 2Q13, from CLP 36,167 million in 2Q12 to CLP 7,967 million in 2Q13, reflecting higher financial costs (CLP 8,786 million), mainly due to higher debt levels related to acquisitions, as well as higher losses from foreign exchange variations (CLP 18,694 million). The results also reflect a 79% decrease in income from the revaluation of assets (CLP 14,330 million).
• Adjusted EBITDA¹ reached CLP 159,355 million, up 19% YoY on improved results from the Financial Services and Shopping Centers divisions (with a full quarter of operations for the Costanera center), as well as the consolidation of the Colombian supermarket acquisition.
• The turnaround of Johnson continued, with the business posting positive EBITDA for the first time since being acquired in 2012. Cencosud expanded Johnson's gross margin by 595 bps from 2Q12 and is continuing the process of integrating the unit with the Paris department store business. Together, Paris and Johnson reported total revenue of CLP 230, 716 million, up 9.1%, and total adjusted EBITDA of CLP 18, 124 million, up 21.5%.
• On June 17^th, 2013, Cencosud announced a binding agreement with Itau Unibanco Holding S.A. for the joint development of the financial retail business in Chile and Argentina. A total upfront cash payment of US$1.58 billion will be made to Cencosud. Under the terms of the agreement, Itau Chile will acquire 51% of the shares of Cencosud Administradora de Tarjetas (CAT), Cencosud's credit card operator in Chile. In Argentina, Cencosud will create a new entity, to which Itau Argentina will contribute equity, to jointly develop the business. Additionally, in both countries Itau will provide funding to finance 100% of the current credit portfolio and future growth.

Management Comment

In the second quarter, Cencosud made important progress in its strategy to integrate its recent acquisition of Carrefour Colombia and reduce leverage. Highlights for the quarter include 3.6% SSS in our Colombian supermarkets, while still undergoing the rebranding process.

Other notable developments in the second quarter include the agreement with Itau Unibanco Holding SA to jointly develop Cencosud's financial retail business in Argentina and Chile. This agreement will give our clients the benefit of working with a market leader in financial services, while also providing substantial funds that Cencosud will use to reduce leverage and finance growth.

Cencosud also made advances in corporate governance in the second quarter, with Mr. Richard Buchi being elected as a second independent director, bringing a wealth of private and public sector experience to the board.

Consolidated revenues

Consolidated revenues were CLP 2,508 billion in the second quarter of 2013, compared with CLP 2,198 billion in the second quarter of 2012, a 14% increase YoY.

• Supermarket revenues in 2Q13 increased 15.4% YoY, reaching CLP 1,870 billion, driven by the consolidation of the Colombian supermarket division, positive SSS in almost every country and the net opening of 73 new supermarkets in the region since June 2012 (excluding Colombia).
• Home Improvement revenues increased 8.7% YoY, reaching CLP 277 billion in 2Q13. The growth reflects a 4.1% SSS increase in Chile, 30.9% increase in SSS in Argentina and the net opening of one Easy store in the region.
• Department Store revenues totaled CLP 231 billion, up9.1% YoY, driven by a strong performance of the Chilean operation. Paris and Johnson had sales growth of 7.9% and 9.1% respectively, and a combined SSS increase of 2.9%. Paris Peru contributed CLP 2,152 million of sales in 2Q13, reflecting two openings this quarter, in addition to the first Peruvian Paris store, which was opened in Arequipa in late March 2013.
• Shopping Center revenues grew 35.5% YoY, reaching CLP 50 billion, driven by higher revenues from Chile. This is mainly explained by the revenues from the Costanera Center, which was only in operation for 19 days in 2Q12, as well as the opening of three new shopping centers in the region, and the addition of the real estate operations in Colombia.
• Financial Services revenues increased 5.5% YoY, to CLP 76 billion, reflecting the integration of Colombian financial services and higher revenues from Peru, offset by lower revenues from Chile as the average portfolio ( on a last twelve months basis) decreased in size.

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

The company will hold a conference call to review the 2Q13 results on Wednesday, September 4, 2013 at 11:00 am Santiago/Eastern Time with a live webcast available through its website. The conference call dial-in is [phone] or [phone]. A webcast of the conference call will be available online at http://www.cencosud.com/eng/inversionistas.htm.

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.

¹ Please see "Reconciliation of Non-IFRS measures" starting on page 33 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.

CONSOLIDATED INCOME DATA
(In millions of Chilean pesos as of June 30th, 2013)
	Second Quarter			Six-month, ended June 30th
	2013	2012		2013	2012
	CLP MM	CLP MM		CLP MM	CLP MM
Net revenues	2,508,008	2,197,784		4,976,447	4,366,693
Cost of sales	-1,791,842	-1,573,368		-3,571,301	-3,139,475
Gross profit	716,166	624,416		1,405,145	1,227,218
Selling and administrative expenses	-607,988	-526,686		-1,205,537	-1,010,578
Other income by function	7,015	19,502		23,883	41,921
Other gain (Losses)	-3,055	-272		6,056	-8,511
Operating income	112,138	116,960		229,547	250,050
Participation in profit or loss of equity method associates	1,414	1,140		2,769	2,240
Financial Income	2,265	1,881		3,811	4,688
Finance Costs [for Non-Financial Activities]	-57,400	-48,230		-127,341	-98,014
Income (loss) from foreign exchange variations	-27,920	-9,226		-30,203	-2,607
Result of indexation units	-802	-5,381		-3,644	-14,029
Non-operating income (loss)	-82,443	-59,816		-154,607	-107,721
Income before income taxes	29,695	57,143		74,939	142,330
Income taxes	-21,249	-20,441		-46,288	-48,752
Profit (Loss)	7,976	36,167		28,039	90,582
Profit (Loss) Attributable to Equity Holders of Parent	8,446	36,702		28,651	93,578
Profit (Loss) Attributable to Minority Interest	-470	-535		-612	-2,995
Net income per share	11	40		10.5	40.0
Number of shares outstanding (in millions)	2,829	2,356		2,829	2,356

CENCOSUD S.A.
CONSOLIDATED BALANCE SHEETS DATA
(In millions of Chilean pesos as of June 30th, 2013 )
		June 2013	Dec 2012
		CLP MM	CLP MM
Current Assets:
Cash and Cash Equivalents		115,347	237,721
Other Financial Assets, Current		55,473	68,167
Other Non-Financial Assets, Current		14,951	9,992
Trade and Other Receivables, Net, Current		1,011,877	1,060,333
Accounts receivable from related parties, Current		1,108	324
Inventories		985,778	914,605
Tax Assets, Current		20,597	31,270
Total Current Assets		2,205,132	2,322,411
Non-Current Assets:
Other Financial Assets, Non-Current		43,217	41,007
Other Non-Financial Assets, Non-Current		40,116	38,280
Trade and Other Receivables, Net, Non-Current		147,093	142,306
Equity Method Accounted Investments in Associates		43,178	42,260
Intangible Assets, Net		541,880	544,899
Capital gain		1,664,556	1,718,393
Property, Plant and Equipment, Net		3,142,063	3,135,745
Investment Property		1,488,200	1,471,344
Current tax assets, Non-Current		18,211	4,826
Deferred Tax Assets		284,187	260,102
Total Non-Current Assets		7,412,702	7,399,162
TOTAL ASSETS		9,617,834	9,721,573
Current Liabilities:
Other Financial Liabilities, Current		619,501	1,179,132
Trade and Other Payables, Current		1,715,362	1,903,582
Notes and accounts payable to related companies, Current		1,316	974
Provisions, Current		41,723	22,624
Current Tax Payables		42,003	46,798
Current provisions for employee benefits		82,890	78,800
Other Non-Financial Liabilities, Current		27,323	84,317
Total Current Liabilities		2,530,119	3,316,226
Non-Current Liabilities:
Other Financial Liabilities, Non-Current		2,288,914	2,359,501
Trade and Other Payables, Non-Current		6,457	7,411
Provisions, Non-Current		117,187	111,321
Deferred Tax Liabilities		458,518	443,994
Current tax liabilities		0	0
Other Non-Financial Liabilities, Non current		68,975	70,564
Total Non-Current Liabilities		2,940,050	2,992,790
Equity:
Issued Capital		2,321,381	1,551,812
Issued Premium		526,633	477,341
Other Reserves		-592,354	-484,364
Retained Earnings (Accumulated Losses)		1,890,179	1,866,746
Equity Attributable to Equity Holders of Parent		4,145,839	3,411,534
Minority Interest		1,491	678
Total Equity		4,147,330	3,412,212
TOTAL EQUITY AND LIABILITIES		9,617,500	9,721,228

Corporate Communications
Andrea Brajovic
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Investor Relations
Maria Soledad Fernandez
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Natalia Nacif
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SOURCE Cencosud S.A.