3851a465-d05d-4479-a75f-b3b4a34e365b.pdf


Cencosud Announces Investment Plan for $2.5 Billion Over the Next Four Years

  • The plan for the period is consistent with the company's strategy of profitability and financial strength, and the regional macroeconomic environment. Investment for 2016 will be U.S.$500 million.


  • Investments in infrastructure, logistics and IT will be prioritized, to increase efficiencies, enhance omnichannel strategy and store remodeling.


  • The company is advancing preparation for an eventual spinoff of its Shopping Centers Division, which could involve an additional investment plan as indicated.


    Santiago, February 2, 2016.- Cencosud (NYSE: CNCO, SSE: CENCOSUD), multi-format retailer, multi-brand leader in Latin America, with a presence in five countries, reports its expectations ("Guidance") for the year 2016 and organic growth plan for the period 2016-2019.


    This year, the company expects revenues of U.S.$16 billion1 and an Adjusted EBITDA margin in the range of 7.2% to 7.4%. The principal focus of work for the relevant period are:


    1. Efficiency in Expenses and Profitability: in 2015 the Company implemented a strategy of focusing on efficiencies and process improvements that it expected to generate savings of 120 bps in selling and administrative expenses on sales in 2016. Moreover, it implemented a review of 120 stores with low performance and expects that the results of this program will gradually begin to be realized starting in 2016.
    2. Omnichannel: is one of the strategic pillars of the Company for all its businesses in five countries. The initiative is being led by the CEO of the Company, through a monthly committee in which top executives also participate, to accelerate developments, maximize synergies and monitor performance indicators.
    3. Strengthening Financial Position: In line with the commitment to strengthen its balance sheet and maintain its investment grade, the Company made two issuances of international bonds and sold 51% of its retail finance business in Chile, and with these resources lowered its debt load by approximately U.S.$630 million, strengthened its cash position in


      1 Assume the following average exchange rates for 2016:


      Country

      Exchange Rate U.S.D.

      Chile

      720

      Argentina

      14

      Brasil

      4,1

      Colombia

      3.137

      Perú

      3.4

      dollars and liquidated the liabilities of Banco Paris. In addition, it substantially improved its amortization profile, maintaining low levels of maturity for the next five years.


      Amortization Schedule (U.S. $ millions)

      221 199 138 125 48


      2016 2017 2018 2019 2020


      In terms of currency exposure during 2015, the Company took incremental hedges of U.S.$150 million and the cash position was increased by U.S.$200 million. For 2016, the Company plans to continue strengthening its financial position, seeking to improve liquidity and debt ratios and further reduce exposure to foreign currency liabilities.


    4. Spinoff Shopping: The Company continues to advance the preparation for a possible spinoff of its Shopping Centers Division, for which it is working on structuring the support of investment banks. This operation would involve the development of a plan for investment in additional expansions and new projects as indicated.
    5. Divestment of Non-strategic Assets: In line with maintaining a focus on core businesses and generating improvements in profitability, the Company is dedicated to the sale of non- strategic assets and businesses.


    Organic Growth 2016-2019


    The organic growth plan for the next four years contemplates investments of U.S$2.5 billion and will be financed mainly by cash generated from operations (this plan does not take into account the resources that would be eventually generated from the potential spinoff of the Shopping Centers Division or the sale of non-strategic assets).


    Distribution by Type of Investment



    18%


    22%


    60%


    Organic Growth and Renovations


    Technology, Logistics and Omnichannel

    Maintenance and Recurring Capex


    The Investment Plan for 2016 will be U.S.$500 million, representing an increase of 30% from the plan implemented in 2015. For the following years an average annual growth of 15% is estimated.



    Marisol Fernández Investor Relations Manager Tel +562 2959 0545

    mariasoledad.fernandez@cencosud.cl

    Natalia Nacif Senior IR Analyst Tel +562 2959 0368

    natalia.nacif@cencosud.cl


    Disclaimer

    The statements contained in this release regarding the business outlook of the Company, projections of operating / financial results, the growth potential of the company and market and macroeconomic estimates are mere forecasts and are based on management's expectations regarding the future of the Company. These expectations are highly dependent on market changes, the general economic performance of Latin America and in particular the countries where we operate, industry and international markets, and are therefore subject to change.

    Cencosud SA issued this content on 02 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 02 February 2016 16:17:03 UTC

    Original Document: http://www.cencosud.com/wp-content/files_mf/cencosudguidance2016eng.pdf