São Paulo, October 26th, 2017 – GPA [B3: PCAR4; and NYSE: CBD] announces its results for the third quarter of 2017 (3Q17). The comments refer to the consolidated results of the Group or of its business units. All comparisons are with the same period in 2016, except where stated otherwise.
Net sales grew 8.1%(1) driven by the 25.2%(1) increase at Assaí and the recovery at the Pão de Açúcar banner
Adjusted EBITDA in the Food segment reached R$569 million, up 17.3%, with margin expansion of 40 bps to 5.2%
Operating expenses grew below inflation, with dilution of 90 bps compared to 3Q16
Consolidated net income attributable to controlling shareholders of R$32 million, with margin of 0.3%
- Continued market share(*) gains, marking 12 consecutive quarters of gains. The highlight was the sales volume recovery at Pão de Açúcar and Extra Hiper, that continued to deliver the best performance among formats;
- Decrease of 4.4% in operating expenses, leveraged by the energy efficiency and productivity initiatives;
- Adjusted EBITDA margin of 5.5%, expanding 50 bps from 3Q16 with growth of 7.7% in Adjusted EBITDA affirming the better trend since the beginning of the year;
- The “My Discount” app reached more than 3 million downloads, of which more than 1 million were new loyal customers. The initiative has already reached around 20% of the customers at Extra and over 25% at Pão de Açúcar.
- Strong net sales growth of 25.2%(1) and 7.7%(1)(2) in the same-stores concept, maintaining consistent customer and volume growth in recent quarters;
- Operating expenses stable as a percentage of net sales in relation to 1H17, although already includes the expenses related to conversions and openings expected for 4Q17 (11 stores);
- Adjusted EBITDA margin stood at 4.8% with 40 bps improvement and growth of 35.9% in Adjusted EBITDA.
- The financial result corresponded to 1.4% of net sales, improving 35.0% from 3Q16;
- Net income attributable to controlling shareholders was R$32 million with margin of 0.3%, highlight to the 73.6% improvement at Assaí;
- Financial capacity remains robust: Net debt(3) reduction of R$532 million vs. 3Q16. The net debt(3)/EBITDA ratio fell to 1.0x, from 1.3x in the same period last year. Ratings reaffirmed by S&P (brAAA) and Fitch (AAbra).
- Strategic priorities: (i) focus on and strengthening of Food segment, (ii) sales growth above the industry average, supporting market share(*) gains, (iii) continued expansion of Assaí format, and (iv) optimization of the store portfolio;
- Economic environment and business evolution: Brazil‘s high unemployment and weak consumer spending challenge the recovery of the retail industry. However, for the past 18 months, GPA has outperformed the industry average (ABRAS(4) and IBGE(5)), confirming the market share(*) gains by Extra Hiper and Assaí, as well as the stability in other segments.
- Guidance for 2017: (i) Sales: continuity in market share(*) gains at both Multivarejo and Assaí; (ii) EBITDA Margin(6): around 5.5% in the Food segment, supported by higher profitability at Assaí and at Multivarejo; (iii) CAPEX: approximately R$1.2 billion; and (iv) target to raise more than US$50 million through synergies in Latin America.
(*) According to Nielsen data for each segment. (1) Net sales adjusted for the calendar effect. (2) Includes converted stores, which contributed 290 bps in 3Q17. (3) Includes non-discounted credit card receivables of R$837 million in 3Q17 and R$402 million in 3Q16. (4) Brazilian Supermarkets Association. (5) Monthly Retail Survey (PMC) conducted by IBGE. (6) EBITDA adjusted by Other Operating Income and Expenses, excluding non-recurring tax credits.
Click on the link below in order to access:
CONFERENCE CALL WITH WEBCAST
October 26th, 2017
10:30 a.m. (Brasília time) | 8:30 a.m. (NY) | 1:30 p.m. (London)
Conference in English (simultaneous translation)
+1 786 924-6977
Webcast: click here.
Conference in Portuguese (original language)
+55 (11) 3193-1001 or 2820-4001
Webcast: click here.
Replay: +55 (11) 3193-1012 or +55 (11) 2820-4012
Access code for audio in English: 6729635#
Access code for audio in Portuguese: 2879418#
The conference call will also be available in audio format on http://www.gpari.com.br/.
Please dial in five minutes prior to the scheduled conference call time.