In the first three months of the year, reported revenues reached approximately US$4.1 billion, highlighting double-digit growth in the United States, Brazil, Peru and Colombia. The online channel contributed with an increase in revenue of 12.3% in the period, and reached 6.4 million tickets, highlighting the United States and Brazil. But inflation in Argentina means the holding company significant losses in the currency exchange.
Cencosud SA reported its first quarter results this Thursday, with revenues of CLP $3,938,070 million, (about US$ 4,108 million), which implies an increase of 12.4% in relation to the same period of the previous year.
Among the business categories that had a solid performance, the double-digit growth in online sales (12.3%), the penetration of own brand sales in the region (+15.9%) and the increase in market share in Argentina.
“Despite a challenging economic context, we are starting strong in 2024, registering revenue growth and improvements in profitability in several businesses. This increase in sales in Chilean pesos is the result of the increase in all countries, with the exception of Argentina,” said the Corporate General Manager of Cencosud SA, Rodrigo Larraín.
Indeed, the operational result (reported) of the Chilean holding company showed an increase of 1.7%. However, the Non-Operating Result affects it very strongly, since the Net Financial Cost and the exchange rate variation increase sharply, with which the Non-Operating Result registers a loss of $135,318 million Chilean pesos (about US$ 141,170 million ) versus a loss of $89,512 million pesos (US$ 93,383 million) in the same period of 2023.
Finally, the Controllers Net Profit for the first quarter of this year is a loss of $22,613 million pesos (US$ 23,591 million) versus a profit of $60,367 million pesos (US$ 62,977 million) in the same period last year.
Cencosud executives detailed to AméricaEconomía that in the FECU report (Uniform Codified Statistical File) of financial statements with which they report to the regulator, both the reported figures and the one that excludes the effect of Argentina's hyperinflationary economy appear.
"The effect of a hyperinflationary economy is an accounting effect, which is not a flow. We refer to both. The reported one is a loss and when we exclude this effect, it is a profit that also increases," they indicated at the conference where they were given. to know the financial results for the first quarter.
In that sense, the firm considers having had a good first quarter, "with a relevant double-digit income, a good performance in the United States, in Brazil. We have a good level of sales and we are optimistic for the remainder of the year. The outlook is super positive (...) we have double-digit profitability in four countries, which is also something that, despite the context, ultimately continues to drive the company's profits," Larraín expressed.
FINANCIAL DATA
In the report, Cencosud shows a profit of CLP -$601 million (US$ 626,993), which is due to the adjustment for hyperinflation in Argentina (IAS 29). Excluding the above, this profit grew 9.1% compared to the same period of the previous year, reaching CLP $170,246 million (about US$ 178 million). The growth in this indicator comes from an improvement in the operating result of 15.5%, partially offset by the negative impact of the devaluation of the Chilean peso.
Meanwhile, adjusted EBITDA increased 10.2%, excluding the effects of Argentina's hyperinflationary economy, and the EBITDA margin reached 10.6%, an increase of 7 bps year-over-year. Including the accounting effect of Argentina, adjusted EBITDA grows 0.1%, due to better profitability in Chile, the United States, Argentina and Peru.
All added to the financial and operational performance of the shopping center business, announced on Tuesday, whose profit reached CLP $60,852 million, that is, an increase of 82.1% compared to the same period of the previous year, a figure that reaches to an increase of 23.8% if the effect of asset revaluation is excluded.
KEY MOVES
One of the highlights of the period is related to online sales, for example, the alliances with last milers concluded at the end of 2023 in Brazil and the United States, with sales growth of 110.1% and 56.4%, respectively. .
At the same time, the increase in subscribers to Prime programs continues (+54.4% y/y). On the other hand, Own Brand products registered sales growth of 15.7% y/y, with the Food category driving the highest sales, led by the own brand Cuisine&Co, which continues to develop its regionalization strategy by reaching Brazil during the first quarter of the year.
Also in Brazil, the holding company made a capital increase at the beginning of the year.
"It is a financial efficiency. What was done was to increase capital and that capital was used to pay a debt that was located in Brazil. Precisely, the interest rate differential was not favorable in that operation and therefore it was led here," Larraín told AMéricaEconomía.
Another movement of the quarter is a new organizational structure with the generation of a new area called Retail Ecosystem. In this area today all the digital functions of technology and complementary businesses related to retail are grouped. They were in charge of Ricardo Bennett, who was the former manager of the department stores in Chile, from Paris," Larraín added.
Cencosud also recognizes plans to grow in the markets of Peru and Colombia this year.
"In Peru we have done very well. We continue to be able to improve profitability through an EDITA margin. We are applying a more exhaustive promotional strategy there (...) In the case of Colombia, it is a smaller operation that we have in the group "It represents 5% of revenues and is one of the markets where we have great challenges. We are currently working in that market and we are confident that we will have better results than we are reporting at this time," he concluded. Larrain.
