COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO São Paulo, October 25, 2018 - GPA [B3: PCAR4; NYSE: CBD] announces its results for the third quarter of 2018. Due to the ongoing divestment of the interest held by GPA in Via Varejo S.A., as announced in the material fact notice of November 23, 2016, the operations of Via Varejo are treated as discontinued operations. Accordingly, net sales and other profit or loss accounts were adjusted retrospectively, as required under IFRS 5/CPC 31, approved by CVM Resolution 598/09 - Non-current assets held for sale and discontinued operations. The following statements are related to the results of continuing operations. All comparisons are with the same period of 2017, except where stated otherwise.
3Q18 EARNINGS
GPA Food:
▪ Gross sales of R$13.3 billion, with growth accelerating to 12.8% (vs. 9.9% in 2Q18), driven by continued improvement at Multivarejo and another quarter of robust performance at Assaí;
▪ Solid improvement in Adjusted EBITDA, which reached R$697 million (+22.3%), with margin expanding from 5.2% to 5.7% in 3Q18;
▪ Strong growth in net income(*), which came to R$215 million, 5.2 times higher than the net income reported in 3Q17, with net margin expanding from 0.4% to 1.8%;
▪ The leverage ratio remained low at around -1.15x EBITDA, reinforcing the Company's solid financial structure.
Multivarejo:
▪ Gross sales of R$6.9 billion, with same-store sales growth ex calendar effect accelerating to 6.1%, confirming the recovery since the start of the year. All banners continued to capture market share gains, with the highlight the Extra Hiper and Proximity banners;
▪ Gross margin of 27.9%, stable in relation to 3Q17, reflecting the adequate level of price competitiveness;
▪ Operating expenses diluted by 10 bps, reflecting the higher sales and ongoing cost discipline, with the highlight the productivity gains at stores;
▪ Adjusted EBITDA came to R$362 million, advancing 4.8%. Adjusted EBITDA margin expanded 20 bps to 5.7%, surpassing the guidance given for the year and reflecting the consistent results in the last three quarters;
▪ Net income(*) amounted to R$39 million, with net margin of 0.6%.
Assaí:
▪ Gross sales came to R$6.4 billion, marking another quarter of strong growth, which translated into an important market share gain in the period;
▪ Gross margin stood at 15.9%, following the trend of prior quarters, supported by the successful organic expansion and conversions of Extra Hiper stores and by the reemergence of inflation, after the deflation registered in 3Q17;
▪ Adjusted EBITDA posted strong growth of 49.4% to R$335 million, with adjusted EBITDA margin expanding 90 bps to 5.7%;
▪ Robust growth of the net income, which reached R$176 million and up 55.6%, presenting a net margin of 3.0%.
(R$ million)(1)
3Q18
Gross Revenue
Net Revenue
Gross Profit
13,307 12,258 2,714
Gross Margin
22.1%
Selling, General and Adm. Expenses % of Net Revenue
(2,048)
16.7%
Adjusted EBITDA(2)(3)
670
Adjusted EBITDA Margin
5.5%
Net Income - Controlling Shareholders - continuing operations
188
Net Margin- continuing operations
1.5%
Consolidated | |
3Q17 | Δ |
12.8% | 11,791 |
12.4% | 10,909 |
11.2% | 2,441 |
-30 bps | 22.4% |
7.5% | (1,904) |
-80 bps | 17.5% |
24.3% | 570 |
60 bps | 5.2% |
n.a. | 41 |
140 bps | 0.4% |
3Q18
11,791 10,909 2,441
13,307 12,258 2,714
22.4%
22.1%
(1,904)
(2,048)
17.5%
16.7%
539
697
4.9%
5.7%
10
215
0.1%
1.8%
Food Business | |
3Q17 | Δ |
12.8% | |
12.4% | |
11.2% | |
-30 bps | 27.9% |
7.5% | (1,422) |
-80 bps | 22.8% |
22.3% | 345 |
50 bps | 5.5% |
422.6% | (72) |
140 bps | -1.2% |
3Q18
6,925 6,393 1,783
27.9%
(1,451)
22.7%
5.7%
Multivarejo | Assaí | |||
3Q17 | Δ | 3Q18 | 3Q17 | Δ |
6,705 | 3.3% | 6,382 | 5,086 | 25.5% |
6,225 | 2.7% | 5,865 | 4,684 | 25.2% |
1,736 | 2.7% | 930 | 705 | 31.9% |
0 bps | 15.9% | 15.1% | 80 bps | |
2.0% | (597) | (482) | 23.9% | |
-10 bps | 10.2% | 10.3% | -10 bps | |
4.8% | 335 | 225 | 49.4% | |
20 bps | 5.7% | 4.8% | 90 bps | |
n.a | 176 | 113 | 55.6% | |
180 bps | 3.0% | 2.4% | 60 bps |
362
39
0.6%
(*) Net income attributed to the controlling shareholders from continuing operations.
(1) Sums and percentages may present discrepancies due to rounding. All margins were calculated as a percentage of net sales.
(2) Earnings before interest, tax, depreciation and amortization. (3) EBITDA adjusted by Other Operating Income and Expenses.
Outlook:
The performance in 3Q18 corroborates the expectation of meeting the guidance given for 2018:
▪ Same-store sales growth: above inflation at Assaí and in line with food inflation at Multivarejo, supporting continued market share gains;
▪ Adjusted EBITDA margin: 5.5%-5.6% at Multivarejo and 5.8%-5.9% at Assaí;
▪ Financial Result: around 1% of net sales;
▪ LATAM synergies: should reach over US$85 million in savings for the Brazil perimeter.
"The consistency of the results demonstrates the assertiveness of the implemented initiatives with expressive gains of share and profitability. At Multivarejo, the sequential evolution of sales and higher profitability is already seen in the last 3 quarters. At Assaí, we continued to deliver strong sales performance and high profitability. Among the strategic priorities, we have made important progress in the Digital Transformation and in the strengthening of our private label. We continue with our expansion plan, conversion and renovation of stores, seeking a more adjusted portfolio.
Our execution has allowed the delivery of solid results, in line with the guidance we provided to the market. "
Peter Estermann, Chief Executive Officer of GPA
I. Financial Performance
Consolidated
Food Business
(R$ million)(1)
3Q18
3Q17
Δ
3Q18
Gross Revenue
Net Revenue
Gross Profit Gross Margin
13,307 12,258 2,714 22.1%
11,791 12.8%
10,909 12.4%
2,441 11.2%
22.4%
-30 bps
Selling, General and Adm. Expenses % of Net Revenue
EBITDA (2)
(2,048) 16.7% 611
(1,904) 17.5% 409
EBITDA Margin
Adjusted EBITDA(2)(3)
5.0% 670
3.7% 539
7.5% -80 bps 49.4% 130 bps 24.3%
Adjusted EBITDA Margin
5.5%
4.9%
60 bps
Net Financial Revenue (Expenses)
% of Net Revenue
(135) 1.1%
(154) 1.4%
-12.3% -30 bps
Net Income - Controlling Shareholders - continuing operations
188
10
n.a.
Net Margin- continuing operations
1.5%
0.1%
140 bps
Consolidated
(R$ million)(1)
9M18
9M17
Δ
13,307 12,258 2,714 22.1% 11,791 10,909 2,441 22.4%
(1,451) 22.7% 295 4.6% 362 (1,422) 22.8% 216 3.5% 345 2.0% -10 bps 36.8% 110 bps 4.8% (597) 10.2% 343 5.8% 335 (482) 10.3% 224 4.8% 225 23.9% -10 bps 53.0% 100 bps 49.4% 5.7% 5.2% 50 bps 5.7% 5.5% 20 bps 5.7% 4.8% 90 bps (135) 1.1% (154) 1.4% -12.3% -30 bps (121) 1.9% (149) 2.4% -18.9% -50 bps (14) 0.2% (5) 0.1% 184.3% 10 bps 215 41 422.6% 39 (72) n.a 176 113 55.6% 1.8% 0.4% 140 bps 0.6% -1.2% 180 bps 3.0% 2.4% 60 bps | ||
Food Business | Multivarejo | Assaí |
9M18
9M17
Gross Revenue
Net Revenue Ex. tax credits (*)
Gross Profit Ex. tax credits (*)
38,379 35,332 7,945
34,844 32,125 7,349
10.1% 38,379
10.0% 35,332
8.1% 7,945
Gross Margin Ex. tax credits(*) Selling, General and Adm. Expenses % of Net Revenue
22.5%
22.9%
-40 bps
22.5%
(6,066) 17.2%
(5,816) 18.1%
4.3% -90 bps
(6,066) 17.2%
EBITDA (2)
2,085
1,564
33.4%
2,189
EBITDA Margin
Adjusted EBITDA Ex. tax credits (2)(3)(*)
5.9% 1,864
4.9% 1,521
100 bps 22.6%
6.2% 1,967
Adjusted EBITDA Margin Ex. tax credits(*)
5.3%
4.7%
60 bps
5.6%
Net Financial Revenue (Expenses)
(414)
(524)
-21.0%
(414)
% of Net Revenue
1.2%
1.6%
-40 bps
1.2%
Net Income - Controlling Shareholders - continuing operations
726
247
194.3%
830
Net Margin- continuing operations Net Income (Loss) - Controlling Shareholders - continuing operations ex. tax credits(*)
2.1%
0.8%
130 bps
2.3%
449
(90)
n.a.
552
Net Margin - continuing operations ex. tax credits (*)
1.3%
-0.3%
160 bps
1.6%
3Q17
Multivarejo | ||
Δ | 3Q17 | |
Δ | 9M17 | |
34,844 | 10.1% | 20,680 |
32,125 | 10.0% | 19,129 |
7,349 | 8.1% | 5,382 |
22.9% | -40 bps | |
(5,816) | 4.3% | |
18.1% | -90 bps | |
1,657 | 32.1% | |
5.2% | 100 bps | |
1,614 | 21.9% | |
5.0% | 60 bps | |
(524) | -21.0% | |
1.6% | -40 bps | |
340 | 143.9% | |
1.1% | 120 bps | |
4 | n.a | |
0.0% | 160 bps |
3Q18
9M18
20,756 19,131 5,370
28.1%
(4,384) 22.9%
925
4.8% 1,067
5.6%
(385)
2.0%
126
0.7%
92
0.5%
Assaí | ||||
Δ | 3Q18 | 3Q17 | Δ | |
Δ | 9M18 | 9M17 | Δ | |
0.4% | 17,623 | 14,164 | 24.4% | |
0.0% | 16,201 | 12,996 | 24.7% | |
-0.2% | 2,575 | 1,967 | 30.9% | |
28.1% | 0 bps | 15.9% | 15.1% | 80 bps |
(4,471) | -1.9% | (1,681) | (1,345) | 25.0% |
23.4% | -50 bps | 10.4% | 10.3% | 10 bps |
1,054 | -12.3% | 1,264 | 602 | 109.8% |
5.5% | -70 bps | 7.8% | 4.6% | 320 bps |
988 | 7.9% | 901 | 626 | 43.9% |
5.2% | 40 bps | 5.6% | 4.8% | 80 bps |
(483) | -20.4% | (29) | (41) | -28.4% |
2.5% | -50 bps | 0.2% | 0.3% | -10 bps |
54 | 131.3% | 704 | 286 | 146.3% |
0.3% | 40 bps | 4.3% | 2.2% | 210 bps |
(282) | n.a | 460 | 286 | 74.9% |
-1.5% | 200 bps | 2.8% | 2.2% | 60 bps |
(1) Sums and percentages may present discrepancies due to rounding. All margins were calculated as a percentage of net sales. (2) Earnings before interest, tax, depreciation and amortization. (3) EBITDA adjusted by Other Operating Income and Expenses.
(* ) Excludes nonrecurring tax credits related to 2Q18, with R$45 million at Multivarejo referring to the sale to third parties of a portion of the tax credits related to the exclusion of ICMS from the calculation base of PIS/COFINS and R$369 million at Assaí referring to the reversal of the provision related to ICMS ST credits for periods prior to the Supreme Court decision, recognized in cost of goods sold. In relation to 2Q17, R$447 million was excluded at Multivarejo referring to nonrecurring tax credits in connection with the ICMS ST reimbursement, recognized in cost of goods sold.
OPERATING PERFORMANCE BY BUSINESS
Multivarejo
Gross sales came to R$6.9 billion, with same-store sales ex calendar growth of 6.1%, confirming the recovery since the start of the year. All banners continued to capture market share gains, with the highlight the Extra Hiper and Proximity banners.
Gross profit was R$1,783 million, with gross margin of 27.9%, stable in relation to 3Q17, reflecting the adequate level of price competitiveness at each banner. The commercial initiatives have had positive effects on the improvement in sales volume, average ticket and market share.
Selling, general and administrative expenses were R$1,451 million, increasing only 2.0%, which is significantly lower than the IPCA inflation measured in the last 12 months of 4.5%. SG&A expenses as a ratio of net sales decreased 10 bps compared to 3Q17, to 22.7%. This dilution of expenses reflects the stronger sales and continued cost discipline, with the highlight the productivity gains at stores.
Adjusted EBITDA came to R$362 million, increasing 4.8%, outpacing the revenue growth. Adjusted EBITDA margin expanded 20 bps in relation to 3Q17, to 5.7%, surpassing the guidance given for the year and reflecting the consistent results over the past three quarters.
Net income was R$39 million, with net margin of 0.6%, reversing the loss reported in 3Q17.
Assaí
Assaí gross sales advanced 25.5% to R$6.4 billion, maintaining another quarter of strong growth. Same-store sales growth ex calendar and excluding conversions accelerated to 7.4%, driven by the banner's anniversary, which supported growth in sales volume and customer traffic. The period once again was marked by an important market share gain.
Gross profit came to R$930 million, with gross margin of 15.9%. The continued expansion in gross margin compared to last year reflects the following factors:
o The successful expansion of the past two years: 19 organic stores with accelerated maturation, reflecting a well-defined business model and market demand;
o The positive effect from the conversion of Extra Hiper stores, with good attractiveness and adherence to the needs the banner's target public.
Selling, general and administrative expenses registered dilution of 10 bps compared to 3Q17, corresponding to 10.2% of net sales. The result reflects the maturation of stores, despite the growing number of openings and the stores under construction in the period.
Adjusted EBITDA came to R$335 million, for robust growth of 49.4%, with adjusted EBITDA margin expanding 90 bps to 5.7%.
Net income reached R$176 million, a strong growth of 55.6%, with a net margin of 3.0%.
FINANCIAL PERFORMANCE
Other Income and Expenses
Other Operating Income and Expenses were an expense of R$59 million in the quarter. In the last 9 months, this expense was R$193 million, down 52.3% from the prior-year period.
The main elements in the quarter are related to:
▪ Tax contingencies related to litigations from prior periods, corresponding to approximately R$19 million.
▪ Integration and restructuring expenses, including personnel and other costs related to the closures and conversions of stores / DCs, in the amount of R$38 million.
▪ Result from property and equipment of R$3 million.
Financial Result
The financial result was R$135 million, or 1.1% of net sales, improving 30 bps from 3Q17. Main variations:
▪ Financial income increased nearly 30%, reflecting the higher cash balance average in the period.
▪ The lower debt cost and improvement in the cost of selling receivables are mainly due to the lower interest rate in the period.
▪ Contingencies adjustment and other expenses remained stable at 0.5% of net sales.
Net Income
In the Food segment, net income attributable to the controlling shareholders from continuing operations was R$215 million, 5.2 times higher than in 3Q17. At Multivarejo, net income was R$39 million, with net margin of 0.6%, reversing the loss reported in 3Q17. At Assaí, net income grew 55.6% to R$176 million, with net margin of 3.0%.
Consolidated net income attributable to the controlling shareholders from continuing operations was R$188 million, 18.8 times higher than in 3Q17.
Earnings per Share
Earnings per share in the quarter stood at R$0.52246 for the common shares and at R$0.58510 for the preferred shares.
Net Debt
Net debt adjusted for the balance of not discounted receivables stood at R$3,260 million. The Company maintained its low financial leverage, with the net debt/EBITDA ratio falling to -1.15x, compared to -1.30x a year ago.
The Company ended the quarter with a cash position of R$2,625 million and R$711 million of not discounted receivables, totaling R$3,336 million in cash and equivalents. Also, it has approximately R$1.8 billion in pre-approved/confirmed credit facilities.
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CBD - Companhia Brasileira de Distribuição published this content on 25 October 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 25 October 2018 21:56:11 UTC
