Companhia Brasileira de Distribuicao : 4Q18 & 2018 EARNINGS RELEASE

GPA's food net income more than doubles to R$1.3 billion in 2018
Multivarejo's best performance of recent years, driven by higher revenue growth, which leveraged market share gains and net income growth of nearly five-fold
Assaí continued to deliver strong sales and acceleration in net income growth, which nearly doubled in the year, with net margin of 4.6%

GPA Alimentar:

• Gross sales of R$15.2 billion in 4Q18, maintaining a strong growth rate of 12.1%, driven by Multivarejo's continued improvement and Assaí's solid performance. In the year, gross sales were R$53.6 billion, with solid growth of 10.7%;
• Robust growth in adjusted EBITDA of 29.4% in 4Q18 to R$801 million, with margin expansion of 70 bps to 5.7%. In 2018, adjusted EBITDA margin expanded 60 bps to 5.8%, supported by improvement in line with guidance at Multivarejo and above-expectation growth at Assaí;
• Strong net income growth in the quarter of 88.1% to R$471 million, while net margin expanded 140 bps to 3.4%. In the year, net income reached R$1.3 billion, with net margin doubling to 2.6%;
• Solid financial structure supported by the stability at low levels of the leverage ratio, which ended the period at -0.32x EBITDA;
• Focus on adjusting the store portfolio to reinforce the multi-channel, multi-format and multi-region presence better aligned with consumer demand. The improvement has translated into real sales growth above the industry average, which in turn has supported better results in all segments.
  

Multivarejo

• Gross sales of R$7.9 billion in 4Q18, with same-store sales growth of 4.5%, confirming the recovery registered since March. In the year, gross sales came to R$28.7 billion, accompanied by market share gains, led by the Extra Hiper and Pão de Açúcar banners.
• Strengthening of Digital Transformation project: (i) higher penetration of loyalty tools and personalization of the 'My Discount' app and 'My Rewards' initiative, with the number of downloads doubling to over 7.5 million; (ii) robust growth in food e-commerce of 63.5% in 4Q18, confirming the leadership position in the industry; (iii) acquisition of James Delivery and strategic partnership with Cheftime to reinforce the omnichannel strategy;
  
• Repositioning of Private-Label Brands: increase in penetration to around 11.5%, with the goal of increasing penetration to 20% by 2020 driven by innovation and new product launches;
  
• Strong dilution of operating expenses by 150 bps in 4Q18, due to decrease in personnel expenses and rigorous control over general expenses. In the year, dilution of expenses was 80 bps, with a nominal drop of 2.2%, despite the inflation in the period;
• Significant growth in adjusted EBITDA of 21.2% to R$400 million in the quarter, with margin expansion of 80 bps to 5.5%. In the year, adjusted EBITDA was R$ 1.5 billion (+13.0%), with margin expanding 50 bps to 5.5%;
  
• Net income in 4Q18 amounted to R$120 million, with net margin of 1.6%, reversing the net loss reported in 2017. In 2018, net income grew nearly five-fold compared to 2017, to R$246 million;
  

Assaí

• Gross sales were R$7.3 billion, representing yet another quarter of strong growth (+23.6%) and addition of R$1.4 billion in sales, with market share gains. In the year, gross sales came to R$24.9 billion, representing robust growth of 24.2%, adding sales of R$4.9 billion compared to 2017;
• Solid same-store sales growth of 9.9% in the quarter, driven by new commercial actions, successful marketing campaigns and adjustments to product assortment;
  
• Inauguration of 10 new stores in the quarter in 6 different states, closing 2018 with 18 new units and reinforcing the commitment to continue growing in the coming year;
  
• Gross margin stood at 16.0% in the quarter, in line with 4Q17. In the year, gross margin expanded 30 bps, mainly reflecting the accelerated maturation of new stores;
• Strong dilution of operating expenses of 60 bps in 4Q18, despite the accelerated pace of store expansions, supported by efficiency gains;
  
• Adjusted EBITDA was R$ 401 million in 4Q18, representing strong growth of 38.7%, with adjusted EBITDA margin expanding 70 bps to 6.0%. In the year, adjusted EBITDA was R$1.4 billion, 34.1% higher than in 2017, with margin expansion of 40 bps to 6.0%;
  
• Net income in the quarter posted robust growth of 37.9% to R$351 million, with net margin of 5.2%. In the year, net income advanced 95.2% to R$1.1 billion, with net margin of 4.6%.
  

For the complete release, click here.

4Q18 Results Conference Call and Webcast
Thursday, February 21^th, 2019
10:30 a.m. (Brasília time) | 8:30 a.m. (NY) | 1:30 p.m. (London)
Conference in English (simultaneous translation)
[phone]
Webcast: click here.
Conference in Portuguese (original language)
[phone]
Webcast: click here.

Replay: [phone] or [phone]
Access code for audio in English: 1779586#
Access code for audio in Portuguese: 1932275#
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.