Companhia Brasileira De Distribuição
Companhia Brasileira
de Distribuição
Investor Relations
October/05
Agenda
Our Business
Recent Performance
New CBD´s Corporate
Governance Structure
What is CBD’s focus today?
Appendix: Historical Performance
1
Our Business
Business Evolution
CBD Today:
Largest Retailer in Brazil
Gross sales of R$ 15.3 billion in
2004 and R$ 7.7 billion in 1H05
16% market share
553 stores in 13 states
1.2 million m2 of sales area
12 distribution centers
2
Sector Overview
2004 Ranking
CBD
15.8%
Carrefour
12.4%
Other
Wal-Mart
61.2%
6.2%
Sonae
4.4%
Fragmented Market: 4 largest represent 39% of the formal sector
Informal Sector accounts for approximately 50% of food consumption
Strong competition from informal retailers and wholesalers
Multi-format Concept (% of Sales)
Balance between Hypermarkets and Supermarkets
Supermarkets 8%
Supermarkets
16%
Hypermarkets 48%
Supermarkets
26%
Home Appliances and
Electronics Stores 2%
3
Sales by Category
1ºHalf 05
2.1%
12.6%
7.0%
42.9%
Grocery
Perishables
Electronics
General Merchandise
35.4%
Textile
Stores
Excellent
Piauí
Ceará
locations in the
3
20
most
2
important
Rio Grande
markets
do Norte
1
Paraíba
6
Pernambuco
June
# of Sales area
2
2005
Stores
m2
Comprebem
Goiás
8
1
185
245,183
Bahia
Distrito Federal
3
13
75
576,208
3
177
215,580
Minas Gerais
Rio de Janeiro
3
11
São Paulo
66
122,637
Mato Grosso do Sul
18
111
13
1
41
50
32,554
164
66
Paraná
50
553 1,192,162
11
2
4
CBD’s Distribution Structure
Fortaleza:
Multi-category
85%
of
Built area
350 thousand m2
Centralization
Recife:
Multi-category
Brasília:
2 Multi-category
Rio de Janeiro:
Multi-category
Curitiba:
São Paulo:
Multi-category
6 Specialized
D. C.
Recent Performance
5
Recent Sales Performance
(in Nominal Terms)
Accumulated
2004
2005
Total 19.6% 6.2%
SSS 5.1% 4.0%
26.6% 27.0%
Total Stores
25.4%
23.0%
17.9%
Sames Stores
18.2%
11.1%
10.4% 10.3%
10.0%
17.4%
4.8%
4.4%
6.0%
3.0% 2.4%
3.0%
1.9%
2.5%
1.0%
5.8%
-1.7%
0.1%
1.5%
-0.4%
-1.3%
Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05
Same Store Sales include only stores with at least 12 months of operation
Food and Non-Food
(Same Store Sales in Nominal Terms)
Accumulated
2004
2005
Food 2.9% 1.5%
Non-Food 13.6% 14.3%
Non Food
Food
23.5%
22.2%
20.2%
20.7%
17.0%
16.9%
16.1%
14.7%
14.5%
11.4%
11.4%9.5%
9.7%
7.9%
8.8%
7.2%
9.0% 7.1%
0.1%
2.2%
3.5%
0.0%
-1.1%
-2.0% -3.1%
-6.3%
Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05
6
Same Store Sales (in Real Terms)
Deflated by IPCA
Accumulated
Easter
2004
2005
Effect
-1.5% -2.8%
9.3%
3.5%
3.2%
3.4%
2.3%
-3.4%
-1.3%
-5.1%
-2.7%
-5.8%
-5.6% -6.1%
1 Day
-8.7%
Less
Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05
Same Store Sales (Adjusted by Food Inflation*)
Accumulated
Household food inflation
2004
2005
has lagged the IPCA index
2.2% 2.2%
Easter
14.6%
Effect
7.5%
8.3% 7.3%
6.6%
2.0%
2.1% 0.9% 0.6%
3.1%
-1.7%
1 Day
-5.1%
-1.8%
Less
Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05
*IPCA-Alim. no Domicílio – Household Food Inflation Rate
7
2Q05 Earnings
R$ million
2Q04
2Q05
% Change
Gross Sales
3
,747
3,
792
1.2%
Net Sales
3
,061
3,
157
3.1%
Gross Income
9
07
9
64
6.3%
Gross Margin
% of Net Sales
29.6%
30.5%
increase and SG&A
Operating Expenses
(
653)
(
673)
3.0%
% of Net Sales
-21.3%
-21.3%
reduction: EBITDA
EBITDA
254
2
91
14.7%
margin up by 90 bps
% of Net Sales
8.3%
9.2%
Depreciation&Amortization
(
111)
(
129)
16.4%
Taxes and Charges
(
15)
(
18)
18.8%
Net Financial Income (Loss)
(6
6)
(
63)
-4.6%
Equity Income
(
1)
(
5)
Non-Operating Results
(
1)
(
1)
Income Before Income Tax
6
0
7
4
24.6%
% of Net Sales
1.9%
2.4%
Significant
Income Tax
(
11)
(
22)
increase in
Minority Participation
1
0
15
EBT and Net Profit
Employees' Sharing Profit
(
4)
Net Income
5
8
6
4
10.2%
1st Half 05 Earnings
R$ million
1ºHalf04
1ºHalf05
% Change
Gross Sales
7
,162
7,
735
8.0%
Net Sales
5
,871
6,
423
9.4%
Gross Income
1,
714
1,
907
11.2%
% of Net Sales
29.2%
29.7%
Growth in
Operating Expenses
(1,244)
(
1,343)
8.0%
% of Net Sales
-21.2%
-20.9%
EBITDA as
EBITDA
470
5
64
19.9%
result of
% of Net Sales
8.0%
8.8%
higher
Depreciation&Amortization
(
215)
(2
51)
17.0%
gross margin
Taxes and Charges
( 30)
(3
5)
20.2%
Net Financial Income (Loss)
(
150)
(1
32)
-12.2%
and expenses
Equity Income
(
2)
(
6)
reduction
Non-Operating Results
(
1)
(
8)
Income Before Income Tax
7
4
1
32
78.7%
% of Net Sales
1.3%
2.1%
Income Tax
(
6)
(3
5)
Minority Participation
1
8
2
8
Employees' Sharing Profit
(4
)
Net Income
8
6
1
22
41.5%
% of Net Sales
1.5%
2.0%
8
Sendas Distribuidora Performance
30.9%
29.8%
30.0%
29.2%
Gross Margin
27.0%
27.2%
25.5%
25.3%
24.7%
25.1%
Operating Expenses
23.6%
22.2%
EBITDA margin
4.3%
4.7%
5.0%
5.6%
5.8%
2.3%
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
New CBD´s Corporate
Governance Structure
9
Past Voting Structure
AD ¹
52%
48%
VSD+
LMD ²
10.6%
PAIC
5.0%
60.4%
Casino
24.0%
CBD
(1) Abilio dos Santos Diniz
(2) Valentim dos Santos Diniz and Lucília Maria dos Santos Diniz
CBD’s Holding – the Transaction
•
PAIC’s shareholders exchanged their shares for CBD
common shares
Casino 50%
50%
AD
•
Casino acquired 50% Holding’s ON and 100% Holding’s
PN : equivalent of 20.3 bi CBD’s ON
Holding
•
AD received for the sale of 20.3 bn ON shares:
– R$ 1 bi that were reinvested into CBD (through the
acquisition of Real Estate Company– approximately
65.6%
R$ 1,03 bi)
– US$ 200 mi that were be converted in an equity
interest in Casino (under negotiation)
CBD
– 12.5 bi CBD’s PN, aligning controlling and minority
shareholders’ interest
10
CBD’s Holding – Corporate Governance
• Holding is CBD’s controlling shareholder
• Holding’s co-control structure:
– AD is the Chairman of the Board
– 50% / 50% Board
– Consensus for strategic decisions
• CBD
– 14 members in the Board of Directors
• 5 appointed by AD
• 5 appointed by Casino
• 4 independent
– AD is the Chairman of the Board
– AD has the casting vote for day-to-day matters
Preferred shares Sale Program
• Other family members converted CBD’s common shares into
preferred shares and shall follow a pre-scheduled sale
program, increasing the liquidity of the stock:
• 2005: 5.5 bn PN shares already sold
• July 2008 – June 2009: 8.5 bn PN shares to be sold
• July 2010 – June 2011: 8.5 bn PN shares to be sold
11
Real Estate Company Constitution
100% Cia Imobiliária’s
shares
CBD
AD
R$ 1,03 bil ion
Lease
Agreement
•
AD acquired 60 CBD’s stores through the acquisition
of Real State Company
≅ 30.5% of CBD’s total sales
– 28 Extra Hypermarkets
Real Estate
100%
– 32 supermarkets
Company
•
CBD received R$ 1,03 bi
•
Lease Agreement
– 40 years term (20+10+10)
– payments equivalent to 2% of each store gross
sales
CBD’s Performance - Estimated Impact
12 months
Source
estimated impact
EBITDA
Increased rental
(-) R$ 117 million
expenses
Depreciation
Assets’ sale to AD
(+) R$ 35.5 million
Financial Results
R$ 1 billion
(+) R$ 200 million
debt reduction
Net Income (1)
R$ 89 million
Cash Flow (1)
R$ 59 million
(1) Considers a 25% income tax
12
Indebtedness – Significant Reduction
Pro forma Debt
R$ million
2Q05
after Transaction
(1) Total Debt
2,450
2,450
(2) Cash and Cash Investments
874
1,903
(3) Receivables
369
369
Net Debt (1-2-3)
1,207
178
Net Debt/Equity
29.4%
4.3%
Highlights of the New Structure
Alignment of the controlling and minority shareholders
interest
Inflow of approximately R$ 1,03 billion to CBD
Debt reduction
Increasing net income and cash flow
Increasing synergies, productivity and efficiency gains
Increasing free float without issuing new shares
13
What is CBD’s focus today?
Focus on higher Assets Turnover
9.0%
2003
2000
2004
in
8.0%
r
g
2002
2001
Ma
A
D
IT 7.0%
B
E
6.0%
0.0x
2.0x
4.0x
6.0x
8.0x
Assets Turnover
14
Opportunities to increase profitability
Higher efficiency in category management
Assortment
Higher Same
Pricing – HiLo
Store Sales
Promotions
Opportunities to increase profitability
Lower expenses
Zero Base Budget
Efficiencies
Shared Services
transferred
Indirect Purchases
to prices
Stores Productivity – Internal Benchmarks
Lower Invested Capital
EVA Program being implemented
Higher efficiency in working capital management
Higher
Sale lease back
Assets
Productivity
Compact hypermarkets/ Power Centers
15
Appendix:
Historical Performance
CBD: 1995 – 2004
Gross Sales (R$ million)
Mkt Share
(ABRAS)
15.8%
14.7%
14.6%
15,297
13.6%
20% Average Sales Growth
20% Average Sales Growt
12,788
14.1%
11,154
12.9%
9,533
9,052
9.9%
7.5%
7.1%
6,943
7.2%
5,133
3,464 3,638
2,911
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
16
Same Store Sales in the last 5 years
Deflated by IPCA
10%
8.5%
18% Decline in
Real Average Income
5%
0.7%
New Consumption
0%
-1.4%
Habits
-1.5%
-4.3%
-2.8%
-5%
-7.2%
-8.9%
-10%
1998
1999
2000
2001
2002
2003
2004
Sep-05
CBD: 1995 – 2004
29.2%
Gross Margin
28.2%
27.9% 28.0%
27.5%
27.0%
27.1%
26.7%
25.1% 25.2%
21.5%
21.6%
21.6%
20.9%
20.9%
20.0%
19.8%
19.7%
19.7%
19.6%
Operating Expenses
8.3%
8.3% 8.3%
7.9%
7.9%
EBITDA Margin
7.3%
6.2%
5.1%
3.6%
3.6%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
17
CBD: 1995 – 2004
R$ million
1,044
EBITDA
Net Profit
902
781
604
634
423
370
332
272
251
245
226
159
159
87
104121
144
77
62
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
CAPEX
Organic growth
sustained by cash
EBITDA
generation
1,044
CAPEX
909
902
R$ million
781
683
590
604
634
559
508
539
532
423
396
272
226
159
87118 104
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
18
Fernando Queiroz Tracanella
Investor Relations Officer
Phone: 55 11 3886-0421
Fax: 55 11 3884-2677
e-mail: cbd.ri@paodeacucar.com.br
www.cbd-ri.com.br/eng
Statements about the Future
Some statements herein included are based on assumptions and perspectives of the
Company’s current management that could bring on material variations between results,
performance, and future events. These perspectives include future results that may be
influenced by historical results, investments. Actual results, performance and events may
significantly differ from those expressed or implied by these statements, as a result of
various factors, such as general and economic conditions in Brazil and other countries;
interest and exchange rate levels, future renegotiations or pre-payment of bonds or credits
denominated in foreign currency, changes in laws and rules, and general competitive factors
(in global, regional, or national basis).
19
