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COMPANHIA BRASILEIRA DE DISTRIBUIÇAO NETHERLANDS HOLDING B.V.

(PCAR3)
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Earnings Release 3Q 2021

11/03/2021 | 04:42pm EST

EARNINGS

RELEASE 3Q21

November 3, 2021

EARNINGS

RELEASE

3Q21

São Paulo, November 3, 2021

GPA [B3: PCAR3; NYSE: CBD] announces its results for the third quarter of 2021 (3Q21). All comparisons are with the same period in 2020, unless stated otherwise. The results include the effects of IFRS 16/CPC 06 (R2), unless stated otherwise.

GPA GROUP - Operational & Financial Highlights

Extra Hiper Transaction:

3Q21 Earnings

Conference Call

Thursday

November 4, 2021

11:00 a.m. (Brasília)

10:00 a.m. (NY)

2:00 p.m. (London)

Portuguese

videoconference: www.gpari.com.br

English (simultaneous translation) videoconference: www.gpari.com.br

Replay: www.gpari.com.br

  • On October 14, 2021, we announced a transaction involving 71 commercial establishments under the Extra Hiper brand to be assigned to Assaí. A binding memorandum of understanding ("MoU") was executed by the parties and establishes a total Transaction price to be received by GPA of R$5.2 billion, of which R$4.0 billion will be paid by Assaí to GPA. The remainder will be paid to GPA through a real estate fund, guaranteed by Assaí.
  • The Transaction intensifies the focus and accelerates the expansion of the Company's most profitable businesses and our digital platform, through the premium and proximity segments. Of the 32 remaining Extra Hiper stores, 28 will be converted into Pão de Açúcar and Mercado Extra and 4 under evaluation.

Digital Ecosystem:

  • GPA Brazil recorded all-time high online food sales of R$475 million, up 46% over 3Q20 and 393% over 3Q19. In 12 months basis, GMV would reach R$1.9 billion. Online sales accounted for 9.3% of total sales in 3Q21, up from 6.3% in 3Q20. At Pão de Açúcar, online sales accounted for an average of 15% of total sales, reaching peaks of 20% in the quarter.
  • At Grupo Éxito, Gross Merchandise Volume (GMV) reached R$572 million in 3Q21, while penetration stood at 9.3%.

Sales:

  • The group's consolidated net revenue from sales totaled R$12.1 billion in 3Q21, in line with 3Q20 and up 11.1% over 3Q19. In 9M21, net revenue was R$36.4 billion, in line with the same period in 2020 and 11.5% higher than in 9M19.
  • Grupo Éxito recorded strong double-digit growth in same-store sales: 16.4% vs. 3Q19 and 15.7% vs. 3Q20, thanks to increased traffic to stores from lower restrictions.
  • Same-storesales of GPA Brazil (excluding hypermarkets and drugstores) rose 8.4% over 3Q19 and remained in line with 3Q20, reflecting the consistent operation of other formats.

Consolidated Adjusted EBITDA Margin:

  • Consolidated Adjusted EBITDA margin dropped 120 bps from 3Q20, concentrated in gross profit due to higher price investment in the Brazilian operation due to the deterioration of the macroeconomic environment with high inflation and unemployment rates. Strict expense control, which reduced the SG&A ratio by 60 bps, partially offset this investment.
  • In 9M21, Consolidated Adjusted EBITDA margin remained flat year on year at 7.2%, with a decline at GPA Brazil (-30 bps) and an increase at Grupo Éxito (+70 bps).

2

ESG Commitments:

  • The GPA Group is included in the main global sustainability indexes and has been constantly improving its ESG initiatives. In 3Q21, it is worth highlighting:
    • Brazil: we made important advances in the sustainability agenda this quarter, contributing to the fulfillment of our commitment to being a mobilizing agent for a more inclusive and sustainable society. At the end of September, 53% of our staff were women and 52% self-declaredBlack, promoting diversity and inclusion for our people.
    • Éxito: we promote sustainability through value creation initiatives in order to contribute to economic growth, social development and environment protection. We collected 520 tons of waste in 3Q21, 900% more than in 3Q20, thanks to the excellent participation of our customers.

Disclaimer: Statements contained in this release relating to the business outlook of the Company, projections of operating/financial results, growth prospects of the Company and market and macroeconomic estimates are merely forecasts and are based on the beliefs, plans and expectations of Management in relation to the Company's future. These expectations are highly dependent on changes in the market, Brazil's general economic performance, the industry and international markets, and hence are subject to change.

3

GPA Consolidated

Challenging scenario in Brazil and strong recovery in Colombia

R$ million, except when

GPA Consolidated (1)

indicated

3Q21

3Q20

3Q19(5)

21 vs 20

21 vs 19

9M21

9M20

9M19(5)

21 vs 20

21 vs 19

Gross Revenue

13,285

13,335

11,794

-0.4%

12.6%

39,993

40,314

35,788

-0.8%

11.7%

Net Revenue

12,084

12,064

10,881

0.2%

11.1%

36,415

36,483

32,672

-0.2%

11.5%

Gross Profit

2,968

3,080

2,820

-3.6%

5.2%

9,224

9,189

8,613

0.4%

7.1%

Gross Margin

24.6%

25.5%

25.9%

-90 bps

-130 bps

25.3%

25.2%

26.4%

10 bps

-110 bps

Selling, General and Adm.

(2,233)

(2,299)

(2,092)

-2.9%

6.8%

(6,764)

(6,828)

(6,419)

-0.9%

5.4%

Expenses

% of Net Revenue

18.5%

19.1%

19.2%

-60 bps

-70 bps

18.6%

18.7%

19.6%

-10 bps

-100 bps

Other Operating Revenue

(161)

(21)

(120)

673.3%

34.1%

(281)

(210)

(267)

33.9%

5.2%

(Expenses)

Adjusted EBITDA (2)(3)

794

944

796

-15.9%

-0.2%

2,628

2,606

2,317

0.9%

13.4%

Adjusted EBITDA Margin (2)(3)

6.6%

7.8%

7.3%

-120 bps

-70 bps

7.2%

7.1%

7.1%

10 bps

10 bps

Net Income - Controlling

(88)

(63)

(22)

39.6%

302.1%

28

(223)

(169)

-112.6%

-116.6%

Shareholders (4)

Net Margin - Controlling

-0.7%

-0.5%

-0.2%

-20 bps

-50 bps

0.1%

-0.6%

-0.5%

70 bps

60 bps

Shareholders (4)

  1. Consolidated figures include the results of GPA Brazil, Grupo Éxito (Colombia, Uruguay and Argentina), other businesses (Stix Fidelidade, Cheftime and James Delivery) and CDiscount (in the equity income line).
  2. Operating income before interest, taxes, depreciation and amortization.
  3. Adjusted for Other Operating Revenue (Expenses).
  4. Continuing Operations.
  5. Grupo Éxito's 2019 results refer to unaudited pro-forma figures, with adjustments related to the deconsolidation of GPA itself, which until November 2019 was directly controlled by Grupo Éxito. Thus, GPA's consolidated results reflect these same adjustments.

Message from the CEO

Despite the challenges imposed by the macro environment, including a decline in the population's income and inflationary pressure, which have required major adjustments and caution from the entire sector, food sales remained resilient, enabling

  1. growth of 8.4% over 3Q19 (excluding hypermarkets and drugstores), reflecting the consistent operation of other formats. In Colombia, this trend is even clearer, with same-store sales growth of 16.8% over 3Q20.
    As our digital ecosystem remains strong, with a dynamic that is increasingly well-adapted to the lives of omnichannel consumers, we reached record sales, 393% higher than in 3Q19 and 46% higher than the extremely strong 3Q20, with ever- growing penetration both in Brazil and in Grupo Éxito. This evolution reflects the robustness of our strategic planning and operational efficiency, with an open platform model and extensive experience in food distribution via e-commerce.
    We continue to advance our environmental, social and governance initiatives, as pillars of our business, and I would like to highlight the advances of programs aimed at promoting diversity, inclusion and gender equity in the group, as well as the valuable recognition we received in rankings about the job market and ESG published last quarter.
    Finally, we have reached the fourth quarter, the most important period for food retail, with a renewed company: last month we announced the most transformative operational transaction in GPA's recent history, as part of a strategy that looks ahead to the future. It was an important step in creating value for our business, with multiple growth drivers, low leverage and important resources to place us in an advantageous position in the market.

Jorge Faiçal

GPA's CEO

4

GPA Brazil

Digital Strategy

We will be wherever the customer is, continuing our strategy of providing an open and collaborative platform

The pillars of GPA Brazil's digital ecosystem are robust strategic planning and efficient execution. In the third quarter, we launched the fulfillment service for marketplace sellers, ensuring fast delivery, competitive freight rates and order traceability. We continued to enhance partnerships with last-mile carriers in order to serve customers wherever they are.

1P & 3P E-commerce

Food e-commerce (1P+3P) grew a hefty 46% over 3Q20, despite the strong comparison base in the previous year. These sales accounted for 9.3% of GPA Brazil's total food sales, with peaks of 20% at Pão de Açúcar. The GMV of GPA Brazil's online operations continued to grow, reaching R$475 million in the quarter and surpassing the GMV recorded in 4Q20 (which was affected by seasonality due to Christmas and Black Friday). On 12 months basis GMV would reach R$1.9 billion.

It is worth noting the strong growth in the number of orders placed in 3Q21. The number of orders increased 109% over 3Q20 and surpassed the total number of orders placed in the whole of 2019.

In 3Q21, the Click & Collect service, available in 286 stores, accounted for 11% of total GMV (1P). In the quarter, partnerships with last-milercarriers, available in 563 stores, recorded a strong performance, representing 42% of the GMV, an increases of 37% compared to 2Q21.

The strong growth is supported by other initiatives designed to improve UX usability. In 3Q21, we launched the following initiatives: social login, Sunday delivery, Click & Collect in one hour, cashback, WhatsApp, pix, 30-minutedelivery (ultra convenience), delivery using electric cars and the new search tool, which will boost e-commerce growth over the coming quarters.

Marketplace

At GPA's Marketplace (3P), we continue to advance our strategy to expand our assortment, focusing on verticals that complement our food core business (wine, spirits, craft beer, baby care, beauty, pet care, household items and kitchen utensils). Our onboarding process continues at full speed in order to further maximize the number of SKUs available, with stable service level indicators. In 3Q21, we launched our fulfillment platform.

Fulfillment: As part of the strengthening of our digital ecosystem's value proposition, we launched a fulfillment platform with GPA Log, the Group's logistics company. We began to offer services to marketplace sellers, ensuring fast delivery, competitive freight rates and order traceability. Initially, we offer two services: Delivery: the partner company relies on GPA's expertise in logistics to deliver its sales, ensuring a reduction in delivery time and freight rates for clients; and Mailing: GPA will provide the partner with a sticker that will enable it to send the parcel via the Brazilian postal service at a more competitive rate, thanks to GPA's business volume with the Brazilian postal service. Currently, 15% of our marketplace is on the fulfillment platform, and our goal is to reach 30% by year-end.

Partnerships

In line with our strategy of being wherever the customer is on an open platform, we entered into a partnership with HomeRefill in October, launching our Retail as a Service (RaaS) business. The project will be executed based on a combination of two services in a full service dynamic, making inventory available for the channel, carrying out handling operations, separating orders and making deliveries.

5

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Disclaimer

CBD - Companhia Brasileira de Distribuição published this content on 03 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 November 2021 21:41:07 UTC.


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Sales 2021 50 775 M 9 461 M 9 461 M
Net income 2021 269 M 50,1 M 50,1 M
Net Debt 2021 8 649 M 1 612 M 1 612 M
P/E ratio 2021 17,0x
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Nbr of Employees 110 000
Free-Float 58,9%
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Technical analysis trends COMPANHIA BRASILEIRA DE DISTRIBUIÇAO NETHERLANDS HOLDING B.V.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 14
Last Close Price 21,64 BRL
Average target price 38,86 BRL
Spread / Average Target 79,6%
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Managers and Directors
Jorge Faiçal Chief Executive Officer
Jean-Charles Henri Naouri Chairman
Eleazar de Carvalho Filho Independent Director
Luiz Augusto de Castro Neves Independent Director
Renan Bergmann Independent Director
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