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Medellin-Based Multinational Supermarket Giant Grupo Exito Posts Profitable 2016

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Thanks to a favorable turnaround in fourth quarter (4Q) 2016, Medellin-based multinational supermarket giant Grupo Exito posted a full-year 2016 net profit of COP$43.5 billion (US$14.9 million).

The improvement came despite a 2016 Colombian interest-rate basis-point hike that cost the company COP$458 billion (US$156 million), higher Colombian income taxes and net losses in its Brazilian operations.

“The good operating performance of the fourth quarter [2016] allowed us to reverse the accumulated net loss posted through September, with net income for the [latest] quarter of COP$191.5 million [US$65million] and accumulated [net profit] for the year of COP$43.5 million [US$14.9 million],” according to Exito.

“The 2016 results reflect the first step in the integration of Grupo Éxito's business and real estate businesses in Colombia, ‘Grupo Pão de Açúcar’ in Brazil, ‘Libertad’ in Argentina and ‘Grupo Disco’ in Uruguay,” added Exito CEO Carlos Mario Giraldo.

“The strength of Colombian and Uruguayan operations and the gradual recovery of Brazil and Argentina allow us to foresee a promising future in the three largest economies of Latin America and the Caribbean.

“Our multichannel strategy, the growth of electronic commerce and the creation of the Viva Malls real estate vehicle are concrete advances that reinforce the Group’s value creation expectations,” Giraldo added.

Full-year 2016 earnings before interest, taxes, depreciation and amortization (EBITA) hit COP$833 billion (US$285 million), with an EBITDA margin of 7.3%, up 3.2%, according to the company.

Operating revenues hit COP$51.6 trillion (US$17.6 billion) “in the first full year of activity reporting after Grupo Pão de Açúcar and Libertad operations were acquired in September 2015,” according to Exito. Revenue growth in Colombia was 7.5%.

“The Brazilian operation showed a gradual recovery in sales, driven by the food business, up 11.4% in local currency, and gaining market share,” according to Exito.

“In Brazil the performance of the Assaí brand -- wholesale format or Cash and Carry – saw a growth in sales in local currency of more than 38% during the year,” which has “become the lever for growth of the food segment in Brazil,” according to Exito.

With a corporate decision to focus on the food segment in Brazil, Exito is “advancing a divestment process for the non-food business” there, according to the company.

In Argentina, sales increased by 25% in local currency. “Implementation of the Colombian textile model gave the [clothing] category a 67% growth in sales within the stores where the complete model was implemented,” according to Exito.

“Sales in Uruguay increased 12% and operating profit increased 38%. The expansion of the ‘proximity’ format with 14 openings in the year stands out, for a total of 24 points of sale,” according to Exito.

Synergies in management of Exito operations in all four countries delivered operational benefits of US$25 million, according to the company.

In the Colombian real estate business, a new Viva Malls holding company was created, the largest real estate vehicle specialized in commercial areas in Colombia with an estimated value of COP$1.6 trillion (US$543 million) and 434,000 square meters of leased space.

Meanwhile, the charitable Éxito Foundation reached eight new territories and provided food to more than 38,000 needy families and 5,000 pregnant mothers, advancing its goal of assuring that all Colombian families avoid chronic malnutrition by 2030, according to the company.

 

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