Parque Arauco Reports First Quarter 2013 Results

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Parque Arauco Reports First Quarter 2013 Results

  • 1Q 2013 Revenues increased 13%, reaching Ch$ 23,953 million
  • EBITDA grew 11.3% from 1Q 2012 to Ch$ 16,418 million
  • 1Q 2013 Net Profit totaled Ch$ 10,021 million, a 31% improvement over 1Q 2012
  • Total Gross Leasable Area (GLA) increased 13% to 690,000 m²
  • Mega Express Chincha in Peru opened in March 2013
  • Strong cash position of Ch$ 84,735 million

SANTIAGO, Chile--(BUSINESS WIRE)-- Parque Arauco S.A. (Santiago Stock Exchange: Parauco; Bloomberg: PARAUCO:CI), one of Latin America's leading shopping center developers and operators, based on gross leasable area (GLA), reported financial results for the first quarter ended March 31, 2013. The following financial and operating information, unless otherwise indicated, was prepared and presented in accordance with IFRS. Accordingly, we no longer consolidate the financial statements of three of our malls: Marina Arauco, Boulevard Marina Arauco and Mall Center Curico, but now account for our interests under the equity income method. 1Q2012 has been adjusted for comparison purposes. For a more detailed review of the results filed with the SVS (Chilean Securities and Exchange Commission), please visit the investor section of Parque Arauco's website www.parauco.com/eng/.

"In 1Q 2013, we achieved strong revenue growth and operating profitability, with an EBITDA margin of 69%, as we continue to strengthen our market position of current properties while also growing our presence throughout the Andean region. We continued to expand our successful strip mall portfolio with the opening of Mega Express Chincha, in Peru, in March, while our newest properties in the region are operating in line with expectations. We remain in a strong cash position and are advancing development of our greenfield projects in Chile, Colombia and Peru, as well as the expansion projects primarily in Chile and Peru. Greenfields are focused on stripcenters and a new mall property in Bucamaranga, Colombia," said chief executive Juan Antonio Álvarez.


FIRST QUARTER 2013 CONSOLIDATED RESULTS

Revenues for 1Q 2013 were Ch$ 23,953 million, a 13% increase as compared to 1Q 2012, driven mainly by increased total GLA and the growth in rent/m² in nearly all of the Company´s existing properties. In Chile, total GLA increased 8.1% to at 467,700 m² due to the expansion of current properties such as Arauco Maipu which included a new Falabella anchor store. In Peru, total GLA increased by 4% to 188,300 m², driven by the openings of Mega Express Chincha, Megaplaza Chimbote, Mega Express Villa El Salvador.

Gross profit for the quarter was Ch$ 18,685 million demonstrating a year-over-year increase of 15.1% with rental revenues and GLA more than offsetting cost increases.

Operating Costs increased 19% to $Ch 6,897 million primarily due to costs related to the Company's growth plans and investments in cost restructuring initiatives, advertising and marketing expenses as well as facilities costs which tend to be greater in the first year of operation of new properties. This was offset by other properties reaching more mature stages and no longer requiring the additional costs incurred in the first years of operation.

The Company recorded EBITDA of Ch$ 16,418 million in 1Q 2013, an 11.3% increase over 1Q 2012. The Company's solid EBITDA reflect its ability to continue to leverage costs of sales as it expands GLA and rental revenues while reducing cost of sales as a share of revenue. The EBITDA margin was 68.5%, slightly lower than the previous year's margin of 69.6%.

Non-operating expenses were significantly lower in 1Q 2013 totaling Ch$ 2,599 million compared to Ch$ 5,595 million in 1Q 2012. Financial income was lower in 1Q 2013 totaling Ch$ 1,283 million compared to Ch$ 1,639 million in 1Q 2012 as the Company continued its investment plan. Other expenses totaled Ch$ 1,120 million compared to Ch$ 700 thousand in 1Q 2012 when the Company realized gains from property sold in Peru. Financial expenses decreased 14% to Ch$ 4,265 million in 1Q 2013 as the average interest rate paid decreased.

An increase in the income tax expense to Ch$ 3,113 million as compared to the 1Q 2012 charge of Ch$ 1,078 million is attributable to an increase in the Chilean income tax rate from 17% to 20%. Excluding the non-cash deferred tax expense, the adjusted tax provision totaled Ch$ 1,913 million compared to Ch$ 711 thousand in 1Q 2012.

In 1Q 2013, net income was Ch$ 8,634 million, or Ch$ 12.29 per share, as compared with net income of Ch$ 7,186 million, or Ch$ 11.27 per share, in 1Q 2012.

FFO ("Funds from Operations") for 1Q 2013, defined as net income plus depreciation and amortization minus a gain (loss) on indexed assets and liabilities minus any gains (losses) on other non-cash items, was Ch$ 11,707 million, as compared to Ch$ 10,565 million in 1Q 2012.

Cash and cash equivalents totaled Ch$ 84,735 million compared to Ch$ 103,782 on December 31, 2012 as the Company continues to invest in renovating and developing properties. Net financial debt at the end of 1Q 2013 was Ch$ 270,057 million. The Company remains comfortably within its financial covenants with Liabilities/(Equity + Minority Interest) of 0.78 as compared to a limit of 1.4 and EBITDA/Financial Expenses of 3.8, substantially above the requisites of 2.375.

Occupancy remained relatively stable as compared to the prior year. Additionally, the Company owns a strategic land bank with assets in Chile, Peru and Colombia for future developments. First quarter total tenant sales increased by 2% to Ch$227,452 million.

PROJECTS UNDER CONSTRUCTION AND DEVELOPMENT

This section includes projects that are currently under construction or have been approved by the Board to commence construction.

Greenfields

 
Greenfield Projects (under construction or ready to start)
                   
Name

of the

Project

  Location

(Country)

  Estimated

Opening

Date

  Total

GLA (m²)

  Final

Stake

  Owned

GLA

  Total

Investment

(US$MM)

2 New Stripcenters  Chile  4Q 2013  4,600  51%  2,346  8
Bucaramanga  Colombia  1H 2013  30,000  55%  16,500  100
Mega Express Chincha  Perú  1H 2013  7,500  50%  3,750  10
Mega Express Barrancha  Perú  2H 2013  8,000  50%  4,000  13
Mega Express Cañete  Perú  2H 2013  16,800  50%  8,400  12
Expansion El Roble - Chillán  Chile  1H 2014  12,500  100%  12,500  20
Boulevard IV Kennedy  Chile  1H 2013  5,000  100%  5,000  24
Expansion Marina Arauco  Chile  2H 2014  40,000  33%  13,320  67
Expansion in MegaPlaza  Perú  2H 2013  27,000  50%  13,500  58
  Total    151,400    79,316  312
 

PROPERTY HIGHLIGHTS BY MALL

Parque Arauco Kennedy (PAK)

PAK generated total EBITDA of Ch$ 7,568 million in 1Q 2013, in line with Ch$ 7,576 in 1Q 2012 of. The Company continues to make investments to reinforce the property's focus on entertainment, services, and restaurants as highlighted by the 7,200 m2 "Luxury District" due to open in 2Q 2013. EBITDA margin increased 0.3 pp compared with the same period in 2012. Sales totals were fairly balanced between anchor tenants (40%) and small stores (51%).

Mall Arauco Maipú

This shopping center continues to show impressive growth generating total revenue of Ch$ 2,472 million in 1Q 2013, an increase of 3% compared to 1Q 2012. EBITDA improved to Ch$ 2,284 million, an increase of 17%, as compared to the same period of 2012. These results reflect the expansion of the mall including a new Falabella anchor store in 4Q 2012.

Plaza El Roble

Plaza El Roble contributed total revenue of Ch$ 1,025 million during 1Q 2013, stable with the same period in 2012 while EBITDA generated Ch$ 834 million. The property is adding 12,500 m2 of GLA which will consist of fashion stores, a cinema, an improved food court and a Hites department store. The property's current GLA of 25,000 m2 is now operating at an occupancy level of 98%.

Paseo Arauco Estación

Paseo Arauco Estación earned total revenues of Ch$ 3,405 million in 1Q 2013, stable with the same period last year. The mall's EBITDA was Ch$ 2,935 million, in line with the EBITDA of 1Q 2012. This is a property in the process of changing the tenant mix and redesigning the GLA to attract and accommodate more international brands and achieve higher rent/m2.

Arauco San Antonio

San Antonio contributed income of Ch$ 979 and EBITDA of Ch$ 690 million in 1Q 2013. The EBITDA in 1Q 2013 was lower than 1Q 2012 due to an increase in the property tax of this property. The Company has identified a third party to operate the hotel which will be integrated into the property's operations in 2H 2013.

Megaplaza Norte

This shopping center, located in the Peruvian capital of Lima, reflects the Company's strategy to target low to middle income areas, a market the Company believes to be underserved in the country. The property added income of Sol$ 15,367 thousand, a 9% increase as compared to the same period of the prior year. The property posted EBITDA of Sol$ 12,500 thousand, a 7% improvement from the previous year. Occupancy remained strong at 99%.

Mega Express Villa

This strip mall property, located in Chorrillos, Peru, contributed income of Sol$ 954 thousand in 1Q 2013. The shopping center's EBITDA increased by 46% to Sol$ 707 thousand compared to last year. The solid performance demonstrates the demand for the strip mall model in the Peruvian market as the Company continues to develop similar properties in partnership with the Wiese Family.

Larcomar Fashion Center

Located in Lima, the mall contributed income of Sol$ 6,693 thousand in 1Q 2013, stable compared to last year. The center's EBITDA was Sol$ 3,897, a 1% decrease compared to last year. The property continues to renovate its facilities and shift the tenant mix to achieve higher rent/m2.

Parque Lambramani

Located in Peru, the mall generated income of Sol$ 2,449 thousand, similar to 1Q 2012. EBITDA decreased 1% to Sol$ 631 thousand as the property significantly increased its cost of sales and SG&A. The Company continues to focus on differentiating the property from peers by specializing in entertainment and food, enhancing the customers experience with the property's unique and award winning architecture, and attracting additional top line anchor stores.

Parque Arboleda

This shopping center is located in Pereira, Colombia. The property utilizes a unique rental structure that is atypical among the primarily condominium type mall structures in Colombia and has proven success to date. For 1Q 2013, Parque Arboleda contributed income of Col$ 4,183 million, an 11% increase compared to 1Q 2012. EBITDA improved 58% to Col$ 3,532 million compared to last year.

NEW OPERATIONS

Arauco Express (Stripcenters Chile): In 1Q 2013, the Parque Arauco subsidiary, Arauco Express posted an EBITDA of approximately Ch$ 398 million.

MegaPlaza Chimbote: In 1Q 2013, this property earned EBITDA of Sol$ 1,298 million.

Mega Express Villa El Salvador: In 1Q 2013 this operation earned EBITDA of Sol$ 777 million.

Buenaventura Outlet Mall: In this quarter of operation, the property earned EBITDA of Ch$ 454 million.

This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Parque Arauco. These are merely projections and, as such, are based exclusively on the expectations of management concerning the future of the business and its continued access to capital to fund the Company's business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the economies in which we work and the industry, among other factors; therefore, they are subject to change without prior notice.

 
Parque Arauco S.A.
       

Consolidated Income Statement

 
IFRS
Ch$ thousands
Quarter Ending March 31,
 
20132012Chg. %
Revenues23,953,46321,190,18513.0%
Cost of Sales(5,268,412)(4,956,093)6.3%
Gross Profit18,685,05116,234,09315.1%
Administration Expenses (2,952,226)   (1,938,103)   52.3%
OPERATING INCOME 15,732,824   14,295,989   10.1%
Depreciation & Amortization 684,987   449,195   52.0%
EBITDA 16,417,811   14,745,184   11.3%
Other Income / Expenses(1,119,685)(700,171)60.0%
Financial Income1,283,2681,639,457-21.7%
Financial Expenses(4,265,053)(4,959,095)-14.0%
Share of Profit (Loss) of Associates Accounted1,305,1891,068,35122.2%
Foreign Exchange Differences(1,670)(518,205)-99.7%
Income (Loss) for indexed assets and liabilities198,983(2,125,710)-
Gains (losses) from the difference between the previous book value and the fair value of financial assets (1,812)   2,463,185   -
NON-OPERATING INCOME (2,598,968)   (5,595,372)   -54.0%
Profit before Income Tax13,133,8578,700,61651.0%
Income Tax(3,112,660)(1,077,817)188.8%
NET PROFIT (LOSS) 10,021,197   7,622,799   31.0%
Attributable to:
Equity holders of the company8,633,6047,186,18520.1%
Minority interests1,387,593436,614217.8%
NET PROFIT (LOSS) 10,021,197   7,622,799   31.0%
 
 

Financial and Operating Highlights

Quarter Ending March 31,
 
20132012Chg. %
Revenues (Ch$ Millions)23,95321,19013.0%
EBITDA (Ch$ Millions)16,41814,74511.3%
EBITDA Margin %68.5%69.6%-1.0 pp
Net Income (Ch$ Millions)8,6347,18620.1%
Net Income Margin %36.0%33.9%2.1 pp
FFO (Ch$ Millions)11,70710,56511.0%
FFO Margin %48.9%49.9%-1.0 pp
Weighted Avg. Shares (million)702.75637.7110.0%
EPS ($)12.2911.279.0%
Stock Price (Ch$)1,218.20990.0023.1%
Daily Traded Volume (Ch$ million)1,299.781,197.818.5%
Total Tenant Sales (Ch$ Millions) 1227,452221,9042.0%
Total GLA (m2)690,000

610,700

13.0%

Parque Arauco GLA (m2) 470,332   

419,532

   

12.0%

 
1. Total Tenant Sales = Sales of Consolidated Assets
 
 

Consolidated Balance Sheet

     
(Ch$ millions)March 31,December 31,
  2013  2012  % Change
Assets:
Cash and Cash Equivalents84,735103,782-18.4%
Trade Accounts Receivable & Other Receivables20,83721,685-3.9%
Other Current Assets22,41020,20410.9%
Total Current Assets127,981145,671-12.1%
Investment Properties836,114814,2922.7%
Other Non-Current Assets92,25191,4030.9%
Total Non-Current Assets 928,365  905,695  2.5%
Total Assets 1,056,346  1,051,367  0.5%
 
Liabilities & Stockholder's Equity:
Current Financial Liabilities32,16236,330-11.5%
Other Current Liabilities34,05534,336-0.8%
Total Current Liabilities66,21770,666
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