Parque Arauco Reports 2012 Full Year and Fourth Quarter Results
Parque Arauco Reports 2012 Full Year and Fourth Quarter Results
- Full Year Revenues Increased 16%, Reaching Ch$ 100,502 million in 2012; 4Q 2012 Revenues up 15% to Ch$ 29,143 million
- Full Year EBITDA Increased 16% from 2011 to Ch$ 71,308 million; 4Q 2012 EBITDA Grew 14% to Ch$ 20,399 million
- Total Gross Leasable Area (GLA) up 13% in 2012, reaching 682,700 m2
- Falabella opening at Maipu Mall at the end of November 2012
- Strong cash position of Ch$ 104,290 million
- Started construction of three strip malls in Peru adding 32,300 m2 of GLA during 2013
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 full year and fourth quarter ended December 31, 2012. The following financial and operating information, unless otherwise indicated, was prepared and presented in accordance with IFRS. Under IFRS, Parque Arauco consolidates 33.3% of the financial results of Marina Arauco and Mall Center Curicó and 100% of the results of all other properties. 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 2012, we achieved strong revenue growth and operating profitability, maintaining an EBITA margin at 71%, as we continue to strengthen our market position of current properties while also growing our presence throughout the Andean region. During 2012, we opened two properties, MegaPlaza Chimbote and Villa El Salvador in Peru, acquired the Buenaventura outlet mall in Santiago, and completed expansions on current properties. The completion of these projects resulted in the strong growth of total GLA while we also continued to diversify our portfolio across a number of fast growing regions and property types.
The reduction in net income is strongly explained by the higher income tax rate. This expense grew 281% during 2012 reaching Ch$ 22,406 million in the company.
Looking ahead in 2013, we have a number of exciting projects expected to be completed. In terms of greenfield projects, we expect to add an additional property in Chile and Colombia, and open three more strip centers in Peru. In terms of expansions, the Luxury District at Parque Arauco Kennedy, the first of its kind in Chile, will solidify the property's strong position in the Santiago market and demonstrates our continued drive to innovate and anticipate the needs of our clients." said chief executive Juan Antonio Álvarez.
Revenues for 2012 were Ch$ 100,502 million, a 16% increase as compared to 2011, driven mainly by increased total GLA and the growth in rent/m² from nearly all of the Company´s existing properties. In Chile, total GLA increased 49,700 m² to 467,700 m², with the additions coming from new properties (Arauco Express and the consolidation of the Buenaventura Outlet Mall) and expansions of current properties such as Arauco Maipu including a new anchor store of Falabella. In Peru, total GLA increased by 37,000 m² to 181,000 m²,driven by the openings of Megaplaza Chimbote and Mega Express Villa El Salvador.
Gross profit for the year was Ch$ 80,227 million leading to a year-over-year increase of 15.1% and a gross margin of 79.8% with increased rental revenues and GLA partially offsetting cost increases. Cost of sales grew 21.7% to Ch$ 20,274 million due to higher GLA, additional costs related to new properties and renovations, and an increase in Chile's property tax following a temporary tax rate freeze in 2011.
Administrative expenses decreased 1% to $Ch 10,645 million partly due to new properties reaching more mature stags and no longer requiring the additional costs incurred in the first years of operation. Administrative expenses include costs related to the Company's growth plans and cost restructuring initiatives, advertising and marketing expenses as well as facilities costs which tend to be greater in the first year of operation of new properties
Depreciation and amortization decreased 29.8% to Ch$ 1,727 million as compared to Ch$ 2,460 million in 2011.
The Company recorded EBITDA of Ch$ 71,308 million, which was 16.2% higher than the Ch$ 61,356 million recorded in 2011. The EBITDA margin was 71.0%, similar to an EBITDA margin of 71.1% in the previous year. The strong EBITDA margin performance is attributable to the Company's ability to increase GLA and rental revenues while efficiently managing administrative expenses, which decreased 1.8% to Ch$ 1,727 million year-on-year.
Total net non-operating income were significantly lower in 2012 totaling a negative amount of Ch$ 2,818 million compared to a negative amount of Ch$9,926 million in 2011. Other income / expenses totaled Ch$ 2,934 million compared to other income of Ch$ 7,050 million in 2011 when the Company realized gains from property sold in Peru. Net financial expenses of Ch$ 11,986 million were similar to the previous year as interest earned on the cash position as a result of an equity issuance in October of 2011 partially compensated for higher financial expenses mainly driven by additional interest expenses from a debt issuance in January of 2012. The lower inflationary environment that prevailed in 2012 resulted in a loss on indexed assets and liabilities of Ch$ 5,618 million compared to a loss of Ch$ 10,119 million in 2011. The Ch$ 18,314 million gain in the adjustment of book value to fair value of financial assets was significantly higher than the Ch$ 2,463 million adjustment in 2011.
An increase in the income tax expense to Ch$ 22,406 million as compared to the 2011 charge of Ch$ 5,879 million is primarily attributable to increased results as well as an increase in the Chilean income tax rate from 17% to 20%. As a result of the higher tax rate, the Company allocates additional funds to the deferred tax account to compensate for the increase in potential tax provisions on the future sale of assets. Excluding the non-cash deferred tax expense, the adjusted tax provision totaled Ch$ 9,485 million compared to Ch$ 4,081 in 2011.
In 2012, net income was Ch$ 36,417 million, or Ch$ 51.82 per share, as compared with net income of Ch$ 40,787 million, or Ch$ 63.96 per share, in the prior year. The lower year-over-year net income is mainly a result of the higher non-cash deferred tax charges in the third and fourth quarters of 2012. The weighted average number of shares outstanding during the year was 702.75 million as compared to 637.71 million in 2011.
FFO ("Funds from Operations") for 2012, 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$ 46,308 million, as compared to Ch$ 55,006 million in 2011.
Cash and cash equivalents totaled Ch$ 104,290 million on December 31, 2012 compared to Ch$ 136,430 on December 31, 2011 as the Company continues to invest in renovating and developing properties. Net financial debt at the end of 2012 was Ch$ 265,396 million. The Company remains comfortably within its financial covenants with Liabilities/ (Equity+ Minority Interest) of 0.82 as compared to a limit of 1.4 and EBITDA/Financial Expenses of 3.6, 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.
2013-2014 Announced Property Openings:
This section includes projects that are currently under construction or have been approved by the Board to commence construction.
|Project||Country||Est. Opening||GLA (m2)|
|Arauco Quilicura||Chile||1H 2013||33,000||100%||50||5|
|Mega Express Chincha||Perú||1H 2013||7,500||50%||10||1|
|Mega Express Barranca||Perú|
|Mega Express Cañete||Perú|
|* Estimated Operational EBITDA refers to the expected annual EBITDA when the property has reached maturity|
|Project||Country||Est. Opening||GLA (m2)|
|Boulevard IV Kennedy||Chile|
|Expansion in MegaPlaza||Perú||2H 2013||27,000||50%||58|
|Expansion El Roble - Chillán||Chile||1H 2014||12,500||100%||20|
|Expansion Marina Arauco||Chile||2H 2014||40,000||33%||67|
New Operations in 4Q 2012
Parque Arauco's subsidiary in partnership with AURUS, Arauco Express, incorporated 7 operating assets (12.000 m2 of GLA) and is expected to open 3-5 strip malls in Chile over the next three years.
In September, the Company acquired its operation of the Buenaventura outlet mall in Chile. The transaction is representative of the Company's strategy to diversify its properties among shopping centers, strip malls, and outlet stores.
At the same time, the Company has begun construction on three Mega Express strip malls in Peru: Mega Express Chincha, Mega Express Barranca and Mega Express Cañete, and are expected to open during 2013.
Property Highlights by Mall
Parque Arauco Kennedy (PAK)
PAK generated total EBITDA of Ch$ 9,080 million in 4Q 2012, a 4.64% increase compared to 4Q 2011 of Ch$ 8,677. The Company continues to make investments to reinforce the property's focus on entertainment, services, and restaurants highlighted by the 7,200 m2 "Luxury District" to open in 2Q 2013. EBITDA margin increased 2.6 pp compared 2011 and recorded lower cost of sales and SG&A of Ch$ 310 million and Ch$ 1,133 million, respectively. The property continues to benefit from a strong brand name and location and its sales totals were fairly balanced between anchor tenants (42%) and small stores (49%)
Mall Arauco Maipú
This shopping center, located in a fast growing, emerging middle class neighborhood in Santiago, Chile, continues to show impressive growth generating total revenue of Ch$ 3,138 million in 4Q 2012, an increase of 19.7% compared to 4Q 2011. EBITDA improved to Ch$ 2,478 million, an increase of 24.6%, as compared to the same period of 2011. This excellent results reflect the expantion of the mall including a new Falabella store in 4Q 2012.
Plaza El Roble
El Roble contributed total revenue of Ch$ 1,193 million during 4Q 2012, an increase of 2.8% from the same period in 2011 while EBITDA generated Ch$ 948 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 97.9%.
Paseo Arauco Estación
Paseo Arauco Estación earned total revenue of Ch$ 3,389 million in 4Q 2012, a 0.7% improvement from the same period last year. The mall's EBITDA grew 6,1% to Ch$ 2,660 million. 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 a higher rent/m2
Arauco San Antonio
San Antonio contributed income of Ch$ 925 and EBITDA of Ch$ 338 million in 4Q 2012. The EBITDA in 2012 was lower than 2011. This is because there was an increase on the real state tax of this property. The Company has indentified a third party to operate the hotel which will be integrated into the property's operations in 1Q 2013.
Mall Marina Arauco
This extremely profitable property, situated in Viña del Mar, Chile, generated total revenue of Ch$ 4,252 million during 4Q 2012, a year-over-year increase of 6.0%. The property's EBITDA of Ch$ 4,125 million grew 6.2% aided by an impressive EBITDA margin of 96.8%.
Boulevard Marina Arauco
Another exceptionally profitable property is this innovative commercial center located in front of Mall Marina Arauco. Total revenue grew 19.9% to Ch$ 596 million in 4Q 2012 compared to 4Q 2011. EBITDA generated Ch$ 553 million with an EBITDA margin of 92.8%.
Mall Center Curicó
This shopping center, located south of Santiago, Chile, contributed income of Ch$ 1,173 million, an increase of 5.4% as compared to 4Q 2011. EBITDA increased 3.0% to Ch$ 1,070 million with an EBITDA margin of 91.2%.
This shopping center, located in the Peruvian capital of Lima, reflects the Company's strategy to target low to middle income areas, a market that the Company believes to be underserved in the country. The property added income of Sol$ 16,308 thousand, a 7.9% increase as compared to the same period of the prior year. The property posted EBITDA of Sol$ 12,657 thousand, a 9.8% improvement from the previous year. Occupancy remained strong at the shopping center, exceeding 99.9%.
Mega Express Villa
This strip mall property, located in Chorrillos, Peru, contributed income of Sol$ 902 thousand in 4Q 2012. The shopping center's EBITDA increased by 125.5% to Sol$ 810 thousand compared to 4Q 2011. 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$ 7,586 thousand in 4Q 2012, a 4.7% improvement compared to 4Q 2011. The center's EBITDA was Sol$ 4,748, a 12.2% increase compared to 4Q 2011. The property continues to renovate its facilities and shift the tenant mix to achieve a higher rent/m2.
Located in Peru, this mall generated income of Sol$ 2,625 thousand compared to Sol$ 2,824 in 4Q 2011. The lower revenue was a result of decreased rent/m2 as the Company is committed to offering competitive rates to maintain maximum occupancy. Despite the decrease in revenue, EBITDA improved 96.1% to Sol$ 199 thousand as the property significantly decreased 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.
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 a success to date. For 4Q 2012, Parque Arboleda contributed income of Col$ 4,583 million, a 25.5% increase compared to 4Q 2011. EBITDA improved 66.7% to Col$ 5,082 million compared to 4Q 2011.
Arauco Express (Stripcenters Chile): In 4Q 2012, the Parque Arauco subsidiary, Arauco Express posted an EBITDA of approximately Ch$ 269 million. The new operation is in line with the Company's strategy to diversify its portfolio of products.
Buenaventura Outlet Mall: Since September 2012, this property was added to the portfolio of property management of Parque Arauco. This operation is located in Santiago, Chile. In its first full quarter of operation, the property earned EBITDA of Ch$ 630 million.
MegaPlaza Chimbote: This operation, located 400 km from Lima, Peru, opened on April 24th, 2012. In its second quarter of operation, the property earned EBITDA of Sol$ 1,937 million.
Mega Express Villa El Salvador: This operation, located in Villa El Salvador, Peru, opened on April 12th, 2012. During 2012, it earned EBITDA of Sol$ 1,125 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
|Quarter Ending December 31,||Year End December 31,|
|2012||2011||Chg. %||2012||2011||Chg. %|
|Cost of Sales||(5,616,563)||(5,376,073)||4.5%||(20,274,456)||(16,654,626)||21.7%|
|Depreciation & Amortization||382,066||1,297,806||-70.6%||1,726,922||2,459,930||-29.8%|
|Other Income / Expenses||(2,110,695)||9,194,133||-||(2,933,696)||7,050,104||-|
|Foreign Exchange Differences||(101,974)||1,282,382||-||(595,228)||2,354,197||-|
|Income (Loss) for indexed assets and liabilities||(2,667,358)||(2,752,911)||-3.1%||(5,618,203)||(10,119,204)||-44.5%|
Gains (losses) from the difference between the
|Profit before Income Tax||29,950,496||24,391,251||22.8%||66,762,995||48,970,267||36.3%|
|NET PROFIT (LOSS)||17,105,368||21,423,302||-20.2%||44,356,840||43,091,585||2.9%|
|Equity holders of the company||11,481,786||21,271,648||-46.0%||36,417,448||40,787,225||-10.7%|
|NET PROFIT (LOSS)||17,105,368||21,423,303||-20.2%||44,356,840||43,091,586||2.9%|
Financial and Operating Highlights
|Quarter Ending December 31,||Quarter Ending December 31,|
|2012||2011||Chg. %||2012||2011||Chg. %|
|Revenues (Ch$ Millions)||29,143||25,376||14.8%||100,502||86,345||16.4%|
|EBITDA (Ch$ Millions)||20,399||17,970||13.5%||71,308||61,356||16.2%|
|EBITDA Margin %||70.0%||70.8%||-0.8 pp||71.0%||71.1%||-0.1 pp|
|Net Income (Ch$ Millions)||11,482||21,272||-46.0%||36,417||40,787||-10.7%|
|Net Income Margin %||39.4%||83.8%||-44.4 pp||36.2%||47.2%||-11.0 pp|
|FFO (Ch$ Millions)||12,505||25,048||-50.1%||46,308||55,006||-15.8%|
|FFO Margin %||42.9%||98.7%||-55.8 pp||46.1%||63.7%||-17.6 pp|
|Weighted Avg. Shares (million)||702.75||702.75||0.0%||702.75||637.71||10.2%|
|Stock Price (Ch$)||1,185.50||847.12||39.9%||1,185.50||847.12||39.9%|
|Daily Traded Volume (Ch$ million)||1,145.79||
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