Cencosud Posts Lower-Than-Expected Profit in Chile

Cencosud SA (CENCOSUD), Chile’s largest retailer by sales, reported an unexpected drop in first-quarter profit on financial costs and the sale of a put option to UBS AG.

Net income fell to 54.4 billion pesos ($109 million) from 65.8 billion pesos a year ago, the company said in an e-mailed statement. The average estimate of four analysts surveyed by Bloomberg was 69.9 billion pesos.

“The fall in profits reflects higher non-operational losses due to a rise in financial costs,” Cencosud said in the statement. The company booked a non-recurring loss of 6.8 billion pesos related to the sale of a put option to UBS for a stake in an Argentine unit.

Sales rose 25 percent to 2.16 trillion pesos, while earnings before interest, tax, depreciation and amortization increased 7 percent from a year earlier to 156 billion pesos. The average analyst forecast for Ebitda was 161 billion pesos.

Cencosud operates supermarkets, shopping malls, department stores and home improvement stores in Chile, Argentina, Brazil, Peru and Colombia.

The company plans to sell by the end of June as many as 270 billion new shares in Santiago and New York. Cencosud hasn’t decided how many shares it will sell in each country or hired investment banks, Chief Executive Officer Daniel Rodriguez told reporters today. Proceeds may fund three years of expansions and won’t be used to repay debt, he said.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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