December 31, 2017 Company Overview (MSE: Walmex)
This presentation is property of Wal-Mart de México S.A.B. de C.V. and is intended for the use of the company s shareholders and the investment community. It should not be reproduced in any way. This presentation may contain certain references concerning Wal-Mart de Mexico S.A.B. de C.V. s future performance that should be considered as good faith estimates made by the Company. These references only reflect management expectations and are based upon currently available data. Actual results are always subject to future events, risks and uncertainties, which could materially impact the Company s actual performance. 2
Table of contents History of Walmex 4 Walmex Today 11 Financial Information 29 Competitors 35 Walmex Resources 42 3
4 History of Walmex
History: founded in 1958 1958 Aurrerá start operations 1964 Vips Restaurants start operations 1977 Cifra starts trading on the Mexican Stock Exchange Superama start operations 1959 Bodega Aurrerá & Suburbia start operations 1970 5
History: Walmart s first international business 1991 1997 2003 Joint venture between Cifra and Wal-Mart Stores, Inc. & Wal-Mart Stores, Inc. acquires majority position in Cifra - Tender offer on the MSE Walmart de México Foundation created Walmart Supercenter start operations Stores, Inc. Introduction of Every Day Low Prices 1993 1999 6
History: Bodegas expansion & incorporation of Central America 2004 2007 2010 Mi Bodega start operations License issued to operate a bank in Mexico Walmart de México acquires 100% of Walmart Centroamérica Superama.com.mx Online grocery sales pilot Wal-Mart Stores, Inc. acquires 33% of the shares of CARHCO (Central American Retail Holding Company) 2005 Bodega Aurrerá Express expansion 2008 7
History: Sells its Restaurant Division, the Bank and Suburbia 2011 2014 2017 First Walmart Supercenter in Central America (Honduras) Walmart de México y Centroamérica sells its restaurant division to Alsea Walmart de México y Centroamérica sells Suburbia to Liverpool Walmart.com.mx launches 2013 Walmart de México y Centroamérica sells its bank to Inbursa 2015 8
Continuous profitable growth Sales (Mx$ billion) 569.4 EBITDA (Mx$ billion) 55.5 219.7 22.0 2007 2017 2007 2017 9 Walmex fiscal year: January-December
Growth across multiple formats Total Sales (Mx$ billion) CAGR 13.5% 255.3 CAGR 9.8% 157.0 72.2 61.4 2007 2017 2007 2017 CAGR 6.8% 115.8 CAGR 13.1% 38.8 59.8 11.3 2007 2017 2007 2017 10 Walmex fiscal year: January - December
11 Walmex Today
Walmex: Listed on the Mexican Stock Exchange Wal-Mart Stores, Inc. 70% 30% ADR: WMMVY OTCQX Market Cap: Mx$ 841 bn 1 Weight on the MSE index: 7.47% 3 rd most traded stock on the MSE Mexican Stock Exchange Sustainable Index 12 1 As of December 31, 2017
Company description As of December 31, 2017 Revenues (Mx$ billion) 573 * Units 3,134 Countries 6 Cities 634 Business formats 4 ecommerce sites 3 Distribution centers 23 Associates (thousand) +237 Mexico 81.2% Contribution to 2017 sales 18.8% Central America 13 * Last 12 months as of December 2017
Basic general merchandise, food and household items at the best prices. % of 2017 Walmex sales 45.1 Customer target C, D, E Cities* 618 Value Driver: Price Operating units* Mexico 1,820 Central America 655 SQ. FT. (average) SKUs (average) Units Approach 45,000 32,000 503 Weekly shopping 12,620 11,200 476 Small towns 3,800 4,400 1,496 Fill-in trip 14 * As of December 31, 2017
Mama Lucha She is the average Mexican housewife: she wants the best for her family, but faces a constant struggle (lucha in Spanish) to make ends meet. She is Mexico s favorite luchadora, who fights against high prices together with Bodega Aurrerá. She brings the lowest prices to all families. 15
Widest assortment of goods at Every Day Low Prices. Value Drivers: Price and assortment % of 2017 Walmex sales 27.7 SQ. FT. (average) 80,900 SKUs 90,000 Customer target A/B, C, D+ Cities* 93 Prototypes 4 Operating units* Mexico 270 Central America 29 16 * As of December 31, 2017
Carrito Carrito is the perfect shopping partner. He knows our customer better than anyone and he understands what motivates her to shop. Only Carrito can join, advise and listen to our customer in order to help her find everything she needs when she comes to Walmart. Qualities: Friendly, curious, helpful, observer, good listener, fun, responsible, practical, intelligent, ally, accomplice. 17
Neighborhood supermarkets with outstanding fresh and food departments at reasonable prices. Value Drivers: Quality, convenience and service % of 2017 Walmex sales 6.8 SQ. FT. (average) 16,100 SKUs 30,000 Customer target A, B, C Cities* 45 Prototypes 2 Operating units* Mexico 94 Central America 94 18 * As of December 31, 2017
Local format branding Costa Rica Nicaragua Mexico El Salvador Guatemala & Honduras 19
Membership warehouse clubs focused on businesses and high income households. Value Drivers: Price leader, volume, new and unique merchandise % of 2017 Walmex sales 20.4 SQ. FT. (average) 76,700 SKUs 4,500 Customer target A, B, C, D, Business Cities* 86 Prototypes 4 Operating units* Mexico 162 20 * As of December 30, 2017
Business Member Individual Member 21
Superama.com.mx: online grocery sales leader Web page Delivery Mobile Apps 22 Call Center
Walmart.com.mx: online general merchandise Differentiated catalogue Delivery Categories Audio Auto & tires Baby & toddler Books Cell Phones Computers & tablets TV s & video Sports Consumer Appliances Electronics Cameras Home Musical Instruments Jewelry & accessories Toys Books Pets Health & Beauty Video Games Patio & Garden Furniture 23
Walmart.com.mx: groceries and perishables Categories Meal Solution, grains & pasta, snacks Pharmacy, Health & Beauty Beverages, Wine & liquor Cleaning Supplies & Pets Frozen Food Produce Dairy, Eggs & Cheese Meat, Seafood & Poultry Baby & toddler Deli Bakery & Bread 24
25
Flexible multiformat operation Income Level Flexible Prototypes C, D, E A/ B, C, D A, B, C, D A, B, C, D 26 Sales Area (Sq. Ft.) 0 15,000 30,000 45,000 60,000 75,000 90,000
Regional store presence 634 Cities with Walmex presence Mexico 484 31 Honduras Guatemala 47 El Salvador 21 27 24 Nicaragua Costa Rica 27 * As of December 31, 2017
Efficient distribution network 2 2 23 Distribution Centers Culiacán Monterrey 2 Mexico City Guadalajara 5 2 Villahermosa Guatemala El Salvador Nicaragua 3 3 1 1 Honduras 2 Costa Rica 28 * As of December 31, 2017
29 Financial Information
Walmex: 4Q17 Results 4Q17 4Q16 % Growth (Mx$ millon) $ % $ % Total revenues 168,185 100.0 157,497 100.0 6.8 Gross margin 36,974 22.0 34,606 22.0 6.8 General expenses 23,033 13.7 21,801 13.8 5.7 Earnings before other income 13,941 8.3 12,805 8.1 8.9 Other income (127) (0.1) (157) (0.1) (19.4) Operating income 13,814 8.2 12,648 8.0 9.2 EBITDA 16,883 10.0 15,476 9.8 9.1 Income from continuing operations 10,579 6.3 9,404 6.0 12.5 Net income 10,579 6.3 10,400 6.6 1.7 30
Mexico: 4Q17 Results 4Q17 4Q16 % Growth (Mx$ million) $ % $ % Total revenues 137,690 100.0 127,729 100.0 7.8 Gross margin 29,604 21.5 27,703 21.7 6.9 General expenses 17,754 12.9 16,749 13.1 6.0 Earnings before other income 11,850 8.6 10,954 8.6 8.2 Other income (99) (0.1) (138) (0.1) (28.6) Operating income 11,751 8.5 10,816 8.5 8.6 EBITDA 14,158 10.3 13,020 10.2 8.7 31
Central America: 4Q17 Results 4Q17 4Q16 % Growth (Mx$ million) $ % $ % In peso terms On a constant currency basis Total revenues 30,495 100.0 29,768 100.0 2.4 8.5 Gross margin 7,370 24.2 6,903 23.2 6.8 13.1 General expenses 5,279 17.3 5,052 17.0 4.5 10.7 Earnings before Other income 2,091 6.9 1,851 6.2 13.0 19.7 Other income (28) (0.1) (19) (0.1) 45.9 54.5 Operating income 2,063 6.8 1,832 6.2 12.6 19.3 EBITDA 2,725 8.9 2,456 8.3 11.0 17.6 32
Walmex: 2017 Results 2017 2016 % Growth (Mx$ millon) $ % $ % Total revenues 573,265 100.0 532,384 100.0 7.7 Gross margin 127,695 22.3 117,484 22.1 8.7 General expenses 83,684 14.6 77,834 14.6 7.5 Earnings before other income 44,011 7.7 39,650 7.4 11.0 Other income (173) (0.0) (195) (0.0) (11.0) Operating income 43,838 7.6 39,455 7.4 11.1 EBITDA 55,482 9.7 50,149 9.4 10.6 Income from continuing operations 32,390 5.7 28,509 5.4 13.6 Net income 39,865 7.0 33,352 6.3 19.5 33
Mexico: 2017 Results 2017 2016 % Growth (Mx$ million) $ % $ % Total revenues 465,886 100.0 433,025 100.0 7.6 Gross margin 101,862 21.9 94,133 21.7 8.2 General expenses 64,455 13.8 60,251 13.9 7.0 Earnings before other income 37,407 8.0 33,882 7.8 10.4 Other income (185) (0.0) (236) (0.1) (21.7) Operating income 37,222 8.0 33,646 7.8 10.6 EBITDA 46,310 9.9 42,081 9.7 10.0 34
Central America: 2017 Results 2017 2016 % Growth (Mx$ million) $ % $ % In peso terms On a constant currency basis Total revenues 107,379 100.0 99,359 100.0 8.1 8.7 Gross margin 25,833 24.1 23,351 23.5 10.6 11.4 General expenses 19,229 17.9 17,583 17.7 9.4 10.0 Earnings before Other income 6,604 6.2 5,768 5.8 14.5 15.4 Other income 12 0.0 41 0.0 (72.4) (72.3) Operating income 6,616 6.2 5,809 5.8 13.9 14.7 EBITDA 9,172 8.5 8,068 8.1 13.7 14.4 35
Financial strength Cash Inventories 35,596 59,463 Balance sheet statement (December 31 2017 Mx$ Million) TOTAL: $295,256 80,099 Suppliers Fixed assets and other 200,197 215,157 Shareholders equity and other Assets Liabilities & shareholders' equity 36
Growth Program 2017 (Mx$ billion) CAPEX (% Total) 14.0 12.7 12.5 14.3 17.4 ecommerce & Technology Fresh Upstreaming Logistics 10% 6% 6% Total CapEx: $17,4B 36% New Stores 42% 2013 2014 2015 2016 2017 Existing Stores (Remodels & maintenance) 37
38 Competitors
Selected self-service competitors Listed on the MSE Revenues* (Mx$ billion) Private 153.6 94.6 16.6 39 * Last 12 months as of December 2017
ANTAD: Self-service and Department Stores Association December 2017* Mx $ 1,632 billion in sales Department 19% % Participation to sales 28% Specialized +100 Members 27.0 million sq. ft. Self-service 53% 40 * Last 12 months as of December 2017
Informal market remains a large competitor 41
Associates 2017 highlights: 01 MX$65 million invested in training 02 23,413 promoted associates 03 35% of management positions are filled by women 42
Community support 2017 highlights: 01 15,966 small producers developed 02 29,971 tons were donated household necessities donated through the armed forces 03 75,558 volunteers Associates, family members and customers participated as volunteers 43
Environmental commitment and success 2017 highlights: 01 MX$ 1,310 million investment in sustainability initiatives 02 1.41% energy savings vs. 2016 03 1,046 water treatment plants 04 91% of our units are supplied by renewable energy 05 The zero waste objective: 73% progress in Mexico & 50% in Central America 44
Walmex resources Investor Relations: www.walmex.mx Corporate: www.walmartmexico.com.mx Online & sales: www.superama.com.mx www.walmart.com.mx www.sams.com.mx 45