Sonae Sierra Brasil reports 21.8% Net Income Growth in 2013

  • Net income reached R$ 74.6 million in 4Q13 up 165% year-on-year; full year 2013 net income was up 21.8% to R$ 226.0 million;
  • Net revenue totaled R$ 78.3 million in 4Q13, a 10.8% increase over 4Q12. In 2013, net revenue was R$ 275.8 million, a 7.4% increase over 2012;
  • Adjusted EBITDA was R$ 57.8 million in 4Q13, 0.6% above 4Q12. For 2013, Adjusted EBITDA increased 3.8%, representing a 75.0% margin;
  • Adjusted FFO totaled R$ 38.3 million in 4Q13 and R$ 147.9 million in 2013; FFO margin was 53.6% for 2013;Sonae Sierra Brasil S.A. (BM&FBovespa: SSBR3), a leading Brazilian shopping mall developer, owner and manager, announces its results for the fourth quarter and year ended December 31st, 2013. The year was another period of solid financial and operating performance for Sonae Sierra Brasil. We reported double-digit gross revenue growth; one of the strongest EBITDA margins in the industry (75.0%); and key operating metrics, such as Funds From Operations and Net Operating Income margins, of 53.6% and 90.9%, respectively, that remained at industry-leading level.

    Important milestones for our 2013 strategy implementation were the opening of the Boulevard Londrina Shopping in May, and the opening of the Passeio das Águas Shopping in October. Together, these malls represent more than 120 thousand square meters of new owned GLA, or 52% growth in the Company’s owned GLA – the largest increase reported in any single year in the Company’s 15-year history. Since their openings, traffic and sales in these malls have surpassed our initial expectations, suggesting that they will be major contributors to our Company’s performance in the periods ahead.

    Additionally, we continued to evidence a solid performance across basic metrics such as same store rents and same store sales, which attest the effectiveness of our strategy and the appeal of our malls that have provided resilience to the recent macroeconomic changes in Brazil. And, we believe that our competitive advantages will continue to benefit the Company in the coming years:

  • Over 90% of our leases are at fixed rents, providing the Company with significant foreseeability, particularly important in a less buoyant economic environment;
  • Many of our major malls, such as Parque D. Pedro and Passeio das Águas, are built in the single story, horizontal format, making our common charges approximately 30% lower than the industry average, providing our tenants with the lowest occupancy costs in the industry;
  • Successful renovation and improvement programs, effective marketing and tenant mix improvement have resulted in 7.4% and 11.0% increases in net revenue and tenant sales in 2013, respectively, trends likely to continue for the foreseeable future;
  • The centralized back office infrastructure drives operating efficiencies across the property portfolio and gives us the ability to increase capacity at a much faster rate than costs; and
  • The Company’s disciplined investments approach aims to create long term value for all of our stakeholders. Our balance sheet remained one of the strongest in the sector, with a net debt to EBITDA ratio of 2.3 times at year-end 2013. Importantly, our debt is not tied to foreign currencies, and most of it is not due until 2018.Total tenant sales in the ten operating malls of Sonae Sierra Brasil’s portfolio totaled R$ 1.3 billion in 4Q13, a 15.1% increase over 4Q12. Tenant sales reached R$ 4.0 billion in 2013, an impressive 11.0% increase over 2012. Considering the Company’s ownership interest in each of the malls, sales reached R$ 928 million in 4Q13, a 17.0% increase over 4Q12 and 13.6% for 2013.

    In 4Q13, Uberlândia Shopping had strong sales performance, increasing 19.7% compared to 4Q12, reflecting a successful ramp-up since its opening in March 2012. Most of the malls in the portfolio posted strong sales growth rates, illustrated by Parque D. Pedro’s 8.0% increase in the quarter.
    Same-store sales (SSS) increased by 7.9% in 4Q13 and 6.4% in 2013.

    Satellites and anchors stores’ SSS increased by 8.5% and 7.3%, respectively, in 4Q13, led mainly by Franca Shopping and Uberlândia Shopping, attesting the resilience of a dominant portfolio.
    Same-store rent (SSR) sharply increased by 10.8% in 4Q13, compared to the same period last year, and was up 11.6% in 2013. SSR continued to benefit from the combination of high occupancy rates in mature malls, strong double-digit leasing spreads and inflation adjustments of lease contracts. SSR was also helped by the continuous ramp-up at Uberlândia Shopping.

    Excluding the three recently opened malls, which are still in lease-up phases, the occupancy rate remained high at 97.2% of GLA at the end of 4Q13. The overall occupancy rate of the Company’s malls was 93.7% in 4Q13.

Download PDF

See also