Cencosud shares and bonds fall due to the crisis in Argentina

The truth is that this cimbronazo experienced by the titles and bonds of the Chilean giant is not even close to the first bad news it receives from its Argentine subsidiary.

Without going any further, as can be seen from Cencosud's economic results corresponding to the first quarter of this year, in Argentina its revenues decreased by about 30% due to the devaluation of the Argentine peso versus the Chilean, which reaches -43.9%.

Some time before, in the middle of last year, JP Morgan maintained a neutral recommendation for the Chilean commercial group due to the impact of higher salary costs in its Argentine subsidiary and its effect on consolidated Ebitda (profit before taxes).

Logically, the collapse of the Argentine economy greatly affects the Chilean company because currently around 20% of its revenues correspond to this market.

Locally, the company is a major player in the retail sector. It operates with the Jumbo, Vea and Disco supermarkets and in total it has more than 280 stores distributed throughout the country.

In addition, in the shopping malls category, the Unicenter, San Martín Factor and Plaza Oeste Shopping malls are under its orbit, among others. As detailed from the company currently has 18 malls.

Finally, it is also present in the home supplies sales business with Easy and Blaisten with a total of 53 stores.

A separate chapter takes its business segment associated with financial services with the Cencosud Card as a flagship.

The company launched this card in 2007 with the objective of offering financial services (credit) to its customers, in addition to some special discounts to build loyalty. This business came to occupy a very important part of its operations when consumption in the domestic market experienced growth but since last year the situation changed dramatically. In this way the firm reflected it in the memory of its balance sheet: "Given the situation in the country, risk mitigation measures were taken, mainly lower account openings, reduction in the placement of financial products and lower incentives in sales campaigns in stores."

In this context and when asked about the permanence of Cencosud in Argentina, Horst paulmann -your majority owner- detailed the Chilean newspaper El Mercurio: “We did not go to Argentina to play. When we go to a country we stay there. We did not go to Argentina for ten years, but for fifty. We've been 39 years now and we're going for fifty more. ” The businessman also got into the current political situation and detailed: “I am very happy that President Macri and candidate Alberto Fernández had an open dialogue. They are not leading Argentina to hyperinflation or disaster. Two months is a long time and anything can happen. ”