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Sonae SGPS

Earnings Release Jan 24, 2018

1901_iss_2018-01-24_206a7603-467d-4d28-a18c-7c3fd672ad2f.pdf

Earnings Release

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IMPROVING LIFE

1HIGHLIGHTS AND MESSAGES FROM THE CEOs

Sonae Retail grew sales by 6.9% to €5,554 M in 2017 (7.3% in 4Q17)

  • Sonae MC sales increased by 5.4%, to €3,884 M in 2017 (6.8% in 4Q17), fueled by a LfL growth of 1.2% in 2017 (3.2% in 4Q17)
  • During 2017, Sonae MC opened additional 19 Continente Bom Dia stores
  • Worten sales surpassed €1bn, increasing by 10.2% in 2017 (13.4% in 4Q17) and with LfL growth delivering once again a solid figure (7.7% in 2017 and 10.2% in 4Q17)
  • Sonae Sports & Fashion presented sales growth of 11.7% in 2017 reaching €589 M
  • Online retail sales surpassed €100 M in 2017

"2017 was once again a positive year for Sonae MC with the continuous reinforcement of our market leadership in such a demanding market environment. In line with our expectations, sales increased by 5.4% when compared to 2016, supported by a LfL sales growth of 1.2% and by the continuous expansion of our Continente Bom Dia proximity stores.

The LfL sales growth clearly shows the results of a stronger value proposition, namely the effective improvement of our perishables' quality as well as the price perception, confirmed by the latest study of DECO in which Sonae MC was recognised as the price leader in the Portuguese market."

Luís Moutinho, CEO Sonae MC

"Worten ended a particularly good year by surpassing sales of €1bn and a high single digit LfL growth. With this positive performance, Worten has been able to reinforce its market share both in Portugal and Spain, in the online and offline channels.

Sports & Fashion division posted combined sales growth of 11.7%, with positive LfL contributions from all fashion brands, in spite of the negative impact from October weather conditions."

Miguel Mota Freitas, CEO Worten and Sonae S&F

2SALES PERFORMANCE

Sonae Retail sales

Million euros
Sonae Retail
2016
5,196
2017
5,554
y.o.y.
6.9%
4Q16
1,450
4Q17
1,556
y.o.y.
7.3%
Worten 910 1,003 10.2% 276 313 13.4%
Sonae S&F 527 589 11.7% 154 152 -0.8%
Other 1 72 78 9.3% 18 20 12.5%

1Maxmat

Sonae MC sales – yearly performance (€M)

Sonae MC sales – quarterly performance (€M)

Sonae Retail sales reached €5,554 M in 2017, +6.9% versus 2016, benefiting from the positive contribution of all divisions. In quarterly terms, Sonae Retail sales posted a 7.3% y.o.y. performance to €1,556 M.

Online sales surpassed €100 M in 2017 particularly with the contribution of Worten, Sonae MC and Salsa among our 8 ecommerce operations.

Sonae MC sales amounted to €3,884 M in 2017, growing 5.4% when compared to 2016. This evolution was supported not only by the continuous expansion of the store network (with the opening of 19 Continente Bom Dia and 1 Continente Modelo) but also by a LfL sales growth of 1.2%. This LfL sales growth reflects the impact from the measures implemented by Sonae MC to strengthen its value proposition. From these measures, we highlight (i) the effective improvement of its perishables' quality and consequently the quality perception and (ii) the price perception, reinforced once again by the latest study released in October 2017, in which Sonae MC was recognised by DECO, the Portuguese consumers' association, as the price leader in the Portuguese market.

This operational performance allowed Sonae MC to further strengthen its market share, both in the quarter and in the year.

Regarding 4Q17, it is worth highlighting Sonae MC's LfL sales growth of 3.2%, also impacted by 2.0% of food inflation. This growth was particularly positive considering the comparable 2.1% LfL sales growth registered in 4Q16.

Pursuing the strategy of strengthening its position in the Health and Wellness segment, throughout 2017, Sonae MC took several steps to promote the health and wellbeing of the communities, namely by (i) increasing the variety of healthy products in Continente stores under the renewed brand bio e saudável (healthy), (ii) acquiring 51% of Go Natural and 100% of Brio' supermarkets, and (iii) opening 19 Wells and 3 Dr. Well's clinics.

Already in January of 2018, Dr. Well's opened its 4th clinic. Dr. Well's clinics are specialised in dental and aesthetic medicine.

2SALES PERFORMANCE (cont.)

Worten sales – yearly and quarterly performance (€M)

Sonae S&F sales – yearly andquarterly performance (€M)

Worten surpassed 1bi € sales for the first time, ending 2017 with €1,003 M. This represents 10.2% y.o.y. growth, which was sustained by a LfL sales growth of 7.7% and by a significant increase of Worten's online operation, that grew in excess of 50% in Portugal and 65% in Spain. The Spanish operation reached a particularly good sales performance, driven by the online sales hike and by reinforced sales area productivity.

In the 4Q17, total sales grew 13.4% versus 4Q16, on the back of a 10.2% LfL sales growth. It is worth mentioning that Worten experienced a very substantial growth during the "Black Friday" period, both in Spain and in Portugal, with no relevant impact on traditionally high sales in December.

As a result of this annual performance, Worten reinforced its market leadership in Portugal and slightly improved market share in Spain, both in the online and offline channels.

The Sonae S&F sales reached €589 M in 2017, an increase of 11.7% when compared to the previous year. This evolution benefited not only from Salsa's consolidation in the first semester but also from a positive contribution of the remaining brands, proving the success of the value proposition adjustments made over the last quarters.

In terms of LfL sales growth, all brands, except Sport Zone, witnessed a positive performance in 2017, reaffirming the continued growth path posted over the last quarters, despite the unfavourable weather conditions that led to a late start in the season, which impacted very negatively October figures.

Regarding the agreement with JD Sports Fashion Plc, Balaiko Firaja Invest S.L. and JD Sprinter Holdings 2010, S.L., formalized in September 2017 for the combination of JD Sprinter and Sport Zone, everything is evolving as planned, including the anti-trust approval from the competition authorities (received on January 18th). The transaction is expected to be completed in the very near future.

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SAFE HARBOUR

This document may contain forward-looking information and statements, based on management's current expectations or beliefs. Forward-looking statements are statements that should not be regarded as historical facts.

These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, changes in regulation, industry and economic conditions; and the effects of competition. Forward-looking statements may be identified by words such as "believes," "expects," "anticipates," "projects," "intends," "should," "seeks," "estimates," "future" or similar expressions.

Although these statements reflect our current expectations, which we believe are reasonable, investors and analysts, and generally all recipients of this document, are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. You are cautioned not to put undue reliance on any forward-looking information or statements. We do not undertake any obligation to update any forward-looking information or statements.

Report available at Sonae's institutional website www.sonae.pt

Media and Investor Contacts

Patrícia Vieira Pinto Head of Investor Relations [email protected] Tel.: + 351 22 010 4794

Catarina Oliveira Fernandes Head of Communication, Brand and Corporate Responsibility [email protected] Tel: + 351 22 010 4775

Maria João Oliveira External Communication [email protected] Tel: + 351 22 010 4745

Sonae Lugar do Espido Via Norte 4471-909 Maia Portugal Tel.: +351 22 948 7522 Fax: +351 22 940 4634

SONAE is listed on the Euronext Stock Exchange. Information may also be accessed on Reuters under the symbol SONP.IN and on Bloomberg under the symbol SONPL

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