9M12 x 9M11 - Alpargatas

1
AGENDA
A COMPANY OF BRANDS
BUSINESS ENVIRONMENT
HAVAIANAS
50 years old and with a with new home
FINANCIAL PERFORMANCE
WHY ALPARGATAS?
2
A COMPANY OF BRANDS
3
We are a company with relevant brands...
The Brazilian brand with the highest global
visibility
The market leader in rubber sandals in the
Northeast
Brazil: the soccer footware market leader
Argentina: the leader in the sporting goods sector
The most traditional sporting goods brand in Brazil
The leader in the running performance segment
The global premium outdoor brand
The leading brand in professional rubber boots
44
... which are recognized ...
Havaianas is top of mind in Brazil in its category
Most frequent use
Bought in the last 12 months
83%
Owns/has already owned
100%
Knows the brand
100%
Source: Brand Tracking Brasil 2012 (Millward Brown)
5
74%
... and desired by consumers worldwide.
HAVAIANAS
M
I
Z
U
N
O
Daniella Cicarelli
Ashley
Tisdale
6
Jennifer
Aniston
Reynaldo
Gianecchini
T
O
P
P
E
R
Guillermo Vilas
Our success in brand management arises from our
expertise in:
1. Innovation in products that exceed
consumers’ expectations
2. World-class quality and technology
Mondo Club
Prorunner 1 Creation 1
Creation 10
Prophecy
3. Distribution: channel selection, scope
and reach
4. Intellectual and financial capital
7
Havaianas is
present in 87 countries
Our sucess in brand management arises from our
expertise in:
5. Domain of the virtual and physical retail channels
Alpargatas
Stores
Own
Third parties
Total
Brazil
32
267
299
Overseas
42
107
149
Total
74
374
448
Points of sale worldwide: ~200 thousand
8
Brand management has been important to boost
our performance
Net Revenue (R$ million)
TURNAROUND
CAGR 96-99
5.1%
GLOBALIZATION STRATEGY...
RESTRUCTURING
2,575
CAGR 05-11
CAGR 00-04
11.1%
2,232
15.4%
1,927
1,700
1,570
1,260
1,090
884
425
443
580 610
446 494
673
767
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
9
BUSINESS ENVIRONMENT
Market
10
Social development contributes to increase
footwear consumption per capita in Brazil
Footwear consumption in
Brazil is still lower than that
of countries with higher GDP
per capita
In 2011, 76% of Brazilians
belonged to the A, B and C
classes, versus 49% in 2005
Consumption per capita
(pairs/year)
A+B
28 million
A+B
42 million
7
Great Britain
6
C
63 million
C
103 million
France
5
Japan
4
Brazil
3
D+E
95 million
China
1
0
-
2005
2011
Source: Cetelem BGN Survey - Ipsos
11
Germany
India and Indonesia
2
D+E
45 million
USA
10.000
20.000
30.000
40.000
GDP per capita (US$)
50.000
Brazilian sandal and athletic shoe markets
continue to expand
Sandals
Athletic shoes
(millions of pairs)
(millions of pairs)
CAGR
12-14
= 6.7%
CAGR
12-14
491
470
121
41
45
47
7%
Soccer
8
10
13
27%
Casual
39
43
44
6%
Other
Sports
33
28
26
-11%
2012E
2013E
2014E
Running
2013E
2014E
Source: Kantar WorldPanel, GfK and Alpargatas’estimate
12
131
125
431
2012E
= 4.1%
CAGR12-14
Alpargatas’ adressable markets in Brazil
Sandals
Athletic shoes
(millions of pairs)
(millions of pairs)
431
43,1
10%
unbranded
387,9
2012E
Source: Alpargatas’ estimate
13
90%:
Alpargatas’
adressable
market
121
73,8
61%
unbranded
47,2
39%:
Alpargatas’
adressable
market
2012E
BUSINESS ENVIRONMENT
Competition
14
Characteristics
Sources: 10-K Form and Annual Reports
15
Characteristics
ALPARGATAS
Receita por
região
GRENDENE
Receita por
categoria ou
marca
AREZZO
• Brasil: 68%
• Brasil: 80%
• Brasil: 80%
• Brasil: 96%
• Argentina: 18%
• Exterior: 20%
• Argentina: 16%
• Exterior: 4%
• Outros: 14%:
Marcas
principais
VULCABRAS
Havaianas, Dupé,
Topper, Rainha,
Mizuno, Timberland,
Sete Léguas e
Meggashop
• Calçados: 92%
• Outros: 4%:
Melissa, Rider,
Grendha, Ipanema,
Ilhabela, Zaxy,
Cartago
ND
• Têxtil: 5%
Azaleia, Dijean,
Olympikus, Reebok,
Opanka
Arezzo, Schutz,
Anacapri e
Alexandre Birman
• Calçados esport.: 71%
• Arezzo: 63%
• Calçados femininos,
chinelos e botas: 20%
• Schutz: 32%
• Outras: 5%
• Vestuário: 3%
• Vestuário esport.: 9%
448 lojas
Flagship
stores
Empregados
42 franquias
ND
368 lojas
24,4 mil
36,2 mil
Não informado
200 mil PDVs no
mundo
17,6 mil
Sources: Reference form and most recent earnings release
16
Indicators
ALPARGATAS
NIKE
ADIDAS
ASICS
MIZUNO
VF Co.
12/31/2012
5/31/2011
12/31/2012
3/31/2011
3/31/2011
12/31/2012
1.5
24.1
19.6
3.1
2.0
10.9
16%
6.7%
8.3%
2.3%
-2.9%
9.2%
0.2
3.4
1.9
0.3
0.1
1.7
14%
5.8%
2.7%
-0.7%
-7.1%
11.3%
EBITDA Margin
14%
14%
9.8%
10.2%
5.1%
15.3%
Net Cash (Debt)
0.2
3.4
0.36
(0.2)
(0.1)
(1.3)
21.4%
22%
13.5%
10%
4.1%
22.5%
Latest balance sheet
Net Revenue
(US$ billion)
Net Revenue CAGR
( 5 years)
EBITDA
(US$ billion)
EBITDA CAGR
(5 years)
(US$ billion)
ROE
Source: Bloomberg
17
Indicators
Latest published annual
report
Net Revenue
(R$ billion)
CAGR Net Revenue
(last 5 years, except Arezzo: 3
years)
EBITDA
(R$ billion)
CAGR EBITDA
(last 5 years, except Arezzo: 3
years)
EBITDA Margin
Net Cash (R$ billion)
ROE
EV/ EBITDA
(on 11/1)
ALPARGATAS
GRENDENE
VULCABRAS
AREZZO
12/31/2011
12/31/2011
12/31/2011
12/31/2011
2.6
1.5
1.5
0.7
12.4%
5.4%
10.8%
28.4%
0.4
0.2
(0.1)
0.1
17.1%
-8.3%
Na
40.4%
15.7%
14.6%
-8.6%
17.2%
0.4
0.8
(0.1)
0.1
22.1%
17.6%
-148%
34.6%
13.6x
17.7x
Na
26.9x
Sources: Alpargatas: Financial department
Other companies: Economática and Reuters
18
HAVAIANAS
50 years old and with a new home
19
1962
Havaianas is born
1962
1964
INSPIRATION
Japanese Zōri
Sandals
PRODUCTION
1 model
4 colors
S. José dos Campos – SP (1962)
Jaboatão – Pernambuco (1965)
São José dos
Campos-SP
20
PATENT
REGISTRATION
Jaboatão-PE
1985 to 1994
Production relocation
1985
1989
1994
Acquisition of the
Campina Grande plant
and relocation of
production from
São José dos Campos
Expansion of
the Campina
Grande built
area
HAVAIANAS
TOP launch
280,000
pairs/day
Campina Grande - PB
21
1996 to 2004
Expansion of production capacity
1996
2001
340,000
pairs/day
450,000 pairs/day
with expansion of
production area
22
2004
Inauguration of
Distribution
Center
More SKUs:
1994 = 44
2012 = 9,000
2006 to 2012
Expansion of the manufacturing area, acquisition of Dupé
and production capacity increase
2007
2006
Construction of factory 2
600,000
pairs/day
23
2012
acquisition
Carpina - PE
760 – 800,000
pairs/day
2012
Havaianas’ 50th anniversary....
94%
47
of Brazilians
own/have
already
owned a pair
trips
around
the
Earth
800
thousand
pairs
produced
each day
24
3.5
Sold in
87
billion
pairs
sold
countries
30
thousand pairs
produced per
hour
8
pairs
produced
per second
2012
... and the construction of its new home begins
MONTES CLAROS
R$250 million
investment
25
Project milestones
1
3
COUNTRY
CITY
5
ARCHITECTURE
2
4
6
REGION
TECHNOLOGY
VOCATION
26
7
SOCIALENVIRONMEN
TAL
1
COUNTRY
Why Made in Brazil?
COMPETITIVE ADVANTAGES
“Made in...” label
Lead time
Cost of raw material
Cost of labor
Production scale
Best evaluation
27
2
REGION
Main comparison factors
Factors
Region
Dilution of production
risk
Negotiation with
states
Federal/State/Local
Taxation
Labor costs
Shipping
Best evaluation
28
PB
MG
North
MG
South
RJ
BA
PE
3
CITY
Montes Claros
Criteria:
•
City in the southeast of Brazil with more than 200,000 inhabitants
•
Skilled workforce
•
Infrastructure
•
Presence of major multinational
companies
•
Land donated by the State Gov
•
Partnership with Cemig
(138 kV high-tension substation)
29
3
CITY
Montes Claros
Land:
Total area: 357,000 m²
Built area: 50,000 m²
Production area: 44,000 m²
30
4
TECHNOLOGY
Coperion – Feeding and dosage
• Automation of banburys’
feeding system and chemical/
pigment dosing
Advantage:
99.8% guarantee of formula
integrity
31
4
TECHNOLOGY
Semi-final rubber: continuous system
• Continuous production system:
fast and even cutting
Advantage:
Loss reduction
32
4
TECHNOLOGY
Final rubber: automatic cutting
• Change in the rubber sheet
coloring process
• Automated system for waste
incorporation
• Automation of pre-mold
cutting
Advantage:
Standardization, swiftness
and loss reduction
33
4
TECHNOLOGY
Presses: magazine-fed
• Semi-automatic presses
• Use of single energy matrix: electrical
Advantage:
2-minute reduction in rubber vulcanization
cycle
34
4
TECHNOLOGY
High productivity
Ramp-up
Installed capacity
Baseline 100
Productivity
(pairs/MOD/day)
Baseline 100
250
180
170
170
160
167
150
155
140
148
120
100
100
100
100
50
80
0
2013
2014
Early Production
35
192
200
2015
2013
2014
2015
2016
5
ARCHITECTURE
SOLID WASTE
WATER TOWER AND LOWER
RESERVOIR
EMPLOYEES’ PARKING LOT
SUBSTATION AND UTILITIES
ADM/ HR / TRAINING /
AMB.
INDUSTRIAL BUILDING
ETS
BUS/TRUCK
PARKING LOT
HIGH-VOLTAGE
SUBSTATION
BALANÇA
FRONT GATE
MUSEUM AND
MEGGASHOP
AREA FOR
EXPANSION
VISITORS’ PARKING
LOT
CD
RECREATION
CAFETERIA
LOCKER
ROOMS
FLAMMABLE MATERIAL
WAREHOUSE
36
5
ARCHITECTURE
INDUSTRIAL BUILDING
LOCKER ROOMS
FLAMMABLE
MATERIAL
WAREHOUSE
AREA FOR EXPANSION
ADM/HR/ TRAINING
SUBSTATION AND
UTILITIES
CAFETERIA
RECREATION
SOLID
WASTE
ETS
WATER TOWER
AND LOWER
RESERVOIR
MUSEUM AND
MEGGASHOP
37
FRONT GATE
5
ARCHITECTURE
Main driveway
38
5
ARCHITECTURE
External view
NATURAL
VENTILATION
WAREHOUSE
RAW MATERIALS
2nd LEVEL:
1st LEVEL:
22 m HEIGHT
12 m HEIGHT
PRODUCTION FLOW
39
DC
FINISHED
PRODUCTS
6
VOCATION
The sandals with highest added value
40
7
SOCIALENVIRONMENTAL
ENVIRONMENTAL PROJECTS
• Natural lighting and ventilation
• Collection and use of rainwater
Walkway for factory visitation
• Water reuse
• Use of solar energy for lighting
• Waste incorporation
SOCIAL PROJECTS
• Actions taken by the Alpargatas Institute
• Alpargatas Museum
• Partnerships with SESI, SENAI, FIEMG
41
Why a new plant?
To support the main strategic actions in the
Sandal segment
2010 Apimec
42
FINANCIAL PERFORMANCE
43
3Q12 x 2Q12
Revenue growth with improved
margins
44
3Q12 x 2Q12
National Business Revenue
Net revenue in Brazil was 25.1%
higher than in 2Q12
NEGÓCIOS NACIONAIS
• Increase in sales volume:
• 10.5% (56.7 million units)
Receita Líquida
(R$ milhões)
+ 25,1%
45
465,3
582,3
2T12
3T12
• Increase in prices of sandals and
athletic shoes in 3Q12:
• from 2.5% to 10%
3Q12 x 2Q12
National Business Gross Margin
Gross margin grows by 1.8 p.p.
NEGÓCIOS NACIONAIS
Margem Bruta
• Rubber cost reduction in Reais
in 3Q
(% da RL)
+ 1,8 p.p.
42,3%
44,1%
• GPE was 4% lower, even with a
10.5% increase in the volume of
sandals and athletic shoes
• Lean Manufacturing project:
reduction of lead time and
manufacturing costs, and
increased quality
2T12
46
3T12
3Q12 x 2Q12
National Business EBITDA Margin
EBITDA margin increases by 7.8 p.p.
NEGÓCIOS NACIONAIS
Margem EBITDA
• Increase in revenue from all brands
(% da RL)
• Gross margin improvement
• Better SG&A performance:
+ 7,8 p.p.
47
8,7%
16,5%
2T12
3T12
• 3Q12 = 28.9% of net revenue
• 2Q12 = 31.7% of net revenue
9M12 x 9M11
48
9M12 x 9M11
Consolidated Net Revenue
Net revenue rose by 16%
NATIONAL BUSINESSES:+14.2%
Larger volume, price adjustment
and a better mix
Receita Líquida Consolidada
(R$ milhões)
INTERNATIONAL BUSINESSES:+20.4%
+ 16%
49
1.871,0
2.170,4
9M11
9M12
Increases in foreign currency
revenues:
•
•
•
•
USA: +31.9% in dollars
Europe: +11.4% in euros
Argentina: +4.8% in pesos
Exports: +20.8% in dollars
9M12 x 9M11
Consolidated Gross Margin
Increase in commodity and imported
finished product prices had a big impact on 9M12,
with recovery in 3Q12
Margem Bruta Consolidada
9M12:
(% da RL)
• Higher raw material (rubber)
and imported finished product
costs
- 3,4 p.p.
45,9%
42,5%
• Smaller fixed cost dilution in
Argentina
3Q12: trend reversal
9M11
50
9M12
9M12 x 9M11
Consolidated EBITDA
15% EBITDA margin, before impact created by
FX variations and high commodity prices
Variação do EBITDA Consolidado
(R$ milhões)
50,6
(42,3)
(41,0)
325,2
316,9
EBITDA
9M11
Margens
51
16,9%
Volume/
Preço/Mix
Despesas
operacionais
e gastos
estratégicos
Subtotal
15%
284,2
Variação cambial
e
commodities
EBITDA
9M12
13,1%
9M12 x 9M11
Consolidated Net Income
Impacted by decrease in EBITDA and
financial result
Variação do Lucro Líquido Consolidado
(R$ milhões)
300
250
12,7
(32,7)
200
150
5,8
(12,1)
(8,6)
213,7
248,6
100
50
Lucro
Lucro
Líquido
Líquido
9M11
9M11
Margens
52
13,3%
EBITDA
Resultado
financeiro
Equivalência
patrimonial
TAVEX
Venda de
marca na
Argentina
IR e
outros
Lucro
Lucro
Líquido
9M12
Líquido
9M12
9,8%
52
9M12 x 9M11
Cash
Operating cash generation of R$135.1 million
Variação do Caixa Consolidado
(R$ milhões)
371,8
(83,3)
47,9
(29,2) (22,1)
(12,8)
(153,4)
(61,0)
(81,3)
Geração oper. de caixa
de R$ 135,1 milhões
683,7
Saldo de
EBITDA
caixa em
30/09/2011
53
741,6
818,8
Invest.
capital
de giro
CAPEX
Sub-total Resultado
oper.
financeiro
Refis
660,3
IR/CSLL Aumento Amortiz. Sub-total Remuner. Saldo de
particip. dívidas
acionistas caixa em
30/09/2012
Argentina
9M12 x 9M11
Net Cash
Net cash of R$ 361 million
Reinforces Alpargatas’ financial strength
54
9M12
Evolution of Stock Prices
ALPA4 appreciated by 30% and ALPA3 increased by 37%
in 9M12. The Ibovespa appreciated by 2%
Índice 100
em
02/01/2012
Evolução das Ações nos 9M12
Volume
(R$ milhões)
35
30
137
130
25
20
15
100
102
10
5
Jan
Fev
Mar
Volume ALPA4
55
Abr
Mai
ALPA4
Jun
Jul
IBOVESPA
Ago
Set
ALPA3
9M12
Shareholder Compensation
Compensation to shareholders has already come to
R$ 85 million in 2012
R$ million
85.0
21.0
•
•
•
•
64.0
9M12
39.8% payout
56
R$
R$
R$
R$
21.6
21.8
20.6
21.0
million
million
million
million
paid on 4/18
paid on 7/4
paid on 9/3
to be paid on 12/12
WHY ALPARGATAS?
57
Why Alpargatas?
• Business model resilience
Operational efficiency, free cash flow, multi-currency revenue and human capital
management
• Brand awareness
We have market-leading brands both in Brazil and abroad that strengthen our results
and increase Company value
• The regional leader in sandals and sportswear
Havaianas is the market leader in Brazil and Topper is the leader in Argentina
• Flexible sourcing
We have the advantage of being able to manufacture in Brazil and/or abroad
• Retail presence
We operate directly in retail: 448 stores in 2012, and expanding
• Cash generation
Business model oriented towards cash generation
• Solid balance sheets
High financial leverage capacity
58