3Q07 - Positivo Informática

3Q07 Results
November 08, 2007
1
Computer Market
2
Household PC penetration is still low...
...especially when compared to other emerging countries
Household PC Penetration (%)
PC Penetration in Brazil by Income Group1
82.8%
30.0%
25.0%
20.5%
62.2%
19.6%
4.0%
1.8%
Russia
Argentina
Mexico
India
Brazil
Sources: (export.gov) / PNAD IBGE Survey / E-commerce 2005 – Argentinean government
Mexican Institute of Geography, Statistics and IT 2006
PC Penetration in Brazil by Income Group1
Household
(mm)
A
86.0%
B
C
D/E
63.2%
70%
30%
2.8%
27.0
2.8%
0.1%
B Group
C Group
D/E Group
Desktops Notebooks
0.6%
Total
65%
51%
5.3
18.0
0.3%
PCs Penetration: Developed Countries
2.7
18.8%
1 Source: CGI, ago/ set 2006
A Group
19.3%
18.6%
15.6%
Sweden
51%
48%
34%
24%
Denmark
Source: Eurobarometer,2006
17%
UK
France
Desktop
Notebook
16%
Germany
41%
19%
Italy
3
Important Events
4
Positivo Informática expands its operations in the Brazilian market
Positivo Informática da
Amazônia Ltda.
Manaus/AM
• Set Top Boxes
• Desktops
• Notebooks
• 6,500 points of sale
Manaus
Ilhéus/ BA
Ilhéus
• 404 technical
assistance outlets,
serving all Brazilian
municipalities
• LCD Monitors
• Desktops
• Notebooks
Positivo Informática S.A.
Curitiba/ PR - Sede
Curitiba
•
•
•
•
Desktops
Notebooks
Servers
Motherboards
Source: Positivo Informática
5
The set top box device coincides with the launch of Digital TV in
Brazil...
...and millions of households with poor quality transmission
Breakdown of Households per Income Group
„ 47.2 million households only have access
Number of
Households
(million)
3.3
to the open networks, often with poorquality transmission
Pay TV
Penetration
(%)
A
A
„ 64% users have 20” TVs or smaller and
50.6
47% use indoor antennas
A/B
6.6
19.7
25.1
B
B
„ Only 4.6 million households have access to
32.3
C
C
C
Pay TV
3.7
D/E
D/E
„ IBOPE: 26% of households with TV would
0.4
acquire pay TV service just to watch the
open networks with a better-quality
picture.
Total Households = 54.6 million
Installed Base = 90 million TVs
Source: Anatel/ IBGE – PNAD 2007/ IPSOS/ Cetelem/ IBOPE
Digital TV = Open-network TV with
high transmission quality
6
Positivo Informática will launch 2 set top boxes targeting the
middle- and low-income groups
Digital TV will be launched in São Paulo on December 2nd and Positivo’s
products will be on the shelves of the region’s largest retail chains.
Positivo’s Models:
How it works:
The antenna receives
the digital signal
through the air...
1) DigiTV Positivo:
For conventional TV sets
...and transmits the digital
signal to the set top box
...which transmits the
signal with DVD quality to
analog TVs of any size
The set top box
decodes the 16:9
digital signal and
converts it into 4:3
analog
7
Positivo Informática will launch 2 set top boxes targeting the
middle- and low-income groups
Digital TV will be launched in São Paulo on December 2nd and Positivo’s products will be
on the shelves of the region’s largest retail chains.
Positivo’s Models:
How it works:
2) DigiTV HD Positivo:
For high-definition LCD or plasma sets, via HDMI
The antenna receives
the digital signal
through the air...
...and transmits the digital
signal to the set top box
...which transmits the highdefinition 16:9 digital signal
via HDMI to widescreen
TVs
The set top box decodes
the digital signal,
adjusts it to the
definition of the LCD or
Plasma TV connected
via HDMI (480, 720 or
1080 lines)
8
In line with its vertical integration strategy, Positivo Informática
begins producing its own monitors
Positivo LCD Monitors:
¾ Plant in Ilhéus/ BA
„ Reduced risk of component
¾ Production Capacity: 20K/ month
¾ Sudene Region: 75% reduction in Income Tax
shortfalls in times of
exceptionally high demand
„ Higher flexibility of products
Positivo: LCD x CRT Sales
20.1%
79.9%
3Q06
„ Reduced cost of important
21.1%
78.9%
4Q06
34.4%
39.4%
65.6%
60.6%
1Q07
CRT
LCD
2Q07
51.3%
components in PC’s final cost
¾ Reduction of 7% in our monitor
48.7%
acquisition cost, which accounts for 30%
of the cost of an average PC
3Q07
9
... and also begins producing its own motherboards
Positivo Motherboards:
¾Plant in Curitiba/ PR, next to the computer plant
¾Production Capacity: 44K/ month
¾Creation of 134 direct jobs
¾Reduction of 25% in assembly costs, which account for around 1.5% of the
total cost of an average PC
Positivo Motherboard
10
Positivo Informática has expanded its operations in the North and
Northeast regions...
...which have the lowest PC penetration in the country
Household PC Penetration (%)
Midwest
Largest Clients in the North and Northeast Regions
Penetration in the main North retail
chains = nearly 80%
20.4
South
Y Yamada
33 outlets
27.9
Southeast
29.2
Northeast
9.7
North
9.8
Lojas Bemol
14 outlets
Lojas Facilar
38 outlets
Gazin
44 outlets
Casa Amarela
52 outlets
Leolar
32 outlets Magazine Liliane
35 outlets
Americanas
45 outlets
Ricardo Eletro
55 outlets
Rede Wal Mart G. Barbosa
116 outlets
46 outlets
Lojas Maia
110 outlets Insinuante
Penetration in the main chains of
the Northeast = nearly 80%
Source: IBGE - PNAD 2007 (2006 database)
Rabelo
40 outlets
250 outlets
Source: Companies’ website/ Positivo Informática
11
...and has a unique relationship with the country’s most important
retail chains country...
...In the 2Q07, Positivo Informática achieved a substantial market share
of 38.7%¹ in this market
Competitive Advantages
„ Trade Marketing:
Outright leadership of
retail PC sales
¾Campaigns and promotions in
outlets
¾Shelf space advantage:
product exposure
6,500 points of sale
¾Training of retail sales
representatives
¾ Sales promoters in stores
„ Products present in around
6,500 retail points of sale
„ North and Northeast: now
present in 80% of the leading
retail chains
1 Source: IDC
12
Positivo PC quality confirmed by the leading specialist megazines
Mobile W (white notebooks):
¾Accounted for 14% of notebook sales in
the 3Q07
¾Quality confirmed by specialist
magazines:
• W98 elected as best in the Econômico de
Luxo category (i.e. having the best cost/benefit
ratio), by Info magazine
• PC World magazine gave it 9.7 points out of a
possible 10.
“With Mobile W98, the Best Cost/Benefit choice by
INFO, Positivo achieved the challenge of offering an
attractively-designed, high-powered laptop at a
competitive price." – Info Magazine – October 2007
¾Top of Mind - Folha de São Paulo: Positivo was the
country’s most recognized computer brand, 150%
in front of the second-placed PC company.
Info Magazine Article
13
Positivo Informática is always launching new products based on the
results of field research
PC da Família Line (Family PC):
¾Retail launch in Nov/07
¾Free access to the PC da Família Portal
• Variety of leisure and entertainment options
• Access to home-management tools and
information
How many people, apart from yourself, use
the computer in your home on a regular
basis? (in %)
33.9
27.9
¾The survey showed that in
16.9
13.6
4.7
Only
me
One
Source: Data Popular
Two
Three
Four
3
83.1%, the household
computer is shared with
more than one person
+ than
Four
14
Factory expansion in order to meet retail demand in the 4Q07
Expanded Area
„ Operational start-up in Oct/07
„ Increase of 60% in built-up area,
currently standing at 31,200 m2.
„ Growth of 73.1% in production
capacity, currently 225 thousand
units per month.
Factory View
„ Job creation
• Currently 1,759 factory-floor
workers
Expanded Production Line
15
The Educational Technology segment revolutionizes the
teaching concept
Escola do Século XXI
(21st Century School )
„ Concept
Sale of educational technology solution
package
„ Target
Private schools
„ Products and Services
Educational Portals
Classmate PC
Desktops
Notebooks
Learning Tables
Smartboards
Max Camera
Projector
New project sales of R$3
million since the end of
September.
Teacher training
16
Positivo is currently piloting the Classmate PC in schools
Private Schools
Public Schools
„ Colégio Porto Seguro – São Paulo
„ CIEP - Piraí/ RJ
50 Classmates, 38 for students
and 12 for teachers
400 Classmates donated by Intel and
MEC, involving 398 students
„ Instituto Gay Lussac – Rio de Janeiro „ Colégio Estadual D. Alano du
Noday – Palmas/ TO
50 Classmates
919 students in the project
„ Fundação Bradesco - Campinas
Each teacher received 46 PCs to use as
they fit
By the end of 2007, 600 students will
have their own Classmate PC
Positivo Classmate PC
Colégio Visconde de Porto Seguro
students
Positivo is Intel’s leading
partner in terms of pilot
projects, such as the sale of
Classmates in Brazil
Fundação Bradesco students
17
Positivo establishes new promotion and sales channels for retail
educational software sales
„ Newspaper Sales:
¾Promotions in partnership with
O Estado de S. Paulo, Zero Hora and Rede Gazeta
„ Store Events:
¾Launch of the Cocoricó software
¾ FNAC, Saraiva, Extra
„ Partnership with Racco – the country’s 3rd
largest door-to-door sales firm:
O Estado de S. Paulo Promotion
¾Already established for Christmas
¾350,000 sales reps in Brazil
¾Appeal to children’s education
Lojas Saraiva
Zero Hora Newspaper Promotion
18
3Q07 Highlights
19
3Q07 and 9M07 Highlights
Sales (thousand units)
Desktops Sales (thousand units)
940.8
1,000
76.6%
800
58.1%
1,000
807.6
800
600
532.7
80.4%
400
600
309.1
400
171.4
200
200
0
3Q06
3Q07
9M06
9M07
0
Notebook Sales (thousand units)
150
133.1
120
90
505.0%
30
0
3Q06
256.4
3Q07
1,600
68.9%
57.0%
3Q07
9M07
1,443.2
854.3
800
400
22.0
12.4
9M06
1,200
52.7
3Q06
159.0
510.7
Gross Revenue (R$ million)
324.9%
60
61.3%
9M06
9M07
0
285.3
3Q06
448.1
3Q07
9M06
9M07
20
9M07 x 2006 Comparison
Sales (thousand units)
1,050
940.8
900
+ 12.7%
834.7
750
600
450
300
150
0
9M07
2006
21
Gross Revenue grew by 57.0% in the 3Q07
Breakdown of Hardware Gross Revenue per
Segment
Gross Revenue Breakdown
Hardware
97.1%
Hardware
96.3%
E.T.
3.7%
Retail
84.8%
Gov.
13.3%
E.T.
2.9%
-2.5 p.p.
-0.8 p.p.
3Q07
3Q06
3Q06
E.T.: Educational Technology
NB
11.6%
Others
1.0%
Desktops
75.2%
Others
0.1%
NB.: Notebook
Others: Printers + Services
3Q07
NB
23.9%
Positivo’s Average Price Trends
R$
PCs
Desktops
Notebooks
+13.1 p.p.
3Q06
Gov.
9.1%
Corp.
1.9%
Gov.: Government
Corp.: Corporate
Hardware Gross Revenue by Product Type
Desktops
88.3%
Corp.
3.6%
Retail
87.3%
R$
3Q07
PCs
Desktops
Notebooks
3Q06
1,610
1,519
2,578
9M06
1,546
1,490
2,621
3Q07
1,395
1,276
1,974
9M07
1,475
1,383
2,031
% Chg.
-13.3
-16.0
-23.4
% Chg.
-4.6
-7.2
-22.5
22
Positivo passed on the US dollar devaluation to its prices...
...as well as the gains from increased scale and direct purchases from suppliers
Positivo: Price (R$)
Desktops
Notebooks
18.9%
37.3%
38.3%
99.9%
81.1%
62.7%
61,7%
„ Average notebook prices were
54.7% higher than those of
desktops in the 3Q07
0.1%
3Q06
3Q07
below R$ 1,500
3Q06
above R$ 1,500
3Q07
below R$ 2,000
above R$ 2,000
Positivo: Sales Mix Growth
Positivo Lowest Installment: in Retail (R$)
15%
8%
9%
3%
2%
39.90
7%
92%
98%
1Q06
97%
2Q06
69.90
17%
85%
91%
83%
25
24
3Q07
2006
9M07
93%
3Q06
4Q06
Desktop
1Q07
Notebook
2Q07
Lowest installment
Max. no. of installments
23
PCs sales volume increased by 80.4%1 in the 3Q07
„ Retail: 276.3 thousand PCs (+80.3%1)
• Positivo’s prices
- Desktops begin at R$ 799.00
- Notebooks begin at R$ 1,499.00
• Market share of 38.7% in the 2Q07²
• 89.4% of retail sales, considering seasonality
„ Corporate: 9.1 thousand PCs (+204.7%1)
• Launching of the “Smart Desktop” in association with Stefanini
• “ Com Computador Positivo Todo Mundo Entende e Todo Mundo Ganha” Program
(With a Positivo Computer, Everyone Understands and Benefits)
„ Government: 23.7 thousand PCs (+56.6%1)
1 Compared to the 3Q06
2 Source: IDC
24
Financial Performance
25
3Q07 and 9M07 Financial Highlights
Net Revenue¹ (R$ million)
1,400
66.5%
1,200
EBITDA¹ (R$ million)
1,221.6
600
400
250.2
160
733.8
54.4%
3Q06
3Q07
9M06
9M07
200
85.3%
160
92.5%
80
¹ Adjusted
3Q06
3Q07
9M06
9M07
EBITDA and Net Income Margin Trends (%)
181.3
0
0
¹ Adjusted
Net Income¹ (R$ million)
40
32.1
40
¹ Adjusted
120
111.5
62.7
80
200
0
95.1%
120
386.3
203.7
82.8%
200
1,000
800
240
20%
15%
97.9
10%
58.7
30.5
3Q06
25%
15.3%
15.7%
17.7%
16.2%
12.8%
12.2%
12.7%
3Q06
4Q06
13.8%
15.3%
15.2%
2Q07
3Q07
,
5%
3Q07
9M06
9M07
0%
EBITDA
1Q07
Net Income
26
The gross margin was favored by US dollar devaluation, scale gains and
direct purchases from suppliers
COGS (R$ million)
Gross Margin Trends1
900
53.1%
840.2
750
600
188.9
26.0%
265.1
2Q07
3Q07
24.5%
24.0%
,
22.0%
0
3Q06
3Q07
9M06
9M07
COGS and Input Growth
3Q06
4Q06
1Q07
• US Dollar devaluation
71.5%
70.0%
68.8%
66.0%
69.0%
68.7%
65.1%
65.7%
1Q07
2Q07
68.6%
64.4%
62.0%
3Q06
20.0%
Gross Margin Gains
75.5%
74.0% 72.4%
4Q06
COGS
¹ Adjusted
31.4%
28.0%
150
78.0%
31.3%
28.5%
30.0%
548.8
40.3%
450
300
31.0%
32.0%
Inputs
3Q07
• Scale gains and negotiations with
suppliers
• Direct purchases from suppliers since
2007
• Price reduction of some components in
the international market
27
Selling expenses were responsible for the increase in operating
expenses
Operating Expenses (R$ million)
200
122.4%
88.2%
80
40
0
G&A
10.5%
Financial
-1.6%
82.4
Other
0.1%
60.4
32.1
3Q06
3Q07
9M06
9M07
G&A1 and Selling1 Expenses
Operating Margin Trends1
19.0%
17.0%
15.0%
13.0%
11.0%
9.0%
7.0%
5.0%
Sales
91.1%
183.2
160
120
3Q07 Operating Expenses Breakdown
17.6%
11.7%
13.0%
18.0%
15.7%
14.7%
15.0%
12.0%
10.9%
12.3%
12.8%
14.2%
9.0%
6.0%
3.0%
3Q06
14.1%
4Q06
1Q07
2Q07
3Q07
1.3%
1.2%
3Q06
4Q06
2.1%
1.5%
1.6%
1Q07
2Q07
3Q07
0.0%
Selling
¹ Compared to Adjusted Net Revenue
G&A
28
Positivo Informática has been investing heavily in consolidating its
brand
Marketing Expenses1
Selling Expenses Breakdown
Technical Assistance
16.0%
8.0%
Commissions
22.9%
Marketing
46.5%
6.0%
6.6%
4.,4%
5.1%
5.3%
4.8%
4.0%
Freight
4.6%
3Q07
Other
9.9%
2.0%
0.0%
3Q06
Handled Calls2
Response Time
Abandonment rate
Answered e-mails2
Response Time - Retail
Response Time - Govt.
76% by 2’
15%
55% by 48h
56% by l2h
1Q07
2Q07
3Q07
5,7%
Upgrade of Call Center
Before
4Q06
Marketing Expenses Breakdown
After
90% by 40’’
3%
99% by 48h
94% by 2h
„ Personnel: 18.5%
•
Corporate marketing team
•
250 promoters, support to retailers
„ VPC (Joint Advertising Budget ): 41.6%
•
Promotion expenses shared with retail chains
•
E.g. TV commercials, magazine ads, fliers, etc
„ Marketing: 39.9%
¹ Compared to Adjusted Net Revenue
2
quarter’s average
•
Ads in newspapers and magazines
•
TV commercials.
29
Cash Flow – Free Cash Flow (R$ million)
3Q07
2.9
58.7
(17.1)
Inflows: 61.6 million
(1.7)
Free Cash
Flow
Outflows: (64.4)
Free Cash: (2.8)
(31.3)
Initial Balance: 22.2
Final Balance: 19.5
(14.3)
Net Income
1
9M07
Depreciation and Other Assets and Working Capital
Amortization
Liablities
7.9
181.4
Dividends
Capex and Repurchase
(2.8)
7.3
Inflows: 196.6 million
Free Cash
Flow
Outflows: (239.4)
Free Cash: (42.8)
Initial Balance: 62.2
(173.6)
Final Balance: 19.5
Net Income1
Depreciation and Other Assets and Working Capital
Amortization
Liablities
(31.9)
Dividends
Capex and Repurchase
(33.9)
(42.8)
„ Option Plan: repurchase of 193,800 shares for R$ 8.0 million
„ Dividend payment: R$ 31.3 million
„ CAPEX of R$ 6.4 milhões
1
Adjusted
30
Working Capital and Cash and Cash Equivalents
„ Financial Working Capital: +25 days compared to the 3Q07
Cash Cycle3
Working Capital 3Q06 4Q06 1Q07 2Q07 3Q07 Average
(days)
•
Accounts Receivable¹
63
54
60
Inventories²
34
Suppliers²
31
31
38
Cash Conversion
Cycle
66
47
82
65
62
36
67
36
28
68
48
46
36
86
76
101
75
¹ In days of net revenue
² In days of COGS
³ Excl. materials in transit
Accounts Receivable (+15 days)
¾ Deterioration due to deliveries to the Ministry of Education
¾ Excluding this, the line recorded 65 days, in line with the average for previous periods
•
Inventories (+32 days)
¾ Orders slower than originally indicated by the Ministry of Education relative to the addition
of 21,000 PCs to the original contract
¾ End-of-year sales
•
Suppliers (+20 days)
¾ Extended payment terms with major international suppliers
31
Capex
Investments (R$ million)
35.5
17.7
17.3
3.0
4.1
2.6
6.4
1.8
0.8
3.8
14.8
10.6
3Q07R
9M07R
R&D
ERP Project
2007E
Other
Main Investments:
• R&D projects in the Educational
Technology segment
• ERP project
• Factory expansion
32
Capital Market
Share Performance X Indexes since the IPO up
to sep/07
Institutional x Retail Allocation
70.2%
31.8%
40.1%
40.7%
Institutional
97%
41.6%
Institutional
92%
Retail
8%
Retail
3%
Itag
IGC
Ibov
IBX-100
Jun/30
POSI3
Daily Traded Volume (R$ million and % Float)1
29.5%
18.1
Institutional: Geographical Allocation
4,00%
USA
32%
3,50%
14.0
39.0%
3,00%
2,50%
10,1
1.56%
1.63%
Europe
17%
1,00%
0,00%
1Q07
USA
25%
Europe
13%
2,00%
0,50%
1
Local
54%
Local
52%
1,50%
1.49%
Sep/30
2Q07
Jun/30
Others
3%
Sep/30
Others
5%
3Q07
excluding stabilization period
33
Forward-looking statements
The forward-looking statements contained herein are based on our management’s current
assumptions and projections, which may result in material differences regarding future
results, performance and events. Actual results, performance and events may differ
substantially from those expressed or implied by such forward-looking statements due to a
variety of factors, including the overall and economic situation in Brazil and other
countries, interest and exchange rate levels, legal and regulatory changes and general
competitive factors (global, regional or national).
Positivo Informática S.A.
Lucas Guimarães
CFO and Investor Relations Officer
Silvia Emanoele de Paula Sewaybricker
Investor Relations Manager
Phone: (55 41) 3316 7887/7824/7833
Fax: (55 41) 3316 7810
E-mail: [email protected]
http://www.positivoinformatica.com.br/ir
34