A Camargo Corrêa Group Company

A Camargo Corrêa
Group company
| Contents |
100 years of Brazilian Talent
Vision
Growth Strategies
Financial Performance 9M2007
2012
Capital Markets
Why Alpargatas?
SLIDE 2 - 55
| 100 years of Brazilian Talent |
April 3: foundation
First brands:
Alpargatas Roda and
Locomotiva
SLIDE 3 - 55
Opening up of
Capital
Complete showing of
its products at the
Rio International
Exhibition
Launch of first
leather shoes
First Brazilian
company to
establish a social
program
Launches of Conga,
Bamba and
Sempreviva
tarpaulin
| 100 years of Brazilian Talent |
Launch of
Havaianas
Launch of Topper
and Kichute
Camargo Corrêa
becomes a shareholder
Launch of Havaianas
Top
Acquisition of the
Rainha trademark
Elected best company
in the sector by Exame
Magazine
Mizuno and
Timberland licenses
Launch of Night&Day
tarpaulin
100 million pairs of
Havaianas sold
100 years of Brazilian Talent
Camargo Corrêa becomes
controlling shareholder
New Technologies for
sports shoes:
Rainha System 3000
Topper Dynatech Visible
Founding of the do
Alpargatas Institute
Adhesion to Corporate
Governance Level 1
Elected best company and
Best company in the sector
in 2006 by Exame Magazine
SLIDE 4 - 55
| Contents |
100 years of Brazilian Talent
Vision
Growth Strategies
Financial Performance 9M2007
2012
Capital Markets
Why Alpargatas?
SLIDE 5 - 55
| Vision |
To be a global company of desired brands in sports goods,
footwear and industrial textiles, operating in harmony in the
three dimensions of sustainability
SLIDE 6 - 55
| Vision |
The transformation into a global company already is occurring...
National Leadership
Sales
Brands
Marketing
Innovation and R&D
Market share
An exporting company
80 countries
International Operations
Havaianas’ exports
represent 11% of the
volume of sandal sales
Own companies overseas:
Alpargatas USA, Argentina
and Chile
Presence in opinion-maker
markets
Competitive advantage
replicated globally
Country-to-country
operation
Centralized control of its
brands
Brands customized per
market
SLIDE 7 - 55
| Vision |
... with investments in the main Growth Strategies
Global Brands Company
Strategies
Consolidation of
the Brazilian
Market
Internationalization
M&A
Support of the Strategies
Innovation
Global Sourcing
R&D
Sustainability
SLIDE 8 - 55
Markets
Products
Processes
Management
Competitive advantage
Think globally, act locally
| Contents |
100 years of Brazilian Talent
Vision
Growth Strategies
Financial Performance 9M2007
2012
Capital Markets
Why Alpargatas?
SLIDE 9 - 55
| Growth Strategies |
Strategies
Consolidation of
the Brazilian
Market
Internationalization
M&A
Support of the Strategies
Innovation
Global Sourcing
R&D
Sustainability
SLIDE 10 - 55
| Growth Strategies |
Consolidation of the Brazilian Market
Average consumption (pairs/inhabitant):
Brazil = 3
X
Developed countries = 7
Growth opportunity in Brazil
Havaianas Brand Concept
M&A: Cia. Brasileira de Sandálias – Dupé
Multi-category Management in Sporting Goods
Expansion of Retail as a Business
SLIDE 11 - 55
| Growth Strategies |
Consolidation of the Brazilian Market
Havaianas Brand Concept
Havaianas is energy, happiness, colored and surprising
The improbable combination of comfort and style, of the simple and the
sophisticated, from the street fair to the ballroom, of work and leisure
Havaianas are for everybody
Havaianas are the best expression of individuality
SLIDE 12 - 55
| Growth Strategies |
Consolidation of the Brazilian Market
M&A: Cia. Brasileira de Sandálias – Dupé
Objective
To expand the sandals business, focused on the lower income segment
Strong points
Traditional brand: will be maintained and reinforced
Strong presence in the North and Northeast regions
Market share: between 5% and 7%
Benefits
Increase / complement the Alpargatas portfolio
Gains in Scale
Reduction of manufacturing costs
SLIDE 13 - 55
| Growth Strategies |
Consolidation of the Brazilian Market
M&A: Cia. Brasileira de Sandálias – Dupé
Operational Data
Founded in 1988
Plant in Carpina (PE)
Employees: 1,000
Production capacity: 30 million pairs
(maximum 45 million)
Sales in 2006
- Volume: 23 million pairs
- Gross sales: R$ 90 million
Amount of investment: R$ 49.5 million
SLIDE 14 - 55
| Growth Strategies |
Consolidation of the Brazilian Market
Multi-category Management in Sporting Goods
Objective
Activities multi-category, with specific positioning per brand, led by Topper
Market-oriented model
Better brand portfolio management: synergy gains
Better understanding of the consumer dynamic and sales channel
Competitiveness Gains
SLIDE 15 - 55
| Growth Strategies |
Consolidation of the Brazilian Market
Expansion of Retail as a Business
Participation in the
sporting goods market
Premium
(higher than R$120.00)
Value
(between R$70. and R$119.99)
Basic
(up to R$69.99)
SLIDE 16 - 55
Alert
Modest
(Conservative)
Followers
Sports
Lovers
Utilitarian
| Growth Strategies |
Consolidation of the Brazilian Market
Expansion of Retail as a Business
Alpargatas in Retail
Timberland, Mizuno and Meggashop
+ Topper and + Havaianas
Increase brand value (brand building) through complete exposure of the product line
New ways of acting
• e-commerce
• traveling stores
• franchises
SLIDE 17 - 55
| Growth Strategies |
Strategies
Consolidation of
the Brazilian
Market
Internationalization
M&A
Support of the Strategies
Innovation
Global Sourcing
R&D
Sustainability
SLIDE 18 - 55
| Growth Strategies |
Own global operation is one of the ways of expanding
Alpargatas’ businesses
Alpargatas USA
Alpargatas Argentina
Alpargatas Chile
SLIDE 19 - 55
| Growth Strategies |
Internationalization
Alpargatas USA
Consumption of sandals in the U.S. has shown
strong growth over the past few years
Consumption
(million s of pairs)
SLIDE 20 - 55
Sources: U.S. International Trade Commission and Alpargatas
| Growth Strategies |
Internationalization
Alpargatas USA
Objective
Increase Havaianas sandals’
share of the U.S. market
Investments
Office in New York
Show room
Logistics
Advertising
SLIDE 21 - 55
New York
| Growth Strategies |
Internationalization
Alpargatas USA
SLIDE 22 - 55
| Growth Strategies |
Internationalization
Latin American sports shoe market
Consumed in 2006
(pairs/year)
Brazil
90 million
(pairs /year/inhabitant)
0.6
The low per capita
Mexico
44 million
0.4
consumption of sports
shoes in Latin America
represents excellent
Argentina
22 million
0.7
growth potential in
these countries
Chile
5.6 million
0.4
USA
1.8 billion
6.7
Source: Alpargatas
SLIDE 23 - 55
| Growth Strategies |
Internationalization
M&A: Alpargatas Argentina
Objective
Make it feasible to be the leader of the Latin American sporting goods market
Strong Points
Traditional brands: Topper, Rueda, Pampero and Flecha
Worldwide owner of the Topper trademark
Largest footwear company in Argentina
Benefits
Gains of Scale
Synergies
Global sourcing
Reduction of operating costs and expenses
Increase in sales of safety shoes and industrial textiles
Increase in exports of Topper, Mizuno and Havaianas
SLIDE 24 - 55
| Growth Strategies |
Internationalization
M&A: Alpargatas Argentina
Operational data
11 plants
5,000 employees
Sales in 2006:
• Volume: 10 million pairs
• Revenue: US$ 160,0 million
US$ 21 million EBITDA in 2006
Amount of Investment
US$ 51.7 million (34.5% of capital)
+ public offer of up to 25% of capital
SLIDE 25 - 55
Plants:
Footwear
Textiles
| Growth Strategies |
Internationalization
Alpargatas Chile
Objective
Expand the sporting goods business in Latin America,
beginning with the running category through the Mizuno
brand
Investments
Office in Santiago
Show room
Advertising
SLIDE 26 - 55
Santiago
Strategies
Consolidation of
the Brazilian
Market
Internationalization
M&A
Support of the Strategies
Innovation
Global Sourcing
R&D
Sustainability
SLIDE 27 - 55
| Support of the Strategies |
Innovation
Innovation Project
15 platforms: 2 already implemented
Portfolio of Partners and Competencies
Identify
Opportunities
Generate
Ideas
Filter and
Develop
Concepts
Develop
Projects
Innovation Flow Process
SLIDE 28 - 55
Commercialize
Opportunities
Capture
Value
| Support of the Strategies |
Global Sourcing
Sandals
Study of global sourcing: definition of the Havaianas production structure
Sporting Goods
Production in Brazil, Argentina and outsourcing in Asia
Strengthen the R&D structure in Asia to ensure Innovation, quality and service
Expansions of plants in Brazil (2007)
Havaianas: + 12,000 m2
Sporting Goods: + 22,000 m2
SLIDE 29 - 55
| Support of the Strategies |
Global Sourcing
Havaianas Plant
Campina Grande
Sporting Goods Plant – CD
Santa Rita
SLIDE 30 - 55
| Support of the Strategies |
R&D
Research and Development Center in São Leopoldo – RS
Research, validation and definition of trends and materials
Preparation of the tech packs for internal or external manufacturing
Alliances and partnerships for design and technology
SLIDE 31 - 55
| Support of the Strategies |
Sustainability
The Challenge of Innovation
Alpargatas is signatory of the
Social
9.
10.
11.
12.
Economic
Labor Practices
Human Rights
Society
Products / Services
delivered
Sustainability Letter, an initiative of the
1.
2.
3.
4.
Legislation
Client
Suppliers
Employees
Shareholders
and Investors
5. Public Sector
Camargo Corrêa Group to stimulate
investments in the search for innovative
Reciprocal Benefit
solutions that lead to growing financial
Values
results, social equality and
environmental balance
Environmental
6.
7.
8.
SLIDE 32 - 55
Materials
Suppliers
Products, Services and
transportation
Sustainability
| Support of the Strategies |
Sustainability
Social Responsibility – Alpargatas Institute
Vision
To make Alpargatas recognized as a company that acts with social responsibility in
partnership with the Camargo Corrêa Institute
Mission
Improve the quality of education of young people and teenagers, 7 to 17, through sports in the
communities in which we operate.
Projects
School / After School Actions and Volunteers
Results 2007
77 Projects:
54 School Action e 23 After School
42,589 students benefited
529 volunteers
SLIDE 33 - 55
Local
Average
Grades 2006
Average
Grades 2005
| Support of the Strategies |
Sustainability
Environmental Responsibility
Projects Carried Out
Waste
• Selective collection
• Recycling
• Co-processing
• Disposal audit
2007: reduction of 7%
Water
• Reutilization of industrial water
• Sewage and effluent treatment
station
2007: reduction of 3%
Energia
• Use of natural lighting in the plants
• Reduction of consumption of energy
through engineering measures
SLIDE 34 - 55
2007: reduction of 2%
| Support of the Strategies |
Sustainability
Environmental Responsibility
Use of natural lighting in the plants
SLIDE 35 - 55
Recycling and co-processing of rubber waste
| Support of the Strategies |
Sustainability
Environmental Responsibility
Projects in the pipeline
Green Factory Pilot
•Optimization of production processes to reduce consumption of energy and water
•Utilization of renewable energy (biodiesel, solar, wind, ethanol)
•Development of alternatives for wastes generated
Reduction of consumption of pastes in the manufacturing of products
Measurement of carbon consumption
SLIDE 36 - 55
| Support of the Strategies |
Sustainability
Economic Responsibility
Added Value (9M2007)
R$ 471 million
Shareholders
7.5%
Capital
Financers
4.4%
Profit
Reserve
24.4%
SLIDE 37 - 55
Employees
40.0%
Government
23.7%
| Contents |
100 years of Brazilian Talent
Vision
Growth Strategies
Financial Performance 9M2007
2012
Capital Markets
Why Alpargatas?
SLIDE 38 - 55
| Financial Performance 9M2007 |
2000 to 2006
Focus on growth with profitability through brand valuation, cost /operating expense
reductions and generation of cash through operations
Gross Revenues (R$ billion)
Gross
Margin
Operating
Expenses
Margins and Operating Expenses = % of net revenues
SLIDE 39 - 55
EBITDA (R$ million)
EBITDA
Margin
Market Cap (R$ billion)
| Financial Performance 9M2007 |
… 9M2007
Internationalization and M&A
9M06
9M07
Gross Revenues (R$ billion)
1,1
1,1
Gross Margin (%)
46,3
44,4
Operating Expenses (%)
30,0
34,9
EBITDA (R$ million)
208
176*
EBITDA Margin (%)
23,0
20,0
Net Income (R$ million)
107
95
Net Margin (%)
11,8
10,8
Margins and Operating Expenses = % of net revenues
SLIDE 40 - 55
* excluding internationalization expenses
| Financial Performance 9M2007 |
Gross Sales revenues (R$ million)
Gross Margin (% of net revenues)
Momentary factors:
- inventory adjustment
- sale of previous collections
1.124,0
1.101,0
46,3%
44,4%
Sales impacted
by the
integrated
management
system,
especially in the
1st four months
9M06
SLIDE 41 - 55
9M07
9M06
9M07
| Financial Performance 9M2007 |
EBITDA (R$ million)
Net Income (R$ million)
208,1
118,4
176,2
151,0
106,6
95,1
9M06
EBITDA
Margin
23,0%
* excluding internationalization expenses
SLIDE 42 - 55
9M07
9M07*
17,2%
20,0%
9M06
Net
Margin
11,8%
9M07
9M07*
10,8%
13,4%
| Financial Performance 9M2007 |
Equity Restatement
Tavex
Industrial Restructuring
Better product mix
Capture of synergies stemming from the merger with Santista
6.6 million
Net Income in 3Q06 = 2.5 million or
Alpargatas
Equity restatement revenues:
3Q07 = R$ 2.2 million)
9M07 = (R$ 7.3 million)*
9M06 = (R$ 10.0 million)
* R$ 8.7 million stemming from devaluation of the euro against the real
SLIDE 43 - 55
| Financial Performance 9M2007 |
Growth of Cash Balance (R$ million)
Excluding internationalization expenses
Cash
balance
12/31/2006
SLIDE 44 - 55
EBITDA
Working
capital
Fixed
assets
Dividends
/ IOE paid
Financial
Funding /
Sales of
Share buyback
income amortization permanent
of loans
assets
Cash
balance
9/30/2007
| Financial Performance 9M2007 |
Growth of Net Assets (R$ million)
Balance
of
12/31/2006
SLIDE 45 - 55
Net
Income
Dividends
and IOE
Subvention
for Income
Tax
Subvention
for
Investment
Share
buyback
Balance
of
9/30/2007
| Contents |
100 years of Brazilian Talent
Vision
Growth Strategies
Financial Performance 9M2007
2012
Capital Markets
Why Alpargatas?
SLIDE 46 - 55
| 2012 |
Be part of the second tier* of global players
Sales of R$ 5 billion
EBITDA Margin: 20% to 23% of net sales
Foreign currency revenues: 30% of net sales
Growth of current businesses with a global
presence, increase of profitability and generation
of value with sustainability
SLIDE 47 - 55
* group of companies with net sales of US$ 1.5 to 3.0 billion
| Contents |
100 years of Brazilian Talent
Vision
Growth Strategies
Financial Performance 9M2007
2012
Capital Markets
Why Alpargatas?
SLIDE 48 - 55
SLIDE 49 - 55
September/2007
December2003
Index 100 = December2003
| Capital Markets |
Share Evolution
| Capital Markets |
Market Cap (R$ billion)
EBITDA
Multiple
SLIDE 50 - 55
| Capital Markets |
Ownership Breakdown
Capital opened up since 1913
5,000 shareholders
Corporate Governance Level 1
Common
Shares
9.090.604
Total
Capital
18.023.178
Preferred
Shares
8.932.574
19%
78%
67%
25%
3%
43%
51%
8%
4%
Controlling Shareholder
Controlling Shareholder
Controlling Shareholder
Managers
Treasury
Treasury
Free Float
Managers
Free Float
Free Float
SLIDE 51 - 55
2%
| Capital Markets |
Camargo Corrêa Group
One of Brazil’s largest business groups
Net Sales Revenues (R$ billion)
Founded in 1939
Employs more than 30,000 persons
Area of activity:
•Engineering and Construction
•Cements
•Footwear
•Textiles
•Steel
•Environmental Management
EBITDA (R$ billion)
•Public Service Concessions and Transportation
SLIDE 52 - 55
EBITDA
Margin
| Capital Markets |
Camargo Corrêa Group
Markets of Activity
Footwear
Textiles
Footwear
Textiles
Textiles
Footwear
Textiles
Textiles
Textiles
Textiles
Textiles
Textiles
Construction
Footwear
Footwear
Textiles
Construction
Footwear
Textiles
Group’s
Central
Offices
Textiles
Footwear
Textiles
Construction
Cements
Textiles
Textiles
Footwear
Textiles
Cements
Footwear
Textiles
Footwear
Local Presence
SLIDE 53 - 55
Commercial Relationship
| Contents |
100 years of Brazilian Talent
Vision
Growth Strategies
Financial Performance 9M2007
2012
Capital Markets
Why Alpargatas?
SLIDE 54 - 55
| Why Alpargatas ? |
Clear growth-oriented strategy
Unique growth
opportunity:
market and
vocation
Focus on the management brands
that are market leaders in their
segments
Effective business model
Strong controlling shareholder
Corporate Governance
Financially solid
SLIDE 55 - 55