Droga Raia - Raia Drogasil

Droga Raia
3rd Quarter Results
November 11th, 2011
Disclaimer
This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 (the “Securities
Act”) and Section 21E of the Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future
performance. Investors are cautioned that any such forward-looking statements are and will be. as the case may be. subject to many risks.
uncertainties and factors relating to the operations and business environments of the Company that may cause the actual results of the companies
to be materially different from any future results expressed or implied in such forward-looking statements.
Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on
information currently available to the Company’s management. the Company cannot guarantee future results or events. The Company expressly
disclaims a duty to update any of the forward looking-statements.
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Highlights:
 Drugstores: 384 stores in operation (24 new store openings and two closures)
 Gross Revenues: R$ 605.1 million. 25.7% growth (14.5% of same-store sales)
 Gross Margin: 26.2% of gross revenues (1.6 percentage point increase)
 EBITDA: R$ 27.4 million. an increase of 29.6%
 EBITDA Margin: 4.5%. a 0.1 percentage point margin expansion
 Net Income: R$ 12.3 million. 2.0% of net margin
 Cash Flow: R$ 40.9 in cash generation. R$ 28.3 million in CAPEX
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Accelerated our growth pace: 24 new store openings, resulting in a total of 384 stores in
operation at the end of the quarter, of which 38% had not yet reached maturity.
Store Count
Age Structure of Store Portfolio
(Store count. % of existing stores)
384
362
350
Year 1
(59 stores)
15.3%
353
Year 2
(48 stores)
12.5%
Year 3
(39 stores)
10.2%
326
3Q10
4Q10
1Q11
2Q11
Mature Stores
(238 stores)
62.0%
3Q11
*24 openings. 2 store closures
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We have increased our national market share by 0.5 percentage point, with Paraná and
São Paulo driving the growth.
Total: 384 stores
Market Share - Brazil
Market Share by State
SP: 265 stores
• Greater São Paulo: 121 stores
• Countryside: 144 stores
9.3%
8.6%
(September. 2011)
4.1%
3.6%
MG: 24 stores
• Greater BH: 24 stores
Minas Gerais
2.3% 2.3%
São Paulo
Rio de Janeiro
RJ: 44 stores
• Greater Rio: 39 stores
• Countryside: 5 stores
4.1% 4.4%
Paraná
SC: 6 stores
• Countryside: 6 stores
0.0%
PR: 35 stores
• Greater Curitiba: 19 stores
• Countryside: 16 stores
6.6%
Santa Catarina
0.9%
4.1%
Rio Grande
do Sul
70% of Brazilian
pharmaceutical market
0.7%
1.1%
RS: 10 stores
• Greater Porto Alegre: 10 stores
Sep-10
Sep-11
Distribution Centers
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We reached 14.5% of same-stores sales growth and 10.4% of mature stores sales growth.
Growth – Total Sales
Growth – Mature Stores
Growth – Same Store Sales
14.5%
25.7%
13.7%
24.7%
10.4%
22.0%
9.5%
10.9%
16.6%
14.8%
6.4%
6.6%
4.2%
1.6%
3Q10
4Q10
1Q11
2Q11
3Q11
3Q10
4Q10
1Q11
2Q11
3Q11
3Q10
4Q10
1Q11
2Q11
3Q11
-1.1%
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Our revenues increased by 25.7%. Generics was our fastest growing category fo the fourth
consecutive quarter.
Sales Mix
Gross Revenues
(R$ million)
25.7%
HPC
566.0
509.2
3Q10 vs. 3Q11
605.1
28.1%
30.8%
30.3%
27.2%
28.2%
507.1
26.2%
481.5
OTC
19.0%
18.1%
18.2%
19.3%
18.7%
23.5%
Generic Rx
9.5%
9.3%
9.5%
10.3%
10.5%
38.5%
Branded Rx
43.3%
41.7%
41.9%
43.0%
42.6%
23.5%
3Q10
4Q10
1Q11
2Q11
3Q11
3Q10
4Q10
1Q11
2Q11
3Q11
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We have increased our gross margin by 1.6 percentage point and reduced our cash cycle by
4.8 days when compared to 2Q11, mainly due to a 10 day reduction in inventories.
Cash Cycle
Gross Profit
(COGS days. Gross Revenues days)
(R$ million. % of Gross Revenues)
26.9%
88.2
26.2%
88.9
25.3%
24.6%
88.1
24.5%
152.4
158.6
76.3
67.9
78.1
69.9
59.6
118.4
124.8
60.7
128.5
53.5
48.9
44.1
38.4
18.9
18.8
19.4
20.4
19.4
1Q11
2Q11
3Q11
11.8
6.8
3Q10
3Q10
4Q10
1Q11
2Q11
3Q11
Receivables
4Q10
Inventories
Suppliers
Cash Cycle
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We have increased our sales expenses by 0.7 percentage point as a consequence of the
annual salary increase, of 24 new store opening and of higher staff deployment at our stores.
Sales and Other Operational Expenses – % of Gross Revenues
Sales and Other Operational Expenses – R$ million
Non Recurring Expenses of Media in 3Q11 of R$1MM, equivalent to 0.2% of Gross Revenues
1.6
0.3%
0.2%
0.3%
1.0
0.6%
2.9
0.2%
0.8
1.4
99.5
16.4%
15.7%
15.7%
16.2%
15.6%
3Q10
4Q10
1Q11
2Q11
3Q11
Sales Expenses
75.7
3Q10
80.1
82.3
4Q10
1Q11
88.1
2Q11
3Q11
Other Operational
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We increased expenses due to the acceleration of store openings and to higher staff
deployment at stores to improve customer service and sustain sales and margin growth.
Employees per store (quarterly average)
Store Openings by quarter
24
24
2010
18,4
2011
15
17,1
10
16,4
3
3Q10
4Q10
1Q11
16,0
2Q11
3Q11
1Q
16,4
16,3
16,0
2Q
3Q
4Q
10
G&A increased by 0.8 percentage point as we improved our human resources structure,
increased salaries by 8.3% and had non-recurring expenses to increase staff at stores.
General and Administrative Expenses – % of Gross Revenues
General and Administrative Expenses – R$ million
Non Recurring Expenses related to the store staff increase of R$ 1.2MM, equivalent to 0.2% of Gross Revenues
5.0%
4.5%
4.5%
4.6%
30.0
4.2%
26.1
23.1
23.0
4Q10
1Q11
20.1
3Q10
4Q10
1Q11
2Q11
3Q11
3Q10
2Q11
3Q11
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We have increased our EBITDA margin by 0.1 percentage point, with gross margin expansion
more than offsetting our expenses pressures.
EBITDA
(R$ million. % of Gross Revenues)
6.6%
4.5%
4.4%
4.4%
37.2
3.7%
27.4
22.4
21.2
GROWTH:
29.2%
18.6
3Q10
4Q10
1Q11
2Q11
3Q11
Stores opened in 2011 are affecting the profitability:
- EBITDA ex-2011 new stores in 3Q11: R$ 30,2 million, or 5,2% of gross revenues (sales R$ 586,2 million)
- Loss of R$ 2,8 MM in 3Q11, of R$ 1,4 MM in 2Q11 and R$ 0,4 MM in 1Q11 (includes pre-ops expenses and marginal contribution)
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Higher operational results and stronger capital structure resulted in R$ 12.3MM of net
income for the quarter.
Depreciation
Net Financial Expenses/(Income)
(R$ million. % of Gross Revenues)
Net Income
(R$ million. % of Gross Revenues)
(R$ million. % of Gross Revenues)
4.1%
2.3%
2.2%
1.6%
2.2%
1.5%
2.0%
(0.9%)
(0.6%)
2.0%
23.4
(0.6%)
0.4%
2.0%
2.0%
(0.2%)
11.9
11.7
11.2
12.3
11.3
7.7
10.2
7.7
10.4
2.0
3Q10
4Q10
1Q11
2Q11
3Q11
3Q10
4Q10
1Q11
(5.0)
2Q11
(3.3)
3Q11
(3.8)
3Q10
4Q10
(0.9)
1Q11
2Q11
3Q11
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We generated R$ 32.4 MM of resources from operations, that combined with working capital
improvement , completely funded our investments in the quarter.
Cash Flow
3Q11
3Q10
9M11
9M10
EBT
19.3
3.1
64.7
4.3
(+) Depreciation
(-) Other Adjustments
11.9
1.2
10.4
(1.3)
34.5
3.2
30.6
5.9
Resources from Operations
32.4
12.2
102.3
40.7
Cash Cycle*
Others
5.1
3.4
(17.0)
14.2
(186.6)
(9.6)
(38.2)
30.9
Operations
40.9
9.4
(93.8)
33.5
(28.3)
(23.9)
(61.9)
(55.4)
12.6
(14.5)
(155.7)
(21.9)
(R$ million)
Investments
Total Cash Flow
* Cash cycle includes variation in accounts receivables. inventories and suppliers
** Does not include financing cash flow
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Stock performance
RAIA3
IBOV
ICON
101
97
100
85
Number of Shares (thousand)
th
Stock Quote - November 9 (R$)
62,014
24.21
Market Cap (R$ million)
1,501.4
Average Trading Volume 3Q11 (R$ thousand)
6,160.7
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Ongoing actions – November 11th, 2011:

Opened 9 new stores, which resulted in a total of 393 stores in operation as of this date;

Secured a robust pipeline for new store openings that will allow us to comply with our 60 gross openings
guidance in 2011 and to enter 2012 with a constant pace of store openings;

Closed the merger with Drogasil at our Shareholders’ Meeting on November 10th;

Prepared the launch of Pluii in November, Droga Raia’s main proprietary brand:
o Shampoo, conditioning, post-shampoo, liquid soap, bar soap, body lotion;
o Six different fragances;
o Premiun prices, high gross margins.

Started the integration process of Raia Drogasil, supported by consultancy firms, including:
o System selection, process and structure definition for the new Company;
o Setting coordinated strategies for each brand and the new corporate identity;
o Definition and alignment of a new career program and compensation policy.
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Raia Drogasil S.A.
A Larger and Stronger Company