Droga Raia - Apresentação de Resultados English

Droga Raia
2010 Financial Results
March 30th, 2010
Highlights of the Period
Concluded our IPO on Dec. 16th, 2010 with full exercise of the greenshoe in Jan. 10th, 2011. Offer totalled R$ 654 million
(R$ 526 million primary). The gross amount received in 2010 that corresponded to the base offer totalled R$ 502 million.
Ended 2010 with 350 stores and as Brazil’s 2nd largest chain according to ABRAFARMA. Opened 53 stores and closed 2
stores (24 openings in 4Q10), including 14 stores in nine cities in the countryside of Paraná where we entered in 2010;
Gross revenues reached R$ 1.86 billion in 2010, a 16.6% growth of over 2009. (R$ 437 million in 4Q10, a 16.5% growth
over the 4Q09);
EBITDA reached R$ 75.8 million in 2010, with a margin of 4.1% of gross revenues, a 32.4% growth over 2009 (R$ 18.5
million in 4Q10, 3.6% of gross revenues);
Positive net income of R$ 1.7 million in spite of the pressures entailed by depreciation and financial expenses, which
derive from an asset base that, at the end of 2010, included only 56% of mature stores;
Generated a cash flow from operations of R$ 75.0 million, which allowed us to fund the R$ 84.8 million in total
investments undertook in 2010;
Established a Training Center in São Paulo and our second distribution Center in Paraná, which will supply our stores in the
south of Brazil. This DC has a footprint of 6 thousand square meters and operated in full from the end of December.
Adopted IFRS and new GAAPs without economic effects in 2010. Reclassification of Other Op. Revenues into COGS and of
incident taxes from sales expenses into COGS. Gross margin decreased 0.6%, fully offset by a reduction in sales expenses.
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Our IPO totaled R$ 654.7 million. Primary proceeds amounted to R$ 525.7 million, which
net of tranasaction expenses, resulted in an equity increase of R$ 500.3 million
Base Offer
23/12/2010
Green Shoe
13/01/2011
Total
Gross IPO Proceeds
569.3
85.4
654.7
Gross Secondary Offer
67.0
62.1
129.0
Gross Primary Offer (Raia)
502.3
23.3
525.7
Expenses
Banking Fees
(1)
Transaction expenses
24.5
19.1
5.4
0.9
0.9
25.4
20.0
5.4
Net Proceeds (Raia)
477.8
22.4
500.3
(In R$ million)
(1) Refer to auditing, lawyers, consulting and other expenses
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Our IPO will allow us to accelerate our growth program, with a store opening guidance of
60 new stores in 2011 and 90 new stores in 2012.
Accelerated Growth
Foundations for Growth
1,860
1,595
IPO
1,148
829
721
645
558
467
327
370
95
105
120
132
137
150
198
259
299
350
410*
500*
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011E*
2012E*
Stores
Gross revenues (R$ million)
* Assumes our gross store opening guidance, disregarding eventual store closings that may happen throughout the period.
4
We turned into Brazil’s second largest drugstore chain in store count and remained as the
fifth largest in revenues. At the end of December, 44% of our stores were still maturing.
ABRAFARMA Ranking - 2010
Store Portfolio Age Distribution – December, 2010
(store count. % of existing stores)
Store Count
Gross Revenues
Year 1
(52 stores)
14.8%
1st
Year 2
(41 stores)
11.8%
2nd
3rd
Mature
(196 stores)
56.0%
Year 3
(61 stores)
17.4%
4th
5th
Source: ABRAFARMA (considers Drogaria São Paulo’s gross revenues at a Pro-forma basis, because it includes the revenues of Drogão, acquired in June 2010, for the whole year)
5
The Brazilian pharmaceutical and hygiene and personal care markets kept growing at a
very fast pace in 2010
Hygiene and Personal Care market growth
Pharmaceutical market growth
(R$ billion)
(R$ billion)
12.7%
19.9%
(13.8% of the comparable base)
36.2
27.5
1.8
24.4
21.7
19.6
17.5
15.4
34.4
30.2
26.4
23.6
21.5
19.2
2005
Source: IMS Health
2006
2007
2008
2009
2010
2005
2006
2007
2008
2009
2010
Source: ABIHPEC
6
We accelerated our growth program in 2010. We ended the year with a total of 350 stores
and with market share growth in all the top five Brazilian states in which we operate.
Total: 350 stores
Market Share - Brazil*
2.8%
Market Share by State
2.6%
2.4%
2.7%*
(December 2010)
3.2%
3.5%
3.8%
4.1%*
SP: 246 stores
Greater São Paulo: 118 stores
• Countryside: 128 stores
•
9.0%
MG: 22 stores
• Greater BH: 22 stores
9.3%*
8.1%
6.9%
Minas Gerais
São Paulo
Paraná
Santa Catarina
Rio Grande
do Sul
0.5%
66.6% of the Brazilian
pharmaceutical market
0.0%
RS: 9 stores
• Greater Porto Alegre: 9 stores
RJ: 39 lojas
Rio de Greater Rio: 36 stores
• Countryside: 3 stores
Janeiro
4.3%*
3.8%
3.1% 3.6%
•
PR: 33 stores
• Greater Curitiba: 19 stores
5.4%*
• Countryside: 14 stores
4.2%
4.0% 3.3%
0.8%*
0.5%
Dec-10
Dec-09
Dec-08
Dec-07
Distribution Center
* 2010 participation adjusted to cover the same informant base of 2009. Considering the new base of informants we would have 3.8% of national participation and 8.8% SP; 4.2% RJ; 2.3% MG; 5.2% PR;
and 0.8% RS
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Our gross revenues grew 16.7%, and the highlights have been hygiene and personal care
and our comeback in generics sales in the 4Q10.
Gross Revenues
Sales Mix
(R$ million)
2010 vs. 2009
16.7%
1,860.1
38.9%
1,594.6
1,147.6
Personal
Care
26.5%
OTC
19.9%
Generic
Medicines
9.6%
27.8%
28.9%
30.2%
30.8%
21.3%
19.3%
19.1%
18.5%
18.1%
15.2%
9.3%
9.3%
9.0%
9.3%
16.5%
509.2
436.9
2008
2009
2010
4Q 2009
4Q 2010
Branded 44.0%
Medicines
43.5%
2008
2009
42.7%
2010
42.3%
41.7%
4Q 2009
4Q 2010
14.4%
8
We maintained in the 4Q10 a revenue growth below our historical levels, due to the
extraordinary growth produced by the credit crisis and by the swine flu pandemic in 2009.
Growth – Total Sales
38.9%
38.5%
Growth – Same Stores
22.5%
Growth – Mature Stores
21.9%
13.5%
12.6%
32.4%
14.2%
9.0%
20.5%
16.7%
10.3%
16.6%
15.3%
14.8%
6.6%
6.3%
3.8%
4.5% 4.2%
1.6%
0.9%
2008 2009 2010
4Q09 1Q10 2Q10 3Q10 4Q10
2008 2009 2010
4Q09 1Q10 2Q10 3Q10 4Q10
2008 2009 2010
(0.6)%
(1.0)%
4Q09 1Q10 2Q10 3Q10 4Q10
9
We expanded our gross margin and sustained a lean cash cycle under a purchasing model
that relied, until the end of 2010, on large payment terms from our main suppliers
Cash Cycle
Gross Profit
(days of COGS, days of gross revenues)
(R$ million, as % of Gross Revenues)
24.6%
23.7%
24.5%
97.1
23.3%
22.5%
88.3
83.6
28.0%
83.9
78.6
76.3
458.2
72.1
68.9
32.0%
358.0
61.8
56.7
271.4
101.8
124.8
21.8
7.1
2008
2009
Gross Profit
2010
4Q 09
4Q 10
Other Operational Revenues
2008
Receivables
20.9
20.6
19.0
7.4
4.0
2009
18.8
6.8
3.5
2010
Inventories
4Q 09
Suppliers
4Q 10
Cash Cycle
10
Our expense absorption worsened in 2010 due to the low growth of our mature stores and to
the acceleration of our store openings. Pre-operational expenses of R$ 1.2MM at the new DC.
Sales & Other Op. Expenses – R$ Million
Sales & Other Op. Expenses – % of Gross Revenues
298.0
5.6
15.9%
0.1%
16.0%
15.2%
0.3%
0.3%
15.0%
0.5%
242.1
4.9
16.3%
0.5%
182.6
1,2
292.5
15.8%
14.9%
15.7%
14.5%
237.2
15.7%
181.4
65.7
2.3
63.4
2008
2009
Sales Expenses
2010
4Q09
Other Op. Expenses
4Q10
2008
2009
2010
Sales Expenses
4Q09
82.8
2.6
80.1
4Q10
Other Op. Expenses
11
G&A also affected by the low revenue growth and by the upgrade in our logistics structure.
Executive bonus of R$ 2.3MM in excess of the existing provision in the 4Q10.
Administrative Expenses – R$ thousand
Administrative Expenses – % of Gross Revenues
84.4
4.6%
4.5%
4.5%
4.4 %
69.4
0.7%
3.6%
10.7
52.8
0.7%
3.7%
58.7
2.9%
23.1
15.9
3.0
23.1
12.9
2008
2009
Admin. Expenses
2010
4Q 09
Adjustments
4Q 10
2008
2009
Admin. Expenses
2010
4Q 09
4Q 10
Adjustments
One-time adjustments: R$ 8.5 million of retroactive recovery in PIS and COFINS and R$ 2.2 million in credits due to changes in the provisioning
methodology for civil, tax, and labour contingencies (R$ 3.0 million in the 4Q10)
12
We kept expanding our EBITDA margin in spite of the 4Q10, which was hurt by our worse
expense absorption and by R$ 3.5 million in punctual expenses (0.7% of gross revenues)
EBITDA
(R$ million, as a % of Gross Revenues)
5.4
4.1
3.6
75.8
3.1
3.6
57.2
- DC PR: R$ 1.2 mm (pre operational)
- Executive Bonus: R$ 2.3 mm
10.7
- T OTAL: R$ 3.5 mm (0.7% of gross revenues)
36.1
46.5
23.6
3.0
18.6
20.6*
2008
2009
2010
4Q 09
4Q 10
EBITDA
Adjustments
Adjustment related to the PIS and COFINS credit recovery of R$ 8.5 million and the change in the provision methodology for civil, tax and labour
contingencies (equivalent to R$ 2.2 million in the year and R$ 3.0 in the 4Q10)
13
Net income was only slightly positive as a result of our strong growth pace, which pressured
depreciation and financial expenses arising from an asset base with 46% of maturing stores
Depreciation
Net Financial Expenses
(R$ million, as a % of Gross Revenues)
Net Profit
(R$ million, as a % of Gross Revenues)
(R$ million, as a % of Gross Revenues)
2.0
2.4
2.2
2.3
2.3
1.6
2.1
1.4
1.5
42.3
1.4
1.3
34.6
0.1
30.1
(0.2)
0.1
(0.9)
27.9
23.0
21.5
11.7
9.1
7.7
5.6
2008
2009
2010
4Q09
4Q10
2008
2009
2010
4Q09
6.1
4Q10
2008
2008
1.6
1.7
2009
2010
(0.9)
4Q09
4Q10
(10.1)
14
We generated R$ 75.0MM of operating cash flow, including R$ 37.3MM in recovered taxes
and R$ 30.1MM in interest expenses, which financed the bulk of our R$ 84.8MM investments
15
Our stock has outperformed both the IBOVESPA and the ICON (Consumption Index) since
our IPO
RAIA
IBOV
ICON
108,33
99,34
100
Number of Shares (in thousands)
Stock quote (R$) (March 25th)
Market Cap (R$ million)
62.014
26,0
1.612,4
25-mar
18-mar
11-mar
4-mar
25-fev
18-fev
11-fev
4-fev
28-jan
21-jan
14-jan
7-jan
31-dez
24-dez
17-dez
97,18
Ongoing Actions – March 29th, 2011
We opened three stores in the 1Q11 and signed contracts to open another 25 in 2011;
Prepared our entry into Santa Catarina, where we already have contracts to open five stores, which will position us in six of
the seven largest states in Brazil that account for 70% of the Brazilian pharmaceutical market;
Improved gross margins by reducing payment terms and by selectively investing in inventories for opportunistic purchases
Increased our inventory levels in March to profit in the 2Q11 from the annual pharmaceutical price increase
Expanded our main Distribution Center, in the São Paulo metropolitan region, from 14 thousand to 19 thousand square
meters, in order to cope with the Chain’s expected growth;
Signed an agreement to open a Distribution Center in Rio de Janeiro, in the city of Barra Mansa, which is scheduled for the
beggining of 2012 (8 thousand square meters);
Started several inititives to improve our productivity, including our service levels and service standards;
Renegotiated the credit letter that guarantees our loan with BNDES so as to reflect our new capital structure and to reduce
our interst expenses from the 2Q11;
We hired Itaú DTVM as our market maker, aiming at enhancing our shares’ liquidity;
Obtained coverage by five intitutions: Banif, BB Investimentos, Credit Suisse, Itaú BBA, Raymond James. Their average
target price for RAIA3 is of R$ 34.00 with a consensus EBITDA of R$ 104.4 million for 2011.
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