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4Q12 Presentation 4Q12 Presentation Presentation Transcript

  • 4Q12 ResultsConference Call February 22, 2013
  • DISCLAIMER This presentation contains forward-looking statements regarding the prospects of the business, estimates for operating and financial results, and those regarding Cia. Herings growth prospects. These are merely projections and, as such, are based exclusively on the expectations of Cia. Hering management concerning the future of the business and its continued access to capital to fund the Company’s business Plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in Cia. Hering’s filed disclosure documents and are, therefore, subject to change without prior notice.
  • AGENDA Highlights 4Q12 Operating Performance Outlook
  • 4Q12 and 2012 HIGHLIGHTS Gross revenue of up 10.7% in the quarter and 8.9% in 2012; Highlight to Hering Kids performance (sales growth of 43.0% in 4Q12 and 22.2% in the year.);EBITDA of R$ 407.4 million in 2012 (+3.3%), with -1.8 p.p. change in EBITDA margin, which hasreached 27.3%; Net Profit of R$ 311.0 in 2012 (+4.6). Hering Store Chain:  83 store openings in 2012, with a network of 515 stores at the end of the year  Total sales of R$ 1,428.1 million in the year (+15.6% overall growth and -0.2% SSS growth);  New guidance for store openings – 592 by the end of 2013 Hering Kids:  Implementation of the stores network, with 22 openings in 2012.  Highlight to the franchises (+44.6%) and own stores (+83.5%) channels. 4
  • AGENDA Highlights 4Q12 Operating Performance Outlook
  • SALES PERFORMANCEGross Revenue ( R$ million) 1,793.7 8.6% 1,647.3 27.1 21.4 26.7% 8.6% 10.7% 1,766.6 1,625.9 552.8 499.3 123.0% 7.2 3.2 10.0% 496.1 545.6 4T11 4T12 2011 2012 Foreign Market Domestic MarketGross sales reached R$ 1.8 billion in 2012, with sales growth of 10.7% and 8.9% in thequarter and year, respectively. 6
  • SALES PERFORMANCE (cont.)Domestic Market ( R$ million) Gross Revenues - % 2011 2012 R$ 1,243.0 +8.7% R$ 1,351.6 Hering R$ 116.4 +22.2% R$ 142.3 Kids Hering 8% 77% R$ 125.0 +13.1% R$ 141.5 -1.1% PUC R$ 98.0 R$ 97.0 8% dzarm. Other 5% 2%Growth in Hering, Hering Kids and PUC brands in 4Q12 and 2012, with highlight to theperformance of the Hering Kids brand (+43.0% and +22.2%, respectively). 7
  • STORES CHAIN EVOLUTION 638 530 17 1 Target: 25 (+2 stores) 443 78 16 1 27 365 76 311 15 1 5 78 Target: 507 15 2 (+8 stores) 22 74 Target: 418 Target: 325 (+14 stores) 59 Target: 273 (+22 stores) 515 Target: 224 432 (+3 stores) (+6 stores) 347 276 230 2008 2009 2010 2011 2012 Total Foreign Market dzarm. PUC Hering Kids Hering StoreIn the domestic market, the Company ended 2012 with 515 Hering Stores, 78 PUC, 27Hering Kids and 1 dzarm. store. 8
  • HERING STORE CHAIN PERFORMANCEHering Store Chain Performance 4Q11 4Q12 Chg. 2011 2012 Chg.Number of Stores 432 515 19,2% 432 515 19,2%Franchise 384 465 21,1% 384 465 21,1%Owned 48 50 4,2% 48 50 4,2% (1)Sales (R$ thousand) 461.680 530.637 14,9% 1.234.956 1.428.149 15,6%Franchise 388.183 452.678 16,6% 1.033.495 1.218.306 17,9%Owned 73.496 77.958 6,1% 201.461 209.842 4,2%Same Store Sales growth (2) 8,2% -0,2% -8,4 p.p 12,7% -0,2% -12,9 p.pSales Area (m²) 57.507 70.899 23,3% 57.507 70.899 23,3%Sales (R$ per m²) 8.200 7.572 -7,7% 24.361 22.234 -8,7%Check-Outs 4.773.449 5.349.692 12,1% 12.646.638 14.332.499 13,3%Units 10.263.807 11.730.932 14,3% 27.011.508 31.131.137 15,3%Units per Check-Out 2,15 2,19 2,0% 2,14 2,17 1,7%Average Sales Price (R$) 44,98 45,23 0,6% 45,72 45,88 0,3%Average Sales Ticket (R$) 96,72 99,19 2,6% 97,65 99,64 2,0%(1) The amounts referred to the sales to final costumers. (sell out concept)(2) Compared to the same period of the previous yearSlowdown in SSS growth to -0.2% in 4Q12 due to supply shortages in the stores anddecline in the average price in December, with the year ending with SSS of -0.2%. 9
  • GROSS PROFIT AND GROSS MARGIN 51.9% -4.6 p.p. 49.5% -2.8 p.p. 51.0% 47.3% 46.7% -4.7 p.p. 48.5% -3.0 p.p 46.3% 45.5% 3.6% 1.9% 655.9 679.2 208.2 212.1 4Q11 4Q12 2012 2011 Gross Profit Gross Margin Cash Gross MarginGross margin declined by 4.7 p.p. in 4Q12 due to greater cost of freight and overtimework at the end of the year and devalued currency over imports. 10
  • EBITDA AND EBITDA MARGIN 32.8% -3.8 p.p. 29.0% 29.1% -1.8 p.p. 27.3% 3.3% 394.5 407.4 -0.6% 133.8 133.0 4Q11 4Q12 2011 2012 EBITDA DivisãoDecline of 3.8 p.p. in the EBITDA margin as a function of gross margin loss, growth ofsales, general and administrative expenses and reduction in other operatingrevenues, being partially compensated by profit sharing reduction. 11
  • NET PROFIT 25.8% -3.7 p.p. 22.1% 22.0% -1.1 p.p. 20.9% 4.6% 297.3 311.0 -4.0% 105.2 101.0 4Q11 4Q12 2011 2012 Net Income DivisãoNet profit decline of 4.0% with net margin loss of 3.7 p.p. in 4Q12 as a result ofreduction in EBITDA margin and financial revenues, despite lower charges of incometax and social contribution. 12
  • CAPEXBy Activity ( R$ million) 63.5 6.0 33.7% 1.8 47.5 22.3 10.1 1.7 29.2% 23.9 13.4 18.6 2.5 0.3 2.8 8.8 33.4 1.2 7.3 22.3 12.3 7.2 4Q11 4Q12 2011 2012 Stores Other IT IndustryCapex in 4Q12 totaled R$ 23.9 million of which the largest part was destined to theindustrial area (R$ 12.3 million), with specific additions to the productive capacity, andIT infrastructure (R$ 8.8 million). 13
  • CASH FLOWCash Flow - Consolidated (R$ thousand) 4Q11 4Q12 Chg. 2011 2012 Chg.EBITDA 133,808 132,982 (826) 394,464 407,396 12,932Non cash items 680 1,680 1,000 2,322 4,236 1,914Current Income tax and Social Contribution (35,814) (33,340) 2,474 (100,840) (95,911) 4,929Working Capital Investment (21,162) (95,442) (74,280) (58,470) (43,506) 14,964 Decrease in trade accounts receivable (71,447) (106,716) (35,269) (66,445) (67,615) (1,170) Decrease (increase) in inventories 5,747 7,352 1,605 (26,965) 6,361 33,326 Increase (decrease) in accounts payable to suppliers 13,118 5,627 (7,491) 2,088 30,130 28,042 Increase (decrease) in taxes payable 20,884 (248) (21,132) 36,911 (16,895) (53,806) Others 10,536 (1,457) (11,993) (4,059) 4,513 8,572CapEx (18,606) (23,893) (5,287) (47,501) (63,489) (15,988)Free Cash Flow 58,906 (18,013) (76,919) 189,975 208,726 18,751Reconciliation from accounting Cash flow to adjusted Cash flow (R$ thousand) 4Q11 4Q12 Chg. 2011 2012 Chg.CFS - Cash provided by operating activities (accounting) 87,629 13,601 (74,028) 267,341 309,731 42,390Adjustment – Financial items allocated to operating cash (10,117) (7,721) 2,396 (29,865) (37,516) (7,651) Unrealized exchange and monetary variation (966) (540) 426 (4,679) (2,803) 1,876 Financial Result (10,193) (7,727) 2,466 (29,696) (37,339) (7,643) Interest paid on loans 1,042 546 (496) 4,510 2,626 (1,884)CFS - Cash flow from investing activities (18,606) (23,893) (5,287) (47,501) (63,489) (15,988)Free Cash Flow 58,906 (18,013) (76,919) 189,975 208,726 18,751* Dividend distribution: R$ 119.9 million have been destined to a proposed account to be distributed upon GeneralShareholders’ Meeting approval.Reduction of R$ 76.9 million in free cash flow in 4Q12, as a function of thedecline in EBITDA combined to higher necessity of investments in workingcapital, mainly due to the reduction in taxes payable and lower provision of profit 14sharing.
  • AGENDA Highlights 4Q12 Operating Performance Outlook
  • OUTLOOK Optmistic perspectives for 2013, with scenario indicating improvement signals and positiveresults from the vacation and fall showrooms.  Potential of organic growth, although in moderate levels compared to previous years  Adjustments in prices and less markdowns should benefit gross margins  Reduction of fiscal incentives over imports and normalization of the profit sharing will hamper EBITDA margin expansion Hering Brand remains the main growth platform of the Company:  Stores opening (guidance of 77 in 2013) and revamping of SSS growth in Hering Store.  Multi-brand channel: Increase in market share within existing clients. Children’s market:  Expansion of the Hering Kids format – opening of 30 new stores in 2013. Adjustments in dzarm. s management structure combined with additional investments in theopening of more flagship stores and marketing. New infrastructure of technology and logistics for online sales implemented in 2012 will allowcapturing the high growth potential of this channel. 16
  • INVESTOR RELATIONS TEAM Fabio Hering – CEO Frederico Oldani – CFO and IRO Patrícia Salem – IR Manager Daniel Popovich – IR Analyst Tel. +55 (11) 3371-4867 E-mail: ri@hering.com.br Website: www.ciahering.com.br/ri