03 22-2012 - bank of america merrill lynch 2012 brazil conference
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03 22-2012 - bank of america merrill lynch 2012 brazil conference 03 22-2012 - bank of america merrill lynch 2012 brazil conference Presentation Transcript

  • BofA Merrill Lynchs Brazil ConferenceMarch 22, 2012
  • DISCLAIMERThe Company makes forward looking statements that are subject to risks anduncertainties. These statements are based on the beliefs and assumptions of our management as wellas on information currently available to us. Forward-looking statements include information regarding ourcurrent intent, beliefs or expectations, in addition to those of the members of the Board of Directors andExecutive Officers of the Company.Forward-looking statements also include information regarding our possible or assumed future operatingresults, as well as statements preceded or followed by, or that include, the words believes”, may”,will”, continues”, expects”, anticipates”, intends”, plans”, estimates”, or similarexpressions.Forward-looking statements are not guarantees of performance. They involve risks, uncertainties andassumptions, for they relate to future events, thus depending on circumstances that may or may notoccur. Our future results and the creation of value to shareholder s may differ significantly from thoseexpressed in or suggested by these forward-looking statements. Many factors determining theseresults and values are beyond Cielo’s ability to control or predict. 2
  • BRAZIL | CARD INDUSTRY Penetration Of Cards as Means of Payment in the Private Consumption Expenditure (PCE) 26.9% 24.3% 22.5% 20.7% 18.9% 17.1% 2006 2007 2008 2009 2010 2011* Source: ABECS e IBGE * 2011 ( the Q4 numbers are estimated) 3
  • CIELO | OWNERSHIP 545.913.520 common shares 0.3% 28.6% 42.4% 28.6% Banco Bradesco Banco do Brasil Free-float Treasury 4
  • CIELO | PORTFOLIO OF BRANDS UPCOMING SOONCREDIT AND DEBITVOUCHER 5
  • CIELO | PLANNING MATRIX Partnership with Cybersource 6
  • CIELO | LOYALTY PROGRAM Cielo Fidelidade is the largest B2B loyalty program in Latin America Cielo Fidelidade Scheme: accrual of points based on the merchant’s is the only loyalty volume with Cielo and program developed redemption of points for exclusively to merchants more than 20 thousand products 7
  • CIELO | ADDING VALUE TO MERCHANTS CIELO INNOVATES ONE MORE TIME AND BRINGS AN ADVANCED TECHNOLOGY CHANGING THE CULTURE OF CARRYING OUT PROMOTIONS AT THE POINT S OF SALES CIELO PREMIA IS THE MOST FLEXIBLE AND THE EASIEST TO USE PROMOTIONAL MARKETING TOOL IN THE MARKET 8
  • CIELO | PREMIA’S MAIN ADVANTAGES The card owner with a differentiated SURPRISES payment experience The card owner through multiple ENGAGES gifts and discounts The promotion according to your needs SEGMENTS (Bank/Card Brand/Card type/Purchasing option: Debit or Credit) The promotion automatically MANAGES reducing operational costs strongly 9
  • CIELO | FIXED DAY AND TIME IT GIVES THE CLIENT A GIFT OR A DISCOUNT ON A SPECIFIC DAY / TIME ADVANTAGES TO CIELO CLIENT IT INCREASES THE RETURN FREQUENCY ON A DAY WITH LOW MOVEMENT 10
  • CIELO | FIXED DAY AND TIME *** CONGRATULATIONS!*** DISCOUNT TO YOU 10% discount At the end of the day On Mondays PRIZE BALANCE -------------------------- EXPIRING DATE: 01/31/2011 11
  • CIELO | INNOVATIVE PRODUCTS  Unprecedented payment solution application in Brazil for iPhone, iPad and iPod touch as well as Android system  Devices used as POS terminal for mobile payment with Visa, MasterCard, American Express and Elo cards  In April Cielo Mobile Blackberry will be launched 12
  • CIELO | ORIZON AQUISITION  Founded in 2006  Ownership interest of 40.95%;  Interconnection between healthcare and dental operators and services providers 13
  • CIELO | FINANCIAL INDICATORS Financial Indicators 4Q11 4Q10 4Q11 X 4Q10 3Q11 4Q11 X 3Q11 Financial Volume (R$ million) 91,252.7 74,079.8 23.2% 79,775.2 14.4% Transaction (million) 1,301.8 1,108.3 17.5% 1,167.0 11.6% Net Revenue* (R$ million) 1,383.1 1,147.9 20.5% 1,210.9 14.2% Cost of Services (R$ million) (405.7) (354.6) 14.4% (365.6) 11.0% Operating Expenses (R$ million) (207.9) (130.4) 59.4% (165.8) 25.4% Adjusted EBITDA (R$ million) 833.2 715.9 16.4% 741.2 12.4% Net Income (R$ million) 504.5 443.3 13.8% 457.5 10.3% Blended Net MDR (bps) 105 110 (5) 103 2 Credit Net MDR (bps) 119 132 (12) 118 1 Debit Net MDR (bps) 81 77 4 77 4* Including prepayment of receivables present value adjusted 14
  • CIELO | FINANCIAL INDICATORS Financial Indicators 2011 2010 2011 X 2010 Financial Volume (R$ million) 315,856.2 261,675.3 20.7% Transaction (million) 4.621,6 4,038.7 14.4% Net Revenue* (R$ million) 4.795,4 4.354,4 10.1% Cost of Services (R$ million) (1.425,2) (1.180,8) 20.7% Operating Expenses (R$ million) (632.7) (441.0) 43.5% Adjusted EBITDA (R$ million) 2,975.2 2,925.8 1.7% Net Income (R$ million) 1,810.3 1,829.3 -1.0% Blended Net MDR (bps) 103 119 (16) Credit Net MDR (bps) 119 142 (23) Debit Net MDR (bps) 77 80 (3)* Including prepayment of receivables present value adjusted 15
  • CIELO | OPERATING PERFORMANCE Cielo- Number of Transactions (millions) Cielo- Financial Volume (R$ millions) CAGR: 17.9% 4,622 CAGR: 23.3% 315,856 4,039 261,675 3,427 1.964 118.315 2,952 1.716 17.5% 213,958 98.742 23.2%2,389 1.424 175,552 1,232 136,500 79.166 987 1,302 64.655 1,108 48.534 2.323 2.658 197.541 74,080 91,253 1.720 2.003 487 572 162.933 35.2191.403 110.897 134.792 29.163 621 730 87.966 44.917 56.034 2007 2008 2009 2010 2011 4Q10 4Q11 2007 2008 2009 2010 2011 4Q10 4Q11 Credit Debit Credit cards Debit cards Cielo- Number of Active Merchants ( 1 transaction in the last 60 days) 5.2% 1.199 1.199 1.133 1.140 1.140 996 824 2007 2008 2009 2010 2011 4T10 4T11 16
  • CIELO | MERCHANTS BREAKDOWN Financial Volume 39% 40% 39% 41% 41% 61% 60% 61% 59% 59% 4Q10 1Q11 2Q11 3Q11 4Q11 Large Merchants Small and Medium Merchants Revenue(*) 67% 67% 66% 67% 68% 33% 33% 34% 33% 32% 4Q10 1Q11 2Q11 3Q11 4Q11 Large Merchants Small and Medium Merchants (*) Comissions revenue (credit, debit and equipment rental) 17
  • CIELO | FAIR SHARE Financial Volume Breakdown (in R$) Considering the 2 main participants, Considering the top three participants,Cielo gained 1.6 p.p. quarter-on-quarter Cielo gained 1.3 p.p. quarter-on-quarter 40,4% 43,1% 42,8% 42,3% 42,1% 40,5% 40.6% 42,0% 43.7% 43.6% 43.3% 43.3% 59,6% 56,9% 57,2% 57,7% 57,9% 59,5% 59.4% 56.3% 56.4% 56.7% 56.7% 58,0% 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Cielo Others Cielo Redecard Source : Earnings reported by the acquiring companies Others = Redecard e Santander/GetNet 18
  • CIELO | REVENUES BREAKDOWN Revenue- Activity (%) Revenue- Activity (%) 46.5% 45.2% 44.6% 44.6% 43.8% 44.5% 51.6% 49.9% 48.1% 52.6% 16.4% 16.6% 16.9% 18.7% 17.3% 17.7% 16.3% 16.0% 15.8% 15.0% 22.5% 21.5% 20.4% 19.4% 20.8% 21.7% 24.3% 26.4% 27.8% 27.9% 8.6% 9.8% 11.0% 11.6% 11.7% 11.1% 0.0% 0.5% 4.5% 7.5% 5.5% 6.1% 6.3% 6.6% 6.4% 4.6% 3.9% 3.4% 3.9% 6.3% 4Q10 1Q11 2Q11 3Q11 4Q11 2007 2008 2009 2010 2011 Credit cards Debit cards Credit cards Debit cards POS Rental Prepayment of Receivables POS Rental Prepayment of Receivables Other revenues Other revenues 29
  • CIELO | REVENUES Commissions Revenues (R$ million) Equipment Rental (R$ million) CAGR: 15.9% 3,268.4 CAGR: 10.2% 3,103.2 1.169,9 2,649.9 913,8 1.101,9 785,4 1.067,1 2,184.8 637,9 903,1 1,810.7 517,9 745,9 401,3 17.1% 2.317,8 2.354,6 2.012,0 955.4 815.8 1.666,9 286,4 7.5% 1.409,3 225,1 590,8 669,0 275,5 296,1 2007 2008 2009 2010 2011 4Q10 4Q11 2007 2008 2009 2010 2011 4Q10 4Q11 Credit DebitMDR 4Q10 1Q11 2Q11 3Q11 4Q11 POS 4Q10 1Q11 2Q11 3Q11 4Q11Net MDR AverageDebit 77 76 74 77 81 Rental 72 69 65 65 67 (R$/month)Net MDRCredit 132 122 117 118 119 Installed POS 1,277 1,293 1,351 1,402 1,484 (thousand) 20
  • CIELO | PREPAYMENT OF RECEIVABLES Revenue of Prepayment of Receivables ex Adjustments (R$ million) 61.7% 193,1 159,9 137,7 119,4 120,8 20.8% 4Q10 1Q11 2Q11 3Q11 4Q11 Prepayment of Receivables Average Term (days)6.000,0 20,0% 19,0% 4.899,2 18,0% 66,1 62,9 17,0%5.000,0 16,0% 58,5 56,0 3.894,6 55,8 15,0% 14,0% 3.376,94.000,0 3.236,9 13,0% 3.016,7 12,0% 11,0%3.000,0 10,0% 9,0% 8,0% 8.7% 7,0% 7,3% 7,7%2.000,0 6,0% 6,7% 7.2% 5,0% 4,0%1.000,0 3,0% 2,0% 1,0% - 0,0% 4Q10 1Q11 2Q11 3Q11 4Q11 Financial prepayment volume 4Q10 1Q11 2Q11 3Q11 4Q11 % Prepayment over Credit Financial Volume 21
  • Costs of services renderedCIELO | COSTS Depreciation and amortization Unit per transaction Costs Comparison 4Q11 X 4Q10 (R$ million) 405.8 6.2%  The impact of the unit cost 62,4 35,7 343.2 323.1 excluding the subsidiaries and 26,8 62,4 the additional brands fee was 52,1 a reduction of 9.6% 343,4 280,8 271,0  If the impact of depreciation is eliminated in the same 4Q11 Reported Costs related to Additional brands 4Q11 Adjusted 4Q10 Adjusted analysis, the reduction would subsidiaries fee have been 11.8% 0.312 0.027 0.021 0.264 9.6% 0.291 Costs Comparison 4Q11 X 3Q11 (R$ million) 405.8 13.7%  The impact of the unit cost 367.8 62,4 35,7 323.3 excluding the subsidiaries and 2,2 62,4 the additional brands fee was 60,4 a increase of 2.0% 343,4 305,4 262,9  If the impact of depreciation is eliminated in the same 4Q11 Reported Costs related to Additional brands 4Q11 Adjusted 3Q11 Adjusted analysis, the increase would subsidiaries fee have been 4.1% 2.0% 0.312 0.027 0.002 0.283 0.277 22
  • Costs of services renderedCIELO | COSTS Depreciation and amortization Unit per transaction Costs Comparison 2011 X 2010 (R$ million) 1,425.2 233,0 1,181.9 6.4% 152,7  The impact of the unit cost 1,111.3 excluding the subsidiaries and 90,6 233,0 190,1 the additional brands fee was a 1.192,2 reduction of 7.1% 948,8 921,2  If the impact of depreciation is 2011 Reported Costs related to Additional brands fee 2011 Adjusted 2010 Adjusted eliminated in the same analysis, subsidiaries the reduction would have been 10.0% 0.308 0.033 0.020 0.256 0.275 7.1% 23
  • CIELO | OPERATING EXPENSES Operating Expenses Composition- 4Q10 to 4Q11 (R$ million) In both comparison 11,8 5,8 0.4 (4Q10 x 4Q11 and 15,7 43,8 3Q11 x 4Q11), the main impact for the 207.9 increase was due to 130,4 marketing and sales expenses: 4Q10 Marketing and Other Expenses Personnel General and Depreciation 4Q11 Sales Expenses Administratives and Amortization • campaigns with partner banks; •Joint Cielo/Elo Operating Expenses Composition- 3Q11 to 4Q11 (R$ million) campaigns; •Actions with major (6.5) 37,0 8,2 3,2 0,2 gas station chains; •Actions with franchisers; 165,8 207.9 •Cielo Fidelidade; •Institutional marketing in 3Q11 Marketing and General and Sales Expenses Administratives Personnel Depreciation Other Expenses and 4Q11 different media Amortization 24
  • CIELO | OPERATING EXPENSES In the comparison Operating Expenses Composition- 2010 to 2011 (R$ million) (2011 x2010),the main impact for the 37,3 1.5 40,5 increase in the 61,2 51,2 expenses were due to: 632.8 • other expenses – provisions for tax 441,0 and labor contingencies; 2010 Marketing and Other Expenses General and Personnel Depreciation 2011 • marketing and Sales Expenses Administratives and Amortization sales–campaigns with partners (banks and clients) and loyalty programs to clients 25
  • CIELO | FINANCIAL PERFORMANCE Adjusted EBITDA (R$ million) Net Income (R$ million)3.500,0 75,00% CAGR: 20.5% CAGR:19.6% 2.925,9 2.975,2 1.829,3 2.000,0 60,00% 1.810,33.000,0 2.450,7 70,00% 16.4% 13.8% 600,0 60,00% 1.800,0 1.536,7 55,00%2.500,0 1.600,0 504,5 68% 833,2 55,00% 900,0 65,00% 75,00% 67% 500,0 1.764,3 1.400,0 50,00% 443,3 800,02.000,0 715,9 50,00% 70,00% 1.115,3 1.409,5 400,0 1.200,0 700,0 62% 60,00% 45,00%1.500,0 61% 600,0 65,00% 1.000,0 883,9 45,00% 300,0 59% 500,0 800,0 42% 42% 40,00% 40,00% 62% 55,00% 60,00%1.000,0 400,0 39% 38% 200,0 39% 60% 600,0 37% 35,00% 35,00% 300,0 55,00% 400,0 37% 50,00% 100,0 500,0 200,0 30,00% 30,00% 50,00% 200,0 100,0 0,0 25,00% 0,0 25,00% 0,0 45,00% 0,0 45,00% 2007 2008 2009 2010 2011 4Q10 4Q11 2007 2008 2009 2010 2011 4Q10 4Q11 Adjusted EBITDA Margin Net Margin Net Income Adjusted EBITDA 26
  • Investor Relations Contacts:www.cielo.com.br/riEmail: ri@cielo.com.brPhone.: + 55 11 2596 1701