Presentation 4 q09

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Presentation 4 q09

  1. 1. ConferenceConference CallCall 4Q094Q09 MarchMarch 8, 20108, 2010
  2. 2. Disclaimer This presentation contains forward-looking statements regarding the prospects of the business, estimates for operating and financial results, and those regarding Cia. Hering's 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.documents and are, therefore, subject to change without prior notice.
  3. 3. Highlights Operational Performance AGENDA Performance Economic-Financial Performance Outlooks
  4. 4. Highlights MAIN INDICATORS • 2009 total gross revenue: +39.4%, of which +44.5% in the domestic market; • EBITDA of R$ 154 MM and EBITDA Margin of 21.4% in 2009 (+4.0 p.p.); • Hering Store Same-store sales: + 27.2% in 2009 and +32.6% in the 4Q09; • Hering brand sales +50.6%, PUC +18.1% and dzarm. +34.9% in the 4Q09.• Hering brand sales +50.6%, PUC +18.1% and dzarm. +34.9% in the 4Q09. OTHER HIGHLIGHTS • Opening of 46 Hering Stores in 2009, 3 over the forecasted; • Opening of15 PUC Stores, 10 in the 4Q09 (4 over the forecasted); • Dzarm. repositiong plan execution shows its results with a 34.9% sales growth in the 4Q09; • The hybrid production model assured to attend production volumes over the forecasted. 4
  5. 5. Highlights Operational Performance AGENDA Performance Economic-Financial Performance Outlooks
  6. 6. 33.0 15.4 629.2 877.0 Gross Revenue (R$ million) Sales Performance 44.5% 53.3% 39.4% 195.5 284.7 596.2 861.6 5.2 3.0200.6 287.7 4Q08 4Q09 2008 2009 Foreign Market Domestic Market 45.7% 42.6% 43.4% 6 With na expressive 43.4% growth in the 4Q09, the gross revenue reached R$ 877.0 million in 2009 (+39.4%). 44.5% Total
  7. 7. R$ 473.8 R$ 711.0 Sales Performance (cont.) Domestic Market (R$ million) 2008 2009 +50.1% R$ 61.9 R$ 47.6 83% 9% 6% Highlight for the double digit growth of the three brands, specially for Hering which represented 83% of the sales. R$ 78.4 R$ 54.2 +26.5% +14.0%
  8. 8. 59 74 76 19 23 22 15 15 209 248 311 365 416 Evolution of the Distribution Network Distribution network- Hering Store and PUC Goal: 172 Goal: 57 (+ 2 stores) Goal: 224 (+ 6 stores) Goal: 70 (+ 4 stores) Goal: 273 (+ 3 stores) 151 181 230 276 32539 4419 2006 2007 2008 2009 2010* Abroad PUC Hering Store 8 Goal: 172 (+ 9 stores) (+ 6 stores) In 2009, we opened 46 Hering Stores and 15 PUC Stores, reaching 350 stores in Brasil; 7 over the forecasted (+3 HS and +4 PUC). * estimated Total
  9. 9. Hering Store Network Performance Hering Store Performance 4Q08 4Q09 Chg. 2008 2009 Chg. Number of Stores 230 276 20.0% 230 276 20.0% Franchise 193 236 22.3% 193 236 22.3% Own 37 40 8.1% 37 40 8.1% Sales (R$ thousand) (1) 169,028 257,956 52.6% 438,844 645,999 47.2% Franchise 133,983 204,088 52.3% 352,371 512,777 45.5% Own 35,045 53,868 53.7% 86,473 133,222 54.1% Same Store Sales growth (2) 29.1% 32.6% 3.5 p.p. 32.4% 27.2% -5.2 p.p. 9 Highlight fot the SSS, +32.6% in the 4T09 and +27.2 in 2009, boosted mainly by the traffic increase in the stores. Same Store Sales growth (2) 29.1% 32.6% 3.5 p.p. 32.4% 27.2% -5.2 p.p. Sales Area (m²) 29,791 35,415 18.9% 29,791 35,415 18.9% Sales (R$ per m²) 5,776 7,368 27.6% 16,256 19,864 22.2% Check-Outs 2,040,928 3,001,915 47.1% 5,225,865 7,391,080 41.4% Units 4,760,440 6,925,219 45.5% 12,222,332 16,851,285 37.9% Average Sales Ticket (R$) 82.82 85.93 3.8% 83.98 87.40 4.1% (2) Compared to the same period of the previous year (1) The amounts reffered to the sales to final costumers. (sell out concept)
  10. 10. Highlights Operational Performance AGENDA Performance Economic-Financial Performance Outlooks
  11. 11. Gross Profit (R$ million) and Gross Margin (%) Gross Profit and Gross Margin 52.1% 51.0% 53.1% +2.8 p.p. +1.1 p.p. 46.3% 47.3%48.0% 48.6% +1.1 p.p. +0.6 p.p. 11 83.2 123.8 238.5 340.9 4T08 4T09 2008 2009 Gross Profit Gross Margin Cash 50.3% 51.0% Gross Margin Highlight for the Gross Margin Cash, excluding depreciation, which reached 53.1% in the 4Q09 and 48.6% in 2009. 4Q08 4Q09
  12. 12. EBITDA (R$ million) and EBITDA Margin (%) – Comparable Basis EBITDA and EBITDA Margin 21.9% 26.2%+4.3 p.p. 17.4% 21.4%+4.0 p.p. 12 EBITDA reached R$ 154 million in 2009, with +71.9% growth in comparable basis, and EBITDA Margin of 21.4% (+4.0 p.p.). 35.8 62.2 89.6 154.0 4Q08 4Q09 2008 2009 Comparable EBITDA 21.9% Comparable EBITDA Margin
  13. 13. 14.6 20.2 23.5 3.1% 2.7% 3.3% EBITDA and EBITDA Margin (cont.) EBITDA (R$ million) and EBITDA Margin (%) – Annual Variation EBITDA 2008 Non Recurring Result 2008 EBITDA 2008 - Base Comparavel Sales Growth Deduction - Taxes and AVP Incentives and Subventions CPV Dilution and Operating Exp. EBITDA 2009 105.4 15.8 89.6 35.3 14.6 20.2 154.0 EBITDA Margin 2008 Non Recurring Result 2008 Margem EBITDA 2008 - Base Comparavel Deduction - Taxes and AVP Incentives and Subventions CPV Dilution and Operating Exp. EBITDA Margin 2009 20.5% 17.4% 2.0% 2.7% 21.4% 13 Expansion of EBITDA and EBITDA Margin are explained mainly by (i) sales growth and (ii) dilution of cost of goods sold and expenses.
  14. 14. Net Profit Net Profit (R$ million) and Net Margin (%) 20.4% +14.7 p.p. 7.3% 15.9%+8.6 p.p. 80.0 100.0 120.0 140.0 14 Besides the EBITDA growth, the net profit was affected by the non recurring gain of R$ 24.8 million (Derivatives rev) and R$ 6.6 million (REFIS). 417.9% 203.7% 5.7% Net Margin 9.3 48.4 37.7 114.6 0.0 20.0 40.0 60.0 4Q08 4Q09 2008 2009 Net Profit
  15. 15. By activity (R$ million) CapEx 12.8% 1.2 2.7 6.1 4.8 35.8 31.2 15 In 2009, we invested R$ 31.2 million, mainly on production, logistics and store openings (3 HS and 1 PUC). 26.7% 2.2 0.5 13.0 9.36.6 3.8 15.5 14.4 0.4 1.9 1.2 1.4 4Q08 4Q09 2008 2009 Stores Industry IT Other 10.5 7.7
  16. 16. Cash Flow - Consolidated 4Q08 4Q09 Chg. 2008 2009 Chg. EBITDA 51,534 62,209 10,675 105,358 154,013 48,655 No cash items 3,940 24,813 20,873 4,594 26,757 22,163 Current IR&CS -10,971 -8,690 2,281 -22,798 -22,584 214 Cash Flow Capex -67,627 -54,394 13,233 -110,014 -45,213 64,801 Increase in trade accounts receivable -34,341 -42,751 -8,410 -52,241 -45,710 6,531 Cash Flow Free Cash Flow (R$ million) Increase in trade accounts receivable -34,341 -42,751 -8,410 -52,241 -45,710 6,531 Increase in inventories 8,871 15,820 6,949 -19,337 -14,010 5,327 (Decrease) in deffered taxes - REFIS - 31,773 31,773 0 31,773 31,773 Increase (decrease) in accounts payable to suppliers -16,102 -3,295 12,807 -12,477 36,372 48,849 Increase (decrease) in taxes payable -7,373 -34,434 -27,061 -13,437 -67,856 -54,419 Others -18,682 -21,507 -2,825 -12,522 14,218 26,740 CapEx -10,463 -7,670 2,793 -35,773 -31,189 4,584 Free Cash Flow -33,587 16,268 49,855 -58,633 81,784 140,417 16 In this year, the Free Cash Flow reached R$ 81.8 million, due to the EBITDA growth and the better working capital management.
  17. 17. Indebteness Evolution Short Term x Long Term Indebteness 201.3 184.6 4,6x 3,5x Short Long Term 52% * Last 12 months EBITDA Total Debt = R$ 77.6 million 17 The management is focused on low leverage and new financing with lower interest rate and longer terms. -33.4 11.0 -25.1 3,5x -0,7x 0,1x -0,2x 2005 2006 2007 2008 2009 Net Debt (R$ million) Net Debt/Ebitda* Short Term 48%
  18. 18. Highlights Operational Performance AGENDA Performance Economic-Finance Performance Outlooks
  19. 19. Expansion Plan – 2011 and 2012 New Expansion Plan - Hering Store Network Location selection premises: • Cities with > 100 thousand inhabitants • Total and Retail Consumption Potential - IPC (Target) and POF (IBGE) • Actual and forecasted Shopping centers analysis; • Benchmark with other franchise networks +42 +38 151 181 230 276 325 367 405 2006 2007 2008 2009 2010* 2011* 2012* * estimated • Benchmark with other franchise networks • Evaluation of the Operational Potential 80 locations were selected which presented greater potential 19 The new expansion plan, consistenly elaborated, renew the perspectives for the Hering Store network growth.
  20. 20. Hering • Hering Store Network: New expansion plan- 405 stores by 2012; • Products with High Perceived Value and the concept “Retail is detail”; • Continuity of the marketing campaign “eu uso Hering desde sempre”; • Actions with the Hering Store Card and the Hering Webstore . Outlooks • Actions with the Hering Store Card and the Hering Webstore . Research in the children market to evaluate the opportunities to better explore the potential of the PUC and Hering Kids brands; Continuity of the reposition plan for dzarm.: casual jeans concept, marketing campaign and distribution channel qualification. 20
  21. 21. Investor Relation Team Fabio Hering – CEO and IR Director Frederico de Aguiar Oldani – Finance Director Karina Koerich – IR Manager Gracila Camargo Lopes – IR Analyst Tel. +55 (47) 3321-3469 E-mail: ri@heringnet.com.br Website: www.ciahering.com.br/irWebsite: www.ciahering.com.br/ir FIRB – Financial Investor Relations Brasil Tel. +55 (11) 3897-6857 E-mail: ligia.montagnani@firb.com

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