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Earnings Release 4Q12


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Earnings Release 4Q12

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Earnings Release 4Q12

  1. 1. 4Q12Earnings ReleaseMarch 1, 2013
  2. 2. 2DisclaimerThis notice may contain estimates for future events. These estimates merely reflect the expectationsof the Company’s management, and involve risks and uncertainties. The Company is not responsiblefor investment operations or decisions taken based on information contained in this communication.These estimates are subject to changes without prior notice.This material has been prepared by Multiplus S.A. (“Multiplus“ or the “Company”) includes certainforward-looking statements that are based principally on Multiplus’ current expectations and onprojections of future events and financial trends that currently affect or might affect Multiplus’business, and are not guarantees of future performance. They are based on management’sexpectations that involve a number of business risks and uncertainties, any of each could causeactual financial condition and results of operations to differ materially from those set out in Multiplus’forward-looking statements. Multiplus undertakes no obligation to publicly update or revise anyforward looking statements.This material is published solely for informational purposes and is not to be construed as a solicitationor an offer to buy or sell any securities or related financial instruments. Likewise it does not give andshould not be treated as giving investment advice. It has no regard to the specific investmentobjectives, financial situation or particular needs of any recipient. No representation or warranty, eitherexpress or implied, is provided in relation to the accuracy, completeness or reliability of theinformation contained herein. It should not be regarded by recipients as a substitute for the exercise oftheir own judgment.2
  3. 3. 3growth in non-air redemptionsvs 4Q11growth in Gross Billingsvs 4Q1113,5%141%Partnersvs 190 in 4Q11369million members16% growth vs 4Q1110,94Q12 Highlights3
  4. 4. 4We reached 369 partners(coalition, accrual and redemption)More than 10,9 million members190200 2072303690501001502002503003504004504Q11 1Q12 2Q12 3Q12 4Q12SMEsMain partnersTotal9.49.8 10.110.510.94Q11 1Q12 2Q12 3Q12 4Q12Number of partnersMembers, in mlnNetwork growth4+40% growthin active base
  5. 5. 5Creating a good member experience: targeted offers5
  6. 6. 6Adding value to partners: sales offers6
  7. 7. 7Using Multiplus you can accumulatepoints from different loyaltyprograms in a single accountBranding a very new concept7Redeem your points to have momentsyou would never put on saleEmotionalas of Oct/2012FunctionalJan/2010 ~ Oct/2012Online mediaChannelsStrategyRadio spots Partner channelsPress media
  8. 8. 8.Credit Card usageExpected double digit growth for next 3 yearsOnly 35% of customers understands that they haveenrolled in a bank loyalty program(vs 31% in 2011)Business drivers remain robust8ConsumptionPossible high single digit growth for next 3yearsLoyalty culture still in the early stagesAir transportationLatin America is the second fastestgrowing region in RPKAverage trips per capita is only 0.5 inBrazil vs more than 2.0 in mature marketsWealth distributionA/B classes expected to reach 15% in 2014(vs 7% in 2003)Multiplus network focus on A, B and C+Sources: Multiplus, Ernst&Young Global Consumer Banking Survey 2012, LCA Consultores, Euromonitor and FGV-Rio
  9. 9. 9398.3347.1319.5378.4430.917.415.214.516.719.44Q11 1Q12 2Q12 3Q12 4Q12Net Revenue Points RedeemedR$ 430,9 mln in Net RevenueR$ 492,0 mln in Gross Billings433.6 430.4457.1491.4 492.04Q11 1Q12 2Q12 3Q12 4Q12R$ mln & bln pointsR$ mlnSolid Gross Billings growth9
  10. 10. 10Breakage rate:gradual decline as expected12 months average, in %24.1%23.4%22.5% 22.0%21.0%4Q11 1Q12 2Q12 3Q12 4Q12Non-air redemptions reached1.3 bn points in 4Q120.0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12Non-air redemptions, in bn pointsStable breakage rate besides non-air redemptions ramp-up10
  11. 11. 11R$ 130,5 mln in FCF* R$ 52,9 mln in Net Income151.1 156.1129.8124.579.04Q11 1Q12 2Q12 3Q12 4Q1270.961.643.366.652.94Q11 1Q12 2Q12 3Q12 4Q12RS mln R$ mln* Excluding Dividends, Interest on Capital and variations ofPrepaid Expenses and Capital (4Q12 excludes alsoanticipated settlement of R$71.3 mln of Accounts Payable)Delivering Results11
  12. 12. 12Net income analysis1270.970.114.419.318.920.110.54.852.94Q11 NetIncomePoints sold RedemptioncostsBreakageprovisionHedge SG&A Others* Taxes 4Q12 NetIncome*Equity method, Financial Income and Other Revenues+11.5% in points redeemed+7.1% in unit revenue+11.5% in points redeemed-5.8% in unit costMarketingand IT
  13. 13. 13DividendsInterest on capitalTotalR$ 210,9 mnR$ 11,6 mnR$ 222,5 mnDividendsR$ 500 mn fixed limit forpre-purchase of TAM Airline seatswith additional discountPre-purchase of air ticketsBetter return for ourcash investmentsMaximizing Shareholders Return13* based on current number of sharesMore than 99%Dividend Payout ratio
  14. 14. Recent developments● Financial industry dynamics● TAM Fidelidade improvement● 11th Amendment to Operational Agreement● Competitive environment
  15. 15. 15Financial industry dynamics15Sources: Multiplus, Ernst&Young Global Consumer Banking Survey 201266%of total members have transferred points from non-financialpartners or from at least two banks in the last 24 months65%of Brazilians have at least two banking providers20%29%of customers have changed their main banking provider in 2012of Brazilians plan to switch their bank
  16. 16. 16TAM Fidelidade main improvements16ImprovedflexibilityPoints per seat will vary according to flight fare, improvingMultiplus competitive advantageAir tickets redemptions window increased from 90 or 180to 360 days before flight dateSeveral benefits such as some fee exemptions,lowered points requirement and complimentary upgradesWider redemptionwindowPremium members will collect up to 100% bonuspointsBetter recognitionto premium clientsMuch morebonus pointsEffective from June 1st 2013
  17. 17. 1711th Amendment to Operational Agreement17New unit costFrom June 1st 2013 Multiplus’ unit cost will be only 3% higher than 2012New unit priceFrom June 1st 2013, the unit price of points sold to TAM will be similar to current levelsas a result of new unit cost, breakage change and economic equilibrium ruleNew transfer price methodologyFrom June 1st 2013, Multiplus and TAM Airlines start the setup phase to the new modelbased on discounted air ticket market price
  18. 18. 18New pricing model methodology18Unitcost(R$)Jun/2013 ~Aug/2014CapFloorPrevious model Setup period New pricing model3% increaseToday• Multiplus pays discountedmarket price per seat• 5% cap and floor protect marginand guarantee businesssustainability• Data gathering offares availableat redemptionmoment• Discountmeasurement• Unit cost set according to acombination of TAM’smarginal cost and revenuedisplacement• Short term fluctuations due toTAM’s promotional activityAverageAir tickets market priceDiscounted market priceLong haul and South America flights priced in USDILLUSTRATIVE12 months data gatheringMultiplus` implicit discount
  19. 19. 19Competitive environment19Four main reasons to be confident inMultiplus case in a morecompetitive environment1Early stagesLoyalty penetration inBrazil is very low. In thisphase, new entrantsshould help industrygrowth243First moverMultiplus has advantageof an already establishednetwork, now startingmore advanced moveson data analyticsservices and memberexperienceTrack recordMultiplus has 3 years ofproven focus onshareholdersreturn with steady unitprices, efficient breakagemanagement,conservative cashinvestments, andhigh dividend payoutsLATAM GroupTAM Fidelidade programis positionedas the superiorloyalty program inBrazil by offering themost valued attributes toour members: a lowerearn-to-burn ratios andthe larger network forredemptions via TAM,LAN and their airlinerpartners
  20. 20. Thank you!Contact IR Team+55 11 5105