4 q12 presentation results

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4 q12 presentation results

  1. 1. 4Q12 Conference CallMarch, 27th 2013
  2. 2.  Highlights of 4Q12 and 2012 Operational Performance Financial Performance Expectations for 2013 2
  3. 3. Highlights of 4Q12 and 2012 – consolidated Sales Performance Northeast and Baú Integration Consolidated gross revenue growth  Integrations in 2012 • 4Q12: 15.2% over 4Q11 – R$2.6 billion • 104 stores in the South/Southeast – concluded Feb.. • 2012: 19.1 % over 2011 – R$9.1 billion • 150 stores in the Northeast – concluded Out. Same store sales growth  Stores, DCs , Accounting and Management Systems – • 4TQ2: 11.9% over 4T11 completed integrated • 2012: 12.5% over 2011  The integration process was extremely successful, despite its Growth drivers: maturation of the new stores, especially the complexity, directly involving more than 200 employees stores in the Northeast, and the accelerated growth of e-  The integration is a symbol of the conclusion of a very commerce, despite the economic environment and the fierce important growth cycle for the consolidation of the Company competition in the Brazilian retail segment “More with Less” Program Financial Results The first step of a cycle focused on productivity and  4Q12: (+) sales growth, expense rationalization and profitability Luizacred’s improved performance; (-) decline in the gross margin from the retail segment (2.3p.p. – stimulus to 4Q12: Company’s recurring operating expenses, adjusted for consumption through intensive promotions and marketing non-recurring expenses, edged down by 0.7 p.p. over 4Q11 campaigns, given Christmas sales below expectations)  2012: (-) non-recurring expenses related to the integration of the stores in the Northeast and Baú stores, robust provisions for loan losses at Luizacred and the ongoing maturation of the new stores 3
  4. 4. Highlights of 4Q12 and 2012 – per business Retail E-commerce Luizacred 4Q12: retail gross revenue moved up  4Q12: gross revenue of R$313.7  4Q12: gross margin widened by 6.5 by 15.5% over 4Q11, totaling R$2.4 million, 25.0% up on 4Q11 p.p. over 4Q11, reaching 90.6% billion  2012: R$1.1 billion, 33.3% up on 2011 • Reduction in the CDI rate and the 4Q12: same-store sales grew by  Growth in the number of website increase in the share of direct 11.9%, 10.2% in the bricks-and-mortar users, the expanded product consumer credit stores assortment and new B2B and market  Default indicators (NPLs above 90 days) The need to stimulate consumption place partnerships – dropped from 10.4% in 3Q12 to 8.2% through promotions and  E-bit’s best home appliance store and in 4Q12, allowing a 3.4 p.p. reduction campaigns, such as Black Friday, led to most beloved store in Brazil awards in provisions for loan losses as a a 2.9 p.p. reduction in the gross percentage of net revenue over 3Q12 margin amid fierce competition  Focus on innovation with the launch of the new version of the website/mobile  Balanced mix between direct Recurring operating expenses from the and a significant improvement in consumer credit and co-branded credit retail segment declined by 3.1 logistics and operations card p.p., thanks to the program to reduce  Project to rationalize costs and costs and expenses and increase store  Magazinevocê: more than 70,000 disseminators 10 months after its expenses and increase store productivity productivity launch in February 2012 In 2012, the Company opened 22 new  4Q12: EBITDA margin of 11.6% and stores, closed 7 and remodeled 75, 16 net margin of 6.0% of which related to the change of brand in the Salvador metropolitan region 4
  5. 5.  Highlights of 4Q12 and 2012 Operational Performance Financial Performance Expectations for 2013 5
  6. 6. Operational Performance – Stores Number of Store Same Store Sales Growth# stores 17.7% 15.5% + 15 stores 11.9% 10.1% 10.2% 7.0% 728 730 731 736 743 1 1 1 1 1 103 106 106 106 106 4Q11 4Q12 Same Stores Sales Growth (Physical Stores) Same Store Sales Growth (Includes e-commerce) Total Retail Growth 624 614 623 624 624 623 629 624 636 629 Average Age – Stores Up to 1 year 83 1 to 2 years 55 4Q11 1Q12 2Q12 3Q12 4Q12 457 148 2 to 3 years More than 3 years Conventional Stores Virtual Stores Site 6
  7. 7. Operational Performance – Luizacred Financed Mix Sales Luizacred’s Revenues% of total sales R$ million 12.7% 100% 100% 2,381 2,112 39 27% 30% 51 402 223 431 622 29% 34% 13% 1,509 19% 1,217 34% 31% 19% 17% 4Q11 4Q12 4Q11 4Q12 Luiza Card Third Party Credit Card Luiza Card – Outside Luiza Stores CDC CDC Cash Sales/Down Payment Luiza Card – Inside Luiza Stores Personal Loan 7
  8. 8. Operational Performance – Portfolio’s composition Luiza Card – Total Credit Card Base Portfolio# million R$ million 9.5% 4.4 4.3 3,650 4.2 3,334 4.0 3.9 91 139 459 946 2,737 2,614 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 4Q12 Credit Card CDC Personal Loans 8
  9. 9. Luizacred Portfolio Portfolio Overdue Comments% of portfolio • Default indicators at the close of December 2012 significantly better 16.8 17.4 than in September 2012 and December 15.9 2011 14.4 • Provisions for loan losses: 4.3% of the total portfolio in 4Q12, lower than the 11.5 4.7% recorded in 3Q12 • Balance of provisions fell by R$4.4 12.4 12.7 11.6 million in 4Q12, from R$460.8 million in 10.4 September 2012 to R$456.4 million in 8.2 December 2012 • Portfolio balance overdue by more than 4.4 4.7 4.3 4.0 90 days decreased by R$57.1 3.3 million, from R$355.9 million in September 2012 to R$298.8 million in December 2012 dec/11 mar/12 jun/12 sep/12 dec/12 • Coverage ratio increased from 129% to 114% 111% 117% 129% 153% 153% Overdue 15-90 days Overdue above 90 days Total overdue Coverage Ratio (%) 9
  10. 10. Comparative Growth Nominal Sales% annual variation CAGR 2002 – 2012 11.5% 12.9% 51.0 24.8% 39.7 39.0 33.6 31.1 30.0 24.6 21.4 19.7 18.5 19.0 19.7 17.5 13.4 15.1 13.1 .11.9 11.3 14.5 12.3 12.8 13.0 12.8 7.5 10.2 11.6 10.1 11.5 8.8 7.3 7.3 7.3 1.5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Restricted Commerce Furnishings and appliance Magazine Luiza (Retail) 10
  11. 11.  Highlights of 4Q12 and 2012 Operational Performance Financial Performance Expectations for 2013 11
  12. 12. Gross Revenue Retail CommentsR$ billion 25.0% 19.9% 14.9% 15.5% 18.5%  Magazine Luiza grows above industry average, highlighting sustainability of its top line growth 2.4 2.1  Aggressive sales expansion demonstrates 2.0 8.4 Magazine Luiza’s ability to weather difficult 1.8 7.1 6.0 1.6 2.0 economic conditions, passing stress test with 2.0 flying colors 1.6 • Strong growth of e-commerce (accounts for 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 12.8% of retail sales) • Northeast robust performance: 18.6% of same store sales growth Consolidated • 9.4% growth in revenue from the consumerR$ billion 25.7% 21.8% 15.4% 15.2% 19.1% finance segment • The success of campaigns such as Golden Clients 2.6 Day and Black Friday partially offset the lower 2.3 than expected Christmas sales 2.2 9.1 1.9 7.6 • Promotions to stimulate consumption, given 1.7 2.1 the slower pace of economic activity and the 1.7 2.1 increased competition 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 Growth over the same quarter of 2011 Growth over 2011 12
  13. 13. Gross Revenue – Internet Internet CommentsR$ million 42.8% 45.0% 25.5% 25.0% 33.3%  For the first time in the Company’s history, e- 314 1,095 commerce sales have exceeded R$1 billion, closing 2012 at R$1.1 billion, 33.3% up on 2011 251 821  Main growth drivers: 269 • Growth in the number of website users 214 • Expanded product assortment 264 • New B2B and market place partnerships 182  2012: e-bit’s best home appliance store and 248 most beloved store in Brazil awards 1741Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 Growth over the same quarter of 2011 Growth over 2011 13
  14. 14. Net Revenues and Gross Profit Net Revenue – Consolidated CommentsR$ billion 27.6% 22.6% 15.3% 14.4% 19.4%  Strong growth due to the retail and consumer 2.2 finance segments 1.9 1.8 1.8 1.6 7.7 6.4 1.8 1.5 1.4 1.81Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 Gross Profit – Consolidated CommentsR$ billion 22.6% 25.7% 18.7% 6.9% 17.5%  Impacted by non-recurring promotions to 0.7 0.6 stimulate consumption, as well as the higher 0.7 share of Internet sales and the integration of 0.5 0.6 2.5 the Northeast (gross margin of 26.8% in 4Q12 2.1 1,8 1.8 0.5 0.6 versus 28.0% in the other stores) 0.5 0.6  Gross margin from the consumer finance segment - 90.6% in 4Q12, 6.5 p.p. more than 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 4Q11 (reduction in the CDI rate and increase33.2% 32.8% 32.7% 34.7% 33.4% 31.9% 33.6% 33.6% 32.4% 32.9% in the share of direct consumer credit) Growth over the same quarter of 2011 Growth over 2011 Gross Margin (%) 14
  15. 15. Operating Expenses – Consolidated Operating Expenses CommentsR$ million  Company’s recurring operating expenses, adjusted for non-recurring expenses, edged down by 0.7 p.p. over 86 12 4Q11, due to the program to rationalize 24 616 630 73 costs and expenses 118 115  Provisions for loan losses: 0.7 p.p. 439 reduction from 3Q12 was due to the 404 improvement in default indicators in recent quarters  Opportunities of further reduction with the ongoing “More with Less” in 2013, besides the maturation process of more than 1/3 of the storesSales G&A Prov. Others Total Sales G&A Prov. Others Total-21.0% -5.9% -3.8% -1.2% -31.9% -19.9% -5.3% -3.9% 0.6% -28.6% 4Q11 4Q12 % Net Revenues 15
  16. 16. Other Operating Expenses (Revenues) – Consolidated Other Operating Expenses (Revenues) CommentsR$ million • Non-recurring expenses with the integration of the store chains, totaling R$3.0 million in 4Q12, marking the end of the integration process of all of the stores 10 acquired by the Company 9 4 24 28 • Recording of deferred revenue of R$7.2 million in 4Q12. Note that the reversal of Booking of Integration Personal Others Total deferred revenue of R$9.3 million in 4Q11 Deferred Expenses Loan was mainly due to the change of the Revenues accounting methodology to the straight- line method in 4Q11 3 12 6 7 3 Booking of Integration Personal Others Total Deferred Expenses Loan Revenues 4Q11 4Q12 16
  17. 17. EBITDA and Adjusted EBITDA EBITDA CommentsR$ million • EBITDA chiefly impacted by the decline in the 53 gross retail margin and by the conclusion of 92 84 the Lojas Maia integration process in October 301 2012, partially offset by sales growth, expenses 72 72 242 reduction and improvements at Luizacred 84 76 • EBITDA for the Northeast region was R$6.2 10 million in 4Q12 and does not reflect the benefits expected with the incorporation of the 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 Maia stores 5.9% 4.9% 5.8% 2.7% 4.7% 0.6% 4.2% 3.9% 3.8% 3.2% Adjusted EBITDAR$ million 4Q11 4Q12 2.7% 5.5% 3.8% 3.9% 16 107 84 3 0 87 38 53 EBITDA Extraord. Deferred Adjusted EBITDA Extraord. Deferred Adjusted Expenses Revenues EBITDA Expenses Revenues EBITDA Margin EBITDA (%) 17
  18. 18. Financial Expenses – Consolidated Financial Expenses CommentsR$ million • Financial Expenses: -2.1% -1.8% • Reduction in the CDI rate • Reduction in working capital requirements for the period 40 39 4Q11 4Q12 Financial Expenses % Net Revenues 18
  19. 19. Net Income and Adjusted Net Income Net Income CommentsR$ million 11.7 16.9  4Q12: positively impacted by sales 12.3 4.6 11.7 growth, expenses reduction and improvements at Luizacred; negatively 16 impacted by gross margin decline 6.7 2.4 9.7 40.7 21.9 1Q11 2Q11 3Q11 4Q11 2011 1Q12 2Q12 3Q12 4Q12 2012 0.9% 0.3% 0.7% -0.9% 0.2% -2.3% 1.2% 0.1% 0.4% -0.1% Adjusted Net IncomeR$ million 4Q11 4Q12 -0.9% 1.4% 0.4% 0.5% 54.5 18.5 7.6 26.7 9.7 3.0 1.0 0 11.7 16.9 Net Income Extraord. Extraord. Tax Credits Adjusted Net Income Extraord. Extraord. Tax Credits Adjusted Ops. Results Taxes Income Ops. Results Taxes Income Net Margin (%) 19
  20. 20. Investments Investments CommentsR$ million  Significant reduction in investments 98 over 4Q11  Store remodeling – 75, 16 of which 29 related to the change of brand in the Salvador metropolitan region 6  New stores 52 45 • Opened nine bricks-and-mortar 43 11 38 stores 35 18 16 8 • Began investing in 12 more stores 18 to be opened in 2013 6 12 7 25 25 4 19  Other investments include 11 8 logistics, which totaled R$9.5 million 6 5 4 7 in 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 New Stores Remodeling Technology Others 20
  21. 21.  Highlights of 4Q12 Operational Performance Financial Performance Expectations for 2013 21
  22. 22. Expectativas para 2013 Sales Performance Gross Margin Conservative sales growth projections, with the aim of  The Company expects to reduce the difference in the gross preserving margins in a more competitive environment margin between stores in the Northeast and the stores in the The company plans to open between 20 and 25 new other regions where it operates stores, after closing 14 stores in January 2013  Price Management Project: currently being implemented; Same-store sales are expected to record high single-digit designed to increase pricing intelligence by channel, region growth in the bricks-and-mortar stores and an upturn of and product family between 20% and 30% in e-commerce “More with Less” Program Other Opportunities Stricter control policies for 2013  Payroll tax exemption and reduced electricity costs, as • Redefinition of budget processes for each department announced by the Federal Government • Maintenance of the committee responsible for the success  Higher productivity of back office teams and Luizacred of the entire program personnel in the stores • Adoption of “zero base” goals for each area  Lower logistics costs with the multi-channel delivery project • Prioritizing cost reduction projects that will be  Dilution of marketing expenses implemented during the year  Amendment to Luizacred agreement – operational efficiency improvement 22
  23. 23. Investor Relations ri@magazineluiza.com.br www.magazineluiza.com.br/irLegal DisclaimerAny statement made in this presentation referring to the Company’s business outlook. projections and financial and operating goalsrepresent beliefs. expectations about the future of the business. as well as assumptions of Magazine Luiza’s management and aresolely based on information currently available to the Company. Future considerations are not a guarantee of performance. Theseinvolve risks. uncertainties and assumptions since they refer to forward-looking events and. therefore depend on circumstances thatmay not occur. These forward-looking statements depend substantially on the approvals and other necessary procedures for theprojects. market conditions. and performance of the Brazilian economy. the sector and international markets and hence are subject tochange without prior notice. Thus. it is important to understand that such changes in conditions. as well as other operating factorsmay affect the Company’s future results and lead to outcomes that may be materially different from those expressed in such futureconsiderations. This presentation also includes accounting data and non-accounting data such as operating. pro forma financial dataand projections based on the Management’s expectations. Non-accounting data has not been reviewed by the Company’sindependent auditors. 23
  24. 24. 4Q12 Conference CallMarch, 27th 2013

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