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.
5. HERING STORE NETWORK PERFORMANCE
Positive SSS performance in July, which was not sustained
throughout the subsequent months.
July sales were important for normalizing the network´s
inventory
5
8. GROSS PROFIT AND EBITDA
Gross Profit and Gross Margin (R$ million)
EBITDA and EBITDA Margin (R$ million )
46.2%
45.1%
44.9%
43.9%
23.0%
22.8%
10.8%
13.9%
142.2
162.0
74.4
3Q12
Gross Profit
3Q13
Gross Margin
Cash Gross Margin
82.5
3Q12
3Q13
EBITDA
EBITDA Margin
1.0 p.p. expansion in gross margin due to lower promotional activity in the quarter,
compensated by the PPR (Profit Sharing Program) provisioning, keeping the EBITDA
margin pratically stable.
8
9. NET INCOME
Net Income (R$ million)
16.9%
16.1%
6.7%
54.6
3Q12
Net Income
58.3
3Q13
Net Margin
+6.7% growth in Net Income, as a result of EBITDA growth combined with higher
Income & Social Contribution Taxes.
9
10. CAPEX
SAP Project – Phase 2
Capex (R$ million)
25.4
Implementation 2nd Phase
(Project Jul/2011-Jan/2014)
2.4
0.8
19.9
1.5
0.3
•
•
7.5
27.6%
5.4
2014
•
Production
14.7
12.7
2008
3Q12
Industry
Future
Sales
Logistics
3Q13
IT
Others
Implementation 1st Phase
(Project Aug/2007-Mar/2008)
•
•
Back-Office
Accounting
Stores
CapEx totalled R$ 25.4 million in 3Q13, with highlight to IT infrastructure (R$ 7.5
million) due to the process of extending the SAP to the commercial and logistics
departments.
Time
11. SAP Project
Inventory* (Items)
2Q13
3Q13
Inventory w/ SAP
4Q13
1Q14
Additional Inventory SAP Preparation
2Q14
Previous Year
*Finished Goods + Resale Goods
The Company is carrying additional inventory due to the preparation for
implementing the SAP and foresees a normalization of inventory levels throughout
1S14.
11
12. CASH FLOW
Cash Flow - Consolidated (R$ thousand)
3Q12
3Q13
Chg.
EBITDA
Non cash items
Current Income tax and Social Contribution
Working Capital Investment
Decrease in trade accounts receivable
Decrease (increase) in inventories
Increase in accounts payable to suppliers
Increase in taxes payable
Others
CapEx
Free Cash Flow
74,431
815
(18,022)
48,779
33,835
(10,459)
20,610
(1,748)
6,541
(19,875)
86,128
82,461
1,345
(19,099)
(6,717)
63,151
(84,008)
21,735
(5,043)
(2,552)
(25,405)
32,585
8,030
530
(1,077)
(55,496)
29,316
(73,549)
1,125
(3,295)
(9,093)
(5,530)
(53,543)
Free Cash Flow of R$32.6 million, afected mainly by the punctual increase in inventory
due to the preparation for implementing the SAP.
12
14. OUTLOOK
Challenging business enviornment throughout the next quarters.
Evolution of the organizational structure of the Company with a focus on Brand Management
1st Cia. Investor Day: Dec/10
14
15. INVESTOR RELATIONS TEAM
Fabio Hering – CEO
Frederico Oldani – CFO and IRO
Alissa Prince – IR Manager
Daniel Popovich – IR Analyst
Tel. +55 (11) 3371-4867
E-mail: ri@hering.com.br
Website: www.ciahering.com.br/ri
