Profarma reported its 1Q13 earnings. Highlights include acquiring pharmacy chains to enter the retail market, forming a joint venture, issuing debentures, and decreasing its cash cycle. Revenue grew 3.3% to R$986 million driven by 31.3% growth in generics. EBITDA increased 51% to R$10.9 million and net profit fell 28% to R$6.9 million. Cash flow was negatively impacted by a R$102.6 million increase in accounts receivable.
3. Highlights in the Period
• The Company entered the pharmaceutical retail market. It acquired on January 17 100% of the Drogasmil and Farmalife
chains, with 85 drugstores in Rio de Janeiro, for R$ 87.0 million, to be paid net of the Company's debt balance. On
January 30, it acquired 50% of Drogarias Tamoio chain, with 57 drugstores in Rio de Janeiro. The transaction was made
by means of a primary subscription of R$ 62.3 million and a secondary subscription of R$ 43.1 million, with a multiple
EV/EBITDA (2013E) of 7.5x;
• On February 21, Profarma entered into a joint venture agreement with Nutrilatina to create Supernova. As a result,
Profarma became the exclusive distributor and supplier of Nutrilatina's products for the pharmaceutical retail market and
entered a new sales channel: body shops;
• In March, the Company announced its first issue of debentures, totaling up to R$ 200.0 million. The proceeds from this
issue will be mainly used to pay for the acquisitions;
• A drop of 3.5 days in the Company's cash cycle when compared with 1Q12, to 51.1 days. This decrease resulted in a fall
of about R$ 19.1 million in working capital;
• It is worth noting the generics category, whose sales rose significantly by 31.3% YoY and for the third straight quarter;
• The annual price increase on March 31 came to 4.5% on average, the second highest in four years and twice as high as
last year's.
6. (R$ million and % Net Revenues)
Gross Profit and Revenues from Services to Suppliers
Gross Profit Revenues from Services to Suppliers Gross Profit Margin (%)
1Q12
37.8
45.0
10.2%
11.2%
10.7%
4Q12
39.7
50.7
1Q13
37.3
58.5
12. * Average
(1) Average of Gross Revenues in the Quarter
(2) Average of COGS in the Quarter
(3) Average of COGS in the Quarter
Cash Cycle - Days *
Accounts Receivable (1)
Inventories (2)
Accounts Payable (3)
59.5
47.4
55.8
1Q13
51.1
51.0
48.2
52.9
4Q12
46.3
50.7
49.7
45.8
1Q12
54.6
17. Analyst Coverage
Credit Suisse Marcel Moraes (55 11) 3841-6302 marcel.moraes@credit-suisse.com
Banco Fator Daniel Utsch (55 11) 3049-9483 dutsch@bancofator.com.br
BTG Pactual João Carlos dos Santos (55 11) 3383-2384 joaocarlos.santos@btgpactual.com
Juliana Rozenbaum (55 11) 3073-3040 juliana.rozenbaum@itausecurities.comItaú BBA
Javier Martinez de Olcoz (55 11) 3048-6088 javier.martinez.olcoz@morganstanley.comMorgan Stanley
Andre Parize (55 11) 5171-5870 andre.parize@votorantimcorretora.com.brVotorantim
Merrill Lynch Mauricio Fernandes (55 11) 2188-4236 mauricio.fernandes@baml.com
Company Analyst Phone number Email address
18. Contatos RI
Max Fischer | Diretor Financeiro e de RI
Beatriz Diez | Gerente de RI
Telefone.: 55 (21) 4009-0276 | E-mail: ri@profarma.com.br | www.profarma.com.br/ri
IR contacts
Max Fischer | Chief Financial and IR Officer
Beatriz Diez | IR Manager
Phone number: 55 (21) 4009-0276 | E-mail: ri@profarma.com.br | www.profarma.com.br/ir