4Q12 ResultsConference Call
February 22, 2013
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.
AGENDA
Highlights
4Q12 Operating Performance
Outlook
4
4Q12 and 2012 HIGHLIGHTS
Gross revenue of up 10.7% in the quarter and 8.9% in 2012;
Highlight to Hering Kids´ performance (sales growth of 43.0% in 4Q12 and 22.2% in the year.);
EBITDA of R$ 407.4 million in 2012 (+3.3%), with -1.8 p.p. change in EBITDA margin, which has
reached 27.3%;
Net Profit of R$ 311.0 in 2012 (+4.6).
Hering Store Chain:
83 store openings in 2012, with a network of 515 stores at the end of the year
Total sales of R$ 1,428.1 million in the year (+15.6% overall growth and -0.2% SSS growth);
New guidance for store openings – 592 by the end of 2013
Hering Kids:
Implementation of the stores network, with 22 openings in 2012.
Highlight to the franchises (+44.6%) and own stores (+83.5%) channels.
AGENDA
Highlights
4Q12 Operating Performance
Outlook
6
SALES PERFORMANCE
Gross sales reached R$ 1.8 billion in 2012, with sales growth of 10.7% and 8.9% in the
quarter and year, respectively.
Gross Revenue ( R$ million)
4Q11 4Q12 2011 2012
496.1 545.6
1,625.91,766.6
3.27.2
21.4
27.1
499.3552.8
1,647.3
1,793.7
26.7%
123.0%
8.6%
10.0%
8.6%
10.7%
Domestic Market
7
SALES PERFORMANCE (cont.)
Growth in Hering, Hering Kids and PUC brands in 4Q12 and 2012, with highlight to the performance of the Hering Kids brand (+43.0% and +22.2%, respectively).
Domestic Market ( R$ million)
R$ 1,351.6
R$ 141.5
R$ 97.0
+8.7%
R$ 142.3+22.2%
+13.1%
-1.1%
20122011R$ 1,243.0
R$ 125.0
R$ 98.0
R$ 116.4Hering77%
Hering Kids
8%
PUC
8%dzarm.5%
Other2%
Gross Revenues - %
2008 2009 2010 2011 2012
230276
347432
51559
74
78
76
78
2215
15
16
17
2
5
27
1
1
1
Hering Store Hering Kids PUC dzarm. Total Foreign Market
8
STORES CHAIN EVOLUTION
In the domestic market, the Company ended 2012 with 515 Hering Stores, 78 PUC, 27 Hering Kids and 1 dzarm. store.
311365
443
530
638
Target: 224(+6 stores)
Target: 273(+3 stores)
Target: 325(+22 stores)
Target: 418(+14 stores)
Target: 507(+8 stores)
Target: 25(+2 stores)
9
HERING STORE CHAIN PERFORMANCE
Slowdown in SSS growth to -0.2% in 4Q12 due to supply shortages in the stores and decline in the average price in December, with the year ending with SSS of -0.2%.
Hering Store Chain Performance 4Q11 4Q12 Chg. 2011 2012 Chg.
Number of Stores 432 515 19,2% 432 515 19,2%
Franchise 384 465 21,1% 384 465 21,1%
Owned 48 50 4,2% 48 50 4,2%
Sales (R$ thousand) (1) 461.680 530.637 14,9% 1.234.956 1.428.149 15,6%
Franchise 388.183 452.678 16,6% 1.033.495 1.218.306 17,9%
Owned 73.496 77.958 6,1% 201.461 209.842 4,2%
Same Store Sales growth (2) 8,2% -0,2% -8,4 p.p 12,7% -0,2% -12,9 p.p
Sales Area (m²) 57.507 70.899 23,3% 57.507 70.899 23,3%
Sales (R$ per m²) 8.200 7.572 -7,7% 24.361 22.234 -8,7%
Check-Outs 4.773.449 5.349.692 12,1% 12.646.638 14.332.499 13,3%
Units 10.263.807 11.730.932 14,3% 27.011.508 31.131.137 15,3%
Units per Check-Out 2,15 2,19 2,0% 2,14 2,17 1,7%
Average Sales Price (R$) 44,98 45,23 0,6% 45,72 45,88 0,3%
Average Sales Ticket (R$) 96,72 99,19 2,6% 97,65 99,64 2,0%(1) The amounts referred to the sales to final costumers. (sell out concept)(2) Compared to the same period of the previous year
10
GROSS PROFIT AND GROSS MARGIN
Gross margin declined by 4.7 p.p. in 4Q12 due to greater cost of freight and overtime work at the end of the year and devalued currency over imports.
4Q11 4Q12 2012 2011
208.2 212.1
655.9 679.2
51.9%
47.3%
49.5%
46.7%
51.0%
46.3%
48.5%
45.5%3.6%
1.9%
Gross Profit Gross Margin Cash Gross Margin
-2.8 p.p.
-4.6 p.p.
-4.7 p.p.
-3.0 p.p
11
EBITDA AND EBITDA MARGIN
Decline of 3.8 p.p. in the EBITDA margin as a function of gross margin loss, growth of sales, general and administrative expenses and reduction in other operating revenues, being partially compensated by profit sharing reduction.
4Q11 4Q12 2011 2012
133.8 133.0
394.5 407.4
3.3%
-0.6%
32.8%29.0%
29.1%27.3%
EBITDA Divisão
-3.8 p.p.-1.8 p.p.
12
NET PROFIT
Net profit decline of 4.0% with net margin loss of 3.7 p.p. in 4Q12 as a result of reduction in EBITDA margin and financial revenues, despite lower charges of income tax and social contribution.
4Q11 4Q12 2011 2012
105.2 101.0
297.3 311.0
4.6%
-4.0%
25.8%
22.1% 22.0% 20.9%
Net Income Divisão
-3.7 p.p.
-1.1 p.p.
13
CAPEX
Capex in 4Q12 totaled R$ 23.9 million of which the largest part was destined to the industrial area (R$ 12.3 million), with specific additions to the productive capacity, and IT infrastructure (R$ 8.8 million).
By Activity ( R$ million)
4Q11 4Q12 2011 2012
7.212.3
22.3
33.4
7.3
8.8
13.4
22.3
1.2
0.3
1.7
1.8
2.8
2.5
10.1
6.0
18.6
23.9
47.5
63.5
33.7%
29.2%
Industry IT
14
CASH FLOW
Reduction of R$ 76.9 million in free cash flow in 4Q12, as a function of the decline in EBITDA combined to higher necessity of investments in working capital, mainly due to the reduction in taxes payable and lower provision of profit sharing.
* Dividend distribution: R$ 119.9 million have been destined to a proposed account to be distributed upon General Shareholders’ Meeting approval.
Cash Flow - Consolidated (R$ thousand) 4Q11 4Q12 Chg. 2011 2012 Chg.
EBITDA 133,808 132,982 (826) 394,464 407,396 12,932
Non cash items 680 1,680 1,000 2,322 4,236 1,914
Current Income tax and Social Contribution (35,814) (33,340) 2,474 (100,840) (95,911) 4,929
Working Capital Investment (21,162) (95,442) (74,280) (58,470) (43,506) 14,964
Decrease in trade accounts receivable (71,447) (106,716) (35,269) (66,445) (67,615) (1,170)
Decrease (increase) in inventories 5,747 7,352 1,605 (26,965) 6,361 33,326
Increase (decrease) in accounts payable to suppliers 13,118 5,627 (7,491) 2,088 30,130 28,042
Increase (decrease) in taxes payable 20,884 (248) (21,132) 36,911 (16,895) (53,806)
Others 10,536 (1,457) (11,993) (4,059) 4,513 8,572
CapEx (18,606) (23,893) (5,287) (47,501) (63,489) (15,988)
Free Cash Flow 58,906 (18,013) (76,919) 189,975 208,726 18,751
Reconciliation from accounting Cash flow to adjusted Cash flow (R$ thousand) 4Q11 4Q12 Chg. 2011 2012 Chg.
CFS - Cash provided by operating activities (accounting) 87,629 13,601 (74,028) 267,341 309,731 42,390
Adjustment – Financial items allocated to operating cash (10,117) (7,721) 2,396 (29,865) (37,516) (7,651)
Unrealized exchange and monetary variation (966) (540) 426 (4,679) (2,803) 1,876
Financial Result (10,193) (7,727) 2,466 (29,696) (37,339) (7,643)
Interest paid on loans 1,042 546 (496) 4,510 2,626 (1,884)
CFS - Cash flow from investing activities (18,606) (23,893) (5,287) (47,501) (63,489) (15,988)
Free Cash Flow 58,906 (18,013) (76,919) 189,975 208,726 18,751
AGENDA
Highlights
4Q12 Operating Performance
Outlook
16
OUTLOOK
Optmistic perspectives for 2013, with scenario indicating improvement signals and positive
results from the vacation and fall showrooms.
Potential of organic growth, although in moderate levels compared to previous years
Adjustments in prices and less markdowns should benefit gross margins
Reduction of fiscal incentives over imports and normalization of the profit sharing will
hamper EBITDA margin expansion
Hering Brand remains the main growth platform of the Company:
Stores opening (guidance of 77 in 2013) and revamping of SSS growth in Hering Store.
Multi-brand channel: Increase in market share within existing clients.
Children’s market:
Expansion of the Hering Kids format – opening of 30 new stores in 2013.
Adjustments in dzarm.´s management structure combined with additional investments in the
opening of more flagship stores and marketing.
New infrastructure of technology and logistics for online sales implemented in 2012 will
allow capturing the high growth potential of this channel.
INVESTOR RELATIONS TEAM
Fabio Hering – CEOFrederico Oldani – CFO and IRO
Patrícia Salem – IR ManagerDaniel Popovich – IR Analyst
Tel. +55 (11) 3371-4867E-mail: [email protected]
Website: www.ciahering.com.br/ri
Top Related