Profit of R$239 million in 1Q15, growth of 34%; EBITDA Margin of 9.6%, or a 70 bps increase

Transcription

1 Profit of R$239 million in 1Q15, growth of 34%; EBITDA Margin of 9.6%, or a 70 bps increase In 1Q15, net revenue totaled R$5.388 billion, a flat growth compared to 1Q14, excluding the impact of store closures to comply with CADE 1 decision; Market share gain in the period, according to IBGE's Monthly Sales Survey (PMC) data, reinforce the Company s growth strategy; Gross profit reached R$1.778 billion, a 6.0% increase, with a gross margin of 33.0% and a 220 bps. increase compared to 1Q14; the continuity of the cost efficiency capturing and new revenues streams supported the progression of gross margin associated with greater commercial competitiveness; EBITDA reached R$515 million, with a margin of 9.6%, a 70 bps. increase compared to 1Q14 as a result of gross margin gains as well as expenses growth below inflation in the period; Investments grew by 33%, from R$57 million in 1Q14 to R$76 million in 1Q15, reflecting the Company s confidence in its medium and long term strategy; Highlights R$ million (1) 1Q15 1Q14 Gross Sales 6,103 6, % Net Sales 5,388 5, % Gross Profit 1,778 1, % Gross Margin - % 33.0% 30.8% 220 bps EBITDA (2) % EBITDA Margin - % 9.6% 8.9% 70 bps Net Income % Net Margin - % 4.4% 3.3% 110 bps (1) Totals and percentage changes are rounded off and all margins w ere calculated as percentage of net revenue (2) EBITDA = Earnings before interest, taxes, depreciation and amortization. 2 1 Brazilian antitrust agency 2 Total and percentage changes are rounded off and all margins were calculated as percentage of net sales in all tables on this document 1

2 Net Sales Performance R$ milhões 1Q15 1Q14 Net Sales 5,388 5, % Net Sales Ex-CADE 1 5,388 5, % Same-Store Sales Revenue % 3 In 1Q15, net sales amounted to R$5.388 billion, stable in relation to 1Q14 after excluding the effects from the closure of 42 stores from 2Q14 to 1Q15 in compliance with Brazil s antitrust authority CADE 1. Including the store closures, net sales decreased 1.1%. On a same-store basis, net sales decreased by 2.3%. Data on appliances, electronics and furniture market growth in January and February, according to IBGE's Monthly Sales Survey (PMC), show market share gains in both specialist and total markets (including online sales). In a more challenging macro environment, capturing market share remains as the main focus of the Company, which will leverage itself especially through its position as the dominant player in the market, its strong cash position, its solid partnership with suppliers and its leadership in media as the major advertiser in Brazil according to IBOPE. Based on the success of Crescer Mais Project s pilots, the Company s growth strategy is to start the rollout stage of these initiatives, which include: i) Complete renewal of the furniture category, with improvements in design, store displays and offering of customized furniture at accessible prices; ii) iii) iv) Mobile project, which includes the complete renovation of the telephony category, offering postpaid plans from the major mobile operators in the country; Accelerating organic expansion in higher growth regions; and Strengthening of Pontofrio banner; Smartphone and white line categories were the highlights in the quarter, while television category presented the higher contraction in the period, which mainly reflects the strong comparison base for televisions created by the World Cup in the first half of 2014; The Company closed 1Q15 with 1,037 stores. During the quarter, three Casas Bahia stores were opened. 1 Between 2Q14 and 1Q15, the Company discontinued the activities of 42 stores to comply with the Performance Commitment Agreement entered into with the Brazilian antitrust agency ( CADE ) after the Pontofrio and Casas Bahia association. 2

3 Operating Performance FIRST QUARTER OF 2015 Operating Performance R$ million 1Q15 1Q14 Net Sales 5,388 5, % Gross Profit 1,778 1, % Gross Margin - % 33.0% 30.8% 220 bps Selling Expenses (1,104) (1,076) 2.6% General and Administrative Expenses (153) (130) 17.3% Equity Income (23) (4) N/A Other Operating Revenue (Expenses) % Total Operating Expenses (1,275) (1,202) 6.0% % of Net Sales Revenue 23.7% 22.1% -160 bps Depreciation (Logistic) (1) % EBITDA % EBITDA Margin - % 9.6% 8.9% 70 bps (1) Depreciation (Logistics) is accounted in the COGS and has been disclosed since 1Q13 to allow calculation of EBITDA In 1Q15, EBITDA was R$515 million, a 6.1% growth compared to 1Q14. The EBITDA margin reached 9.6% in the quarter, a 70 bps increase. The EBITDA growth was driven by the following factors: In Gross Profit, 220 bps increase pushed by: o The impact of the new sources of revenue, notably deliveries, assemblies, and synergies with other companies from the Group; o Carryover of logistics and assembly efficiency initiatives conducted throughout 2014; o Sales mix, especially in the smartphones category, with a growth higher than the Company s average. Through the gains from efficiency and new revenues, the Company was able to reinforce its competitiveness strategy. In expenses, the impact of inflation on overhead was partially mitigated by operating efficiency initiatives, resulting in a 6.0% growth of the Total Operating Expenses, below inflation for the period, which was 8.1% as measured by the IPCA (Broad Consumer Price Index). o o o On General and Administrative Expenses, we had one-off impacts related to Crescer Mais Project and consulting services to enhance financial services; On Selling Expenses, the 2.6% growth compared to 1Q14 was lower than inflation in the period, mainly as a result of higher efficiency on store expenses and variable expenses dilution, which varies accordingly to sales; Total Expenses had an impact from a decline in Equity Income of negative R$23 million in 1Q15 vs. negative R$4 million in 1Q14, which corresponds to a 40 bps increase on expenses as percentage of net sales. 3

4 Financial Performance R$ million 1Q15 1Q14 Financial Revenue % Financial Expenses (154) (247) -37.7% Cost of the Discount of Payment Book Receivables (88) (81) 8.6% Cost of the Discount of Credit Card Receivables (14) (108) -87.0% Other (52) (58) -10.3% Net Financial Income (Expense) (88) (160) -45.0% % of Net Sales Revenue 1.6% 2.9% 130 bps In 1Q15, the Company improved its net financial result by 130 bps compared to 1Q14, reaching net financial expenses of R$88 million, which are equivalent to 1.6% of net sales, against 2.9% in the same period of In 1Q15, the accumulated CDI rate was 2.76%, against 2.36% for 1Q14, a 17% increase. 4 The net financial income (expenses) consists mainly of the following items: The financial income totaled R$66 million, compared to R$88 million in 1Q14. The decrease in sales revenue was caused by a lower cash volume invested in 1Q15 due to the credit card receivables factoring management strategy in the quarter. Cost of discount of payment book receivables, amounting to R$88 million, corresponding to 1.6% of net sales revenue, an 8.6% increase compared to 1Q14 mainly due to the increase in the CDI rate in the period. Cost of sales of credit card receivables of R$14 million, corresponding to 0.3% of net sales revenue, a 87.0% decrease compared to 1Q14, as a result of the strategy to reduce the factoring of receivables in 1Q15 (R$1,579 million of total credit card receivables were not factored), to mitigate the increase in interest rate in the quarter compared to the previous year. The successful cash management was possible thanks to the Company s sound cash position due to a strong cash generation in recent years. 42 Source: Cetip (Brazilian over-the-counter market) 4

5 Profit for the quarter R$ million 1Q15 1Q14 EBITDA % Depreciation (Logistic) 1 (12) (11) 7.9% Depreciation and Amortization (42) (34) 22.6% Net Financial Income (Expense) (88) (160) -44.9% Income before Income Tax % Income Tax (134) (102) 31.9% Net Income % Net Margin - % 4.4% 3.3% 110 bps (1) Depreciation (Logistics) is accounted in the COGS and has been disclosed since 1Q13 to allow calculation of EBITDA Profit for 1Q15 totaled R$239 million, with a 4.4% margin, 110 bps above the profit for 1Q14. The growth in profit for the quarter was driven by the from the efficiency improvement initiatives, the new sources of revenue implemented in the past twelve months, and a decrease in financial expenses that offset the increase in the interest rate. Indebtedness R$ million Loans and Financing Short Term (47) (53) Debentures Short Term (408) (417) Loans and Financing Long Term (149) (151) Debentures Long Term - (400) Total Debt (604) (1,021) Cash and Cash Equivalents 1,552 2,773 Net Cash (Debt) 948 1,752 Net Cash / EBITDA (last 12 months) #N/A 0.41x x - Payment Book (CDCI) Short Term (2,526) (2,667) Payment Book (CDCI) Long Term (113) (126) Total Payment Book (CDCI) (2,639) (2,793) Net Cash (Debt) with CDCI (1,691) (1,041) Net Cash (Debt) with CDCI / EBITDA (last 12 months) (0.74x) (0.41x) On balance Credit Card receivables 1, Net Cash, including credit card receivables (1) 2,527 1,795 Net Cash / EBITDA (1) (last 12 months) 1.10x 0.71x Caixa (Dívida) Líquida com CDCI, ajustado recebíveis de cartões (1) (112) (998) Caixa (Dívida) Líquida com CDCI (1) / EBITDA (últimos 12 meses) (0.05x) (0.39x) (1) For comparisson purpose, 1Q15 includes on balance R$1.579 billion credit card receivables unfactored. In 1Q15, net cash was R$948 million, lower than the R$1.752 billion net cash for 1Q14 mainly due to the decrease in card receivables factoring in the quarter. 5

6 On a comparable basis, i.e., considering total card receivables (unfactored), net cash would be R$2,527 billion, 41% higher than in 1Q14. This represents a deleveraging of R$732 million, or 0.39x EBITDA. It is worth noting that the trade payables-to-inventory ratio remains positive, driving growth with cash generation. Investments In 1Q15, Via Varejo s investments totaled R$76 million, broken down as follows: R$ million 1Q15 1Q14 New Stores Stores Renovations and Conversions Infrastructure Fleet and Logistic 10 4 Technology 27 7 Others Total In 1Q15 the Company opened three Casas Bahia stores in the Northeast, Southeast, and South. The investments in the period include, among others, the implementation of new logistics management systems, credit analysis and management tools, store and back office productivity increase tools and stores renovations. 6

7 Balance Sheet Assets R$ million Current Assets 9,510 10,717 8,845 Cash and Cash Equivalents 1,552 4,448 2,830 Accounts Receivable 3,731 2,338 2,107 Credit cards 1, Payment Book 2,152 2,265 2,240 Other Allowance for doubtful accounts (210) (224) (202) Inventories 3,171 2,984 2,826 Recoverable Taxes Amounts Receivable from Related Parties Noncurrent Assets Held for Sale Expenses in Advance and Other Accounts Receivable Noncurrent Assets 5,371 5,287 4,402 Long-Term Assets 2,199 2,107 1,761 Accounts Receivable Payment Book Allowance for doubtful accounts (8) (10) (9) Recoverable Taxes 1,324 1, Deferred Income Tax and Social Contribution Amounts Receivable from Related Parties Judicial Deposits Expenses in Advance and Other Accounts Receivable Investments Property and Equipment 1,330 1,313 1,162 Intangible Assets 1,060-1, TOTAL ASSETS 14,881 16,004 13,248 Liabilities R$ million Current Liabilities 8,408 9,719 7,600 Taxes and Social Contribution Payable Suppliers 3,556 4,132 2,926 Loans and Financing Payment Book (CDCI) 2,526 2,740 2,667 Debentures Fiscal Obligations Dividends Debt with Related Parties Advertisement Tax Installments Advanced revenue Other Long-Term Liabilities 1,525 1,570 1,518 Loans and Financing Payment Book (CDCI) Debentures Deferred Income Tax and Social Contribution Tax Installments Provision for lawsuits Advanced revenue Shareholders' Equity 4,948 4,715 4,130 Capital 2,895 2,895 2,895 Capital Reserves Profit Reserves 1,683 1, TOTAL LIABILITIES 14,881 16,004 13,248 7

8 Income Statement R$ million 1Q15 1Q14 Gross Sales 6,103 6, % Net Sales 5,388 5, % Cost of Goods Sold (3,610) (3,772) -4.3% Depreciation (Logistic) (12) (11) 7.9% Gross Profit 1,778 1, % Selling Expenses (1,104) (1,076) 2.6% General and Administrative Expenses (153) (130) 17.3% Equity Income (23) (4) N/A Other Operating Revenue (Expenses) % Total Operating Expenses (1,275) (1,202) 6.0% Depreciation and Amortization (42) (34) 22.6% Earnings before Interest and Taxes - EBIT % Financial Revenue % Financial Expenses (154) (247) -37.7% Net Financial Income (Expense) (88) (160) -44.9% Income before Income Tax % Income Tax (134) (102) 31.9% Net Income from Continuing Operations % Earnings before Interest, Taxes, Depreciation, Amortization-EBITDA % % of Net Sales Revenue 1Q15 1Q14 Gross Profit 33.0% 30.8% 220 bps Selling Expenses -20.5% -19.7% -80 bps General and Administrative Expenses -2.8% -2.4% -40 bps Equity Income -0.4% -0.1% -30 bps Other Operating Revenue (Expenses) 0.1% 0.1% 0 bps Total Operating Expenses -23.7% -22.1% -160 bps Depreciation and Amortization -0.8% -0.6% -20 bps Earnings before Interest and Taxes - EBIT 8.6% 8.1% 50 bps Net Financial Income (Expense) -1.6% -2.9% 130 bps Income before Income Tax 6.9% 5.1% 180 bps Income Tax -2.5% -1.9% -60 bps Net Income from Continuing Operations 4.4% 3.3% 110 bps EBITDA 9.6% 8.9% 70 bps 8

9 Cash Flow from Operating Activities R$ million 1Q15 1Q14 Net Income for the period Adjustment for Reconciliation of Net Income Deferred Income Tax Depreciation and Amortization Interests and Exchange Variation Equity Income 23 4 Provision for lawsuits Gain (loss) with fixed and intangible assets (6) (2) Allowance for doubtful accounts Provision for Obsolescence and Retail Loss 15 2 Other (9) (4) Asset (Increase) Decreases Accounts Receivable (1,465) (55) Inventories (202) (492) Taxes recoverable (150) 26 Other Assets (1) (22) Net Related Parties (64) 12 Judicial Deposits (9) (30) Prepaid expenses (84) (70) (1,975) (631) Liability Increase (Decrease) Suppliers (576) (223) Payroll and Charges 3 13 Other Accounts Payable (51) (12) Income tax paid (67) (78) Other Liabilities (228) 17 (919) 0 (283) 0 Net Cash Generated from (Used in) Operating Activities (2,270) (419) Cash Flow fom Investment Activities R$ million 1Q15 1Q14 Acquisition of fixed and intangible assets (75) (56) Sale of Property and Equipment 11 8 Net Cash Generated from (used in) Financing Activities (64) (48) Cash Flow from Financing Activities R$ million 1Q15 1Q14 Proceeds from borrowings 1,005 1,201 Repayments of borrowings (1,458) (1,346) Payment of interest (109) (90) Net Cash Generated from (used in) Financing Activities (562) (235) Cash and Cash Equivalents at the Beginning of the Year 4,448 3,509 Cash and Cash Equivalents at the End of the Year 1,552 2,807 Change in Cash and Cash Equivalent (2,896) (702) 9

10 Breakdown of Net Sales by Format R$ million 1Q15 % 1Q14 % Pontofrio 1, % 1, % -6.6% Casas Bahia 4, % 4, % 0.2% Breakdown of Net Sales by Format - Ex-CADE (3) R$ million 1Q15 % 1Q14 % Pontofrio 1, % 1, % -2.6% Casas Bahia 4, % 4, % 0.4% Sales Composition % of Net Sales Revenue 1Q15 1Q14 Cash 25.6% 28.0% -240 bps Cards 61.9% 58.0% 390 bps Payment Book 12.5% 14.0% -150 bps 5 Stores per Format Casas Bahia Opened Closed Street Shopping Total Sales Area ('000 m 2 ) Total Area ('000 m 2 ) 1, ,178 Pontofrio Opened Closed Street Shopping Total Sales Area ('000 m 2 ) Total Area ('000 m 2 ) Consolidated (Total) Opened Closed Street Shopping Total 1, ,037 - Sales Area ('000 m 2 ) 1, ,112 Total Area ('000 m 2 ) 1, ,502 3 Store closures in compliance with the Performance Commitment Agreement entered into with the Brazilian antitrust agency ( CADE ) after the Pontofrio and Casas Bahia association position updated to consider the conversion of 6 Pontofrio stores into Casas Bahia 10

11 The Company closed the quarter with 64,714 employees, including 58,469 under the FTE (full-timeequivalent) criterion. 6 Ownership Structure The issued capital of Via Varejo is represented by 1,291 million shares, divided into 656 million common shares and 635 million preferred shares. GPA is the Company s controlling shareholder, holding 43.3% of its total capital and 62.6% of its common shares. The free float corresponded to 29.3% of all shares issued by Via Varejo. Free float 29,3% 43,3% GPA Família Klein 27,3% 6 Considering Bartira employees, the Company closed the quarter with 66,204 employees, including 59,874 employees under the FTE (Full-Time Equivalent) criterion, 11

12 1Q15 Earnings Conference Call and Webcast Thursday, May 7, :00 am (Brasilia time) 10:00 am (NY) 3:00 pm (London) Conference call in Portuguese (original language) +55 (11) Conference call in English (simultaneous translation) +1 (646) Webcast: Replay +55 (11) Audi code: Via Varejo The statements contained in this release relating to the Company's business prospects, projected operating and financial results and growth potential are merely forecasts and were based on the Management's expectations for the Company's future. These expectations are highly dependent on changes in the market and on the performance of the Brazilian economy, the industry and international markets and therefore are subject to change. CONTACTS Investor Relations Phone: (11) Fax: (11) Website: 12