A Camargo Corrêa Group company

Transcription

1 A Camargo Corrêa Group company

2 Contents 100 years of Brazilian Talent Vision Growth Strategies Financial Performance 9M Capital Markets Why Alpargatas? SLIDE 2-55

3 100 years of Brazilian Talent April 3: foundation First brands: Alpargatas Roda and Locomotiva Opening up of Capital Complete showing of its products at the Rio International Exhibition Launch of first leather shoes First Brazilian company to establish a social program Launches of Conga, Bamba and Sempreviva tarpaulin SLIDE 3-55

4 100 years of Brazilian Talent Launch of Havaianas Launch of Topper and Kichute Acquisition of the Rainha trademark Camargo Corrêa becomes a shareholder Elected best company in the sector by Exame Magazine Launch of Night&Day tarpaulin Launch of Havaianas Top Mizuno and Timberland licenses 100 million pairs of Havaianas sold 100 years of Brazilian Talent Camargo Corrêa becomes controlling shareholder New Technologies for sports shoes: Rainha System 3000 Topper Dynatech Visible Founding of the do Alpargatas Institute Adhesion to Corporate Governance Level 1 Elected best company and Best company in the sector in 2006 by Exame Magazine SLIDE 4-55

5 Contents 100 years of Brazilian Talent Vision Growth Strategies Financial Performance 9M Capital Markets Why Alpargatas? SLIDE 5-55

6 Vision To be a global company of desired brands in sports goods, footwear and industrial textiles, operating in harmony in the three dimensions of sustainability SLIDE 6-55

7 Vision The transformation into a global company already is occurring... National Leadership An exporting company 80 countries International Operations Sales Brands Marketing Innovation and R&D Market share Havaianas exports represent 11% of the volume of sandal sales Presence in opinion-maker markets Country-to-country operation Own companies overseas: Alpargatas USA, Argentina and Chile Competitive advantage replicated globally Centralized control of its brands Brands customized per market SLIDE 7-55

8 Vision... with investments in the main Growth Strategies Strategies Global Brands Company Consolidation of the Brazilian Market Internationalization M&A Support of the Strategies Innovation Global Sourcing R&D Sustainability Markets Products Processes Management Competitive advantage SLIDE 8-55 Think globally, act locally

9 Contents 100 years of Brazilian Talent Vision Growth Strategies Financial Performance 9M Capital Markets Why Alpargatas? SLIDE 9-55

10 Growth Strategies Strategies Consolidation of the Brazilian Market Internationalization M&A Support of the Strategies Innovation Global Sourcing R&D Sustainability SLIDE 10-55

11 Growth Strategies Consolidation of the Brazilian Market Average consumption (pairs/inhabitant): Brazil = 3 X Developed countries = 7 Growth opportunity in Brazil Havaianas Brand Concept M&A: Cia. Brasileira de Sandálias Dupé Multi-category Management in Sporting Goods Expansion of Retail as a Business SLIDE 11-55

12 Growth Strategies Consolidation of the Brazilian Market Havaianas Brand Concept Havaianas is energy, happiness, colored and surprising The improbable combination of comfort and style, of the simple and the sophisticated, from the street fair to the ballroom, of work and leisure Havaianas are for everybody Havaianas are the best expression of individuality SLIDE 12-55

13 Growth Strategies Consolidation of the Brazilian Market M&A: Cia. Brasileira de Sandálias Dupé Objective To expand the sandals business, focused on the lower income segment Strong points Traditional brand: will be maintained and reinforced Strong presence in the North and Northeast regions Market share: between 5% and 7% Benefits Increase / complement the Alpargatas portfolio Gains in Scale Reduction of manufacturing costs SLIDE 13-55

14 Growth Strategies Consolidation of the Brazilian Market M&A: Cia. Brasileira de Sandálias Dupé Operational Data Founded in 1988 Plant in Carpina (PE) Employees: 1,000 Production capacity: 30 million pairs (maximum 45 million) Sales in Volume: 23 million pairs - Gross sales: R$ 90 million Amount of investment: R$ 49.5 million SLIDE 14-55

15 Growth Strategies Consolidation of the Brazilian Market Multi-category Management in Sporting Goods Objective Activities multi-category, with specific positioning per brand, led by Topper Market-oriented model Better brand portfolio management: synergy gains Better understanding of the consumer dynamic and sales channel Competitiveness Gains SLIDE 15-55

16 Growth Strategies Consolidation of the Brazilian Market Expansion of Retail as a Business Participation in the sporting goods market Alert Modest (Conservative) Followers Sports Lovers Utilitarian Premium (higher than R$120.00) Value (between R$70. and R$119.99) Basic (up to R$69.99) SLIDE 16-55

17 Growth Strategies Consolidation of the Brazilian Market Expansion of Retail as a Business Alpargatas in Retail Timberland, Mizuno and Meggashop + Topper and + Havaianas Increase brand value (brand building) through complete exposure of the product line New ways of acting e-commerce traveling stores franchises SLIDE 17-55

18 Growth Strategies Strategies Consolidation of the Brazilian Market Internationalization M&A Support of the Strategies Innovation Global Sourcing R&D Sustainability SLIDE 18-55

19 Growth Strategies Own global operation is one of the ways of expanding Alpargatas businesses Alpargatas USA Alpargatas Argentina Alpargatas Chile SLIDE 19-55

20 Growth Strategies Internationalization Alpargatas USA Consumption of sandals in the U.S. has shown strong growth over the past few years Consumption (million s of pairs) SLIDE Sources: U.S. International Trade Commission and Alpargatas

21 Growth Strategies Internationalization Alpargatas USA Objective Increase Havaianas sandals share of the U.S. market Investments Office in New York Show room Logistics Advertising New York SLIDE 21-55

22 Growth Strategies Internationalization Alpargatas USA SLIDE 22-55

23 Growth Strategies Internationalization Latin American sports shoe market Consumed in 2006 (pairs/year) (pairs /year/inhabitant) Brazil 90 million 0.6 Mexico 44 million 0.4 Argentina 22 million 0.7 The low per capita consumption of sports shoes in Latin America represents excellent growth potential in these countries Chile 5.6 million 0.4 USA 1.8 billion 6.7 Source: Alpargatas SLIDE 23-55

24 Growth Strategies Internationalization M&A: Alpargatas Argentina Objective Make it feasible to be the leader of the Latin American sporting goods market Strong Points Traditional brands: Topper, Rueda, Pampero and Flecha Worldwide owner of the Topper trademark Largest footwear company in Argentina Benefits Gains of Scale Synergies Global sourcing Reduction of operating costs and expenses Increase in sales of safety shoes and industrial textiles Increase in exports of Topper, Mizuno and Havaianas SLIDE 24-55

25 Growth Strategies Internationalization M&A: Alpargatas Argentina Operational data 11 plants 5,000 employees Sales in 2006: Volume: 10 million pairs Revenue: US$ 160,0 million US$ 21 million EBITDA in 2006 Plants: Footwear Textiles Amount of Investment US$ 51.7 million (34.5% of capital) + public offer of up to 25% of capital SLIDE 25-55

26 Growth Strategies Internationalization Alpargatas Chile Objective Expand the sporting goods business in Latin America, beginning with the running category through the Mizuno brand Investments Office in Santiago Show room Advertising Santiago SLIDE 26-55

27 Strategies Consolidation of the Brazilian Market Internationalization M&A Support of the Strategies Innovation Global Sourcing R&D Sustainability SLIDE 27-55

28 Support of the Strategies Innovation Innovation Project 15 platforms: 2 already implemented Portfolio of Partners and Competencies Identify Opportunities Generate Ideas Filter and Develop Concepts Develop Projects Commercialize Opportunities Capture Value Innovation Flow Process SLIDE 28-55

29 Support of the Strategies Global Sourcing Sandals Study of global sourcing: definition of the Havaianas production structure Sporting Goods Production in Brazil, Argentina and outsourcing in Asia Strengthen the R&D structure in Asia to ensure Innovation, quality and service Expansions of plants in Brazil (2007) Havaianas: + 12,000 m2 Sporting Goods: + 22,000 m2 SLIDE 29-55

30 Support of the Strategies Global Sourcing Havaianas Plant Campina Grande Sporting Goods Plant CD Santa Rita SLIDE 30-55

31 Support of the Strategies R & D Research and Development Center in São Leopoldo RS Research, validation and definition of trends and materials Preparation of the tech packs for internal or external manufacturing Alliances and partnerships for design and technology SLIDE 31-55

32 Support of the Strategies Sustainability The Challenge of Innovation Alpargatas is signatory of the Sustainability Letter, an initiative of the Camargo Corrêa Group to stimulate Social 9. Labor Practices 10. Human Rights 11. Society 12. Products / Services delivered Legislation Economic 1. Client 2. Suppliers 3. Employees 4. Shareholders and Investors 5. Public Sector investments in the search for innovative Reciprocal Benefit solutions that lead to growing financial results, social equality and Values environmental balance Environmental 6. Materials 7. Suppliers 8. Products, Services and transportation Sustainability SLIDE 32-55

33 Support of the Strategies Sustainability Social Responsibility Alpargatas Institute Vision To make Alpargatas recognized as a company that acts with social responsibility in partnership with the Camargo Corrêa Institute Mission Improve the quality of education of young people and teenagers, 7 to 17, through sports in the communities in which we operate. Projects School / After School Actions and Volunteers Local Average Grades 2006 Average Grades 2005 Results Projects: 54 School Action e 23 After School 42,589 students benefited 529 volunteers SLIDE 33-55

34 Support of the Strategies Sustainability Environmental Responsibility Projects Carried Out Waste Selective collection Recycling Co-processing Disposal audit Water Reutilization of industrial water Sewage and effluent treatment station 2007: reduction of 7% 2007: reduction of 3% Energia Use of natural lighting in the plants Reduction of consumption of energy through engineering measures 2007: reduction of 2% SLIDE 34-55

35 Support of the Strategies Sustainability Environmental Responsibility Use of natural lighting in the plants Recycling and co-processing of rubber waste SLIDE 35-55

36 Support of the Strategies Sustainability Environmental Responsibility Projects in the pipeline Green Factory Pilot Optimization of production processes to reduce consumption of energy and water Utilization of renewable energy (biodiesel, solar, wind, ethanol) Development of alternatives for wastes generated Reduction of consumption of pastes in the manufacturing of products Measurement of carbon consumption SLIDE 36-55

37 Support of the Strategies Sustainability Economic Responsibility Added Value (9M2007) R$ 471 million Shareholders 7.5% Capital Financers 4.4% Profit Reserve 24.4% Employees 40.0% SLIDE Government 23.7%

38 Contents 100 years of Brazilian Talent Vision Growth Strategies Financial Performance 9M Capital Markets Why Alpargatas? SLIDE 38-55

39 Financial Performance 9M to 2006 Focus on growth with profitability through brand valuation, cost /operating expense reductions and generation of cash through operations Gross Revenues (R$ billion) EBITDA (R$ million) Market Cap (R$ billion) Gross Margin Operating Expenses EBITDA Margin Margins and Operating Expenses = % of net revenues SLIDE 39-55

40 Financial Performance 9M2007 9M2007 Internationalization and M&A 9M06 9M07 Gross Revenues (R$ billion) 1,1 1,1 Gross Margin (%) 46,3 44,4 Operating Expenses (%) 30,0 34,9 EBITDA (R$ million) * EBITDA Margin (%) 23,0 20,0 Net Income (R$ million) Net Margin (%) 11,8 10,8 Margins and Operating Expenses = % of net revenues * excluding internationalization expenses SLIDE 40-55

41 Financial Performance 9M2007 Gross Sales revenues (R$ million) Gross Margin (% of net revenues) Momentary factors: - inventory adjustment - sale of previous collections 1.124, ,0 46,3% 44,4% Sales impacted by the integrated management system, especially in the 1 st four months 9M06 9M07 9M06 9M07 SLIDE 41-55

42 Financial Performance 9M2007 EBITDA (R$ million) Net Income (R$ million) 208,1 176,2 118,4 151,0 106,6 95,1 9M06 9M07 9M07* 9M06 9M07 9M07* EBITDA Margin 23,0% 17,2% Net Margin 20,0% 11,8% 10,8% 13,4% * excluding internationalization expenses SLIDE 42-55

43 Financial Performance 9M2007 Equity Restatement Tavex Industrial Restructuring Better product mix Capture of synergies stemming from the merger with Santista Net Income in 3Q06 = 2.5 million or 6.6 million Alpargatas Equity restatement revenues: 3Q07 = R$ 2.2 million) 9M07 = (R$ 7.3 million)* 9M06 = (R$ 10.0 million) * R$ 8.7 million stemming from devaluation of the euro against the real SLIDE 43-55

44 Financial Performance 9M2007 Growth of Cash Balance (R$ million) Excluding internationalization expenses Cash balance 12/31/2006 EBITDA Working capital Fixed assets Dividends / IOE paid Financial income Funding / amortization of loans Sales of permanent assets Share buyback Cash balance 9/30/2007 SLIDE 44-55

45 Financial Performance 9M2007 Growth of Net Assets (R$ million) Balance of 12/31/2006 Net Income Dividends and IOE Subvention for Income Tax Subvention for Investment Share buyback Balance of 9/30/2007 SLIDE 45-55

46 Contents 100 years of Brazilian Talent Vision Growth Strategies Financial Performance 9M Capital Markets Why Alpargatas? SLIDE 46-55

47 2012 Be part of the second tier* of global players Sales of R$ 5 billion EBITDA Margin: 20% to 23% of net sales Foreign currency revenues: 30% of net sales Growth of current businesses with a global presence, increase of profitability and generation of value with sustainability SLIDE * group of companies with net sales of US$ 1.5 to 3.0 billion

48 Contents 100 years of Brazilian Talent Vision Growth Strategies Financial Performance 9M Capital Markets Why Alpargatas? SLIDE 48-55

49 Capital Markets Share Evolution December2003 Index 100 = December2003 September/2007 SLIDE 49-55

50 Capital Markets Market Cap (R$ billion) EBITDA Multiple SLIDE 50-55

51 Capital Markets Ownership Breakdown Capital opened up since ,000 shareholders Corporate Governance Level 1 Common Shares Total Capital Preferred Shares % 67% 51% 43% 78% 19% 3% 8% Controlling Shareholder Managers Free Float 2% 4% Controlling Shareholder Treasury Managers Free Float Controlling Shareholder Treasury Free Float SLIDE 51-55

52 Capital Markets Camargo Corrêa Group One of Brazil s largest business groups Founded in 1939 Employs more than 30,000 persons Net Sales Revenues (R$ billion) Area of activity: Engineering and Construction Cements Footwear Textiles Steel Environmental Management Public Service Concessions and Transportation EBITDA (R$ billion) SLIDE EBITDA Margin

53 Capital Markets Camargo Corrêa Group Markets of Activity Footwear Textiles Footwear Textiles Footwear Textiles Textiles Textiles Textiles Textiles Footwear Textiles Textiles Construction Footwear Footwear Textiles Construction Footwear Textiles Group s Central Offices Cements Cements Footwear Textiles Local Presence Textiles Construction Textiles Textiles Textiles Textiles Footwear Commercial Relationship Footwear SLIDE 53-55

54 Contents 100 years of Brazilian Talent Vision Growth Strategies Financial Performance 9M Capital Markets Why Alpargatas? SLIDE 54-55

55 Why Alpargatas? Clear growth-oriented strategy Unique growth opportunity: market and vocation Focus on the management brands that are market leaders in their segments Effective business model Strong controlling shareholder Corporate Governance Financially solid SLIDE 55-55