Itausa Sa · BMFBOVESPA:ITSA3
Itausa Sa — FY2017 Earnings Presentation
79 slides from Itausa Sa's earnings presentation, February 2018
Slide 1: Conference Call 2017
Conference Call 2017 Alfredo Egydio Setubal CEO and Investor Relations Officer
Slide 2: Agenda
Bes) rT A /// aaa ||| ‘i TT ime ITAUSA 2) Duratex | 94 Elekeiroz o, ALPARGATAS Agenda
Slide 3: Ownership structure
Ownership structure(1) Moreira Salles Egydio Souza Free % in number of shares Family Aranha Family Float (2) 100.00% total 63.26% C 36.74% C 16.94% P 83.06% P 34.44% total 65.56% total Cia. E. Johnston de Participações 50.00% C 40% 0.00% P 33.47% Total 50.00% C 100.00% P 60% 66.53% Total Foreigners
Slide 4: Itaúsa's Governance
Itaúsa’s Governance Shareholders General Meetings Fiscal Council will be permanent from April 2018, in line with the Fiscal best practices of corporate Council governance External Board of Audit Directors Reinforcement of Itaúsa’s Governance Structure Executive Internal Directors Audit 4
Slide 5: Itaúsa's Governance
Itaúsa’s Governance Advisory Renewal of Itaúsa Committe and Shareholders’ Commissions Agreement Disclosure & Trading Itaúsa Committe Shareholders’ Agreement will be Finance automatically Commission renewed on 06/24/2019 for another 10 years, Sustainability and Risk guaranteeing the Commission sustai
Slide 6: Itaúsa Results - Main indicators
Financial Highlights Main indicators - Dec/2017 x Dec/2016 R$ Million Itaúsa Results - Main Non-controlling indicators Parent Company interests Consolidated 12/31/17 12/31/16 12/31/17 12/31/16 12/31/17 12/31/16 Net income 8,403 8,211 119 5 8,522 8,216 Recurring net income 9,120 8,643 192 (9) 9,312 8
Slide 7: Main Results per share
Financial Highlights Main indicators - Dec/2017 x Dec/2016 Main Results per share Results per share - in R$ 12/31/17 12/31/16 Change Net income of parent company 1.13 1.11 0.02 1.9% Recurring net income of parent company 1.22 1.17 0.05 5.0% Book value of parent company 7.12 6.45 0.67 10.5% Dividends
Slide 8: Stockholders' Equity and Net Income
Financial Highlights Stockholders' equity and Net income of the Parent Company(1) Stockholders’ Equity and Net Income (R$ Million) Stockholders' Equity 53,229 CAGR 12.6% 44,847 47,729 Recurring 39,226 9,120 Net Income 33,131 8,868 8,643 CAGR 10.1% 7,911 6,199 8,416 8,211 8,403 Net Income 7,573 CAGR
Slide 9: ROE of the Parent Company
Financial Highlights ROE of the Parent Company ROE (1) and Recurring ROE (%) 21.2% 20.1% Recurring 19.8% ROE 18.6% 18.2% ROE 22.1% 21.2% 18.2% 17.7% 16.8% 2013 2014 2015 2016 2017 (1) Represents the ratio of Net Income of the period and the Average Shareholdrs’ Equity. 9
Slide 10: Assets Composition - Total Assets
Financial Highlights Assets Composition in R$ million(1) Total Assets 57,797 50,873 47,011 40,958 34,432 55,349 43,641 47,138 38,035 32,181 2013 2014 2015 2016 2017 CAGR (2) : CAGR (2) : 14.5% | Investiments (3) 13.8% | Total Assets (1) Individual balance sheet (2) Period: 12/31/2013 until 12/31/201
Slide 11: Investments by Sector
Financial Highlights Assets Composition in R$ million(1) Investments by Sector Total Assets Itaúsa Investiments in 12/31/2017 Non-Financial Sector Financial Sector 50,005 (90.3%) 1,749 Invest. (2) Non-Financial Sector 1,722 55,349 5,004 (9.1%) 1,387 Other 340 (0.6%) 146 (1) Individual balance sheet
Slide 12: Itaúsa and Invested Companies Financial Highlights (2017)
Itaúsa and Invested Companies Financial Highlights (2017) R$ 9.1 R$ 6.6 R$ 53.2 R$ 80.9 billion billion billion billion 18.2% (*) +5.5% +76.8% +11.5% +32.9% -0.4p.p. Recurring net Dividends/ Stockholders' Market Value ROE recurring income 2017 IOC 2017 equity Dec/17 Dec/17 R$ 23.9 R$ 134.8 R$ 275.5
Slide 13: Itaúsa and Invested Companies Financial Highlights (2017)
Itaúsa and Invested Companies Financial Highlights (2017) R$ 362 R$ 2.2 R$ 8.1 billion 17.1% (*) 0.0% +10.6% +83.0% -1.8p.p. Net income 2017 Stockholders' Market Value ROE equity Dec/17 Dec/17 R$ 185 R$ 4.7 R$ 6.3 million billion billion 4.0% (*) +670.8% +3.2% +37.9% +3.5p.p Net income 2017 Stockhol
Slide 14: Liquidity / Debt
Financial Highlights | Liquidity / Debt Equity x Other Liabilities(%) R$ million and Debt Total Debt – Dec/17 4,568 4% 4% 5% 6% 8% Div/IOC payable 1,334 Debentures 1,208 % Other Liabilities Loans 200 96% 96% 95% 94% 92% Mutual 301 % Equity Provisions/Others payables. 1,525 12/31/2013 12/31/2014 12/3
Slide 15: Debt
Financial Highlights | Debt Debentures Details 400 400 400 Emission: 05/24/2017 Amount: R$1.2 billion Amortization: 2022, 2023 and 2024 Cost: 106.90% of CDI 2022 2023 2024 Interest: semester – 05/24 and 11/24 Amortization Schedule – R$ million 15
Slide 16: Dividends and Interest on Capital
Financial Highlights | Dividends and Interest on Capital (1) R$ million Flow of Dividends/ Interest on Capital and Yield (2) 8.90% 6,601 6,601 6.53% 4.89% 4.42% 3.86% 3,734 3,734 2,717 2,717 2,438 2,438 1,878 1,877 2013 2014 2015 2016 2017 CAGR (13-17): 36.9% Dividends/Interest on Capital Paid/Payab
Slide 17: Dividends and Interest on Capital Paid/Payable
Financial Highlights | Dividends and Interest on Capital (1) R$ million Dividends and Interest on Capital Paid/Payable |Capital Increase 83% 6,601 1,370 48% 35% 32% 32% 3,734 740 2,717 2,438 5,231 1,877 300 525 2,717 2,994 2,138 1,352 2013 2014 2015 2016 2017 Capital Increase Dividends / Interest on
Slide 18: Dividends Received - Non-Financial Sector
Financial Highlights | Dividends and Interest on Capital (1) R$ million 172 Dividends/ Interest on Capital Received Non-Financial Sector 70 64 52 35 15 19 2 7 2013 2014 2015 2016 2017 ⁽¹⁾ Interest on Capital net of income tax (IRRF). Accrual basis. 18
Slide 19: Itaúsa in the Capital Market
Itaúsa in the Capital Market Evolution of the Shareholder Base Liquidity of ITSA4 Shares (2017) (number of shareholders) 73,520 1,142 Average Daily Trading Volume: R$ 155.7 Million Average Trading Volume : 54,398 1,134 R$ 6.4 Thousand 41,217 1,007 72,378 Analyst Recommendations 27,256 27,521 937 1,0
Slide 20: Creating Value for Shareholders
Capital Market Creating Value for Shareholders Market Value(*) x Stockholders' equity (R$ million) 80,865 60,855 1.5x 57,585 46,539 1.3x 48,744 1.5x 1.0x 47,729 53,229 1.5x 44,847 39,226 33,131 2013 2014 2015 2016 2017 CAGR (13–17): 13.5% CAGR (13-17): 12.6% Market Value Stockholders’ Equity (*) Ave
Slide 21: Discount in the Price of Itaúsa
Capital Market R$ million Market Value of the Itaúsa Portfolio Other Net Assets and Liabilities Discount in 103,709 2,223 2,308 1,387 249 171 -2,273 the Price of Itaúsa(*) Market Value of the Sum of the Parts of Itaúsa 107,774 12/28/2017 Market Value of Itaúsa 80,865 Discount 24.97% Discount Evoluti
Slide 22: Strategy
Strategy Itaúsa contracted a strategic consulting company to identify potential sectors and target companies. In 2017, Itaúsa became more active prospecting new businesses and making contact with investment banks and private equities Focus of Itaúsa's investment portfolio diversification: Governance
Slide 23: Recent Strategic Movements
Strategy Recent Strategic Movements 2014 2016 and 2017 Apr 2017 July and Sep 2017 Itautec: Itaúsa sold certain Repurchases for Treasury: Itaúsa NTS: Itaúsa acquired 7.65% Alpargatas: in July/2017, activities of Itautec to OKI and acquired treasury shares more of Nova Transportadora do Itaúsa signed
Slide 24: Evolution of Itaúsa's Investments
Portfolio Evolution of Itaúsa's Investments(1) Market value (R$ billion) R$ 84 bn R$ 110 bn (sum of the parts) (sum of the parts) Dec/2016 Dec/2017 (*) (*) + 31% R$ 82.0 bn R$ 103,7 bn (97,7%) (94,2%) R$ 1,6 bn R$ 2,3 bn (1,9%) (2,1%) - R$ 2,2 bn (2,0%) R$1,4 bn (**) - (1,3%) R$ 0,1 bn R$ 0,2 bn (0,
Slide 25: Recent Acquisitions: NTS
Recent Acquisitions Total investment R$ 1.4 bi Highlights Investment Rational It operates ~ 2,000 km of pipelines through 5 Company with strong cash flow profile with contracts with ship-or-pay clauses signed with good predictability and attractive returns. Petrobrás. Critical asset in Brazil's infr
Slide 26: Recent Acquisitions: Alpargatas
Recent Acquisitions It was already granted the registration request to the tender offer for the Total investment acquisition of common shares from minority R$ 1.7 bi shareholders of 80% of the amount paid for the common shares (R$ 11.34/share). Maximum additional disbursement by Itaúsa of ~R$ 200 mi
Slide 27: Recent Repurchases of Own Shares
Recent Repurchases of Own Shares Total investment R$ 653 million (2016/2017) Investment Rational Itaúsa made significant repurchases of its own shares in 2016/2017 taking advantage of the discount of the shares, currently at ~ 23%, given the investment implicit return. Discount Evolution (%) 20.2 21
Slide 28: Differentials
Diferentials Strong corporate governance and rigorous ethical and transparency principles Consistent history of profitability and high level of dividend / interest on capital Solidity, liquidity and low debt Performance of stocks in the last 10 years Remuneration to Shareholders (with reinvestment)
Slide 29: Itaúsa in the Capital Market
Itaúsa in the Capital Market Evolution of R$ 100 invested on December Annual Average Appreciation in Reais 30, 2007 until December 28, 2017 Itaúsa(1) Itaúsa(2) Ibov. CDI Dollar 10 years 11.49% 6.35% 1.81% 10.79% 6.45% 5 years 16.78% 10.77% 4.62% 11.18% 10.11% 12 months 37.71% 31.52% 26.86% 9.92% 1.5
Slide 30: Conference Call: Alfredo Egydio Setubal
Conference Call 2017 Alfredo Egydio Setubal CEO and Investor Relations Officer
Slide 31: Conference Call: Alexsandro Broedel Lopes
Conference Call 2017 Alexsandro Broedel Lopes Group Executive Finance Director and Investor Relations Officer
Slide 32: Main indicators – BRGAAP e IFRS
Main indicators – BRGAAP e IFRS Conciliation BRGAAP x IFRS Result Equity In R$ millions ADJUSTMENTS Dec/31/2017 4th Q/17 3rd Q/17 4th Q/16 jan-dec/17 jan-dec/16 BRGAAP - Values Attributable to Controlling Stockholders 126,924 5,821 6,077 5,543 23,965 21,639 (a) Allowance for Loan Losses 5,257 (291)
Slide 33: Consolidated Recurring Financial Highlights - IFRS
Consolidated Recurring Financial Highlights - IFRS Recurring Net Income¹ 4Q17/3Q17 2017/2016 R$ 5.9 bn -3.1% (4Q17/3Q17) Interest Financial Margin2,5: + 1.4% -0.2% R$ 24.4 bn +3.8% (2017/2016) Recurring ROE (p.a.)¹ Provision for Loan Losses3,5: - 1.5% -17.4% 19.3 % - 40 bps (4Q17/3Q17) Commissions a
Slide 34: Recurring Net Income and ROE - IFRS
Recurring Net Income and ROE - IFRS 20,6% 21,0% 21,0% 20,4% 20,1% 19,7% 19,3% 18,9% 6,4 6,0 6,1 6,0 6,1 5,7 5,9 5,6 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Recurring Net Income (R$ billions) Annualized Recurring Return on Average Equity (quarterly) 34
Slide 35: Credit Portfolio - IFRS
Credit Portfolio - IFRS Change 12/31/17 12/31/16 12/31/17 – 12/31/16 R$ billions Individuals 185.3 183.6 0.9% Credit Card Loans 63.0 59.0 6.8% Personal Loans 25.2 26.3 -3.9% Payroll Loans 44.2 44.6 -0.9% Vehicle Loans 14.1 15.4 -8.8% Mortgage Loans 38.7 38.2 1.3% Companies 227.0 243.2 -6.7% Corporat
Slide 36: Nonperforming Loans Ratios – IFRS
Nonperforming Loans Ratios – IFRS1 6.2% 4.7% 3.8% 3.8% 3.8% 3.7% 3.6% 3.0% 2.5% 2.6% 2.5% 2.7% 1.5% 1.5% 1.5% 1.6% 1.4% 1.8% 15 to 90 days 6.9% 5.8% 5.4% 4.9% 4.7% 4.8% 4.3% 3.7% 3.5% 3.1% 3.4% 3.2% 3.0% 2.0% 1.7% 1.9% 2.1% Over 90 days 1.8% dec/12 dec/13 dec/14 dec/15 dec/16 dec/17 31/dez/17 Indivi
Slide 37: Coverage Ratio and Credit Provision - IFRS
Coverage Ratio (90-day NPL) and Credit Provision¹ - IFRS 187% 160% 164% 160% 144% 147% Coverage (90 days) 26.8 27.0 27.7 25.7 22.2 22.4 Allowance for Loan Losses (R$ billions) 2012 2013 2014 2015 2016 2017 The allowance for loan losses uses the concept of incurred loss in IFRS and of expected loss i
Slide 38: Payout Practice
Payout Practice In order to manage capital efficiently, aiming at creating value to our shareholders, we announced through a Material Fact disclosed on September 26, 2017, that we intend to: Maintain the practice of paying dividends and interest on own capital at 35% of net income, however we exclud
Slide 39: Capital Ratios
Capital Ratios Changes in the Core Capital Ratio 1 Includes deductions of Goodwill, Intangible Assets (generated before and after October 2013), 16.7% 0.8% -0.4% 0.1% -0.1% -0.1% -0.8% 16.2% Tax Credits from Temporary Differences and Tax Loss Carryforwards, Pension Fund Assets, Equity Investments in
Slide 40: Payout and Share Buyback
Payout and Share Buyback 83.0% 12.4% 2017 Dividend Yield* = 8.0% 49.3% 44.6% 4.3% 32.3% 13.9% 70.6% 0.2% 45.0% 32.2% 30.6% 2014 2015 2016 2017 Payout Share Buyback * Dividend yield considers payout of 83% and the daily closing price average in 2017. 40
Slide 41: 2017 Forecast - BRGAAP
2017 Forecast - BRGAAP Consolidated Brazil2 Forecast 1 Actual Forecast 1 Actual 3 Total credit portfolio From 0.0% to 4.0% -0.8% From -2.0% to 2.0% -3.2% Financial Margin with Clients 4 (Ex-impairment From -4.2% to -0.8% -4.7% From -5.2% to -1.8% -4.4% and Discounts Granted) Between R$ 15.5 bn Betwe
Slide 42: 2018 Forecast - BRGAAP
2018 Forecast - BRGAAP 2018 forecast considers Citibank’s retail operations. Therefore, 2017 income statement basis for 2018 forecast must consider Citibank’s figures in all lines of the income statement and also in the credit portfolio.* Consolidated Brazil¹ Total Credit Portfolio2 from 4.0% to 7.0
Slide 43: Conference Call: Alexsandro Broedel Lopes
Conference Call 2017 Alexsandro Broedel Lopes Group Executive Finance Director and Investor Relations Officer
Slide 44: Conference Call: Guilherme Setubal Souza e Silva
Conference Call 2017 Guilherme Setubal Souza e Silva Investor Relations Executive Manager
Slide 45: Consolidated Results and Highlights
Consolidated Results and Highlights More favorable Gains in Duratex Subsequent economic biological assets Management system Events environment Adequation of the cost Structured initiatives resulted Sale of Improvement in demand of capital in measuring in savings of BRL 76 million non-strategic asset
Slide 46: Consolidated Results and Highlights
Consolidated Results and Highlights In millions of BRL Net Revenue Recurring EBITDA Net Profit 3,991 760 185 3,910 681 26 2017 2016 2017 2016 2017 2016 Gross Margin EBITDA Margin 28.7% 25.8% 19.0% 17.4% 46
Slide 47: Free Cash Flow and Debt
Free Cash Flow and Debt Reaping benefits Investments focused Deleveraging Acquisition of of the S&OP on sustaining on course Ceusa In millions of BRL 2017 2016 2017 760 Net Debt/EBITDA 2.8x Net Debt/EBITDA 2.9x 2016 681 Ex Ceusa BRL 186mi 3,457 3,175 59 2,100 2,041 (366) (381) (65) (70) (197) 0 (157
Slide 48: Wood Division
Wood Division Expansion of Price increases Reduction of Biological Asset Operations as a leverage inventory and Lower cost of capital, of results service level recognition of gains in BRL Increase in sales and market share back to 44mn Increase in panels Capture of gains in normal standards in Jan/1
Slide 49: Wood Division
Wood Division In millions of BRL Volume (‘000 m³) Net Revenue Recurring EBITDA 2,399 2,433 2,515 2,594 2017 2016 502 504 Gross Margin EBITDA Margin 27.8% 24.9% 20.0% 19.4% Capacity Utilization MDF 64% MDP 59% Wood 61% 49
Slide 50: Deca Division
Deca Division Growth in a Incorporation of Improvement challenging market Ceusa in returns Construction still at Transaction approved Better volumes and low levels, focus on retail by CADE, results Duratex Management consolidated into 4Q17 System as main leverages 50
Slide 51: Deca Division
Deca Division In millions of BRL Volume (‘000 items) 26,053 Capacity Utilization Metals 65% 24,590 Ceramics 52% Deca 61% 2017 2016 Net Revenue Recurring EBITDA 1,475 258 1,315 177 2017 2016 2017 2016 Gross Margin EBITDA Margin 30.2% 27.6% 17.5% 13.4% 51
Slide 52: Development of the Strategy
Development of the Strategy Returns and Growth Cycle Jeito de Ser e de Fazer Cash Generation Boom de demanda Strategic review of Duratex Focus on generation of value 2x a capacidade em ambas personnel Revision of asset base as divisões de negócio Culture is rejuvenated and Exchange of lines Diversif
Slide 53: Sale of Thin Fiber Wood Installations and Equipment
Sale of Installations and Equipment Dedicated to the Production of Thin Fiber Wood (Hardboard) Strategic Operation Rationale Details Evolution of the Brazilian Swap of Installation and wood panel market Equipments for a production farm Production technology from the 50’s The remaining lines of thick
Slide 54: Sale of Land and Forests
Sale of Land and Forests Strategic Operation Rationale Details Evolution of forest Aquisition of land and forests in the management technology amount of BRL 308 million Duratex expertise in forest plantation Exclusive option to purchase an Exceeding land and forests additional lot of land and forest
Slide 55: Message from the Administration
Message from the Administration Duratex Closer relationship Value Proposition, Integration of new Efficient cash Management to clients, initiatives Duratex 2025 and business, our management, System, Cultural to stimulate Avenues for Growth brands as leverages deleveraging, and Transformation, demand
Slide 56: Conference Call: Guilherme Setubal Souza e Silva
Conference Call 2017 Guilherme Setubal Souza e Silva Investor Relations Executive Manager
Slide 57: Conference Call: Marcos De Marchi
Conference Call 2017 Marcos De Marchi CEO and Investor Relations Officer
Slide 58: Operational Performance 2016 and 2017
Operational Performance 2016 and 2017 Shipments (kt) In 2017 Elekeiroz’s shipments were 25% higher than in 2016, mainly driven by smooth operating performance and favorable market conditions in key segments – alcohols, plasticizers and sulfuric acid. +9% 121 119 128 Inorganics +25% 104 114 Organics
Slide 59: Operational Performance: Net Revenue
Operational Performance 2016 and 2017 Net Revenue (R$ million) Net revenue had a significant growth in 2017 in both segments – organic and inorganic products. In the 4th quarter we highlight 70% increase in inorganic products due to favorable prices +40% (shortage of sulfuric acid in the market). 27
Slide 60: Costs and Expenses Reduction
Costs and Expenses Reduction Full-time Productivity Fixed Costs and employees (tons shipped / nº employees) Administrative Expenses* (R$ million) -24% +64% -20% 631 1,004 166.5 149.7 491 481 132.4 612 678 Dec, 15 Dec, 16 Dec, 17 2015 2016 2017 2015 2016 2017 (*) costs + expenses ex-depreciation In 2
Slide 61: Operational Performance: EBITDA
Operational Performance 2016 and 2017 EBITDA (R$ million) 32.3 Non-Recurring Items: In 2017, tax credits recognition of R$ 7.7 million as a result of favorable lawsuit judgment. 7.7 In 2016, Elekeiroz’s results had been negatively affected by R$ 293 million for a series of non-recurring events 25.5
Slide 62: Operational Performance: Net Income
Operational Performance 2016 and 2017 Net Income / Loss (R$ million) Net income of R$ 24.3 million in the 4th quarter was 62% higher than the previous quarter. Net income for 2017 reached R$ 47.7 million, 24.3 corresponding to 4.9% of net revenue. 7.7 15.1 47.7 0.7 9.3 7.7 4.3 -13.2 -7.9 -… -1.1 16.
Slide 63: Non-Recurring Items
Non-Recurring Items (R$ million) The economic crisis that heavily impacted the industry (17% 2017 Net Income EBTIDA reduction in the industrial production in 2014-2016), also hit Elekeiroz’s markets, resulting in relevant adjustments in the 2017 Published 47.7 87.8 2016 balance sheet, which are deta
Slide 64: Income Statement
Income Statement (R$ million) 2017 2016 Δ Q4 17 Q4 16 Δ NET SALES 978.5 770.8 27% 259.8 185.7 40% Costs of Sales -825.2 -730.8 -13% -212.7 -172.6 -23,% GROSS PROFIT 153.4 40.0 284% 47.0 13.1 259% Selling Expenses -47.5 -37.9 -25% -10.7 -9.1 -17% General and Administrative Expenses -64.1 -64.6 1% -18
Slide 65: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow (R$ million) ASSETS DEC, 17 DEC, 16 LIABILITIES AND SHAREHOLDERS’ EQUILITY DEC, 17 DEC, 16 CURRENT ASSETS 292 252 CURRENT LIABILITIES 177 141 Balance Cash and cash equivalents 56 34 Suppliers 54 33 sheet Clients – trade receivables 122 97 Personnel obligations 8 10 Invent
Slide 66: Conclusions and Priorities
Conclusions and Priorities Priorities for 2018: Operational Excellence: lower cost through yield and productivity improvements Continuous increasing in productive capacity occupation Lean structure, with teams trained and Conclusions: committed to change management and sustainability of operations I
Slide 67: Conference Call: Marcos De Marchi
Conference Call 2017 Marcos De Marchi CEO and Investor Relations Officer
Slide 68: Conference Call: Fabio Leite de Souza
Conference Call 2017 Fabio Leite de Souza CFO
Slide 69: Net Revenue
Net Revenue (R$ million) -8.2% Brazil Net revenue variations Sandals (2017 vs 2016) International 4,054.4 Argentina BRAZIL: -8.3% 3,721.9 11% reduction in net revenue of Sandals business due to 772.7 the anticipation of sales of ~ 9 million pairs of sandals 664.6 from 1Q17 to 4Q16. Discounting this
Slide 70: Net revenue breakdown by business
Net revenue breakdown Consolidated net revenue by business 6% 6% 6% 6% 2016 2017 24% 24% 64% 64% Sandals Sporting goods Textiles Argentina Osklen 70
Slide 71: Net revenue breakdown by region
Net revenue breakdown Consolidated net revenue by region 16% 17% 2016 2017 19% 18% 65% 65% Brazil Argentina Sandals International 71
Slide 72: Gross profit
Gross profit (R$ million) -8.9% Brazil Gross margin variations Sandals International (2017 vs 2016) Argentina 1,800.3 1,639.6 BRAZIL: +1.3 p.p. 205.9 135,2 +6.3% Growth in gross margin of Sandals business 440.0 413.1 (improvement in manufacturing efficiency) and Mizuno (domestic production of footwe
Slide 73: Recurring EBITDA
Recurring EBITDA (R$ million) -15.9% Brazil Ebitda margin variations Sandals International (2017 vs 2016) Argentina 599.4 504.0 +16.9% BRAZIL: -0.5 p.p. 90.6 42.4 Gain in gross margin was offset by lower 126.8 99.6 195.6 G&A expense productivity. 167.3 7.0 382.0 .,1 362.0 2.0 SANDALS INTERNATIONAL:
Slide 74: Net Income
Net Income (R$ million) 358.5 69.5 11.4 2.0 350.6 (1.0) (89.8) Net income EBITDA Income taxes Financial result Exchange rate Other Net income 2016 2017 8.8% Margins (% of net revenue) 9.4% 74
Slide 75: Net Financial Position
Net Financial Position (R$ million) Operating cash generation of 486.2 R$ 274.1 milhões (41.4) (65.3) (105.4) 14.2 122.0 (38.6) (37.1) (149.3) (27.3) (90.6) Net financial position EBITDA Items with no Working CAPEX Financial Payment Exchange NFP before Payment to Net financial 12/31/2016 impact on c
Slide 76: Corporate structure and governance
Corporate structure and governance Change in control on September 20, 2017 Cambuhy I FIP + Silvio Tini Free Float Treasury Itaúsa Cambuhy Alpa Holding Group 33.93% 1,57% 27.12% 27.12% 10.26% Shareholders Agreement Improvement in Corporate Governance Creation of 4 Committees: Strategy, People, Financ
Slide 77: Preferred shares and payment to shareholders
Preferred shares and payment to shareholders Preferred shares Preferred shares ALPA4 Payment to appreciated by Ibovespa shareholders 79% in 2017 Payment to shareholders related to 2017 79% results: R$ 178.1 million: • R$ 150.3 million in interest 45% 39% on equity (paid in 2017) • R$ 27.8 million in
Slide 78: Strategic priorities
Strategic priorities Argentina Grow portfolio and share in Increase supply Resume growth and Cut back on men’s and children’s segments of running shoes improve profitability industrial base Reinforce women’s segment in and Increase lower price ranges Continuity Accelerate sales, competitiveness Impr
Slide 79: Conference Call: Fabio Leite de Souza
Conference Call 2017 Fabio Leite de Souza CFO