Alpargatas Sa · BMFBOVESPA:ALPA3

Alpargatas Sa — Investor Presentation (April 2013)

35 slides from Alpargatas Sa's investor presentation, Apr 9, 2013

  1. Slide 1: Alpargatas

    i. iba . * Tl \ <a yN ALPARGATAS

  2. Slide 2: Agenda: Company Overview

    1 Company Overview 2 Brands 3 Growth Drivers 4 Financial Highlights 2

  3. Slide 3: Agenda: Company Overview

    1 Company Overview 2 Brands 3 Growth Drivers 4 Financial Highlights 3

  4. Slide 4: Who we are

    Who we are  The largest Brazilian footwear and apparel company in Latin America  Brands that lead markets with strong growth prospects SANDALS SPORTING GOODS LUXURY APPAREL  Global business: - operations in Brazil, Argentina, Europe and the USA - exports to 85 countries  Flexible sourcing  Mult

  5. Slide 5: Business breakdown

    Business breakdown Revenue by brand Revenue by region 2012: R$3.0 billion 2012: R$3.0 billion Volume by product Volume by channel in Brazil 2012: 265,3 million pairs/units 2012: 226,6 million pairs/units 5

  6. Slide 6: Attractive portfolio

    Attractive portfolio I | 1 havaianas havaianas ; havaianas | I ! faazno. Timberland & | Topper RAINHA | Topper RAINHA ! » 1 OSKLEN dupe | ! ! I } 1 1 1 1 ! R$ 85 billion R$ 178 R$ 115 billion billion A:5% ‘' B:28% i C:49% | B Wace bill D/E: 18% havaianas duec R$ 23 billion WM Brazilian Population: 1

  7. Slide 7: Flexible sourcing

    Flexible sourcing Installed Capacity BRAZIL  Sandals: • 2012: 255 million pairs/year • 2014: 355 million pairs/year  Athletic footwear: • 13 million pairs/year ARGENTINA  Athletic footwear: • 11 million pairs/year VIETNAM, CHINA AND INDONESIA  Import of sporting apparel and footwear 7

  8. Slide 8: Global distribution

    Global distribution Havaianas is sold in 85 countries Flagship stores (2012) Number of Brazil Abroad Total stores Havaianas 281 101 382 Timberland 18 - 18 Topper - 12 12 Meggashop 19 - 19 Outlet - 17 17 Alpargatas Osklen 64 6 70 Total 382 136 518 Points of sale BRAZIL ARGENTINA USA, EUROPE TOTAL AND

  9. Slide 9: Lean management structure

    Lean management structure CEO Business Units Corporate Functions Sandals Industrial Sporting Goods Supply Chain Luxury apparel Financial & IT Argentina Human Resources Legal Strategic Planning 9

  10. Slide 10: Agenda: Brands

    1 Company Overview 2 Brands 3 Growth Drivers 4 Financial Highlights 10

  11. Slide 11: Havaianas brand identity, products, distribution

    Brand Identity Products  Most well known Brazilian consumer brand worldwide  Among the 10 most valuable brands in the Brazilian retail market in 2013, according to Interbrand  50 years in 2012, with more than 4 billion pairs sold  International recognition: 55% of the Europeans know the brand 33

  12. Slide 12: Stores in Brazil and abroad

    Stores in Brazil Concept store in São Paulo Franchise store in São Paulo Stores abroad Barcelona Madrid London Milan 12

  13. Slide 13: Franchises in Brazil

    Franchises in Brazil (279) Franchises – general information NORTH 4%  Average monthly sales: US$34,000 h  Average monthly volume: 3,000 units h NORTHEAST 12% h h  Average ticket: US$21 h h h h  Annual sales per sqm: US$20,000 h h h h h  Same stores sales (2012x2011): h h  volume: 4,5% h  sale

  14. Slide 14: Mizuno brand identity and products

    Brand Identity Products  Leading brand in running performance in Brazil  Wave: state of the art cushioning technology  Product categories: running, football, volley and judo  Licensed brand since 1996 Media Coverage Distribution Channels Flagship stores Brazil Own stores - Third-party operations

  15. Slide 15: Topper brand identity and products

    Brand Identity Products  Most renowned football brand in Brazil  Leading sporting goods brand in Argentina  Product categories Brazil: football, casual, running and rugby  Product categories Argentina: football, tennis, casual, running, rugby, basketball and fitness & training Media Coverage Dis

  16. Slide 16: Rainha brand identity and products

    Brand Identity Products  Brazil’s pioneering sporting goods brand, with the first 100% Brazilian cushioning system  Product categories: running and casual Media Coverage Distribution Channels Flagship stores Brazil Own stores - Third-party operations Sneakers BR (Franchises, concessions - and dist

  17. Slide 17: Timberland brand identity and products

    Brand Identity Products  Global premium outdoor brand  Product categories: adventure and casual  Licensed brand since 1996 Media Coverage Distribution Channels Flagship stores Brazil Own stores 11 Third-party operations (Franchises, concessions 7 and distributors) Multi brand 1,500 (points of sal

  18. Slide 18: Osklen brand identity and products

    Brand Identity Products  Most renowned Brazilian luxury apparel brand  Product categories: surfing, casual and collection  Reference in sustainability  Added to Alpargatas’ portfolio in March 2013 Media Coverage Distribution Channels Flagship stores Brazil International 70 Own stores 38 6 44 Thi

  19. Slide 19: Agenda: Growth Drivers

    1 Company Overview 2 Brands 3 Growth Drivers 4 Financial Highlights 19

  20. Slide 20: Sandals: how will we grow?

    Sandals How will we grow? Brazil’s sandals market (million of pairs)  Consolidating Havaianas as a dominant brand in Brazil: CAGR 12-14 = 6% - Innovation - Communication - Distribution - Brand extension Expanding international presence: - New markets - Brand expansion - Exclusive stores  Increasi

  21. Slide 21: New sandals plant

    New sandals plant Location: Montes Claros, State of Minas Gerais Focus: higher value added sandals Inauguration: 2Q13 Capacity: 105 million pairs/year Cost saving: 10% to 15% Technology Social and Environmental Projects  Automatic feeding and dosing systems  Natural lightning and ventilation, capt

  22. Slide 22: Athletic footwear: how will we grow?

    Athletic footwear How will we grow? Brazil’s athletic footwear market (million pairs)  Consolidating leadership in Brazil: - Mizuno: running - Topper: football CAGR 12-14 = 4.1% - Rainha: casual - Timberland: adventure 131 CAGR 121 125 12-14  Entering new categories: - Topper: running and rugby -

  23. Slide 23: Athletic footwear

    Athletic footwear 23 Mx ALPARGATAS

  24. Slide 24: Agenda: Financial Highlights

    1 Company Overview 2 Brands 3 Growth Drivers 4 Financial Highlights 24

  25. Slide 25: Peer comparison

    Peer comparison ALPARGATAS NIKE ADIDAS ASICS MIZUNO VF.Co Last balance sheet released 12/31/2012 5/31/2011 12/31/2012 3/31/2011 3/31/2011 12/31/2012 Net Revenue 3.1 1.5 24.1 19.6 2.0 10.9 (US$ billion) Net Revenue CAGR 16% 6.7% 8.3% 2.3% (2.9%) 9.2% (last five years) EBITDA 0.3 0.2 3.4 1.9 0.1 1.7 (

  26. Slide 26: Net sales

    Net sales (R$ million) CAGR 09-12= 16% 3,007 2,575 2,232 1,927 26

  27. Slide 27: Sales volume

    Sales volume (million units) CAGR 09-12= 6.6% 265.3 249.6 244.0 218.9 27

  28. Slide 28: Gross Profit

    Gross Profit (R$ million) CAGR 09-12= 15% 1,273 1,154 1,018 831 Gross Margin - Domestic 46% 48% 49% 45% - Havaianas International 56% 61% 50% 55% - Argentina 27% 28% 27% 25% Consolidated 43% 46% 45% 42% 28

  29. Slide 29: EBITDA

    EBITDA (R$ million) CAGR 09-12= 13% 405 414 401 290 EBITDA Margin - Domestic 18% 21% 19% 16% - Havaianas International -6% 2% 0% 10% - Argentina 12% 13% 11% 6% Consolidated 15% 18% 16% 14% 29

  30. Slide 30: Cash net of debt

    Cash net of debt (R$ million) 30

  31. Slide 31: Shareholders' compensation

    Shareholders’ compensation (R$ million) Average in the Payout 24% 29% 26% 39% Brazilian consumer sector Dividend Yield 0.6% 1.7% 1.5% 2.1% 1.4% (base March 31, 2013) 31

  32. Slide 32: Stock performance

    Stock performance Average in the (March 31, 2013) Brazilian consumer sector P/E 38.3x 18.5x (base March 31, 2013) 32

  33. Slide 33: Corporate structure

    Corporate structure 100% 100% 100% 18.7% 100% Alpargatas Alpargatas Alpargatas Tavex Cia. Brasileira Argentina USA Europe Corporation de Sandálias (Spain) (Brazil) Common shares Preferred shares Market cap 199,676,488 189,124,980 388,801,468 Camargo Corrêa Silvio Tini Group Treasury Free Float 33

  34. Slide 34: IR Team

    IR Team  José Roberto Lettiere – CFO and IRO lettiere@alpargatas.com.br 55 11 3847-7406  José Sálvio Moraes – IR Manager jsalvio@alpargatas.com.br 55 11 3847-7397  Mariane Weger – IR mweger@alpargatas.com.br 55 11 3847-7672  Bruno Keinradl Monteiro – IR brunokm@alpargatas.com.br 55 11 3847-7465

  35. Slide 35: History of growth and innovation

    HISTORY OF GROWTH AND INNOVATION Foundation Growth Growth and and Leadership Leadership and and Global Foundation Creation Creation Recognition Recognition Global Footprint Footprint • Foundation in • With the launching • Alpargatas receives the Mauá • Havaianas, one of the 1907 of Conga and award,

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