Raia Drogasil S.A. · BMFBOVESPA:RADL3
Raia Drogasil — FY2012 Earnings Presentation
22 slides from Raia Drogasil's earnings presentation, Mar 28, 2013
Slide 1: Earnings Presentation – 2012
Earnings Presentation – 2012 March 28th, 2013
Slide 2: Disclaimer
Disclaimer This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Exchange Act of 1934. Such forward-looking statements are only predictions and are not guarantees of future performa
Slide 3: Highlights
Highlights Drugstores: 864 stores in operation (101 new store openings and 13 closings in 2012) Gross Revenues: R$ 5.6 billion, 18.3% of growth (11.6% for same-store sales) Gross Margin: 26.7% of gross revenues, a 1.1 percentage point margin increase Adjusted EBITDA: R$ 325.8 million, an inc
Slide 4: RaiaDrogasil posted in 2012 another year of strong growth with margin expansion
RaiaDrogasil posted in 2012 another year of strong growth with margin expansion Gross Revenues & Store Count Adjusted EBITDA (R$ million, Units) (R$ million, % of Gross Revenues) ~ 984** 5.7% 5.8% IPO 5.6% 864* 5.2% (Raia) 4.3% 776 3.8% IPO 5,594 (Drogasil) 688 4,730 582 3,949 2,740 515 3,383 2,311
Slide 5: We sustained our industry leadership in revenues and store count
According to Abrafarma, we sustained our industry leadership both in revenues and in store count Revenues Store Count 1st 1st 2nd 2nd 3rd 3rd 4th 4th Source: ABRAFARMA Ranking. 2012 5
Slide 6: The pharmaceutical market has grown 16% per year since 2007
The pharmaceutical market has grown 16% per year since 2007, and real demand in the drugstore industry has far outgrown supply … Demand: Pharmaceutical Market Supply: Number of Drugstores (R$ billion) (Units) 49.6 42.9 65,788 67,189 64,281 62,002 59,518 36.2 55,021 30.2 26.4 23.6 2007 2008 2009 2010
Slide 7: Aging of the Brazilian population expected to endure for two decades
… powered by the aging of the Brazilian population, a trend that is expected to endure for another two decades Brazilian Population above 65 years old Speed of Population Aging Annual per Capita Pharma Spending (Million People) (Years for population 65+ to increase from 7% to 14% of (US$ LTM Mar 201
Slide 8: The top drugstore chains have captured the lion's share of industry growth
The top 5 drugstore chains have captured the lion´s share of the industry growth over the years, and have managed increase both their total scale and the revenues per store % of Stores % of Pharma Revenues Pharma Revenues per Store (R$/Month) 600.000 1.9% 1.9% 2.0% 2.1% 2.2% 2.4% 15.8% 16.4% 2.7% 16
Slide 9: HPC market shifting market share from supermarkets to drugstore chains
The HPC market saw another year of shifting market share from supermarkets to drugstore chains due to our superior convenience and shopping experience HPC Market Market Share by Channel Cumulative HPC Growth by Channel – R$ (R$ billion) (R$ %) (Index: 2007 = 100) 6.3% 6.3% 5.7% 5.7% 5.4% 5.5% 226 7.
Slide 10: We opened 101 new stores and closed 13 in the year
We opened 101 new stores and closed 13 in the year. Only 65% of our stores are fully matured Store Count Age Structure of Store Portfolio (Store Count, % of Existing Stores) 864 828 YEAR 1 101 stores 11.7% 807 YEAR 2 97 stores 11.2% 785 776 YEAR 3 104 stores MATURE 12.0% 562 stores 65.0% 4Q11 1Q12 2
Slide 11: Opening schedule concentrated in the end of the year
Due to the incorporation of Raia, the opening schedule was highly concentrated in the end of the year, with 42 stores in the 4Q12 and 29 in December alone 101 99 80 68 59 72 52 67 59 39 35 48 38 22 13 28 9 21 4 5 8 10 2 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2011 11
Slide 12: We entered 3 new states and increased market share in most markets
We entered 3 new states in the year: BA, MS e MT. We increased market share in most markets, with São Paulo and Rio de Janeiro as our main highlights Geographic Presence Market Share (December ‘12) 22.0 20.3 16.0 15.8 13.1 13.2 DF: 45 stores BA: 10 stores 9.7 MT: 6 stores GO: 38 stores 9.09.3 9.0 MG
Slide 13: Gross Revenues increased by 18.3%
Gross Revenues increased by 18.3%. Same stores grew 11.6% and mature stores grew 8.1% (14.9%, 9.1% and 5.3% in the 4Q12 with an adverse calendar effect of 1.0%) Growth – Total Sales Growth – Same Store Sales Growth – Mature Stores 14.8% 22.3% 10.8% 20.4% 12.9% 19.7% 18.8% 18.3% 17.8% 11.6% 11.5% 11.
Slide 14: Generics grew 25.6% in the year
Generics grew 25.6% in the year (18.7% in the 4Q12), and enhanced their participation in the revenue mix by 0.7 percentage point (0.4 percentage point in the 4Q12) Gross Revenues Sales Mix (R$ million) 2011 vs. 2012 5,593.8 (%) HPC 29.4% 29.7% 30.6% 30.7% 28.0% 29.2% 31.0% Year: 19.4 4,730.0 4Q: 16.
Slide 15: Gross margins increased 1.1 in 2012; cash cycle increase
Gross margins increased 1.1 in 2012 (0.9 in 4Q12), in spite of a tax pressure of 0.3 in the year (0.4 in 4Q12) due to a new regime. Cash cycle increase of 7.9 days in 2012 Adjusted Gross Profit * Cash Cycle (R$ million) 28.1% Receivables Inventories Suppliers Cash Cycle 26.7% 27.1% 26.2% 25.6% 90.9
Slide 16: Sales expenses increased by 1.3 percentage point
Sales expenses increased by 1.3 percentage point (1.4 in the 4Q12) due to structural payroll and rental pressures and to transitory logistics and new store pressures Sales Expenses Main Expense Pressures (% of Gross Revenues) Percentage variation over Gross Revenues versus the previous period) 18.4%
Slide 17: Administrative expenses were diluted by 0.3 percentage point
Administrative expenses were diluted by 0.3 percentage point due to the unification of the management structure and to a limitation in new corporate admissions General & Administrative Expenses General & Administrative Expenses (R$ million) (% of Gross Revenues) 167.3 154.3 3.3% 3.3% 3.3% 3.2% 3.0%
Slide 18: EBITDA margin increased 0.1 in 2012
EBITDA margin increased 0.1 in 2012 and (0.3) in the 4Q12. Transitory pressures in gross margins* (0.3 in 2012 and 0.4 in 4Q12) and in expenses** (0.4 in 2012 and 0.5 in 4Q12) Adjusted EBITDA (R$ million, % of Gross Revenues) 7.3% 5.8% 5.9% 5.6% 5.6% 5.7% 4.8% 325.8 271.5 776 stores operating at 4Q1
Slide 19: Net margin of 2.8% in the year and 2.2% in the 4Q12
We posted a net margin of 2.8% in the year and of 2.2% in the 4Q12. The smaller net cash position versus 2011 generated a significant increase in financial expenses Depreciation Net Financial Income/(Expenses) Adjusted Net Income * (R$ million, % of Gross Revenues) (R$ million, % of Gross Revenues)
Slide 20: Integration process resulted in R$ 40.8 million in non-recurring expenses
The integration process resulted in R$ 40.8 million in non-recurring expenses in 2012. The goodwill amortization will provide R$ 235 million in tax shield from 2013 to 2018 Gross D&A and Non-Recurring Expenses Profit SG&A EBITDA Income Tax Net Profit (R$ million) Transaction Expenses (25.9) (25.9) 8
Slide 21: Total cash consumption of R$ 168.8 million
We had a total cash consumption of R$ 168.8 million. We generated R$ 278.3 million and invested R$ 189.1 million in working capital and R$ 258.0 million in CAPEX Cash Flow 4Q12 4Q11 2012 2011 (R$ million) EBT 22.1 3.4 158.1 144.2 (-) Income Tax (12.0) (13.4) (30.3) (43.4) (+) Depreciation 33.2 27.2
Slide 22: Share price implies average annual return of 26.3% since Drogasil's IPO
Our share price implies in an average annual return of 26.3% since Drogasil´s IPO in 2007 and of 37.0% since Raia´s IPO in 2010 Share Evolution (Base 100) RADL3 IBOV 383 100 103 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Number of Shares (thousand) 330,386 St