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3 rd Quarter 2010

The brand of brands. 3 rd Quarter 2010. Results Presentation. November| 2010. Disclaimer.

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3 rd Quarter 2010

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  1. The brand of brands. 3rd Quarter 2010 Results Presentation November| 2010

  2. Disclaimer This release contains forward-looking statements relating to the prospects of the business and estimates of operating and financial results, as well as the Company’s growth prospects. These are merely projections and as such are based exclusively on the expectations of the Company’s management concerning the future of the business and its continued access to capital to fund its business plan. These forward-looking statements depend substantially on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors, as well as the risks described in the Company’s filed disclosure documents, and therefore are subject to change without prior notice. 2

  3. A marca das marcas. Agenda • Highlights • Results 3

  4. A marca das marcas. Agenda Highlights 4

  5. Favorable macroeconomic perspective Industrial ProductionIndex Unemployment Rate (%) 7.1% Average 127 Average 8.7% Growth Inflation- IPCA (%) Real AverageEarnings (R$) 1,421 Average 0.38% Average 10.4% Growth 5 Source: IBGE, FGV.

  6. Net Revenues growth (million) 3Q10 27,0% 68% 9M10 25,0% 22,8% LTM 27,0% 72% 69% 6

  7. 3Q10 EBITDA Evolution (million) 27,0% 45% 33% 23,4% 21,4% 26,9% 9M10 25,0% 22,8% LTM 60% 27,0% 45% 25,0% 61% 22,8% 49% 24,3% 27,0% 22,6% 25,5% 7

  8. “Same Brand Sales” results 3Q10 9M10 LTM Net Revenues R$ MM % NR ∆ SBS R$ MM % NR ∆ SBS R$ MM % NR ∆ SBS Pharma 306.9 37% 24% 907.3 40% 27% 1,156.1 39% 29% Personal Care 406.4 49% 40% 983.9 44% 31% 1,264.5 43% 28% Home Care and Foods 122.6 15% -25% 359.4 16% -7% 549.4 18% 8% Total 835.9 100% 13% 2,250.6 100% 18% 2.970,0 100% 22% 8

  9. Pharmahighlights in 3Q10 OTC • AverageYTD demandincreaseof15% • DemandrecordofLisadorandRinosoro Prescription • Demandincreaseof +25% in thepromotedproducts • Mioflex-Aconsolidates as leader in musclerelaxingprescriptiondrug • LaunchingofAddera D3, theonlymarket’s D3 vitamin Similars • Neosoro reaches thepositionofthecountry’smostsoldproduct • Over 48 newproductsandpresentationswaiting for Anvisa’sregistrationapproval Generics • ExtensionoftheNeo Química Genericsadvertisingcampaignwith POS supportwithRonaldo • Growthof 3.7 x in thequarter • Strong 2011 newproductspipeline 9

  10. Hypermarcas is Brazil’sthird largestpharmaceuticalcompany 3Q09 3Q10 +55% #2 Source: PMB – IMS Health, sept 2010. 10

  11. PersonalCarehighlightsin 3Q10 Beauty • Launching of the collection Pop 4 You (Absolute Success) • Continuity of the hair coloring brand Biocolor’s growth (75%) PersonalCare • Relaunch of Monange’s deodorants • Acceleration of Monange Hair Care line’s growth (10x) • Relaunch of traditional Avanço (faithful consumers) and Avanço Mob (young public) Disposables • GrowthcontinuityofSapeka, Big FralandPomPom Health • Repositioning of Cenoura& Bronze sunscreen (2.2x) 11

  12. Process of dormant brand relaunch FAST GROWTH PLANNING LAUNCHING SUSTAINABILITY Sales BRAND Time 3. Developvalueproposition 4. Reformulate marketing mix 2. Identifyconsumer insight 1. DiscoverBrand DNA 5. Relaunchwithfullsupport 6. Reinforcegrowth 12

  13. Marpex return ILLUSTRATIVE R$ million Contribution margin (before acquisition 91 Marpex for relaunch (Phase III) (105) Contribution margin after Phase III (3Q10) 210 (-) Maintainance marketing (30) Recurrent Contribution Margin (3Q10) 180 Marpex (105) Contributionmargin 89 Multiple 1,2x 13

  14. IntegrationandOperationshighlights in 3Q10 Systems • Almost all companies integrated in the SAP platform • Go Live SAP for PomPom and Neo Química in the quarter, has involved more than 300 people on full time basis for 8 months Savings – Phase 1 • All companies completed the Phase 1’s SG&A reductions and quick wins • Significant improvements of factories efficiency in PomPom, Inal, Sanifill • Waiting Anvisa’s new registration approval to start producing Jontex in INAL plant Savings – Phase 2 • Reduction of several raw material costs with the consolidation of purchasing and packaging • Significant improvements in storage capacity and shipping of the acquired companies • Industrial consolidation project and logistic network reconfiguration evolving within the planned schedule Operations • Automation via radio frequency of the main distribution center in Cajamar • Investments in improvements, capacity increase and verticalization in Taboão and Anápolis sites 14

  15. Capital structurehighlights in 3Q10 • Debentures public issuance in July of R$651 million • Announced operation with BNDES of R$1.1 billion • 50% simple debentures • 50% convertible debentures Cash Autonomy 68 % +2 years • Net debt(1)= 2,089.8 million • 3.1 x Proforma EBITDA • It considersdebenturespublicissueanceof R$1.1 billion, andtheacquisitionsof York, Mabesa, Bitufo, PomPomsoaps, Sanofi-Medleypharmaceuticalstotaling R$ 696mm. 15

  16. Case study: acquisition of “PomPom” soaps brand Strategic rationale • PomPom brand consolidation and complementary for the acquisitions of PomPom, Sapeka and Hydrogen, strengthening market presence in children's products • Possibilityofcreating a strongumbrellabrand for children’sproducts Ownership structure • Multinationalbrand (Colgate-Palmolive) Economic rationale Financial results (¹) (1) Based of the Sellers’ LTM financial statements as of September 2010 16

  17. Case study: acquisition of three • Sanofi-Medley medication brands Strategic rationale • Presenceexpansionin prescriptiondrugs (Rx), strengtheningcardiology (Lopigrel), gastroentherology (Digedrat/Peridal) andpediatrics (Peridal) line • Utilizationofmedical salesrepresentativesteam • Highlevelsofprofitability Ownership structure • Multinational’sbrands (Sanofi-Medley) Economic rationale Financial results (¹) (1) Based of the Sellers’ LTM financial statements as of September 2010 17

  18. Case study: acquisition of Bitufo Strategic rationale • Broadportfolioof‘specialbrushesthatcomplementstheSanifill Oral Caresegment • Sales model includes to strength dentists visitation specialist • Highgrowthandattractivegrossmargin Ownership structure • Family-owned business Economic rationale Financial results (¹) (1) Based of the Sellers’ 2009 financial statements 18

  19. A marca das marcas. Agenda Results 19

  20. Net Revenue Net Revenue (R$ million) Net Revenue (R$ million) 68% 72% 13% 18% ► Organic growth of 13% in 3Q10 and 18% in 9M10; ► Considering only Pharma and Personal Care, the SBS was 32% in 3Q10 and 29% in 9M10; ► Acquisitions over the last 12 months represent 33% of revenue in 3Q10 and 31% in 9M10. 20

  21. Gross Margin Gross Margin (%) Gross Margin (%) -5.2p.p. +4.5p.p. +0.2 p.p. ► Even with acquisitions dilutive effect (average gross margin of 47.4% in 9M10), gross margin felt only 0.7 percentage points in 9M10; ► SBS Gross Margin rose 4.6 percentage points due to synergies and brand valorization trade policies. 21

  22. EBITDA EBITDA (R$ million) EBITDA Margin (%) -4,2p.p. -5,5p.p. 45% 33% ► 33% EBITDA growth in 3Q10 despite the R$10.0 million negative effect of Other Operating; ► EBITDA before Marpexwas R$195.3 million with a margin of 23.4% in 3Q10 and R$563.2 million, with margin of 25.0% in 9M10. 22 22

  23. Cash Earnings Cash Earnings (R$ million) Cash Earnings Margin (%) -8,9p.p. -6,5p.p. 24% 7% ► Cash Earnings per Share of R$0.73 in 9M10, at the same level of 9M09, despite the dilution of Neo Química, 2010 Follow On and Sapeka. 23

  24. Leverage (R$ million) Proforma Net Debt LTM EBITDA = 3,1x • LoansandFinancingsandCashconsiderthepublicdebenturesissuance in theamountof R$1.1 bi andtheacquisitionsof York, Mabesa , Bitufo, PomPomsoaps, Sanofi-Medleydrugs in the total amountof R$696mm . 24

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