Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Grendene SA (BSP:GRND3, Financial) reported a growth in gross revenue by 3.1%, with a notable increase of 12.4% in the external market.
- The company achieved a gross profit growth of 8%, reaching BRL204.7 million, with an improved gross margin of 42.6%.
- Melissa brand showed strong performance with a 9.4% increase in gross revenue and a 25.1% growth in sellout.
- E-commerce gross revenue grew by 20%, indicating a successful digital strategy.
- The company maintained efficient management of operational expenses, with administrative expenses growing only 2.1%, under the inflation rate.
Negative Points
- The internal market faced challenges with high interest rates and inflation impacting consumer purchasing power, particularly among low-income populations.
- Recurring net profit decreased by 27.1%, primarily due to lower financial results and taxation impacts.
- The volume of pairs sold in the domestic market decreased by 3.1%, with a specific decline in the Ipanema series.
- The international market is experiencing a slowdown, affecting consumption habits, particularly in North America and Europe.
- The company faced a 30% decrease in sales in the Southern region of Brazil due to the impact of floods in Rio Grande do Sul.
Q & A Highlights
Q: What is the expectation for cash generation and its potential use, particularly regarding share buybacks?
A: Alceu De Albuquerque, CFO and Investor Relations Officer, stated that Grendene is a strong cash-generating company and does not foresee any changes in this aspect. The board approved a share repurchase program, and if deemed appropriate by the Board of Directors, they may proceed with buybacks, although nothing is currently planned.
Q: Has there been any measurable impact on revenue due to the floods in Rio Grande do Sul?
A: Alceu De Albuquerque explained that the company's exposure in Rio Grande do Sul is around 3.4% to 3.7%. The second half is typically weaker due to the winter period. Sales in the Southern region decreased by 30% in the second quarter, particularly in May and June, but recovery has begun. The overall impact on sales was not significant due to the low exposure in the region.
Q: Can you elaborate on the impact of the new tax law on Grendene's financials?
A: Alceu De Albuquerque noted that the new tax law, which began in January, affected the taxation of state incentives, impacting net sales revenue and recurring net profit. Without this taxation, net sales revenue would have grown by 4.4% instead of 3.6%, and recurring net profit would have been higher.
Q: How has the international market performance been, particularly in terms of exports?
A: Alceu De Albuquerque highlighted that despite a general decline in Brazilian exports, Grendene's exports grew by 12.4% in reais, 14% in dollars, and 16.3% in volume. The company is still below historical levels but sees potential for growth, with exports representing 20.4% of Brazilian exports in the second quarter.
Q: What are the key factors contributing to the growth in gross profit and margins?
A: Alceu De Albuquerque attributed the growth in gross profit and margins to price adjustments, a favorable mix, and a decrease in raw material prices. The gross margin improved to 42.6% in the second quarter, driven by these factors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
