Release Date: November 08, 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 robust growth in revenue and margins for the third quarter of 2024, with gross revenue increasing by 10%.
- The domestic market showed strong performance, particularly driven by the Melissa brand, which saw a 53.3% increase in sales.
- The company achieved a significant increase in recurring net profit, reaching 239.4 million reais, a growth of 45.9% compared to the previous year.
- Grendene SA managed to control production costs effectively, with net revenue per pair increasing by 10.4% while COGS per pair increased by only 5.7%.
- The company maintained a strong financial position, with a dividend yield of 5.1% and a payout ratio of 54%.
Negative Points
- The foreign market experienced a decline, with a 13.5% decrease in volume and a 5.4% decrease in gross revenue.
- The female segment, particularly the Zaxy brand, underperformed compared to the previous year, impacting overall sales.
- Challenges in the export market were noted, particularly in Latin America, due to economic issues in countries like Argentina and Bolivia.
- The company faced logistical challenges, such as shipping delays, which affected export sales.
- Increased competition and promotional discounts from competitors negatively impacted the performance of certain brands like Ipanema.
Q & A Highlights
Q: Is there an action plan to address the potential increase in import rates in the US due to a new government?
A: We currently do not have a specific plan because historically, increases in import taxes, such as those discussed during the Trump administration, have been seen more as opportunities than threats. The North American footwear industry does not produce products similar to ours, so we view this as a chance to position ourselves as an alternative to Asian imports.
Q: How does Alpargatas' market share impact Grendene, and what is your competitive strategy?
A: Alpargatas is a well-known company with strong brands. We maintain competitive pricing and focus on positioning ourselves with strong design, quality, and pricing to compete effectively. We are observing a strong liquidity movement at the endpoint, not just from Alpargatas but from other competitors as well.
Q: What are your expectations regarding dollar variation, and how does it impact revenue and raw material costs?
A: The strengthening of the dollar is generally positive for Grendene as we have more revenue in dollars than costs. Our raw material costs are updated monthly and are influenced by the dollar, but our Q3 results already reflect this increase.
Q: Can you elaborate on the impact of the new tax law on your financial results?
A: The new tax law, which started taxing our fiscal incentives and social contributions, impacted our financial results. However, the government guaranteed an increment of 25% in the precision of investments for our state incentives. Despite these challenges, we reported robust financial results for the third quarter.
Q: How is the performance of the Melissa brand contributing to your overall results?
A: Melissa has shown a strong performance with a 53.3% increase in sales and a 30.8% increase in volume. This reflects a higher acceptance of new collections and a shift towards selling more full-price products. The brand's success is a significant contributor to our domestic market growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
