Cia Hering reported financial results for 4Q15 and full year 2015. Revenues declined 1.4% in 4Q15 and 6% for the full year due to challenging economic conditions in Brazil. EBITDA fell 33.6% for the full year due to sales declines and higher promotional activity. The company will focus on revamping sales growth and refurbishing stores in 2016 while controlling expenses to protect margins and earnings in the difficult market environment.
2. 4Q15 and 2015 Results
DISCLAIMER
This presentation contains forward-looking statements regarding the
prospects of the business, estimates for operating and financial
results, and those regarding Cia. Hering'sgrowth prospects. These are
merely projections and, as such, are based exclusively on the
expectations of Cia. Hering management concerning the future of the
business and its continued access to capital to fund the Company’s
business Plan. Such 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 and risks disclosed in Cia.
Hering’sfiled disclosure documents and are, therefore, subject to
change without prior notice.
• Financial Performance
• SAP Implementation
• Outlook
• Q&A
3. FINANCIAL PERFORMANCE
GROSS REVENUES AND BREAKDOWN BY BRAND
R$ MILLION
4Q15 4Q14 Change 2015 2014 Change
595.4 603.9 -1.4% 1,857.3 1,976.0 -6.0%
475.4 475.0 0.1% 1,415.0 1,482.6 -4.6%
58.4 57.1 2.3% 204.8 213.3 -4.0%
35.9 40.9 -12.4% 130.2 155.8 -16.5%
17.4 25.6 -31.8% 82.4 99.5 -17.2%
12.5 8.1 53.0% 42.8 35.1 22.2%
International
Markets
GROSS REVENUES BREAKDOWN PER CHANNEL
DOMESTIC MARKET EX -OTHER REVENUES
2015, R$ MILLION – CHANGE 2015 X 2014
Gross revenues of R$ 1.9 billion, influenced by the negative effects of macroeconomic scenario
and greater conservatism of distribution channels.
4. HERING STORE NETWORK
GROSS SALES
SELL-OUT, R$ MILLION
Gross revenues of R$ 1,577.5 million (- 0.3%), affected by challenging consumer
environment, partially offset by the opening of 13 stores in the year
¹ Stores opened in the last twelve months net from closings.
5. FINANCIAL PERFORMANCE
EBITDA of R$ 262.9 million (-33.6%) explained by sales retraction
and operational deleveraging.
Gross margin retraction due to sales contraction, insufficient to
dilute fixed costs and higher promotional activity.
GROSS PROFIT
R$ MILLION AND GROSS MARGIN
EBITDA
R$ MILLION AND EBITDA MARGIN
6. FINANCIAL PERFORMANCE
NET INCOME
R$ MILLION AND NET MARGIN
CAPEX
R$ MILLION
Operating income decline was partially offset by higher
financial income and lower income tax.
Inauguration of São Luis de Montes Belos plant (Goiás State), and
implementation of SAP system.
In stores, investments were mainly to the opening of 2 DZARM.
stores, after its business plan reformulation.
7. FINANCIAL PERFORMANCE
Cash flow of R$ 114.7 million in 2015 , result of lower operating result and higher working
capital during the year, opposed in part to lower income tax and social contribution.
CASH FLOWS
R$ MILLION
Cash Flow - Consolidated 2015 2014 Chg.
EBITDA 262,876 395,835 (132,959)
No cash items 25,693 18,106 7,587
AVP (Adjustment to Present Value) - Clients and Suppliers 18,219 20,017 (1,798)
Current Income tax and Social Contribution 1,631 (74,042) 75,673
Working Capital Capex (96,812) (76,561) (20,251)
(Increase) decrease in trade accounts receivable 9,931 (37,623) 47,554
(Increase) in inventories (28,908) (3,736) (25,172)
Increase (decrease) in accounts payable to suppliers (20,420) 18,235 (38,655)
(Decrease) in taxes payable (24,745) (50,704) 25,959
Others (32,670) (2,733) (29,937)
CapEx (96,915) (96,553) (362)
Free Cash Flow 114,692 186,802 (72,110)
9. SAP IMPLEMENTATION
Implementation schedule foresees project closure in March/16
‘Go-Live’ with assisted operation during the month
Operation normalization, but still monitored by the
project team
Project closure, with operations conducted by the
company normally
Jan
Mar
Feb
53
10. PERSPECTIVAS
Economic environment remains challenging in 2016
Priorities for 2016: actions to revamp sales growth by improving Products supply and Shop
experience (P&S)
Aggressive refurbishment plan at Hering Store Network
Balance Sheet and Earnings protection - CapEx reduction, expenses control and reduction in
collection leftovers.
11. Fabio Hering – CEO
Frederico Oldani – CFO and IRO
Bruno Salem Brasil – IR Manager
Caroline Luccarini – IR Analyst
www.ciahering.com.br/ir
+55 (11) 3371 – 4867/4805
ri@hering.com.br
INVESTOR RELATIONS TEAM