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Earnings Release 3Q08 Presentation

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Profarma
Profarma

The document summarizes Profarma's financial and operational highlights for 3Q08. Key points include: - 12.3% growth in gross revenue compared to 3Q07, reaching R$784 million, driven by strong hospital and vaccine sales. - Reduced cash cycle by 6 days, generating R$40 million in working capital savings. - Lower operating expenses of 7.0% of net revenue, the best since 2004, through a 12.5% reduction versus prior quarter. - Market share reached 12.1%, up from 11.8% in 3Q07, demonstrating continued growth since the 2006 IPO.

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Earnings Release 3Q08 Presentation
Highlights For The Period Expressive reduction of the cash cycle, of about six days generating a R$ 40.0 million working capital reduction; A reduction of 12.5% in operating expenses represented by administrative, commercial and logistic expenses when compared to the previous quarter, reaching 7.0% of the net revenue, being this the company’s best performance since 2004; A 12.3% growth of the consolidated gross revenue when compared to the same period of the previous year, reaching R$ 784.0 million, highlighting the hospital and vaccine category which had an expressive growth of 67.3%; Profarma’s market share reaches 12.1% in the 3Q08, 0.1 percentage point above the one performed during the same period of the previous year and 0.3 percentage point above in relation to the previous quarter; Profarma announced to the market on August, 6, 2008, it’s Share Repurchase Program of 312.500 shares and until September, 30, 2008 the company acquired 190.632 shares.
Gross Revenues Evolution In R$ MM 784.0 742.8 698.2 3Q07 2Q08 3Q08
Gross Revenues Breakdown In R$ MM (R$ Million) 3Q08 3Q07 Chg % 2Q08 Chg % Branded 536.4 475.2 12.9% 519.7 3.2% Generics 48.6 50.4 -3.6% 42.6 14.1% OTC 144.7 125.5 15.3% 131.7 9.9% Health and Beauty Products 30.1 32.6 -7.6% 29.3 2.9% Other 24.1 14.4 67.3% 19.6 23.1% Total 784.0 698.2 12.3% 742.8 5.5%
Market Share (%) 12.0 11.8 12.1 11.5 9.3 9.6 9.6 2004 2005 2006 2007 3Q07 2Q08 3Q08 Source: IMS
Gross Profit and Revenues from Services to Suppliers In R$ MM and as % Net Revenues 10.8% 10.2% 8.7% 10.5 11.2 15.1 58.9 50.7 42.8 3Q07 2Q08 3Q08 Gross Profit Revenues from Services to Suppliers Adjusted GP Margin (%)
Operating Expenses In R$ MM 7.9% 7.9% and as % Net Revenues 7.0% 50.9 48.0 46.4 3Q07 2Q08 3Q08 EXPENSES: General and Administrative + Selling and Marketing + Logistics and Distribution
Net Financial Expenses In R$ MM and as % Net Revenues 1.4% 1.3% 0.9% 9.1 9.0 5.2 3Q07 2Q08 3Q08
Net Income In R$ MM 1.3% and as % Net Revenues 1.0% 0.2% 8.2 6.6 1.1 3Q07 2Q08 3Q08
Adjusted EBITDA and EBITDA Margin 3.6% 3.7% In R$ MM and as % Net Revenues 2.1% 23.9 21.6 14.0 3Q07 2Q08 3Q08
Cash Flow (R$ Million) 3Q08 3Q07 Chg % 2Q08 Chg % Cash Flow (Used) / Generated in Operating Activities 18.7 (31.6) -159.1% (24.0) -177.9% Internal Cash Generation 11.0 14.7 -24.9% 16.7 -34.2% Operating Assets Variation 7.7 (46.2) -116.6% (40.7) -118.8% Trade Note Receivable (3.8) (35.5) 89.2% (11.6) 67.0% Inventories 0.2 (1.9) -110.1% (0.3) -169.1% Suppliers 13.0 (13.4) -196.9% (4.2) -408.5% Other Items (1.7) 4.6 -137.0% (24.6) 93.1% Cash Flow (Used) in Investing Activities (1.4) (11.6) 88.0% (3.1) 54.8% Cash Flow (Used) / Generated by Financing Activities (8.2) (6.1) -33.1% 38.5 -121.2% Net Increase (Decrease) in Cash 9.1 (49.3) -118.5% 11.5 -20.7%
Cash Cycle 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Cash Cycle - Days * 49.3 53.4 62.5 69.6 67.8 64.3 68.8 67.2 61.8 Accounts Receivable (1) 45.2 50.0 54.6 53.1 50.9 51.7 50.7 49.2 47.0 Inventories (2) 33.1 44.7 43.4 47.2 41.3 48.6 47.9 45.7 42.5 Accounts Payable (3) 29.0 41.3 35.6 30.7 24.5 36.0 29.8 27.7 27.7 *Average (1) Average of Gross Revenues in the Quarter (2) Average of COGS in the Quarter (3) Average of COGS in the Quarter
Indebtedness Net Debt (R$ MM) and 3Q08 Indebtedness Profile Net Debt / Ebitda* In R$ MM 1.5 1.9 1.9 28% 72% 163.3 Long Term 154.5 Short Term 114.0 X100% in Reais XBasic Interest Tax: CDI X77% Clean 3Q07 2Q08 3Q08 * Ebitda = Accumulated last 12 months
Capex 1.9% In R$ MM and as % Net Revenues 0.5% 0.2% 11.7 3.1 1.4 3Q07 2Q08 3Q08
Operating Indicators Service Level Logistics E.P.M (units served / units requested) (Errors per Million) 145.0 93.7% 92.8% 98.0 86.0 90.8% 3Q07 2Q08 3Q08 3Q07 2Q08 3Q08
Share Performance 200 * 100 pts basis on 26/oct/2006 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 25- 16- 8- 30- 21- 12- 6- 28- 19- 11- 2- 24- 16- 7- 29- 20- 12- 3- 25- 17- 8- 30- 21- 14- 5- 27- 19- 10- 2- 24- 15- 6- 30- out nov dec dec jan fev mar mar abr mai jun jun jul ago ago set out nov nov dec jan jan fev mar abr abr mai jun jul jul ago set set Ibovespa Profarma
Results after 2 years of IPO Growth 4Q06 – 3Q08 Gross Revenues 57.1% Market 25.2% Market Share Profarma 32.2% Coverage 19.0% Number of Distribution Centers 50.0% Net Income 47.7% Adjusted Ebitda 22.1% Base Year Year II 4Q05 – 3Q06 4Q07 – 3Q08 Cash Cycle - Days (*1) 53.4 58.0 E Working Capital (*2) 17.9 18.0 E (% Net Revenues) Net Debt / Ebitda 2.1 1.7 (Debt average during the period) Indebtedness Profile (*3) % Short Term 75 28 % Long Term 25 72 (*1) Based on 4Q06 and 4Q08 (*2) Based on 4Q06 and 4Q08 (*3) Based on 3Q06 and 3Q08
IR Contacts Max Fischer CFO and IR Director Beatriz Diez IR Coordenator Telephone.: 55 (21) 4009 0276 E-mail: ri@profarma.com.br www.profarma.com.br/ir

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Earnings Release 3Q08 Presentation

  • 2. Highlights For The Period Expressive reduction of the cash cycle, of about six days generating a R$ 40.0 million working capital reduction; A reduction of 12.5% in operating expenses represented by administrative, commercial and logistic expenses when compared to the previous quarter, reaching 7.0% of the net revenue, being this the company’s best performance since 2004; A 12.3% growth of the consolidated gross revenue when compared to the same period of the previous year, reaching R$ 784.0 million, highlighting the hospital and vaccine category which had an expressive growth of 67.3%; Profarma’s market share reaches 12.1% in the 3Q08, 0.1 percentage point above the one performed during the same period of the previous year and 0.3 percentage point above in relation to the previous quarter; Profarma announced to the market on August, 6, 2008, it’s Share Repurchase Program of 312.500 shares and until September, 30, 2008 the company acquired 190.632 shares.
  • 3. Gross Revenues Evolution In R$ MM 784.0 742.8 698.2 3Q07 2Q08 3Q08
  • 4. Gross Revenues Breakdown In R$ MM (R$ Million) 3Q08 3Q07 Chg % 2Q08 Chg % Branded 536.4 475.2 12.9% 519.7 3.2% Generics 48.6 50.4 -3.6% 42.6 14.1% OTC 144.7 125.5 15.3% 131.7 9.9% Health and Beauty Products 30.1 32.6 -7.6% 29.3 2.9% Other 24.1 14.4 67.3% 19.6 23.1% Total 784.0 698.2 12.3% 742.8 5.5%
  • 5. Market Share (%) 12.0 11.8 12.1 11.5 9.3 9.6 9.6 2004 2005 2006 2007 3Q07 2Q08 3Q08 Source: IMS
  • 6. Gross Profit and Revenues from Services to Suppliers In R$ MM and as % Net Revenues 10.8% 10.2% 8.7% 10.5 11.2 15.1 58.9 50.7 42.8 3Q07 2Q08 3Q08 Gross Profit Revenues from Services to Suppliers Adjusted GP Margin (%)
  • 7. Operating Expenses In R$ MM 7.9% 7.9% and as % Net Revenues 7.0% 50.9 48.0 46.4 3Q07 2Q08 3Q08 EXPENSES: General and Administrative + Selling and Marketing + Logistics and Distribution
  • 8. Net Financial Expenses In R$ MM and as % Net Revenues 1.4% 1.3% 0.9% 9.1 9.0 5.2 3Q07 2Q08 3Q08
  • 9. Net Income In R$ MM 1.3% and as % Net Revenues 1.0% 0.2% 8.2 6.6 1.1 3Q07 2Q08 3Q08
  • 10. Adjusted EBITDA and EBITDA Margin 3.6% 3.7% In R$ MM and as % Net Revenues 2.1% 23.9 21.6 14.0 3Q07 2Q08 3Q08
  • 11. Cash Flow (R$ Million) 3Q08 3Q07 Chg % 2Q08 Chg % Cash Flow (Used) / Generated in Operating Activities 18.7 (31.6) -159.1% (24.0) -177.9% Internal Cash Generation 11.0 14.7 -24.9% 16.7 -34.2% Operating Assets Variation 7.7 (46.2) -116.6% (40.7) -118.8% Trade Note Receivable (3.8) (35.5) 89.2% (11.6) 67.0% Inventories 0.2 (1.9) -110.1% (0.3) -169.1% Suppliers 13.0 (13.4) -196.9% (4.2) -408.5% Other Items (1.7) 4.6 -137.0% (24.6) 93.1% Cash Flow (Used) in Investing Activities (1.4) (11.6) 88.0% (3.1) 54.8% Cash Flow (Used) / Generated by Financing Activities (8.2) (6.1) -33.1% 38.5 -121.2% Net Increase (Decrease) in Cash 9.1 (49.3) -118.5% 11.5 -20.7%
  • 12. Cash Cycle 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Cash Cycle - Days * 49.3 53.4 62.5 69.6 67.8 64.3 68.8 67.2 61.8 Accounts Receivable (1) 45.2 50.0 54.6 53.1 50.9 51.7 50.7 49.2 47.0 Inventories (2) 33.1 44.7 43.4 47.2 41.3 48.6 47.9 45.7 42.5 Accounts Payable (3) 29.0 41.3 35.6 30.7 24.5 36.0 29.8 27.7 27.7 *Average (1) Average of Gross Revenues in the Quarter (2) Average of COGS in the Quarter (3) Average of COGS in the Quarter
  • 13. Indebtedness Net Debt (R$ MM) and 3Q08 Indebtedness Profile Net Debt / Ebitda* In R$ MM 1.5 1.9 1.9 28% 72% 163.3 Long Term 154.5 Short Term 114.0 X100% in Reais XBasic Interest Tax: CDI X77% Clean 3Q07 2Q08 3Q08 * Ebitda = Accumulated last 12 months
  • 14. Capex 1.9% In R$ MM and as % Net Revenues 0.5% 0.2% 11.7 3.1 1.4 3Q07 2Q08 3Q08
  • 15. Operating Indicators Service Level Logistics E.P.M (units served / units requested) (Errors per Million) 145.0 93.7% 92.8% 98.0 86.0 90.8% 3Q07 2Q08 3Q08 3Q07 2Q08 3Q08
  • 16. Share Performance 200 * 100 pts basis on 26/oct/2006 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 25- 16- 8- 30- 21- 12- 6- 28- 19- 11- 2- 24- 16- 7- 29- 20- 12- 3- 25- 17- 8- 30- 21- 14- 5- 27- 19- 10- 2- 24- 15- 6- 30- out nov dec dec jan fev mar mar abr mai jun jun jul ago ago set out nov nov dec jan jan fev mar abr abr mai jun jul jul ago set set Ibovespa Profarma
  • 17. Results after 2 years of IPO Growth 4Q06 – 3Q08 Gross Revenues 57.1% Market 25.2% Market Share Profarma 32.2% Coverage 19.0% Number of Distribution Centers 50.0% Net Income 47.7% Adjusted Ebitda 22.1% Base Year Year II 4Q05 – 3Q06 4Q07 – 3Q08 Cash Cycle - Days (*1) 53.4 58.0 E Working Capital (*2) 17.9 18.0 E (% Net Revenues) Net Debt / Ebitda 2.1 1.7 (Debt average during the period) Indebtedness Profile (*3) % Short Term 75 28 % Long Term 25 72 (*1) Based on 4Q06 and 4Q08 (*2) Based on 4Q06 and 4Q08 (*3) Based on 3Q06 and 3Q08
  • 18. IR Contacts Max Fischer CFO and IR Director Beatriz Diez IR Coordenator Telephone.: 55 (21) 4009 0276 E-mail: ri@profarma.com.br www.profarma.com.br/ir