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Earnings Release Q2’12
Vigor Alimentos S.A.
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Disclaimer
This presentation contains forward-looking statements relating to the prospects of the business, estimates for operating
and financial results, and those related to growth prospects of Vigor Alimentos. These are merely projections and, as such,
are based exclusively on the expectations of Vigor’s 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 Vigor’s filed disclosure documents and are, therefore, subject
to change without prior notice.
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Summary
Vigor Alimentos
Results
What we have done and our next steps
Our Vision
Agenda
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EBITDA in 1H12 is equivalent to full FY 2011
EBITDA
R$18.6 million in 2Q12, +125% yoy
R$43.4 million in 1H12 +148% yoy
Net Revenue
R$324.2 million in 2Q12 (+9.8%) yoy
+9.0% yoy in 1H12 to R$638.4 million
Better mix with reduction in UHT milk participation (-23.2%yoy) and growth of Cheese and Requeijões (+16.5%)
and Spreads (+25.3%) categories
Diversified product porfolio and presence in 2 segments show the resilience of business model
Consumer (+6.4%) and Food (+21.8%) vs. Nielsen Consumer Basket1(+0.4%) vs. Perishable Basket (-0.5%)
Highlights
1 Volume, value and price variation – LTM ended April 2012 – Total Brazil, basis: 137 product categories – Total Brazil
Source: Nielsen | Retail Index
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EBITDA in 1H12 is equivalent to full FY 2011
Highlights
Volume
+12.3% yoy in Q2’12 yoy (net of UHT milk)
+12,6% in 1H12 yoy (net of UHT milk)
Gross Margin
Gross Profit +26.0% in Q2’12 yoy to R$92,1 million (Gross Margin +3.7 p.p. to 28.4%)
+21.8% in 1H12 yoy to R$182.4 million (Gross Margin +3.0 p.p. to 28.4%)
Cash Generation
Cash Flow from Operations1 in 1H12 (R$ 28.4 million) was higher than Capex
Adjusted Net Debt 2 in june, 30 2012 amounted R$10.9 million
Notes:
1. Includes interests from Refis (tax installments) of R$9.5 million
2. Includes the net result from the FX swap (R$31.6 million) hedge USD denominated debt
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Total: R$ 638.4 million
Net Revenue – 1H12
Our product categories
Diversified product categories with high
value-added products
Yogurts
High Margins (%);
Seasonality in Q3 and Q4;
Focus in innovation and product launching
Cheese and Requeijões
Leader brands in categories;
High Margins in R$;
Spreads
High household penetration level;
Helps diversify the cost matrix;
Possible to add “brand” equity
UHT Milk
Low volume;
Margin under severe discipline
Creams and Others
Focus on Food Service segment;
Yogurts 22%
Cheese and Requeijões
26%
Spreads 28%
UHT Milk 8%
Creams and others 13%
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Consumo Food Service
...underpinned by our brands and market segments
A / B / C
National Brand
B / C
Regional
Brand
A / B
National Brand
A / B
National Brand
A / B
National Brand
Yogurt /
Cheese
spread
UHT milk
Butter
Chocolate
milk
Non-sweet
products
Pastry and
basic
ingredients
Parmesan
cheese Cheese /
Dessert
Special
cheese
Business to
Business Segmentation
Main produtos
Reference brands on the consumer segment, and leadership in Food Service
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178,940
181,556
1H11 1H12
295,398
324,233
2Q11 2Q12
585,694
638,409
1H11 1H12
87,111
90,126
2Q11 2Q12
Volume Sold (Ton) Net Revenue (R$ ‘000)
+ 9.8% yoy Revenue growth mirros the change in product mix to more value-added products
Performance
3.5% 1.5% 9.8.% 9.0%
12,3%
Volume sold net of UHT
75,049
66,803
2T122T11
Volume Sold - tonnes 2Q11 2Q12 ∆ % 1H11 1H12 ∆ %
Yogurt 19,145 18,892 -1.3% 42,617 40,901 -4.0%
Cheese and Requeijões 5,664 6,397 12.9% 11,349 12,578 10.8%
Spreads 28,414 35,684 25.6% 54,345 70,101 29.0%
UHT Milk 20,307 15,077 -25.8% 44,068 29,628 -32.8%
Creams and Others 13,581 14,077 3.7% 26,562 28,348 6.7%
Total 87,111 90,126 3.5% 178,940 181,556 1.5%
Net revenues - R$ '000 2Q11 2Q12 ∆ % 1H11 1H12 ∆ %
Yogurt 63,621 67,069 5.4% 135,650 143,096 5.5%
Cheese and Requeijões 73,599 85,720 16.5% 141,769 165,523 16.8%
Spreads 81,863 102,556 25.3% 155,933 195,027 25.1%
UHT Milk 33,409 25,665 -23.2% 70,147 49,696 -29.2%
Creams and Others 42,907 43,223 0.7% 82,195 85,067 3.5%
Total 295,398 324,233 9.8% 585,694 638,409 9.0%
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17.741
43.442
3,0%
6,8%
1H11 1H12
8,280
18,589
2.8%
5.7%
2Q11 2Q12
149,715
182,393
25.6%
28.6%
1H11 1H12
73,052
92,056
24.7%
28.4%
2Q11 2Q12
Gross Profit (R$ ‘000); Gross Margin(%) EBITDA (R$ ‘000); EBITDA Margin(%)
EBITDA Margin growth reflects increase in Gross Margin
Increase in EBITDA Margin of 3.8p.p. (6M12)
+3,0 p.p. Gross Margin
+0.8 p.p. SG&A
Performance
26%
21.8%
124.5% 168.8%
Δ=3,7p.p
Δ=3,0p.p
Δ=2,9p.p
Δ=3,8p.p
Gross Profit - R$ '000 2Q11 2Q12 ∆ % 1H11 1H12 ∆ %
Yogurt 23,584 28,250 19.8% 50,902 61,230 20.3%
Cheese and Requeijões 18,538 20,592 11.1% 36,485 38,575 5.7%
Spreads 11,313 19,806 75.1% 22,207 37,056 66.9%
UHT Milk 3,831 5,444 42.1% 8,874 9,740 9.8%
Creams and Others 15,787 17,964 13.8% 31,247 35,791 14.5%
Total 73,053 92,056 26.0% 149,715 182,393 21.8%
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50.6
203.8
254.4
31.6
211.9
10.9
Short Term Long Term Total Debt Swap Cash Adjusted Net Debt
Line Average Rate Due to Balance
BNDES 11.44% 16/11/12 42,0
FCO 10% 02/05/14 1,6
Finame 8,7% 15/07/16 1,3
BOND 4 FX + 10,25% 24/08/12 209,4
Total Debt 254,4
Net Debt (06/30/2012) – R$ Million
Cash Flow from Operations1 supported Capex
Cash Generation and Leverage
1.Includes interests from Refis (tax installments) of R$ 9.5 million
2.Net result from the FX swap to hedge the USD denominated debt [Notes 2017 (U.S.$ 100,000,000 9.25% Step-up Notes due 2017)]
3. Includes the net result from the FX Swap to hedge the USD denominated debt (R$31.6 million)
4. Debt denominated in USD with swap to hedge FX variation
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Cash Flow in 1H12 – R$ Million
321.7
28.4 28.0
110.2
211.9
Cash Dez/11 Cash flow from
operations
Capex Cash flow used in
financing
Cash Jun/12 3
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What we have done, and our next steps
• Innovation and new product launching
•New media campaign
•New marketing communication aligned with new product positioning and pricing
Strengthening of key brands
•Review of our go-to-market model
•Merchandising with dedicated team Growth of distribution
network
•Meritocracy in management, with systematic KPI’s tracking
•With relevant know-how and external experience
•Majority of Board of Directors members are independent
Excellence in Management and
Corporate Governance
•Product-specific Factories
•Capex in high potential growth categories
•Milk producers fidelity program
State of art in Production processes
• Shutdown of product lines not aligned with
Company’s strategy
• Increase of innovation in our portfolio
• Beginning of our geographic expansion to raise our
presence in areas close to our core market
• Continue to insulate São Paulo market
• Keep investing in our people’s development;
• People , and Finance and Risk Committees;
• Quality Certification guaranteed in every factory;
Iniciatives already implemented… …and thers to come
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Our Vision
• Development of innovation according to seasonal waves
• Further development of Food Service segment Categories and Segments
• Improve our presence in markets close to core market (SP)
• Lower the company’s dependence of São Paulo market; Geographic expansion
• Increase in productive capacity, with investments c.R$500 miilion in the next years; Investment Plan
• Continuously increase in margins to surpass historic levels EBITDA Margin
• Increase stock liquidity
• Reduction of cost of capital
• Return on Invested Capital tor shareholders Policy Capital Structure
Big food Company, one of the biggest dairy companies in Brazil
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THANK YOU! Our Contact Details
Web: www.vigor.com.br/ir
E-mail: [email protected]
Tel.: +(55 11) 2799-5807