1 Earnings Release 3rd Quarter 2009 São Paulo, november 13th, 2009. Alpargatas (BOVESPA - Nível 1: ALPA3 and ALPA4), today released its 3 rd quarter 2009 (3Q9) results and the accrued in the first nine months of the year. This report contains Alpargatas’ performance and that of its controlled companies in 3Q9, or simply “quarter”. The variations mentioned herein refer to the second quarter 2009 (2Q9) and third quarter 2008 (2Q8). To maintain the comparability, the 3Q8 financial statements include 100% of Alpargatas Argentina’s results. 1. Introduction Alpargatas’ third quarter performance is the result of the company’s ongoing efforts to achieve excellence in managing the business. We improved on our second quarter sales volumes and revenues through continuous innovation in our products, in association with strong brands. We have maintained austerity in managing costs and expenditures, with measures that have driven profitability. We have accelerated the cash conversion cycle by controlling our current accounts, resulting in increased cash generation. We have reduced indebtedness, improving our overall financial position. Together, these measures improved Alpargatas’ consolidated performance. From the second to the third quarter of 2009, net revenues grew 16.4%; gross margin increased by 7.7 percent, reaching 45.7%, and EBITDA increased 153.0%, with a margin of 19.2%. We ended the first nine months of the year as a more solidly based company, better positioned to take advantage of the markets in which we operate as a result of the expansion of the global economy and the sporting events scheduled for the next decade. Highlights Sales Volume 3Q8 2Q9 3Q9 Var % 3Q8 Var % 2Q9 (thousands of pairs of shoes) Consolidated 56,482 40,732 58,854 4.2% 44.5% Domestic operations 53,787 37,200 55,466 3.1% 49.1% International operations 2,696 3,532 3,388 25.7% -4.1% Millions of R$ 3Q8 2Q9 3Q9 Var % 3Q8 Var % 2Q9 (International op. - BR GAAP ) Net revenue 519.1 454.2 528.6 1.8% 16.4% Domestic operations 423.2 328.3 424.4 0.3% 29.3% International operations 95.9 125.9 104.2 8.7% -17.2% Gross margin 42.9% 38.0% 45.7% 2.8 pp 7.7 pp Domestic operations 46.1% 41.3% 49.4% 3.3 pp 8.1 p.p. International operations 28.7% 29.4% 30.4% 1.7 pp 1.0 pp EBITDA 87.4 40.2 101.7 16.4% 153.0% Net result 44.3 (1.3) 53.5 20.8% - Cash flow 155.0 267.7 253.2 63.4% -5.4% Debt 267.2 367.8 296.8 11.1% -19.3% Net debt (112.9) (100.1) (43.7) -61.3% -56.4% Share Price: (11/13/2009) • ALPA3 - R$ 80.01 • ALPA4 - R$ 95.00 Market Capitalization: R$ 1,5 billion Teleconference (Portuguese): November 17 th 2009 – 3:00p.m. (BR) Phone: (5511) 4688-6361 Password: Alpargatas Slides: http://ri.alpargatas.com.br APIMEC meeting December, 2nd 2009 – 4:00p.m. (BR) Centro Empresarial Camargo Corrêa Av. Juscelino Kubitschek, 1867 RSVP: (5511) 3107-1571 [email protected]Contacts: José Roberto Lettiere IR Director José Sálvio Moraes IR Manager Fernando Senna IR Analyst Phone (5511) 3847-7397 [email protected]http://ri.alpargatas.com.br
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1
Earnings Release 3rd Quarter 2009
São Paulo, november 13th, 2009. Alpargatas (BOVESPA - Nível 1: ALPA3 and ALPA4), today released
its 3rd
quarter 2009 (3Q9) results and the accrued in the first nine months of the year. This report
contains Alpargatas’ performance and that of its controlled companies in 3Q9, or simply “quarter”.
The variations mentioned herein refer to the second quarter 2009 (2Q9) and third quarter 2008
(2Q8). To maintain the comparability, the 3Q8 financial statements include 100% of Alpargatas
Argentina’s results.
1. Introduction
Alpargatas’ third quarter performance is the result of the company’s ongoing efforts to achieve
excellence in managing the business. We improved on our second quarter sales volumes and
revenues through continuous innovation in our products, in association with strong brands. We have
maintained austerity in managing costs and expenditures, with measures that have driven
profitability. We have accelerated the cash conversion cycle by controlling our current accounts,
resulting in increased cash generation. We have reduced indebtedness, improving our overall
financial position. Together, these measures improved Alpargatas’ consolidated performance. From
the second to the third quarter of 2009, net revenues grew 16.4%; gross margin increased by 7.7
percent, reaching 45.7%, and EBITDA increased 153.0%, with a margin of 19.2%. We ended the first
nine months of the year as a more solidly based company, better positioned to take advantage of the
markets in which we operate as a result of the expansion of the global economy and the sporting
Sandals sales volume increased 53.1% compared with the second quarter 2009 (and 4.2% against 3Q08), driven by the success of
collection. The models reached the stores in July and high consumer acceptance led to a
Sports footwear
The 1.5% increase compared with the second quarter volume reflects the recovery in sales in the sports footwear segment. Ther
volume compared with the 3Q08 due to focus on marketing the premium
revenues in the sporting goods business.
Industrial textiles
The transportation and agribusiness sectors showed signs of recovery during the quarter. This, together with the strong perfo
architecture segment, was reflected in the industrial textiles business, which had its best results so far this year. The num
grew 28.8% compared with the 2Q09.
Net revenues
Domestic operations
Net revenues – R$ million
Net revenues from domestic operations totaled R$ 424.4 million, 29.3% up on 2Q09. This performance caps a critical first seme
consumption, reinforcing projections of continued revenue growth in the fourth quarter and
footwear and industrial textiles, allied with price increases, were the main drivers of revenue growth in the quarter
performance and continued expansion, with the opening of new
24%
Earnings Release 3rd Quarter 2009
3Q08 2Q09 3Q09
50,4 34,3 52,5
Sports footwear (000’s of pairs) 3.343 2.881 2.923
m2) 4.459 3.088 3.976
Sandals sales volume increased 53.1% compared with the second quarter 2009 (and 4.2% against 3Q08), driven by the success of
collection. The models reached the stores in July and high consumer acceptance led to a growth in market share.
The 1.5% increase compared with the second quarter volume reflects the recovery in sales in the sports footwear segment. Ther
volume compared with the 3Q08 due to focus on marketing the premium footwear brands Topper and Mizuno, whose higher added value boosted
The transportation and agribusiness sectors showed signs of recovery during the quarter. This, together with the strong perfo
architecture segment, was reflected in the industrial textiles business, which had its best results so far this year. The num
3Q08 2Q09 3Q09
423,2 328,3 424,4
Net revenues from domestic operations totaled R$ 424.4 million, 29.3% up on 2Q09. This performance caps a critical first seme
consumption, reinforcing projections of continued revenue growth in the fourth quarter and in 2010. The higher sales volumes in sandals, sports
footwear and industrial textiles, allied with price increases, were the main drivers of revenue growth in the quarter
performance and continued expansion, with the opening of new Havaianas franchises.
62%
24%
9%5%
DOMESTIC OPERATIONS
Net revenue per business
Sandals
Sporting goods
Retail
Industrial textiles
2
Variations
3Q08 2Q09
4,2% 53,1%
-12,6% 1,5%
-10,8% 28,8%
Sandals sales volume increased 53.1% compared with the second quarter 2009 (and 4.2% against 3Q08), driven by the success of the new Havaianas
growth in market share.
The 1.5% increase compared with the second quarter volume reflects the recovery in sales in the sports footwear segment. There was a reduction in
footwear brands Topper and Mizuno, whose higher added value boosted
The transportation and agribusiness sectors showed signs of recovery during the quarter. This, together with the strong performance in the
architecture segment, was reflected in the industrial textiles business, which had its best results so far this year. The number of m2 commercialized
Variations
3Q08 2Q09
0,3% 29,3%
Net revenues from domestic operations totaled R$ 424.4 million, 29.3% up on 2Q09. This performance caps a critical first semester for footwear
in 2010. The higher sales volumes in sandals, sports
footwear and industrial textiles, allied with price increases, were the main drivers of revenue growth in the quarter. This was reinforced by retail
Earnings Release
Profit and gross margin
Domestic operations
Gross profit – R$ million
Gross margin
Domestic operations showed a significant increase in gross profit during the quarter. In comparison with 2Q09, gross profit i
gross margin by 8.1 percentage points. This growth was due to the dilution of fixed co
manufacture of sandals and sports footwear, with a ten percentage point increase in manufacturing efficiency (standard hours
production). In the comparison with 3Q08, the variations in profit and gross margin were also positive (7.4% and 3.3% respectively), mainly as a result
of the 20% average reduction in the cost of the company’s principal raw materials, most notably rubber.
EBITDA
Domestic operations
EBITDA – R$ million
EBITDA Margin
Os fatores mais relevantes que explicam a variação do EBITDA das operações
� Ganho de R$ 76,2 milhões em razão dos aumentos do volume de vendas, do preço médio e da margem bruta
� Economia de R$ 11,5 milhões decorrente de
� Recuperação não recorrente de impostos (PIS/Cofins) de R$ 13,3 milhões, contabilizado no 2T9.
The most relevant factors explaining the EBITDA variation in domestic operations compared with 2Q09 are:
� A R$ 76.2 million gain due to increases in sales volume, average prices and gross margin.
� Savings of R$ 11.5 million from restructuring and reduction in operating expenses.
� A non-recurring R$ 13.3 million tax recovery (PIS/Cofins) in 2Q09.
The main events for the business in Brazil were:
Sandals
Launch of the 2009/2010 Havaianas collection, most notably:
Ebitda 2Q09 Volume / Price /Gross Margin
Earnings Release 3rd Quarter 2009
3Q08 2Q09 3Q09
195,3 135,7 209,7
46,1% 41,3% 49,4%
Domestic operations showed a significant increase in gross profit during the quarter. In comparison with 2Q09, gross profit i
gross margin by 8.1 percentage points. This growth was due to the dilution of fixed costs resulting from higher sales and greater productivity in the
manufacture of sandals and sports footwear, with a ten percentage point increase in manufacturing efficiency (standard hours
iations in profit and gross margin were also positive (7.4% and 3.3% respectively), mainly as a result
of the 20% average reduction in the cost of the company’s principal raw materials, most notably rubber.
3Q08 2Q09 3Q09
90,2 36,4 103,9
21,3% 11,1% 24,5%
Os fatores mais relevantes que explicam a variação do EBITDA das operações nacionais, em relação ao 2T9, são:
dos aumentos do volume de vendas, do preço médio e da margem bruta
Economia de R$ 11,5 milhões decorrente de ganhos com reestruturação e com a produtividade do SG&
Recuperação não recorrente de impostos (PIS/Cofins) de R$ 13,3 milhões, contabilizado no 2T9.
The most relevant factors explaining the EBITDA variation in domestic operations compared with 2Q09 are:
to increases in sales volume, average prices and gross margin.
Savings of R$ 11.5 million from restructuring and reduction in operating expenses.
recurring R$ 13.3 million tax recovery (PIS/Cofins) in 2Q09.
Launch of the 2009/2010 Havaianas collection, most notably:
/
Restructuring and Productivity
Gains
Non-recurring tax recovery
Others
3
Variations
3Q08 2Q09
7,4% 54,5%
3,3 pp 8,1 pp
Domestic operations showed a significant increase in gross profit during the quarter. In comparison with 2Q09, gross profit increased by 54.5% and
sts resulting from higher sales and greater productivity in the
manufacture of sandals and sports footwear, with a ten percentage point increase in manufacturing efficiency (standard hours x hours spent in
iations in profit and gross margin were also positive (7.4% and 3.3% respectively), mainly as a result
Variations
3Q08 2Q09
15,2% 185,4%
3,2 pp 13,4 pp
nacionais, em relação ao 2T9, são:
dos aumentos do volume de vendas, do preço médio e da margem bruta.
com a produtividade do SG&A (despesas operacionais).
Ebitda 3Q09
Earnings Release
� Havaianas Top Wash – produced with Havaianas Brasil residues, the sandal is a concrete demonstration of Alpargatas’ concern with the
sustainability of its business.
� Havaianas IPÊ – the innovations in the line generated a tenfold increase in sales compared with the last collection, bolstering the IPÊ
Institute, dedicated to the preservation of Brazil’s flora and fauna.
� Launch of the Dupé 2009/2010 collection with 30 models; reformula
the major TV channels in the Northeast of the country.
� Participation of Havaianas and Dupé in Francal, an important footwear fair held in São Paulo.
Sporting goods
Topper
� Outstanding sales of the “The One Professional” football boot. The model is used by a number of professionals playing in the Brazilian sp
soccer series.
� Launch of clothing line with new materials and designs for shirts, shorts and pants.
� New running and tennis footwear aligned with the strategy to position the Topper brand in a number of different sports categories and in
leading sporting goods distribution channels.
Mizuno
Realization of the second stage of the Mizuno 10 miles competition in São Paulo. The race
Rio de Janeiro, Belo Horizonte and Brasília.
� Participation in the fourth edition of the São Paulo Running Show, the most important street racing and triathlon event in th
Retail
� A 158% increase in the number of sales outlets in comparison with 3Q08.
� Launch of the Timberland Spring/Summer collection, the highlights being the Canvas and Leather lines, aimed at increasing sha
brand among the youth public.
2. INTERNATIONAL OPERATIONS
The international operations are made up of the Alpargatas USA, Alpargatas Europe and Alpargatas Argentina businesses. On Sep
the breakdown of net revenues from the international operations was
Alpargatas Argentina
Sales volume
Alpargatas Argentina
Sales volume
Footwear (000’s of pairs)
Textiles (000’s of m2)
Alpargatas Argentina’s footwear sales topped three million pairs in the quarter, 30% up on 2Q09, and 18.7% up on 3Q08. The st
the result of the new Topper launch in the country. The “El Corazón Manda” campaign was la
Earnings Release 3rd Quarter 2009
produced with Havaianas Brasil residues, the sandal is a concrete demonstration of Alpargatas’ concern with the
the innovations in the line generated a tenfold increase in sales compared with the last collection, bolstering the IPÊ
Institute, dedicated to the preservation of Brazil’s flora and fauna.
Launch of the Dupé 2009/2010 collection with 30 models; reformulation of the brand’s website and launch of an advertising campaign on
the major TV channels in the Northeast of the country.
Participation of Havaianas and Dupé in Francal, an important footwear fair held in São Paulo.
sales of the “The One Professional” football boot. The model is used by a number of professionals playing in the Brazilian sp
Launch of clothing line with new materials and designs for shirts, shorts and pants.
otwear aligned with the strategy to position the Topper brand in a number of different sports categories and in
leading sporting goods distribution channels.
Realization of the second stage of the Mizuno 10 miles competition in São Paulo. The race is part of the Mizuno calender, which includes races in
Participation in the fourth edition of the São Paulo Running Show, the most important street racing and triathlon event in th
ase in the number of sales outlets in comparison with 3Q08.
Launch of the Timberland Spring/Summer collection, the highlights being the Canvas and Leather lines, aimed at increasing sha
The international operations are made up of the Alpargatas USA, Alpargatas Europe and Alpargatas Argentina businesses. On Sep
the breakdown of net revenues from the international operations was:
3Q08 2Q09 3Q09
2.529 2.285 3.001
4.316 4.040 5.371
Alpargatas Argentina’s footwear sales topped three million pairs in the quarter, 30% up on 2Q09, and 18.7% up on 3Q08. The st
the result of the new Topper launch in the country. The “El Corazón Manda” campaign was launched in July, reinforcing the brand’s irreverence and
16%84%
INTERNATIONAL OPERATIONS
Breakdown of net revenues
Alpargatas USA &
Alpargatas Europe
Alpargatas Argentina
4
produced with Havaianas Brasil residues, the sandal is a concrete demonstration of Alpargatas’ concern with the
the innovations in the line generated a tenfold increase in sales compared with the last collection, bolstering the IPÊ
tion of the brand’s website and launch of an advertising campaign on
sales of the “The One Professional” football boot. The model is used by a number of professionals playing in the Brazilian special
otwear aligned with the strategy to position the Topper brand in a number of different sports categories and in
is part of the Mizuno calender, which includes races in
Participation in the fourth edition of the São Paulo Running Show, the most important street racing and triathlon event in the country.
Launch of the Timberland Spring/Summer collection, the highlights being the Canvas and Leather lines, aimed at increasing share for the
The international operations are made up of the Alpargatas USA, Alpargatas Europe and Alpargatas Argentina businesses. On September 30th 2009,
Variations
3Q08 2Q09
18,7% 30,0%
24,4% 32,9%
Alpargatas Argentina’s footwear sales topped three million pairs in the quarter, 30% up on 2Q09, and 18.7% up on 3Q08. The strong performance is
unched in July, reinforcing the brand’s irreverence and
Earnings Release
drive, a positioning aligned with the Brazilian campaign. In Argentina, Topper is the market leader (with a 32% share) presen
categories as well as the casual segment.
Sales revenues
Alpargatas Argentina
Net revenues – R$ million
Net revenues – AR$ million
During the quarter, the growth in footwear volume resulted in a 2.5% increase in net sales revenues for Alpargatas Argentina,
Compared with the 2Q09, revenues in reais were reduced due to the devaluation of
In Argentinean pesos, net revenues grew 15.6% from 3Q08 to 3Q09, and 7.0% from 2Q09 to 3Q09. The increases in Argentinean cu
attributable to higher footwear prices and strong performance in the retail
Gross profit
Alpargatas Argentina
Gross profit– R$ million
Gross margin in reais
Gross profit – AR$ million
Gross margin in pesos
The increase in profit and gross margin during the quarter was due to sales growth, the dilution of fixed costs and increased
factories in Argentina.
EBITDA
Alpargatas Argentina
EBITDA – R$ million
EBITDA margin in reais
EBITDA – AR$ million
EBITDA margin in pesos
Ebitda 2Q09 Volume / Price Gross Margin
Earnings Release 3rd Quarter 2009
drive, a positioning aligned with the Brazilian campaign. In Argentina, Topper is the market leader (with a 32% share) presen
3Q08 2Q09 3Q09
93,5 102,6 95,9
170,5 184,2 197,2
During the quarter, the growth in footwear volume resulted in a 2.5% increase in net sales revenues for Alpargatas Argentina,
Compared with the 2Q09, revenues in reais were reduced due to the devaluation of Argentine peso against the real in 3Q09.
In Argentinean pesos, net revenues grew 15.6% from 3Q08 to 3Q09, and 7.0% from 2Q09 to 3Q09. The increases in Argentinean cu
attributable to higher footwear prices and strong performance in the retail business.
3Q08 2Q09 3Q09
26,2 27,6 29,0
28,0% 26,9% 30,2%
47,7 49,5 59,4
28,0% 26,9% 30,2%
The increase in profit and gross margin during the quarter was due to sales growth, the dilution of fixed costs and increased
3Q08 2Q09 3Q09
10,7 11,9 12,6
11,4% 11,6% 13,1%
19,5 21,5 25,9
11,4% 11,7% 13,1%
/
Restructuring and strategic investments
Operating Ebitda
Exchange variation
Others
5
drive, a positioning aligned with the Brazilian campaign. In Argentina, Topper is the market leader (with a 32% share) present in diverse sports
Variations
3Q08 2Q09
2,5% -6,5%
15,6% 7,0%
During the quarter, the growth in footwear volume resulted in a 2.5% increase in net sales revenues for Alpargatas Argentina, totaling R$ 95.9 million.
Argentine peso against the real in 3Q09.
In Argentinean pesos, net revenues grew 15.6% from 3Q08 to 3Q09, and 7.0% from 2Q09 to 3Q09. The increases in Argentinean currency were
Variations
3Q08 2Q09
10,7% 5,5%
2,2 pp 3,3 pp
24,5% 20,0%
2,2 pp 3,3 pp
The increase in profit and gross margin during the quarter was due to sales growth, the dilution of fixed costs and increased productivity in the
Variations
3Q08 2Q09
17,8% 5,9%
1,7 pp 1,5 pp
32,8% 20,4%
1,7 pp 1,4 pp
Ebitda 3Q09
6
Earnings Release 3rd Quarter 2009
The main factors behind Alpargatas Argentina’s variation in EBITDA compared with 2Q09 are:
� A R$ 5.4 million gain from volume/price/gross margin resulting from sales growth, cost dilution and manufacturing productivity.
� Restructuring costs and strategic investments were R$ 2.9 million up on the 2Q09, mainly due to increased spending on advertising and
promoting the new Topper brand.
� A R$ 1.6 million exchange loss due to the appreciation of the real against the Argentinean peso.
Alpargatas USA and Alpargatas Europe
Sales volume
Alpargatas USA and Alpargatas Europe 3Q08
2Q09 3Q09
Variações
3Q08 2Q09 Sales volume
Sandals (000’s of pairs) 167 1.224 387 131,7% -68,4%
The volume of sandals commercialized in the USA and Europe reached 386,800 pairs, an increase of 131.7% compared with 3Q08. The volume increase
for the calendar year was 21.5%. This strong result is due to the success of the communication campaigns, increased consumer awareness of the brand
and the expansion of the number of sales outlets. The 68.4% reduction in volume compared with 2Q09 is due to seasonal factors. Sandal sales are
stronger in the spring and summer in the northern hemisphere and are concentrated in the second quarter of the year. To minimize the effect of
seasonal variations in sales, we are working on Havianas line extensions to develop products for year round consumption.
Sales revenues
Alpargatas USA and Alpargatas Europe 3Q08 2Q09 3Q09 Variations
3Q08 2Q09
Net revenues – R$ million 2,4 23,3 8,2 241,7% -64,8%
The strategy of substituting intermediate distribution channels with our own operations has contributed to an increase in the average price of sandals
and in revenues. Alpargatas Europe operates directly in the Spanish, English, French, Italian and Portuguese markets, through more than 3,700 sales
outlets. The same is true for Alpargatas USA, which sells directly to large American customers, with the number of sales outlets totaling around 3
thousand. Increases in volume and average price ensured higher sales revenues. Net revenues for the subsidiaries increased 241.7% compared with
the 3Q08, totaling R$ 8.2 million; the increase compared with the first three quarters of 2008 was 191.4%. The reduction in volume against 2Q09 was
the result of seasonal factors.
Gross profit
Alpargatas USA and Alpargatas Europe 3Q08 2Q09 3Q09 Variations
3Q08 2Q09
Gross profit – R$ million 1,3 9,5 2,7 107,7% -71,6%
Gross margin 54,2% 40,8% 32,9% - 21,2 pp -7,8 pp
Gross profit in the subsidiaries grew 107.7% in comparison with 3Q08 as a result of higher revenues. For the nine months of 2009, gross profit
increased R$ 16.7 million compared with same period last year. In the comparison with 2Q09, profits and gross margin were lower due to the effect of
seasonal factors.
EBITDA
Operations that are maturing or growing require strategic investments to expand and consolidate the Havaianas brand in the target market. These
expenditures are directed at communication and distribution, as well as administrative and commercial personnel. These strategic investments explain
why the subsidiaries’ EBITDA is still negative.
Earnings Release
The main events promoted by the subsidiaries were
Alpargatas USA
� Customization of Havaianas at the “White Party”, in Beverly Hills, Los Angeles, an annual event attend
American market.
Alpargatas Europe
� Display of Havaianas sandals customized by personalities in the windows of Selfridges department store in London. The customi
were auctioned, with the proceeds going to “CLIC
� Participation in the Kleine Fabriek, the main Dutch fashion fair, with a stand and a showroom for the new collection.
4. CONSOLIDATED RESULTS FOR DOMESTIC AND INTERNATIONAL OPERATIONS
(2008 figures include Alpargatas Argentina on
Sales volume
Consolidated results
Sales volume
Sandals (millions of pairs)
Sports footwear (000’s of pairs)
Textiles (000’s of m2)
Consolidated volumes showed a significant increase compared with 2Q09 and 3Q08 due to sales growth in Brazil, Argentina, the
Europe. New models of sandals, the increase in the number of overseas sales outlets and th
explain the strong sales performance in the period.
Sales revenues
Consolidated results
Net revenues – R$ million
The growth in net revenues in the domestic operations, in conjunction with increased revenues in Alpargatas Argentina and the
subsidiaries resulted in a 16.4% increase in consolidated net revenues compared with 2Q09 a
months of the year, revenues were 3.5% higher than the same period of 2008. In 3Q09, the real appreciated strongly against th
the company receives its international revenues. On
and the international operations, 24%.
Gross profit
31%
10%
Earnings Release 3rd Quarter 2009
The main events promoted by the subsidiaries were:
Customization of Havaianas at the “White Party”, in Beverly Hills, Los Angeles, an annual event attend
Display of Havaianas sandals customized by personalities in the windows of Selfridges department store in London. The customi
were auctioned, with the proceeds going to “CLIC Sargent”, a London charity for children suffering from cancer.
Participation in the Kleine Fabriek, the main Dutch fashion fair, with a stand and a showroom for the new collection.
CONSOLIDATED RESULTS FOR DOMESTIC AND INTERNATIONAL OPERATIONS
(2008 figures include Alpargatas Argentina on pro forma basis)
3Q08
2Q09 3Q09
50,6 35,5 52,9
) 5.872 5.189 5.924
8.775 7.128 9.347
Consolidated volumes showed a significant increase compared with 2Q09 and 3Q08 due to sales growth in Brazil, Argentina, the
Europe. New models of sandals, the increase in the number of overseas sales outlets and the success of the Topper relaunch in Brazil and Argentina
3Q08 2Q09 3Q09
519,1 454,2 528,6
The growth in net revenues in the domestic operations, in conjunction with increased revenues in Alpargatas Argentina and the
subsidiaries resulted in a 16.4% increase in consolidated net revenues compared with 2Q09 and a 1.8% increase compared with 3Q08. In the first nine
months of the year, revenues were 3.5% higher than the same period of 2008. In 3Q09, the real appreciated strongly against th
the company receives its international revenues. On 30/9/2009, the domestic operations accounted for 76% of Alpargatas’ consolidated net revenues
51%
31%
10%
8%
Consolidated Results
Breakdown of net sales
Sandáls
Sporting Goods
Textiles
Retail
7
Customization of Havaianas at the “White Party”, in Beverly Hills, Los Angeles, an annual event attended by opinion leaders in the North
Display of Havaianas sandals customized by personalities in the windows of Selfridges department store in London. The customized sandals
Sargent”, a London charity for children suffering from cancer.
Participation in the Kleine Fabriek, the main Dutch fashion fair, with a stand and a showroom for the new collection.
Variations
3Q08 2Q09
4,6% 48,9%
0,9% 14,2%
6,5% 31,1%
Consolidated volumes showed a significant increase compared with 2Q09 and 3Q08 due to sales growth in Brazil, Argentina, the United States and
e success of the Topper relaunch in Brazil and Argentina
Variations
3Q08 2Q09
1,8% 16,4%
The growth in net revenues in the domestic operations, in conjunction with increased revenues in Alpargatas Argentina and the US and European
nd a 1.8% increase compared with 3Q08. In the first nine
months of the year, revenues were 3.5% higher than the same period of 2008. In 3Q09, the real appreciated strongly against the currencies in which
30/9/2009, the domestic operations accounted for 76% of Alpargatas’ consolidated net revenues
Earnings Release
Consolidated results
Gross profit – R$ million
Gross Margin
The increase in gross profit in the quarter is due principally to the increase in profit and gross margin from domestic opera
Argentina. The dilution of fixed costs and the increase in manufacturing productivity l
with the 2Q09 and a 8.3% increase compared with 3Q08. In consequence, the consolidated gross margin grew 7.7% and 2.8% compar
and 3Q08, respectively.
EBITDA
Consolidated results
EBITDA – R$ million
EBITDA Margin
The most relevant factors explaining the variation in consolidated EBITDA compared with 2Q09 are:
� A R$ 69.1 gain in volume/price/gross margin, mainly from domestic operations.
� Savings of R$ 14.0 million from restructuring and reduced operating expenditures.
� Non-recurring tax recovery (PIS/Cofins) of R$ 13.3 million in 2Q09.
Net profit
Consolidated results
Net profit– R$ million
Net margin
Ebitda 2Q09 Volume / Price
Earnings Release 3rd Quarter 2009
3Q08 2Q09 3Q09
222,8 172,7 241,4
42,9% 38,0% 45,7%
The increase in gross profit in the quarter is due principally to the increase in profit and gross margin from domestic opera
Argentina. The dilution of fixed costs and the increase in manufacturing productivity led to a 39.8% increase in consolidated gross profit compared
with the 2Q09 and a 8.3% increase compared with 3Q08. In consequence, the consolidated gross margin grew 7.7% and 2.8% compar
3Q08 2Q09 3Q09
87,4 40,2 101,7
16,8% 8,9% 19,2%
variation in consolidated EBITDA compared with 2Q09 are:
A R$ 69.1 gain in volume/price/gross margin, mainly from domestic operations.
Savings of R$ 14.0 million from restructuring and reduced operating expenditures.
of R$ 13.3 million in 2Q09.
3Q08 2Q09 3Q09
44,3 -1,3 53,5
8,5% - 10,1%
Restructuring and
Productivity Gains
Operating Ebitda
Exchange variation
Non-recurring tax recovery
Others
8
Variations
3Q08 2Q09
8,3% 39,8%
2,8 pp 7,7 pp
The increase in gross profit in the quarter is due principally to the increase in profit and gross margin from domestic operations and Alpargatas
ed to a 39.8% increase in consolidated gross profit compared
with the 2Q09 and a 8.3% increase compared with 3Q08. In consequence, the consolidated gross margin grew 7.7% and 2.8% compared with 2Q09
Variations
3Q08 2Q09
16,4% 153,0%
2,4 pp 10,4 pp
Variations
3Q08 2Q09
20,8% -
1,6 pp -
Exchange variation
Ebitda 3Q09
9
Earnings Release 3rd Quarter 2009
Alpargatas’ excellent performance in the quarter, with an increase in revenues and profitability, was reflected in the company’s net profit, which grew
by R$ 54.8 million from 2Q09 to 3Q09, corresponding to a 20.8% increase compared with 3Q08. The main reasons for this increase in consolidated net
profit compared with 2Q09 are:
� A R$ 61.5 million increase in EBITDA.
� A positive R$ 6.0 million variation in the company’s equity investment in the Tavex Corporation.
� A R$ 19.7 million increase in corporation tax (IRRF/CSLL) due to the profits generated in the quarter.
Cash flow
On September 30, 2009, Alpargatas had a cash balance of R$ 253.2 million, R$ 76.2 million more than on December 31, 2008. The acceleration of the
cash conversion cycle, the result of careful current account management, is the main explanation for the growth in cash generation. The largest inflow
in the period was from EBITDA, which reached R$ 198.3 million, due to solid operating performance, particularly during the third quarter of the year.
Working cash productivity generated a gain of R$ 1.1 million and investments in permanent assets totaled R$ 39.6 million. Debt amortization and
shareholder remuneration constituted the main cash disbursements, totaling R$ 75.4 million.
Ebitda Financial income
Net profit 2Q09
Return of investments in
subsidiaries Income taxes
IRRF/CSLL Others Net profit
3Q09
Cash balance on December 31st, 2008
EBITDA
Working capital
investment Fixed asset
investment Operational
sub-total Exchange variation
Financial result
Payment of income
tax (IR/CSLL)
Debt amortization
(net of loans)
Sub-total Shareholder remuneration
Cash balance on September
30th, 2009
10
Earnings Release 3rd Quarter 2009
Indebtedness
On September 30, 2009, consolidated financial indebtedness stood at R$ 296.8 million, of which R$ 251.9 million was accounted for by São Paulo
Alpargatas and R$ 44.9 million by Alpargatas Argentina, with the following profile:
� R$ 162.2 million (55% of the total) due in the short term, of which 48% was in foreign currency for financing the working capital of the US
and European subsidiaries, and 52% was in reais, in loans from the BNDES and the Banco do Nordeste.
� R$ 134.6 million (45% of the total) due in the long term, of which 33% was in foreign currency (Alpargatas Argentina) and 67% in reais.
Consolidated net debt was reduced to R$ 43.7 million in the third quarter of the year compared with R$ 100.1 million on June 30th, 2009. The
reduction in debt debt underscores Alpargatas’ financial robustness, which corresponds to 0.1 times the company’s 2008 EBITDA.
5. CAPITAL MARKETS
Alpargatas shares performed well in the first nine months of 2009. The preferential shares (ALPA4) appreciated by 63%, on a par with the 64%
variation in the Ibovespa index. The three advances corresponding to interest on own capital approved by the Administrative Council totaled R$ 24.4
million, R$ 14.6 million of which was paid in May, R$ 4.9 million in August and R$ 4.9 million in October. On November 13, the Council voted to
advance another R$ 4.9 million in interest on own capital, payable on December 18.
6. SUBSEQUENT EVENTS
Alpargatas filed a public offer with the Comisión Nacional de Valores in Buenos Aires to acquire all outstanding Alpargatas Argentina shares at the price
of AR$ 3.40 (three pesos and forty centavos) per share. This offer will facilitate the integration between the companies in Brazil and Argentina and will
permit further investments in manufacturing, logistics, brand communication and people development.
In an Extraordinary General Shareholders Meeting held on October 29th, Pedro Pullen Parente and Cláudio Borin Guedes were elected to the
Administrative Council. We extend our thanks to the outgoing council members Carlos Pires Oliveira Dias and José Alberto Diniz de Oliveira.
7. OUTLOOK
In the long term, the World Cup in 2014 and the Olympic Games in 2016 will be important events for the market and for our brands. The growth and
increasing maturity of our subsidiaries in the United States and Europe and the increased synergies resulting from the integration with Alpargatas
Argentina will also boost Alpargatas’ performance. We are very well positioned for growth in this promising market as a result of our production
capacity, our innovative products, our professional talents and the passion our brands inspire in consumers.
11
Earnings Release 3rd Quarter 2009
Attachment I – Balance Sheet 09/30 (thousands of R$)
ASSETS 2009 2008 (a)
LIABILITIES 2009 2008 (a)
Current Assets 981,486 929,225 Current Liabilities 433,443 404,670
Cash and banks 27,503 22,650 Suppliers 113,519 130,895