World Footwear


Grendene with recovering profit

Jul 28, 2014 Brazil
Grendene with recovering profit
During the second quarter of the year, the Brazil based footwear company, presented net revenue with modest growth (1%). Profit is now recovering and grew 9.4% in the second quarter, after a 5.7% decline in the first quarter

Grendene’s generated gross revenue of 163.2 million euros in the second quarter of the current fiscal year, declining by 3.2% compared to similar period last year. This movement was mainly motivated by the 4.6% decline in the domestic market (from 135.0 million euros to 128.8 million euros) and modest 2.4% increase in exports (from 33.5 million euros to 34.4 million euros).

Overall net sales for the period deteriorated by 1.0%, from 133.9 million euros to 132.5 million euros. Profit generated in the period went up by 9.4% reaching 24.2 million euros.

Average price during the second quarter of the year was set at 4.43 euros, growing 7% from similar period last year. Price in domestic markets (4.65 euros) continues to be higher than export's price (3.76 euros). However, export price presented a more dynamic evolution, with 8% growth, against 7% growth in domestic prices.

Profit in the first half of the year is in line with the first half of previous financial year, as variation rate was only 0.2% (168.5 million euros generated in half one in 2013 compares to 168.9 million euros in the first semester in 2014). The company congratulated itself for this result as it proves “the resilience of the operation notwithstanding the increased adverse situations". In fact, after decreasing in the first quarter of the current year (net income declined 5.7%, from 33.1 million euros to 31.3 million euros), the company managed to recover in the second quarter growing its profit by 9.4% (compared to second quarter in 2013).

According to the press release issued by Grendene the leading position in Brazilian footwear exports continues to belong to them, as they represented 33.2% of global footwear exports in that country during quarter two; notwithstanding a deterioration from similar period last year (36.4%).

This set of results for the second quarter and half year follows a complete year of 2013 highly marked by sales increment both in volume (16.8%) and value (16.2%). Net income in 2013 consolidated from the previous year, hitting 140.4 million euros (up by 1.1%).

As for future expectations the company continues to be cautious. “The market outlook in Brazil and abroad is still challenging, as expected and, in our opinion, it must not improve in the short term. In the domestic market, after the soccer world cup, the election uncertainties remain. In the foreign market, the recovery of the main markets has not yet been strong. 2Q14 was not surprising to us. The difficulties faced were the expected ones and the adjustments in this environment keep on (…) For this year, we do not expect volume growth, but we still expect some growth in revenue and profit. When the whole year is analyzed, it will be a challenge to maintain the last year margins, because we began the year with the highest costs of 2H13 and with prices not fully aligned yet. We also must adjust our costs structure to the volumes really demanded in this environment. However, we are confident. (...) Based on the performance presented, we believe we will achieve the goals proposed for the period 2008-2015.”

The company shares were last traded at 4.43 euros on the 28th of July at the São Paulo Stock Exchange (BM&FBOVESPA).

Founded in 1971, Grendene is one of the world’s largest producers of footwear. It has exclusive proprietary technologies in the production of footwear for the women’s, men’s and children’s markets. It owns several brands, such as Melissa, Grendha, Ilhabela, Zaxy, Rider, Cartago, Ipanema, Pega Forte, Grendene Kids and Grendene Baby. It also licenses the use of celebrity personalities, and characters in the world of children’s media. Grendene is a totally integrated operation, with six industrial locations and thirteen footwear factories, resulting in an aggregate capacity to produce 250 million pairs of shoes per year – it has its own mold-producing plant, a factory producing PVC for its footwear production, and distribution logistics serving both traditional and non-traditional distributors and retailers in the whole of Brazil, and in the export market.

For more information about Grandene please refer to the company's website.

Please note the company posts results in Brazilian real; Conversion to euros was made applying the exchange rates presented by the European Central Bank on the 28th of July.

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