healthcare 1st trip

São Paulo – Avenida Cidade Jardim
Goiânia – Avenida 85
SANTANDER
&
DROGASIL
HEALTHCARE 1ST TRIP
May 27, 2008- DROG3
0
Presenters
Presenters
Cláudio Roberto Ely
CEO & Investor
Relations Director
Brief Profile
Drogasil President for last 10 years.
Chief of Planning & Control Division at Camargo Correa Construction.
CEO for Banco Geral do Comércio. CEO for Camargo Correa Metais.
Bachelor´s Degree in Civil Engineering from Universidade Federal Rio Grande
do Sul
Roberto Listik
IR manager since 2007.
Investor RelationsManager
Thomson Financial, Euromonitor representative for Brazil and Latin America
Regions. Financial Career developed at Chase,Citibank , Banco Cidade and
EDS in senior positions.
Bachelor´s Degree and Post Graduated Studies from Fundação Getúlio
Vargas- S.Paulo Brazil.
1
Drogasil: Snapshot
Pharma Retail Leader in Brazil
Overview
Drogasil Stores in Brazil
Drogasil has 73 years of presence in pharma
cosmetics retail in Brazil.
Second Largest drugstore chain S.Paulo.
D.F.
174 stores
Minas Gerais
# Stores:
1stQ07=>8,46% 1stQ 08=>9,65% market share1
24
# Stores
Minas Gerais
25
Goiás
Goiá
Goiás
1stQ07=>5,71% 1stQ 08=>5,86% market share1
Goías
# Stores:
19
Minas Gerais
1stQ07=>1,42% 1stQ 08=>6,51% market share1
4th largest drugstore chain in Brazil
São Paulo
242 stores
1st Q07=>3,26% 1stQ 08=>3,73% market share1
Logistics and Transport
Geographic coverage on 1,000km over 4
Brazilian States.
São Paulo
# de Stores:
- metropolitan area:
- Inner Cities
174
116
Legenda
58
Central Distribution
Stores
Nota:
1
As of March 2008, according to IMS Institute.
2
Drogasil :Shareholders
C a r l o s P i r e s Ol i v e i r a
Dia s
26,2%
Fre e Fl o a t
45,8%
Ta n t r a P a r t i c i p a ç õe s
Lt d a
10 , 3 %
Ma n a g e r s
6,8%
Re g im a r Co m e rc ia l
Tr e a s u r y
1, 5 %
S .A
9,4%
5
Note:
1.
2.
3.
4.
5.
Tantra - Lafer Galvão Family (100%)
Oliveira Dias Family (100%)
Stock Options dilution up to 3,0%
Stock Price calculated at R$14,35 ( May 21, 2008)
ShareHolders basis as of March 31, 2008. Buy Back in the total of
914.580 shares.
Outstanding Shares as of March 31, 2008:
61.859 M shares
Market Value: R$ 887,6 MM 4
3
KEY DRIVERS TOWARDS DROGASIL GROWTH
Consistent GDP Growth
+
10,0%
Actual Growth on Population Income
+
GROWTH
Generic Drugs penetration growth
+
Brazilian population life expectancy growth
+
Growing presence women in labour market
+
“ Life Style” Drugs patent expiration in 2008-09.
+
Formal Economy: Tax Evasion Reduction.
4
Brand Loyalty – Consumer Respect- Intrinsic Values
Drogasil has the loyalty from its customers. According to TNS Institute poll, Drogasil has been
elected Best Pharmacy towards Consumer Respect in Brazil.
… Clients
… Suppliers
Chain of choice of our suppliers in new
launchings
7 milhões
Drogasil increases its relevance as
distribuition channel for C& T + Pharma
Industry.
Scalability
Strategic Points of Presence.
Geographic Predominance.
TNS INTERSCIENCE AWARD
Brand Loyalty . Services Oriented.
Seminars,Workshops about Health topics
in our drugstores neighborhood &
community.
Client database available to potential
mail –orders and e- commerce .
64 cities
in Brazil
(MAR/08)
…
5
Expansion - New Markets- Selective and Accretive Acquisitions
Drogalins: 10 Store Locations in
Goiania City( August 21, 2007)
Drogaria-Vison: Drugstore chain
acquisition with 24 Stores in Brasilia
D.F.
Drogasil Competitive Strength
Scalability
Brand
Mix of Products .
Consumer Services.Practices and
Procedures distinct on new markets.
Drogasil: Expansion with Consistent Financials
239
211
Drogasil Presence
151
164
3,3%
3,5%
2004
2005
183
179
6,1%
5,6%
4,6%
5,1%
2006
2007
Number STORES
4,2%
4,1%
1Q07
1Q08
EBITDA MARGIN-% Gross Revenue
6
Drogasil : Continuous Training Towards Service Excellence
115,000 hours of training in 2006.150,000 hours of training in 2007.
42 hours training per employee in 2006. 40 hours training per employee in
2007
733 pharmacists (as of March 31,2008) for 239 stores. Pharmacists available
during stores working hours.
Scholarship programs : Granted 40 scholarships for College Programs.
Number of Employees per area.
2006
2007
2008
st
1 Q
Statistics do not include Vison 24 stores
Adm
201
220
224
C.D.
271
314
366
Stores
2.989
3.714
3.803
Total
3.461
4.248
4.393
7
DROGASIL : 1st Q 2008- Major Topics
S.Paulo State – “Substituição Tributária”( VAT Advance – New Systematic in place). Started
Feb 01, 2008.
Guidance Revision Upwards- From 30 to 50 new store opennings in 2008.
Stocks Buy- Back Program: up to 3,7mm DROG3 stocks repurchase.
Drogaria VISON acquisition. DROGASIL presence in Brasilia(DF).
Interest on Own Capital & Dividends.
E- Commerce launching.
Statistics do not include Vison 24 stores
8
Substituição Tributária- VAT Advance.
Departamento Relações com Investidores
The ICMS(VAT) Systematic- A Comparison
- São Paulo
VAT
COLLECTED
SALE
BUY
PRICE= TAX BASIS
Supplier
DISCOUNT
Purchase Price
ICMS CREDIT
ICMS Retido= VAT ADVANCED
TAX BASIS (38,24% )=Tax Basis Price Reference
ICMS DEBIT
Custo=COGS
Venda= Sales
PMC= GROSS SALES
DISCOUNT
Sales Price= Preço de Venda
ICMS DEBIT
Venda Líquida=NET SALES
ICMS ST <> Preço Praticado x Base Retenção
MARGIN VALUE
Gross Margin Calc ( Compared to Net Sales)
Gross Margin Calc ( Compared to Gross Sales)
ICMS DEBIT
ICMS CREDIT
ICMS VAT ADVANCED
ICMS ST <> Preço
Total
DEBIT
CREDIT
0%
18%
100,00
100,00
(18,00)
82,00
0%
18%
138,24
138,24
(24,88)
113,36
31,36
27,66%
22,68%
(24,88)
18,00
(6,88)
SUBSTITUIÇÃO
TRIBUTÁRIA
100,00
0%
100,00
18%
(18,00)
6,88
138,24
18%
24,88
106,88
0%
138,24
138,24
138,24
31,36
22,68%
22,68%
(6,88)
(6,88)
(1)DRUGS
3 Categories for Drugs- Price Reference Basis(Mark-Up Basis) for VAT Calculation under " Substituição"
38,24% - Drug products that collect Pis/Pasep and Cofins taxes( also denominated positive list).
33,00% - Drug products that does not collect Pis/Pasep and Cofins taxes(also denominated negative list)
41,38%- Drug Product is under no classification for Pis/Pasep and Cofins taxes( also denominated neutral list).
(1)Cosmetics & Toiletries.
Price Reference Basis(Mark-Up Basis) for VAT Calculation under " Substituição"
CAT 8 as of January 31, 2008
Parfums: 165,55%
Deo Colonies, Skin Care, Permanents, products: 71,60%( any C& T product subject to previous icms-vat @ 25% )
Hair Care, Oral Care, Bath & Shower, Men´s Toiletries, Baby Care:38.90%( any C&T product subject to previous icms -vat @ 12%or18% )
9
DROGASIL: INTEREST ON OWN CAPITAL & DIVIDENDS
R$ 12,000
60%
R$ 10,005
50%
49.1%
46.2%
R$ 9,000
40%
35.2%
35.8%
33.8%
35.7%
34.6%
R$ 5,931
28.5%
30%
R$ 5,022
20%
R$ 6,000
R$ 3,366
R$ 2,824
R$ 2,848
R$ 3,000
R$ 2,354
10%
R$ 1,412
R$ 0
0%
2002
2003
2004
2005
2006
2007
Interest on Own Capital & Dividends
1Q07
1Q08
% Net Income
10
Financial Highlights
Sales Mix % Gross Sales Breakdown – 1ST Q2008
Sales Mix % Gross Sales Breakdown –1ST Q2007
1Q08
1Q07
72,9%
Drugs
Generic
OTC
65,6%
27,1%
20,0%
19,8%
OTC
19,2%
Branded
0,0%
15,3%
Generic
15,2%
Non Drugs
73,5%
Drugs
40,0%
64,9%
Branded
26,5%
Non Drugs
60,0%
80,0%
0,0%
20,0%
40,0%
60,0%
80,0%
5%
36%
34%
C as h
C he c ks
Receivables Method – 1st Q 2008
D e b i t C a rd
P re D a t e d C he c ks
C re d i t C a rd
A f f il ia t e P ro g ra ms / P b ms
2%
4%
19 %
11
DROGASIL: SAME STORE SALES
58,8%
55,9%
45,50%
47,5%
44,4%
22,7%
19,1%
18,0%
14,3%
16,5%
11,6%
2004/03
15,6%
12,3%
2005/04
Total
2006/05
More than 3 years
2007/2006
14,60%
11,30%
1Q08 / 1Q07
Less than 3 years
12
DROGASIL: Same Store Sales Index Analysis
Number of Stores at Year end:211 Stores.
Drogaria Vison acquisition: Feb, 2008.
STORES
dez-07 mar-08 jun-08 set-08 dez-08 mar-09 jun-09 set-09 dez-09
More Than 3 Years
149
154
160
160
164
168
172
176
180
Less than 3 Years
30
29
27
35
47
71
67
63
59
Not Included in the Index
32
56
52
44
28
0
0
0
0
TOTAL
211
239
239
239
239
239
239
239
239
13
Growth with Efficiency
GROSS REVENUE
R$Million
CAGR: 24,9%
26,0%
1.000,0
900,0
24,1%
1.006,0
817,5
800,0
GROSS MARGIN
23,1%
CAGR:24,4%%
R$ 250
R$ 200
658,5
700,0
25,2%
600,0
522,8
30%
22.7%
23.1% 22.6% 22.5% 22.5%
21.7%
R$ 150
226.8 20%
500,0
R$ 100
400,0
222,6
R$ 50
200,0
100,0
120.9
149.1
50.6 60.7
R$ 0
-
Value R$millions
07
20
06
20
05
20
04
2004 2005 2006 2007
1Q
07
1Q
08
1Q07 1Q08
10%
20
300,0
184.5
278,7
Gross Margin-% on Gross Revenue
14
Growth with Efficiency- Performance
Drogasil X Abrafarma- BRASIL
Monthly Sales Per Store
500
464
450
400
364
350
300
250
281
270
200
150
ma r/ 0 4
jun/ 0 4
s et/ 0 4
dez/0 4
ma r/ 0 5
jun/ 0 5
s et/0 5
dez/0 5
ma r/ 0 6
jun/ 0 6
Abrafarma - Br
s et/ 0 6
dez/0 6
ma r/ 0 7
jun/ 0 7
s et/0 7
dez/0 7
ma r/ 0 8
Drogasil - Br
Drogasil X Abrafarma
Sales Per Employee
25.000
22589
23.500
22.000
20.500
19.000
17692
17.500
16.000
14.500
13.000
11.500
10.000
mar/07
abr/07
m ai/07
jun/07
jul/07
ago/07
set/07
Ab rafarma BR
out/07
nov/07
dez/07
jan/08
fev/08
m ar/08
Dro g as il
15
Growth with Efficiency
CAGR:42,5%%
CAGR:60,7%%
EBITDA
57.5%
NET PROFIT
35.0
32.8
4.0%
34.0%
60.0
51.3
3.7%
113.8%
30.0
5.1%
50.0
32.2%
3.2%
3.0%
25.0
20.0
40.0
20.8 2.5%
22.3%
30.0
1.5%
10.0
7.9
9.7
38.3
1.0%
10.0
4.0
-
0.0%
1Q07
1Q08
2004
R$ MM
2005
% Gross Revenue
2006
2007
4.0%
3.5%
21.5%
23.4
17.7
20.0
1.4%
4.6%
4.1%
1.8%
10.2
5.0
4.2%
3.3%
158.4%
2.0%
15.0
6.0%
63.4%
9.3
2.0%
11.3
-
0.0%
1Q07
1Q08
2004
R$ MM
2005
2006
2007
% on Gross Revenue
16
25
24
24
24
18
25
24
22
20
20
28
31
38
52
50
52
57
55
54
56
52
52
64
63
62
60
58
56
56
54
52
49
52
54
52
53
55
57
54
55
56
53
59
67
68
66
72
CD
21
24
24
24
26
28
33
48
50
46
53
52
54
52
56
61
61
DIAS EM ESTOQUE - TOTAL
UNIDADES (MIL)
22
27
30
29
27
22
22
22
24
23
23
25
22
22
22
23
22
22
21
23
42
58
58
62
60
59
58
58
58
68
80
35
33
55
55
54
58
59
61
59
60
61
62
65
69
70
Menu
24
29
27
29
24
24
26
27
28
30
33
50
44
60
27
29
28
30
29
30
32
29
40
36
38
41
48
49
50
48
50
70
23
35
32
34
34
30
35
33
31
31
31
28
28
32
28
32
31
28
31
30
30
29
29
29
27
29
29
32
32
27
31
29
32
30
31
32
30
31
31
33
33
31
33
31
33
31
32
32
31
34
30
32
31
29
32
32
33
30
31
30
30
30
29
31
29
26
28
27
20
18
18
17
30
25
25
26
23
22
Working Capital Analysis: Days on Inventory
Lojas
Total
10
jun-02 set-02 dez-02 mar-03 jun-03 set-03 dez-03 mar-04 jun-04 set-04 dez-04 mar-05 jun-05 set-05 dez-05 mar-06 jun-06 set-06 dez-06 mar-07 jun-07 set-07 dez-07 mar-08
17
DROGASIL: DROG3 PERFOMANCE
Volume in Reais - SharePrice DROG3
R$ 20.000
R$ 18,0
R$ 18.000
R$ 16,0
R$ 14,0
R$ 14.000
R$ 12,0
R$ 12.000
R$ 10,0
R$ 10.000
R$ 8,0
R$ 8.000
R$ 6,0
R$ 6.000
R$ 4,0
R$ 4.000
R$ 2,0
R$ 2.000
R$ 0
ago-07
DROG3
VOLUME REAIS
R$ 16.000
R$ 0,0
set-07
out-07
nov-07
dez-07
Volume
jan-08
fev-08
mar-08
abr-08
mai-08
Price Avg
20,0
600
10,0
400
5,0
200
Stock Price (R$)
abr-08
jan-08
out-07
ago-07
jun-07
mar-07
jan-07
out-06
ago-06
mai-06
mar-06
jan-06
out-05
ago-05
0
mai-05
0,0
mar-05
DROG3 ADTV in USD: 1,3MM
800
15,0
jan-05
DROG3 was ranked the 160 Bovespa
most traded share YTD
April 2008.(source: Bovespa)
1000
Rel. Brazil: Bovespa
18
DROG3: Research Coverage.
Broker
Investment
Analyst
Phone
E-Mail
Reports
Produced in
SAFRA
Victor Martins
(5511) 3175-7689
[email protected]
Portuguese
BRADESCO
Ricardo Boiati
(5511) 2178-5326
[email protected]
English
UBSPACTUAL
Jander Medeiros
(55 21)3262-9637
[email protected]
English
BULLTICK
Giuliano Tagliari
(5511)3089 -8749
[email protected]
English
ITAU
Renata Faber
(5511) 5029-4542
[email protected]
English
PROSPER
Alan S. Cardoso
(5521) 2138-8465
[email protected]
Portuguese
UNIBANCO
Juliana Rozenbaum
(5511)3584-1675 [email protected]
English
19
Q&A
Drogasil S.A.
Avenida Corifeu de Azevedo Marques, nº 3.097
Vila Butantã – São Paulo
0533905339-900
www.drogasil.com.br/ir
Roberto Listik
Investor RelationsRelations- Manager
Tel.(5511) 37693769-5670
E-mail: [email protected]
Cláudio Roberto Ely
CEO & Investor RelationsRelations- Director
E-mail: [email protected]
SANTANDER HEALTHCARE 1ST TRIP
May27, 2008- DROG3
20