For the quarter ended Dec. 31, the Brazilian company’s revenues were down by 4.6 percent to 499.9 million Brazilian reais (€169.5m-$220.2m). While sales in Brazil fell by 21.2 percent to R$353.0 million (€119.7m-$155.5m), exports nearly doubled, up by 92.1 percent to R$146.9 million (€49.8m-$64.7m). Net sales fell by 3.2 percent to R$427.7 million (€145.1m-$188.4m).
The quarterly gross profit margin fell by 1.3 percentage points to 48.4 percent. Earnings before interest and taxes (Ebit) for the quarter decreased by 18.2 percent to R$69.2 million (€23.5m-$30.5m). Net income ended up at R$84.1 million (€28.5m-$12.6m), 16.5 percent lower than for the same period in 2007.
For the full year the picture looked better. Gross revenues grew by 4.0 percent to R$1,576.0 million (€534.5m-$694.1m), in line with the company’s guidance. Domestic sales fell by 3.6 percent to R$1,220.5 million (€413.9m-$537.5m), but exports grew by 42.6 percent to R$355.6 million (€120.6m-$156.6m). Net sales closed 4 percent higher at R$1,324.6 million (€449.2m-$583.4m).
The year’s gross profit margin fell by 1.0 percentage point to 46.2 percent, and the operating margin (Ebit) declined by 1.6 percentage points to 12.6 percent. Net income for the full year declined by 8.4 percent to R$243.2 million (€82.5m-$107.1m).
The volume of footwear produced was about the same in both years, 146.4 million pairs in 2008 compared with 145.6 million in 2007. Volume-wise, sales within Brazil fell by 6.6 percent, but increased by 19.4 percent for exports. Average unit prices increased by 3.4 percent to R$10.76 (€3.64-$4.73) per pair. For just the fourth quarter, volume fell by 16.5 percent to 42.5 million pairs, but average price was up by 14.3 percent to R$11.77 (€3.99-$5.18).
Grendene’s numbers compare well with the Brazilian market overall. According to figures from Secex and Abicalçados, the country’s footwear exports in 2008 fell by 1.6 percent in value (U.S. dollars) and by 6.4 percent in volume, with average price rising by 5.1 percent in dollars. Contrast that with Grendene’s 19.4 percent increase in volume exports, along with a 51.4 percent increase in value in dollars and a 27.0 percent increase in average price in dollars. The company’s share of total Brazilian footwear exports rose by 6.3 percentage points to 28.9 percent.
Grendene noted that the Chinese yuan, which lost 43.2 percent of its value against the real from 2003 to 2007, appreciated by 41.3 percent against the real last year, giving Brazilian footwear a competitive edge compared with the previous five years. That goes also for other Brazilian producers, of course. On the down side, though, 2008 also saw a reduction in economic activity and increasing unemployment, hurting the country’s industry as a whole.
Looking ahead, Grendene feels that it is well positioned for a prolonged economic tightening, as it does not depend on credit, it does not have foreign exchange exposure and its client and country base is large and varied. It also stressed that it has products at competitive prices in each category. However, because of the volatility of the market right now, it declined to give guidance for the immediate future, as has been its tendency. Instead it looked at the long term. For the period from 2009 and 2013, Grendene forecasts a compound annual growth rate between 8 percent and 12 percent, with net profit climbing by between 12 percent and 15 percent a year. To further these improvements, the company is going to continue its push to expand its sales outside Brazil, where it already has a large market share.