Alpargatas loses profit, but sales rise in July

After the World Cup, which resulted in a fall in the volume of products sold by Alpargatas and profitability of the company in Brazil, the Hawaiian Sandals manufacturer is optimistic about the second half. In July, the volume of sales rose 29% in the country.
The expectation is ending the year with an increase of 10% to 12% in consolidated net revenue and Ebitda margin at the same level as of 2013. In the second quarter, the company's net revenue rose 5.2% to $ 874,3 million. In Brazil, the high was only 0.4%.
The weak performance in the domestic market is to be expected, due to the smaller number of working days during the World Cup and the slightest movement in stores. In June, sales of Alpargatas rose 8.3% in volume in Brazil, but in April and may was decrease, due to anticipation of the launch of the collection, from June to may, because of the event.
The biggest marketing expenditures during the tournament have affected the profitability of the company. The unstable exchange also pressured the Alpargatas results during the period. In Argentina, for example, was decrease of 8.7% in net revenue in reals, despite the high of 30% in sales in pesos. In Brazil, the impact of exchange rate variations in the cost of imported products and rubber contributed to the fall in gross margin. A pound of rubber was 5% more expensive than a year earlier. For the second half, Alpargatas estimates that the cost of rubber, in dollars, will continue stable before the second quarter of this year.
Utsch said that the debt crisis in Argentina has not affected the business of the company so far, as the country manufactures Alpargatas. "We're making money," he said. The brand of sports shoes Topper is a leader in the country. For Utsch, may occur until a positive effect, since several competitors matter for the country and can harm with the barriers imposed by the Government.
The company's new factory in Montes Claros (MG), inaugurated at the end of last year will help meet the domestic demand. In 2013 the Alpargatas had limited production capacity. The maturation of the plant will also help the gross margin, says CFO José Roberto Dragos. The company made adjustments in production and spending control in operation argentina who consumed $ 6.5 million in the second quarter. Second Dragos, restructuring has already brought gains in revenue and profitability.
Spending on the new plant, with a restructuring in Argentina and with marketing at World Cup contributed to a fall of 67.7% in net profits in the second quarter, to $ 22.8 million.
The Alpargatas must exercise the right to purchase over 30% of Osklen fashion retailer in the next two months, says Utsch.