Alpargatas, the parent of Havaianas, reported net revenue in the first quarter rose 11.7 percent. Net income was down 37.2 percent.

In the first quarter of 2018, worthy of note in Alpargatas’ results was the strong performance in Brazil, where net revenue increased by 22.9 percent as a result of revenue growth in all businesses, in particular Sandals.

Havaianas and Dupé sales volume exceeded the 1Q17 figure by 33.1 percent or 6.8 percent, if the sale of the 8.8 million pairs brought forward to 4Q16 is added to the number sold in 1Q17. As the Sandals business increased its share in revenue and showed increased profitability, the gross margin in Brazil was 4.5 percentage points higher than in 1Q17. Recurring EBITDA in Brazil increased by 175.0 percent (discounting non-recurring effects, such as the exclusion of ICMS tax from the COFINS calculation base in 1Q17).

In Sandals International, there was a reduction in revenues in foreign currencies in most regions, with the exception of LATAM, due to the decreases in volumes. Gross margin was 1.3 percentage point higher.

This was insufficient to offset the lower productivity in operating expenses, resulting in a reduction in EBITDA margin.

In Argentina, the positive variation of 19.0 percent in revenue in pesos was below local inflation. Gross margin dropped 5.1 percentage points due to the impact of lower manufacturing efficiency in production costs. Discounting the effects of non-recurring items, EBITDA margin in Argentina was down 4.2 percentage
points.

In comparison with 1Q17, the variations in the main consolidated indicators for 1Q18 were as follows:

  • Net revenue: R$902.1 million, up 11.7 percent.
  • Gross profit: R$408.8 million, an increase of 16.7 percent. At 45.3 percent, gross margin was 1.9 percentage point higher.
  • EBITDA: R$169.1 million, 31.8 percent lower, with a margin of 18.7 percent. Discounting the impact of nonrecurring items in both quarters, the consolidating recurring EBITDA increased by 40.3 percent and margin was 2.9 percentage points higher.
  • Net income: R$112.8 million, 37.2 percent lower, with a margin of 12.5 percent, impacted by non-recurring items in Brazil and Argentina.
  • Operating cash generation: R$427.6 million in the 12 months ended on March 31, 2018.