Grendene (GRND3) Q2 2024 earnings summary

Executive summary

• Gross revenue rose 3.1% year-over-year in 2Q24 to R$604.4 million, with gross profit up 8.0% to R$204.7 million and recurring EBIT up 47.6% to R$42.4 million, despite challenging markets and high inflation.

• Recurring net profit fell 27.1% year-over-year to R$61.7 million in 2Q24, mainly due to lower financial results and tax effects.

• For 1H24, gross revenue reached R$1.27 billion (+1.8%), gross profit rose 9.2% to R$445.1 million, and recurring EBIT grew 36.3% to R$140.8 million.

• Export volume grew 16.6% year-over-year in 2Q24, while internal market volume declined 3.1%; overall volume reached 26.7 million pairs.

• E-commerce sales surged, with GMV up 37.6% and online channel EBIT up 904.5% year-over-year.

Financial highlights

• Gross margin improved to 42.6% in 2Q24 (+1.7 pp YoY); recurring EBIT margin rose to 8.8% (+2.6 pp YoY); recurring net margin declined to 12.9% (-5.4 pp YoY).

• Net financial revenue dropped 56.0% year-over-year in 2Q24 to R$31.8 million, mainly due to lower returns on cash investments and FX variations.

• E-commerce gross revenue grew 20% in Q2; online sales represented 1.6% of domestic sales.

• Capex in 1H24 totaled R$71.3 million (+9.9% YoY), focused on asset replacement and operational improvements.

• Net cash position at R$1.5 billion as of June 30, 2024 (+44.5% YoY), representing 65.4% of LTM net revenue.

Outlook and guidance

• Management expects gradual macroeconomic improvement, with lower inflation and interest rates, but a lag before full consumption recovery.

• No extraordinary events expected to alter strong cash generation in the second half.

• Board approved a share repurchase program, to be executed if deemed appropriate.