Grendene (GRND3) Q3 2024 earnings summary

Executive summary

• Gross revenue in 3Q24 rose 10% year-over-year to R$926.5 million, with recurring EBIT up 31.6% to R$161.2 million and recurring net profit up 45.9% to R$239.4 million, driven by strong domestic market and Melissa brand performance despite export declines.

• Gross margin improved to 47.9% in 3Q24, supported by higher value-added products and cost efficiency.

• Volume sold in 3Q24 declined 1.5% year-over-year, with domestic volume up 1.1% and export volume down 13.5%.

• Strong cash generation led to a net cash position of R$1.6 billion as of September 30, 2024.

• Strategic focus on innovation, cost control, and higher average selling prices supported results amid challenging macroeconomic conditions.

Financial highlights

• Gross profit in 3Q24 was R$358.7 million (+14.5% YoY), with gross margin up 2.4 pp to 47.9%.

• Net financial revenue in 3Q24 more than doubled to R$108.7 million (+115.2% YoY).

• Net revenue per pair in 3Q24 was R$18.52 (+10.4% YoY); COGS per pair was R$9.66 (+5.7% YoY).

• Recurring EBIT margin in 3Q24 was 21.5%, and recurring net margin reached 31.9%.

• Operating expenses as a percentage of net sales fell to 26.4% from 27.7% YoY.

Outlook and guidance

• Management views potential US import tax increases as an opportunity due to limited local competition.

• Strengthening of the dollar is favorable as dollar revenues outweigh costs.

• Early signs of domestic consumption recovery are noted, but demand impact is expected to materialize gradually.

• Continued focus on cost control, innovation, and market expansion to sustain performance.