profarma 1 q13

1Q13 Earnings Release

May 15, 2013

Highlights in the Period

• The Company entered the pharmaceutical retail market. It acquired on January 17 100% of the Drogasmil and Farmalife

chains, with 85 drugstores in Rio de Janeiro, for R$ 87.0 million, to be paid net of the Company's debt balance. On

January 30, it acquired 50% of Drogarias Tamoio chain, with 57 drugstores in Rio de Janeiro. The transaction was made

by means of a primary subscription of R$ 62.3 million and a secondary subscription of R$ 43.1 million, with a multiple

EV/EBITDA (2013E) of 7.5x;

• On February 21, Profarma entered into a joint venture agreement with Nutrilatina to create Supernova. As a result,

Profarma became the exclusive distributor and supplier of Nutrilatina's products for the pharmaceutical retail market and

entered a new sales channel: body shops;

• In March, the Company announced its first issue of debentures, totaling up to R$ 200.0 million. The proceeds from this

issue will be mainly used to pay for the acquisitions;

• A drop of 3.5 days in the Company's cash cycle when compared with 1Q12, to 51.1 days. This decrease resulted in a fall

of about R$ 19.1 million in working capital;

• It is worth noting the generics category, whose sales rose significantly by 31.3% YoY and for the third straight quarter;

• The annual price increase on March 31 came to 4.5% on average, the second highest in four years and twice as high as

last year's.

Gross Revenues Evolution

(R$ million)

4Q12 1Q13 1Q12

971.0

986.3

954.5

Gross Revenues Breakdown

(R$ Million)

Branded

Generic

OTC

Health and Beauty Products

Hospitals, Vaccines and Specialty

Total

1Q13

518.5

123.1

133.9

79.4

131.5

986.3

1Q12

552.7

93.7

126.3

69.1

112.7

954.5

Chg. %

-6.2%

31.3%

6.0%

14.8%

16.7%

3.3%

4Q12

544.1

110.3

127.2

77.2

112.3

971.0

Chg. %

-4.7%

11.6%

5.3%

2.9%

17.1%

1.6%

(R$ million and % Net Revenues)

Gross Profit and Revenues from Services to Suppliers

Gross Profit Revenues from Services to Suppliers Gross Profit Margin (%)

1Q12

37.8

45.0

10.2%

11.2% 10.7%

4Q12

39.7

50.7

1Q13

37.3

58.5

7.9% 7.5%

8.6%

1Q13

74.0

1Q12

61.1

4Q12

67.1


Operating Expenses - SGA

4Q12

18.8

1Q13

18.8

1Q12

20.2

2.2% 2.2% 2.5%


Ebitda and Ebitda Margin

1Q13

10.9

1Q12

7.2

4Q12

6.3


Net Financial Expenses

0.9% 0.7% 1.3

1Q13

6.9

1Q12

9.5

4Q12

7.8


Net Profit

0.8% 1.2% 0.9%

(R$ Million)

Cash Flow Generated / (Used) in Operating Activities

Internal Cash Generation

Operating Assets Variation

Trade Accounts Receivable

Inventories

Suppliers

Other Items

Cash Flow (Used) in Investing Activities

Cash Flow Generated / (Used) by Financing Activities

Net Increase / (Decrease) in Cash

Summary of Cash Flow

1Q13

(61.9)

14.0

(75.8)

(102.6)

5.0

33.7

(11.9)

(1.1)

132.3

69.4

1Q12

(72.2)

20.0

(92.3)

(64.5)

(13.0)

(11.1)

(3.7)

(1.7)

61.6

(12.3)

Chg. %

14.3 %

- 30.3%

17.8%

-59.2%

-

-

- 222.4%

33.3%

114.7%

-

4Q12

56.9

18.2

38.7

(18.9)

(66.9)

174.5

(50.1)

(3.0)

(18.6)

35.2

Chg. %

-

-23.3%

-

-

-

-80.7%

76.3%

63.3%

-

96.9%

* Average

(1) Average of Gross Revenues in the Quarter

(2) Average of COGS in the Quarter

(3) Average of COGS in the Quarter

Cash Cycle - Days *

Accounts Receivable (1)

Inventories (2)

Accounts Payable (3)

59.5

47.4

55.8

1Q13

51.1

51.0

48.2

52.9

4Q12

46.3

50.7

49.7

45.8

1Q12

54.6

(R$ milllion)

Indebtedness: Net Debt and Net Debt / Ebitda

1Q13

236.5

1Q12

197.2

4Q12

169.7

2.4x 1.8x

2.7x

1Q13

0.8

1Q12

1.7

4Q12

2.2


Capex

0.3% 0.2% 0.1%

Service Level

(Units served / Units Requested)

Logistics E.P.M.

(Errors per Million)

1Q12

114.0

4Q12

65.0

1Q13

115.0

1Q12

85.9%

4Q12

88.3%

1Q13

87.4%

PFRM3 IBOV Index

51.7

Profarma vs Ibovespa - % 1Q13

-7.5

Analyst Coverage

Credit Suisse Marcel Moraes (55 11) 3841-6302 [email protected]

Banco Fator Daniel Utsch (55 11) 3049-9483 [email protected]

BTG Pactual João Carlos dos Santos (55 11) 3383-2384 [email protected]

Juliana Rozenbaum (55 11) 3073-3040 [email protected] Itaú BBA

Javier Martinez de Olcoz (55 11) 3048-6088 [email protected] Morgan Stanley

Andre Parize (55 11) 5171-5870 [email protected] Votorantim

Merrill Lynch Mauricio Fernandes (55 11) 2188-4236 [email protected]

Company Analyst Phone number Email address

profarma 1 q13

Economy & Finance