Alpargatas (ALPA4) Q4 2023 earnings summary

Executive summary

• Q4 net revenue fell 8.5% YoY to R$1.01bn; FY revenue declined 10.7% to R$3.73bn.

• Q4 reported net loss was R$1.61bn, while normalized net income was R$4.8m; FY reported net loss was R$1.87bn.

• Q4 normalized EBITDA was R$67.3m, down 55.9% YoY; FY normalized EBITDA was R$214.8m, down 68.8%.

• H2 cash generation and working-capital release improved, supporting a 2023 turnaround focused on cash, Brazil competitiveness and expense discipline; 2024 priorities shift toward sustainable growth.

Financial highlights

• Q4 statutory EBITDA was -R$1,194.4M; excluding R$1,261.7M of extraordinary items, normalized EBITDA was R$67.3M.

• Consolidated Q4 gross profit fell 11.9% to R$366.6m; gross margin declined 1.4pp to 36.3%. FY gross profit fell 22.4% to R$1.50bn.

• Q4 COGS fell 6.5% YoY to R$642.6m, supported by manufacturing optimization and lower raw-material costs.

• Excluding extraordinary items, Q4 operating expenses were R$360.7m, up 17.7% YoY; FY expenses were R$1.49bn, up 6.5%.

• Net operating cash generation was R$281M in Q4; May-Dec 2023 cash generation totaled R$505M, following R$1.2B cash consumption from Apr 2022-Apr 2023.

Outlook and guidance

• 2024 priorities include sustainable growth, capability development, renewed brand investment and consistent execution.

• Brazil priorities include restoring competitiveness and operating leverage, with continued focus on expense discipline, cash and optimized CAPEX.