Azzas 2154 (AZZA3) Q4 2025 earnings summary

Executive summary

• Achieved BRL 14.7 billion in gross revenue for 2025, up 7.1% year-over-year, driven by strong DTC channels, 7% SSS growth, and portfolio simplification.

• Focused on integration, expense dilution, and shutting down underperforming brands to enhance efficiency post-merger.

• Operating cash generation reached BRL 1.2 billion, with a 71% pre-IFRS EBITDA conversion and leverage reduced to 1.28x, even after BRL 500 million in dividend payments.

• Strategic vision for 2026 includes leveraging AI, differentiated capital allocation, and tailored strategies for each business unit, with Hering turnaround as a key priority.

• Disciplined capital allocation led to a 9-day reduction in inventory days and a 31% reduction in annual CAPEX.

Financial highlights

• 2025 recurring EBITDA was BRL 1,941.1 million (+5.8%), margin at 16.4% (+0.6 p.p.); ex-Hering margin was 18.4%.

• Q4 2025 recurring EBITDA was BRL 501.1 million (-3.5%), margin at 15.4% (+0.1 p.p.), with SG&A down 5.4%.

• Net profit in Q4 was BRL 168 million, stable year-over-year, with a margin of 5.1%.

• Operating cash flow for Q4 was BRL 838 million, the highest since the merger; full-year operating cash generation was BRL 1.17–1.2 billion.

• Shareholder returns totaled BRL 667 million via dividends and buybacks in 2025.

Outlook and guidance

• 2026 will focus on stabilization, simplification, and execution, with Hering turnaround and ROIC improvement as key priorities.

• Expectation of continued strong cash generation, with structural changes supporting sustainability.

• Disciplined CapEx at 2025 levels and international expansion, especially for Farm, are anticipated.