Grazziotin (CGRA4) Q2 2024 earnings summary

Executive summary

• Consolidated net revenue for the first half of 2024 reached R$342.1 million, up 4.9% year-over-year, driven by growth in retail and financial operations.

• Severe climate events in southern Brazil impacted operations, affecting up to 20 stores directly, causing temporary closure of 11, and permanent closure of two; nine stores and shopping center operations in Porto Alegre were notably disrupted.

• Net income for the period was R$31.3 million, a decrease of 37.5% compared to R$50.1 million in the same period of 2023.

• Grazziotin and Tottal brands saw sales growth of 8.5% and 12% respectively; two new stores opened and eight renovated.

• Grato Agropecuária faced a 50% drop in corn productivity due to drought, while cotton harvest showed good results.

Financial highlights

• Gross profit for the first half of 2024 was R$179.9 million, with a gross margin of 52.6%, slightly down from 55% in the prior year.

• EBITDA was impacted by higher provisions for credit losses and flood-related losses, with total operating expenses rising to R$307.6 million from R$300.8 million year-over-year.

• Net income for 2Q24 was R$25.8 million, a 34.86% decrease year-over-year.

• Cash and equivalents at June 30, 2024, totaled R$145.7 million, down from R$168.7 million at year-end 2023.

• Same-store sales fell 0.11% year-over-year; new stores contributed 2% of 2Q24 sales.

Outlook and guidance

• Management is focused on resuming operations in flood-affected locations and implementing contingency plans to mitigate future climate risks.

• Continued investment in store expansion and modernization to enhance competitiveness and customer experience.

• Ongoing focus on disciplined credit policy and recovery to maintain low delinquency rates.