Under Armor says ready for synergies, says Vulcabras president

“Under Armor is fully capable of taking advantage of synergies with other brands.” said Pedro Bartelle, president of Vulcabras Azaleia.

The CEO pointed out that the company worked intensively on the integration and absorption
of Under Armor's business areas during 2019, resulting in above-average spending. And that from the fourth quarter, with the internalization of the electronic commerce operations (e-commerces) of Olympikus and Azaleia, there was use of the already existing structure of the Under Armor brand.

“With the joining of e-commerces of all the brands on the management of a
single structure, and with all other departments completely integrated, Under
Armor is fully capable of taking advantage of synergies with other brands. ”, said Pedro Bartelle, president of Vulcabras Azaleia.

In the fourth quarter, the companies also completed their second expansion of factories located in Bahia and Ceará. Which will provide productivity gains for all other company brands. Bartelle also highlighted the sales growth in Brazil in the fourth quarter. Having “good sales” on Black Friday and the Christmas period.

Vulcabras Azaleia ended the fourth quarter of last year, with growth of 5.6% in net revenue, totaling a net revenue of R$ 373.9 million. Net income fell by 2.4%, amounting to R$ 45.1 million, with expenses growth stronger than revenue growth. Costs, however, advanced at a faster pace. Making the company's gross margin retreat 2 percentage points, going from 37.8% to 35.8%.

Vulcabras, in his opinion, says that there was an increase in the cost of some raw materials and other manufacturing costs. “In 2019, as a percentage of net sales revenue, cost of sales represented 65.3%, compared to 64.1% in 2018. In the fourth quarter of 2019, as seen in the first nine months of year, there was an increase in the cost of products produced due to the increases practiced
on some raw materials and other manufacturing costs, without the possibility of
pass-through to selling prices.” they stated.

In the last quarter of the year, Vulcabras managed to reduce administrative expenses by 6.5%, to R$ 29.8 million with cuts in personnel, travel and electricity expenses. Added to the increase in expenses with third-party services. This, however, was not enough to offset the 9.4% growth in selling expenses — which, according to the company, reflected the increase in freight expenses and provisions for doubtful accounts. There was also a deterioration in the “other operating income/expenses” line, which was negative at R1TP4Q 2.2 million.

In the financial sector, there was an improvement due to the reduction in expenses with interest liabilities, the exchange result and the recognition of R$ 10.2 million in revenue related to the adjustment to present value of ICMS debt in Sergipe. Financial income grew by almost 490% to R$ 15.2 million, while financial expenses decreased by 19% to R$ 7.7 million. As a result, the final, net financial result was R$ 45.7 million, remaining positive. In 2018 in the same range, the result was negative at R$ 6.9 million. Earnings before interest, taxes, depreciation and amortization (Ebitda) amounted to R$ 60.2 million, an amount 12.9% lower than that calculated a year before that period.