earnings release 4q12
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Earnings Release 4Q12TRANSCRIPT
4Q12
Earnings Release March 1, 2013
2
Disclaimer
This notice may contain estimates for future events. These estimates merely reflect the expectations
of the Company’s management, and involve risks and uncertainties. The Company is not responsible
for investment operations or decisions taken based on information contained in this communication.
These estimates are subject to changes without prior notice.
This material has been prepared by Multiplus S.A. (“Multiplus“ or the “Company”) includes certain
forward-looking statements that are based principally on Multiplus’ current expectations and on
projections of future events and financial trends that currently affect or might affect Multiplus’
business, and are not guarantees of future performance. They are based on management’s
expectations that involve a number of business risks and uncertainties, any of each could cause
actual financial condition and results of operations to differ materially from those set out in Multiplus’
forward-looking statements. Multiplus undertakes no obligation to publicly update or revise any
forward looking statements.
This material is published solely for informational purposes and is not to be construed as a solicitation
or an offer to buy or sell any securities or related financial instruments. Likewise it does not give and
should not be treated as giving investment advice. It has no regard to the specific investment
objectives, financial situation or particular needs of any recipient. No representation or warranty, either
express or implied, is provided in relation to the accuracy, completeness or reliability of the
information contained herein. It should not be regarded by recipients as a substitute for the exercise of
their own judgment.
2
3
growth in non-air redemptions vs 4Q11
growth in Gross Billings vs 4Q11
13,5%
141%
Partners vs 190 in 4Q11
369
million members 16% growth vs 4Q11
10,9
4Q12 Highlights
3
4
We reached 369 partners (coalition, accrual and redemption)
More than 10,9 million members
190 200 207
230
369
0
50
100
150
200
250
300
350
400
450
4Q11 1Q12 2Q12 3Q12 4Q12
SMEs
Main partners
Total
9.4 9.8
10.1 10.5
10.9
4Q11 1Q12 2Q12 3Q12 4Q12
Number of partners Members, in mln
Network growth
4
+40% growth
in active base
5
Creating a good member experience: targeted offers
5
6
Adding value to partners: sales offers
6
7
Using Multiplus you can accumulate
points from different loyalty
programs in a single account
Branding a very new concept
7
Redeem your points to have moments
you would never put on sale
Emotional as of Oct/2012
Functional Jan/2010 ~ Oct/2012
Online media
Channels
Strategy
Radio spots Partner channels Press media
8
.
Credit Card usage
Expected double digit growth for next 3 years
Only 35% of customers understands that they have
enrolled in a bank loyalty program (vs 31% in 2011)
Business drivers remain robust
8
Consumption
Possible high single digit growth for next 3
years
Loyalty culture still in the early stages
Air transportation
Latin America is the second fastest
growing region in RPK
Average trips per capita is only 0.5 in
Brazil vs more than 2.0 in mature markets
Wealth distribution
A/B classes expected to reach 15% in 2014 (vs 7% in 2003)
Multiplus network focus on A, B and C+
Sources: Multiplus, Ernst&Young Global Consumer Banking Survey 2012, LCA Consultores, Euromonitor and FGV-Rio
9
398.3
347.1 319.5
378.4
430.9
17.4
15.2 14.5
16.7
19.4
4Q11 1Q12 2Q12 3Q12 4Q12
Net Revenue Points Redeemed
R$ 430,9 mln in Net Revenue R$ 492,0 mln in Gross Billings
433.6 430.4 457.1
491.4 492.0
4Q11 1Q12 2Q12 3Q12 4Q12
R$ mln & bln points R$ mln
Solid Gross Billings growth
9
10
Breakage rate:
gradual decline as expected 12 months average, in %
24.1% 23.4%
22.5% 22.0% 21.0%
4Q11 1Q12 2Q12 3Q12 4Q12
Non-air redemptions reached
1.3 bn points in 4Q12
0.0 0.1
0.2
0.3
0.5
0.6 0.6
1.1
1.3
4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Non-air redemptions, in bn points
Stable breakage rate besides non-air redemptions ramp-up
10
11
R$ 130,5 mln in FCF* R$ 52,9 mln in Net Income
151.1 156.1
129.8 124.5
79.0
4Q11 1Q12 2Q12 3Q12 4Q12
70.9
61.6
43.3
66.6
52.9
4Q11 1Q12 2Q12 3Q12 4Q12
RS mln R$ mln
* Excluding Dividends, Interest on Capital and variations of
Prepaid Expenses and Capital (4Q12 excludes also
anticipated settlement of R$71.3 mln of Accounts Payable)
Delivering Results
11
12
Net income analysis
12
70.9
70.1
14.4
19.3
18.9
20.1
10.5
4.8
52.9
4Q11 NetIncome
Points sold Redemptioncosts
Breakageprovision
Hedge SG&A Others* Taxes 4Q12 NetIncome
*Equity method, Financial Income and Other Revenues
+11.5% in points redeemed
+7.1% in unit revenue
+11.5% in points redeemed
-5.8% in unit cost
Marketing
and IT
13
Dividends
Interest on capital
Total
R$ 210,9 mn
R$ 11,6 mn
R$ 222,5 mn
Dividends
R$ 500 mn fixed limit for
pre-purchase of TAM Airline seats
with additional discount
Pre-purchase of air tickets
Better return for our
cash investments
Maximizing Shareholders Return
13
* based on current number of shares
More than 99%
Dividend Payout ratio
Recent developments ● Financial industry dynamics
● TAM Fidelidade improvement
● 11th Amendment to Operational Agreement
● Competitive environment
15
Financial industry dynamics
15
Sources: Multiplus, Ernst&Young Global Consumer Banking Survey 2012
66%
of total members have transferred points from non-financial
partners or from at least two banks in the last 24 months
65% of Brazilians have at least two banking providers
20%
29% of customers have changed their main banking provider in 2012
of Brazilians plan to switch their bank
16
TAM Fidelidade main improvements
16
Improved
flexibility
Points per seat will vary according to flight fare, improving
Multiplus competitive advantage
Air tickets redemptions window increased from 90 or 180
to 360 days before flight date
Several benefits such as some fee exemptions,
lowered points requirement and complimentary upgrades
Wider redemption
window
Premium members will collect up to 100% bonus points
Better recognition
to premium clients
Much more
bonus points
Effective from June 1st 2013
17
11th Amendment to Operational Agreement
17
New unit cost
From June 1st 2013 Multiplus’ unit cost will be only 3% higher than 2012
New unit price
From June 1st 2013, the unit price of points sold to TAM will be similar to current levels
as a result of new unit cost, breakage change and economic equilibrium rule
New transfer price methodology
From June 1st 2013, Multiplus and TAM Airlines start the setup phase to the new model
based on discounted air ticket market price
18
New pricing model methodology
18
Unit c
ost (R
$)
Jun/2013 ~Aug/2014
Cap
Floor
Previous model Setup period New pricing model
3% increase
Today
• Multiplus pays discounted
market price per seat
• 5% cap and floor protect margin
and guarantee business
sustainability
• Data gathering of
fares available
at redemption
moment
• Discount
measurement
• Unit cost set according to a
combination of TAM’s
marginal cost and revenue
displacement
• Short term fluctuations due to
TAM’s promotional activity
Average
Air tickets market price
Discounted market price
Long haul and South America flights priced in USD
ILLUSTRATIVE
12 months data gathering
Multiplus` implicit discount
19
Competitive environment
19
Four main reasons to be confident in
Multiplus case in a more
competitive environment
1
Early stages
Loyalty penetration in
Brazil is very low. In this
phase, new entrants
should help industry
growth
2
4 3
First mover
Multiplus has advantage
of an already established
network, now starting
more advanced moves
on data analytics
services and member
experience
Track record
Multiplus has 3 years of
proven focus on
shareholders
return with steady unit
prices, efficient breakage
management,
conservative cash
investments, and
high dividend payouts
LATAM Group
TAM Fidelidade program
is positioned
as the superior
loyalty program in
Brazil by offering the
most valued attributes to
our members: a lower
earn-to-burn ratios and
the larger network for
redemptions via TAM,
LAN and their airliner
partners
