Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dimed SA Distribuidora de Medicamentos (BSP:PNVL3, Financial) reported a substantial sales revenue growth of 17% in Q3 2024, significantly outpacing the industry.
- The company's adjusted EBITDA margin increased by 5.4%, reaching 71.8 million Rayis, with adjusted profit exceeding 37 million, up by over 37%.
- Dimed SA's digital operations set it apart, with over 21% of sales occurring via digital channels, and 49% of deliveries made in under 60 minutes.
- The company achieved a 1% market share in Sao Paulo, the largest market in Latin America, indicating successful expansion.
- Dimed SA's focus on customer satisfaction is reflected in a high Net Promoter Score (NPS) of 78, making it the best-rated pharmacy network in its region.
Negative Points
- The company's gross margin experienced slight pressure, decreasing from 30% to 29.9%, due to an increased share of drug sales.
- There was a temporary decrease in private label product sales due to inventory disruptions caused by floods affecting their Unipar Lab.
- Dimed SA faced challenges in logistics and supply chain costs due to the floods, impacting their operational leverage.
- The company is experiencing a decrease in wholesale sales, which will continue to have a low share in operations moving forward.
- Despite strong performance, the company acknowledges the competitive pressure from both local and national players in the pharma retail market.
Q & A Highlights
Q: On the topic of reducing the wholesale side, at what level should we expect these operations to be normalized? Is this a reflection of the floods and the change in routes mentioned in the release?
A: Wholesale will continue to have a very low share in our operations. The structural changes we've made are here to stay. In future periods, expect a small share from wholesale and a large share for retail. This aligns with our strategy to lower logistics costs and unlock cost benefits.
Q: Regarding your retail operations, what do you believe would be an ideal sales mix, considering the performance of drugs and private labels?
A: We aim for the HB (Health & Beauty) mix to grow at a similar pace, perhaps slightly slower than drugs. We understand that our stores' floor is crucial for beauty and toiletry products. Drugs might gain one or two percentage points in their sales share.
Q: Can you provide more color on your expansions, considering the change in the PIS/COFINS?
A: Both manufacturing and retail will find a way to maintain margins at a balance. We do not foresee a significant risk of lower-than-normal margins between March and April. We will use our strategies to keep gross margins healthy.
Q: What are the drivers for your share growth, and how do you see the competition dynamics in the South?
A: Our differentiation is key. We've focused on setting ourselves apart from the competition by investing in drugs, improving loyalty, and enhancing customer-facing technology. Our digitalization efforts and services have also contributed to our growth, especially among chronic disease patients.
Q: Regarding leverage and expansion, what is your outlook on indebtedness in the next few quarters, and is there room to grow your expansion beyond 60 stores?
A: We expect to end 2024 with a lower leverage level than Q3, aiming for a level equal to or lower than 2023. We plan to generate funds to invest and grow PVEL. For 2025, we maintain our expectation of opening 60 new stores, keeping the same pace.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
