Vulcabras, the Brazilian company that owns the Olympikus brand of sports shoes, has definitely turned the corner. It has reported a net profit of 188.9 million reais (€47.0m-$58.3m) for 2017, up sharply from R$35.7 million in the year-ago period, on 11.4 percent higher net revenues of R$1,263.1 million (€313.9m-$389.6m).
Sales of athletic shoes went up by 19.3 percent to R$993.4 million (€247.0m-$306.5m) last year, representing 73.4 percent of the group's total turnover. The balance consisted mainly of the group's two brands of women's shoes, Azaleia and Dijean, whose sales declined by 17.6 percent to R$178.9 million (€44.5m-$55.2m).
In terms of volume, sales of athletic footwear increased by 12.6 percent to 14.7 million pairs, while deliveries of women's footwear declined by 16.7 percent to 5.7 million pairs. Work boots and clothing made marginal contributions to the total turnover.
Citing a survey by Kantar World Panel, Vulcabras said that Olympikus regained its leadership in the sports footwear sector in Brazil. It was probably number one in volume, but not in value. The group's other major shoe brand, Azaleia, went through a reorganization and repositioning in the women's footwear market, and the results are expected in the coming months.
Vulcabras' gross margin improved last year by 3.6 percentage points to 38.2 percent. The Ebitda margin grew at an even faster rate, going up by 7.1 percentage points to a comfortable level of 23.5 percent of sales. Sales of clothing increased by 30.5 percent but had a share of only 2.2 percent of the turnover. About 88.8 percent of group's total revenues were generated in Brazil, where they went up by 13.5 percent.
In the fourth quarter alone, sales went up by only 2.4 percent to R$314.6 million (€78.3m-$96.4m), due to a slowdown in retail sales in October, but revenues from athletic footwear increased by 11.3 percent to R$247.0 million (€61.4m-$76.2m). The group's gross margin rose by 1.6 points to 38.0 percent in the quarter. The Ebitda margin increased by 4.1 points to 22.4 percent and the company ended up with a quarterly net profit of R$45.5 million (€11.3m-$14.0m), improving the net profit margin to 14.4 percent of sales from 4.4 percent in the year-earlier period.
The growing profitability and the proceeds from last October's public offering allowed the company to drastically reduce its debt by R$525.3 million (€130.6m-$162.1m) and to start generating cash, in contrast with a still negative cash position at the end of 2016. It also allowed Vulcabras to raise its investments in the modernization of its factories by 27.5 percent to R$61.7 million (€15.3m-$19.0m). The group employs more than 15,000 people at five sites in Brazil.
As part of the group's cost-cutting program, Olympikus decided last year that it would not renew its sponsorship of the Brazilian Volleyball Confederation. This move helped Vulcabras to reduce its total advertising and marketing expenses to 3.9 percent of net revenues last year from 5.2 percent in 2016. Administrative expenses were cut by 14.0 percent.
