Investor Presentation - October 2014

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Investor Presentation - October 2014

Text of Investor Presentation - October 2014

  • 1. Investor PresentationOctober 2014

2. 2DisclaimerThis notice may contain estimates for future events. These estimates merely reflect the expectations of the Companys 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 managements 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. 3. First moverWe are pioneers in this industry in Brazil and we already have a strong partnership network, highlighting LATAM Airlines, all local banks and the joint venture with our international peer, AIMIA Group.23Track recordMultiplus has already 4 years of proven focus on shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices.Early stagesBrazilian loyalty industry has very low penetration and presents solid growth drivers14Solid strategy Our business sustainability is based on network diversification, member engagement and value delivery to partnersFour main reasons to be confident in Multiplus case 4. First moverWe are pioneers in this industry in Brazil and we already have a strong partnership network, highlighting LATAM Airlines, all local banks and the joint venture with our international peer, AIMIA Group.23Track recordMultiplus has already 4 years of proven focus on shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices.Early stagesBrazilian loyalty industry has very low penetration and presents solid growth drivers14Solid strategyOur business sustainability is based on network diversification, member engagement and value delivery to partnersFour main reasons to be confident in Multiplus case 5. Brazilian loyalty industry is still in early stages53,9%25,3%24,2%20,9%20,5%14,4%7,3%6,3%6,1%4,8%2,4%Penetration of loyalty programs in total population (%)Sources: loyalty programs websites and each country statistic data bureau (Updated in Jan/2014)High growth potentialAverage (ex-Multiplus): 18%5 6. Multiple long term growth driversCredit 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)Consumption Possible high single digit growth for next 3 years Loyalty culture still in the early stagesAir transportation Latin America is the second fastest growing region in RPK Average trips per capita is only 0.5 in Brazil vs more than 3.0 in mature marketsWealth distribution A/B classes expected to reach 15% in 2014 (vs 7% in 2003) Multiplus network focus on A, B and C+6 7. Multiple long term growth drivers71.9802.2492.4992.7453.0172009201020112012201319,9%21,7%24,1%25,9%27,7%2009201020112012201320032013Card ExpenditurePCE- Private Consumer Expenditure(R$ billion)(R$ billion)Card Expenditure over PCE(%)Wealth DistributionA and BCD and ECD and EA and B4876017108379571,09323.6%23.4%18.1%17.9%14.3%15.0%20102011201220132014E2015ER$ bilhesVariao YoYSource: Abecs / BainSource: Abecs / IBGESource: Abecs / IBGESource: Serasa Experian Data popular 8. THREE SOURCES OF PROFITSources of profit: coalition# of months~1002432points sellingredemptionunit revenue less unit costspread1CASH INCASH OUT~10 months float interest incomepoint expiration breakage8 9. First moverWe are pioneers in this industry in Brazil and we already have a strong partnership network, highlighting LATAM Airlines, all local banks and the joint venture with our international peer, AIMIA Group.23Track recordMultiplus has already 4 years of proven focus on shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices.Early stages Brazilian loyalty industry has very low penetration and presents solid growth drivers14Solid strategyOur business sustainability is based on network diversification, member engagement and value delivery to partnersFour main reasons to be confident in Multiplus case 10. 10Consistent network growth9,410,912,211.612.92011201220132Q132Q14Partners12.9 mn members can gather points from several programs in one single account477 partners gain a powerful support acquiring and retaining clientsMembers (mn)1903694724464772011201220132Q132Q14Note: based 2Q14 11. 111993Creation ofTAM Fidelidade2009Spin-off fromTAM FidelidadeFeb/2010Multiplus IPOOct/2011Multipluspresents itsnew brandNov/2011Announcementof JV with AIMIADez/2012Multiplusbecomes one ofTOP 100 mostliquid stocksin BovespaAug/2010Newheadquartersand IT loyaltyplatformMar/2012Multiplusreaches 200partnersApr/2012Multiplusreaches 10 mnmembersMai/2013launched thenewcampaign onseveralmediavehiclesJun/2013Non-airredemptionsreached 8% forthefirst time in aquarterOct/2013Improved corporategovernancestructureCreated from TAM Fidelidade, Multiplus has alreadyfive years of track recordMar/2014Multiplusmobile appfor IOS andAndroidSept/2014Multiplus launches"Points + Moneyand MultiplusChallenge(gamification) 12. Strong partnership networkAccrual partnersCoalition partnersRedemption partners12 13. Non-air redemptions11% of the total redemption in 2Q14More affordable redemption optionsMore competitive portfolio of products and servicesImproved members experienceAdditional liquidityBetter profitability% of total redemption2010 2011 2012 2013 20140.4%2.1%5.4%9.2%13 14. The first partnership in the automotive industry in the country Multiplus members can use their points to redeem reviews, parts, services and accessories at PEUGEOT dealerships Offer to accumulate up to 100,000 points through the purchase of a new Peugeot automobileNew in 201414 15. Other innovations in 2014Points calculatorSimulation of annual expendituresSuggestion of redemptionsPurchase Renewal Points transferFriendly and intuitiveStimulates membersengagementNew home pageNew products15 16. 16Strategic long-term agreement with TAM Airlines15 years agreementautomatically renewable for additional 5-year periodsExclusive relationshipPoints per seat vary according to flight fare with 100% availability,improving Multiplus competitive advantageup to 360 days before flight datefee exemptions, lowered points requirement, complimentary upgrades and up to 100% bonus pointsHigh recognition to premium clientsHigh flexibilitySuperior frequent flyer programlower earn-to-burn ratiosredemptions via TAM, LAN and their airline partnersWide redemption window 17. Pricing model methodology with TAM AirlinesUnit cost (R$)Jun/2013~Oct/2014CapFloorPrevious modelSetup periodNew pricing modelMultiplus pays discounted market price per seat5% cap and floor protect margin and guarantee business sustainabilityData gathering of fares available at redemption momentDiscount measurementUnit cost set according to a combination of TAMs marginal cost and revenue displacementShort term fluctuations due to TAMs promotional activityAverageAir tickets market priceDiscounted market priceLong haul and South America flights priced in USD12 months data gatheringMultiplus` implicit discountILLUSTRATIVE17 18. Over 600 VIP roomsAbout 1,000 destinations in 150 countries6 continentsPossibility to collect and exchange points in all associated airline companiesAir tickets redemptionMost desirable airline company in Brasil - TAMposition of leadership on its principal international and doemstic routes (NY, MIA, SP, RJ)more than 15 million airline tickets redeemed during the last five yearsrecognized as offering the best service to its customers18 19. New product Points + MoneyBetter experience and more accessible redemption opportunities from 1 thousand pointsAdditional liquidity to membersAccess to all TAMs promotionsOpportunity for greater penetration in existing partners of MultiplusIncreased members engagementProduct available on Multiplus siteMargins higher than other redemptions (provenient of the amount in points) 20. Increases customer engagementIncreases number of new membersEnhances brand loyaltyHelps to gather knowledge of individual preferencesAllows to direct personalized offersChallengeMotivationEngagementMultiplus Challenge - gamification 21. 21Solid relationship with banksbonus points per each new credit card activatedTargeted redemption offers1Activationbonus points according to the volume of points transferredsegmented offers to engage an specific member group2Spending3Targeting 22. First mover We are pioneers in this industry in Brazil and we already have a strong partnership network, highlighting LATA