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Brazil, 2008
9th Annual CEO Conference
February 20, 2008
2
    Highlights
    Grendene is one of the world’s largest producers of synthetic
    footwear, and the largest in Brazil (by revenue)
    Production capacity: 176 million pairs/year
    Average production: 500,000 pairs/day
    Active employees:      18,000
    New products/year: 500
    World presence:        85 countries
    Brands with strong personality
    Innovation in product, distribution and media
    Listed on São Paulo’s Novo Mercado; free float 25%
    Solid capital structure, strong cash flow

                                         Respect for water = Respect for life
3


    AGENDA

     •   Footwear Sector
     •   Strategy
     •   Plants
     •   Products
     •   Marketing
     •   Results
     •   Guidance
                           Respect for water = Respect for life
4


                                          F
                                          O
                                          O
    O Setor de Calçados                   T
                                          W
                                          E
                                          A
                                          R

                                          S
                                          E
                                          C
                                          T
                                          O
                                          R
                          Respect for water = Respect for life
5
    The footwear sector
      Brazil’s footwear sector                           Main producing countries
                                                                                      Million pairs
           8,000 producers in 2007                                Country
                                                                                              2005
           299,000 direct employees ;
                                                         China                               9,000
           Production: 764 million pairs in 2007
                          (796 million pairs in 2006)    India                                 909
           World’s 3rd largest producer                  Brazil                                806
           Apparent consumption, Brazilian               Indonesia                             580
           domestic market: 616 million pairs;
                   :                                     Vietnam                               525
           3.31 pairs per capita/year in 2007            Thailand                              264
           (635 million and 3.41 in 2006).               Pakistan                              251
           Exports: 177 million pairs, to more than      Italy                                 250
           100 countries, in 2007
           (1.7% less than in 2006).                     Mexico                                197
                                                         Turkey                                170
       Sources: IEMI, Abicalçados, Secex, MDIC, Satra.
                                                         Others                              1,745
    Brazil is the world’s 3rd
                                                          The 10 principal countries produce:
     largest producer of                                  12.8 million pairs, 88% of
                                                          Total world production of
            footwear                                      14.5 million pairs.


                                                                    Respect for water = Respect for life
6
    The footwear sector in Brazil
                                              Brazil
                                                  2003     2004         2005        2006        2007
                                                          (million pairs)
       Production                                  665        800           806        796        764
       Imports                                        5           9          17            19      29
       Exports                                     189        212           190        180        177
       Apparent consumption                        481        597           633        635        616
       Per capita consumption                      2.83       3.26          3,.42      3.41      3.31



                                                          Consumption - 2005
                     Country
                                                    (million pairs)         (per capita)
       USA                                                 2,129                       7.3
       United Kingdom                                        376                       6.2
       France                                                346                       5.7
       Japan                                                 620                       4.9
       Germany                                               347                       4.2

                     Sources: Decex, Brazilian Trade Ministry, IEMI, Abicalçados.


                                                                      Respect for water = Respect for life
7
      Grendene vs. Brazilian footwear sector
               Brazilian production                                   Grendene: footwear production
                (million pairs/year)                                      (millions of pairs/year)

                    CAGR: 3.5%                                                            7.0%
                                                                           CAGR(01/06):



                     800         806   796                                                                                   **
                                                764

    642     665

                                                                                 145
                                                                         121                 130          132
                                                                116
                                                       94                                                               95*



                                                       2001    2002     2003    2004        2005         2006          2007
                                                                                 * 9M07.         ** Estimate for 2007
2002       2003      2004     2005     2006     2007
                                                              Grendene has grown faster than
      Sources: Abicalçados, Secex, Trade Ministry,
                   Satra, US Census.                              Brazilian GDP, and the
                                                               Brazilian footwear industry*.
                                                                                    *Average growth rates over the period.



                                                                      Respect for water = Respect for life
8
     Exports: Grendene vs. Brazil
    Grendene’s exports were 17.5% of total
    Brazilian footwear exports in 2006.                    Grendene’s footwear exports
    Melissa and Ipanema GB brands:                            (millions of pairs/year)
    strategy of globalization
                                                                                16.4%
                                                                  CAGR (01-06):
               Brazilian exports                                                             32
                                                                            29          28
             (millions of pairs/year)                              27                                 27*

                   CAGR: 1.5%

                    212                            15     16
            189             190
                                    180     177
    164




                                                   2001   2002    2003     2004     2005     2006    2007


                                                                                                    * 9M07
    2002   2003    2004     2005    2006    2007

    Sources: Abicalçados, Secex, Trade Ministry.


                                                               Respect for water = Respect for life
Strategy




Respect for water = Respect for life
10
                     Value proposition
                         Brands
     PRODUCTS         MARKETING          MANAGEMENT
     Constant         Aggressive          Scale gains, scope
     creation of      marketing           gains
     products         Licenses with       Profitability
     Innovative       celebrities         Continuous
     design           Segmentation        improvement
     Manufacturing    Investment in       Financial solidity
     technology       media               Sustainable growth
                      Events


           VALUE FOR STAKEHOLDERS
                                      Respect for water = Respect for life
11
      Medium and long-term strategy
            OBJECTIVES                 EXPECTED RESULTS

     Focus on organic growth        Scale gains
     Sustainable growth with
     profitability                  Scope gains

     Maintain solid financial       Clear view of strong and weak
     situation                      points of each operation
     Operational excellence
                                    Long term vision
     Innovation in product design
     Investments in marketing       Create value for the company
                                    (EVA)
     Segmentation of markets
     Exports with global brands     Reduction of aggregate costs


                                        Respect for water = Respect for life
Plants
13
      Location of industrial plants
                                                                             Brazilian
     In 3 Brazilian states:                                                    states


       Rio Grande do Sul
                                                                                          Sobral
     Farroupilha - 2 units                                                     Ceará


       Ceará                                                                               Fortaleza

     Fortaleza - 2 units                                                                    Crato
     Sobral - 7 units
     Crato - 1 unit                                                        Bahia

        Bahia
                                                                                         Teixeira de
     Teixeira de Freitas - 1 unit                                                          Freitas


     At Farroupilha
     Directors, DPD, Marketing, Sales,
     Exports, Finance, Supplies, Plants
                                    Carlos Barbosa                      Farroupilha
     At Carlos Barbosa
     Molds                                      Rio Grande
                                                  do Sul
                                                                   Built area = 270,000m2



                                                             Respect for water = Respect for life
14
     Industrial plants

                                 Built area
                                270,000 m2



       Farroupilha, Rio                                   Fortaleza, Ceará
        Grande do Sul


                               Sobral, Ceará
                                Main plant
                            (87% of production)


                            Installed capacity:          Carlos Barbosa, Rio
         Crato, Ceará     176,000,000 pairs/year           Grande do Sul

                                                  Respect for water = Respect for life
Products



 The Hell
  Babes
Collection:

“TIRED OF
 BEING A
BABE? SO
 BECOME
  HELL !”




                    “Show that you’ve got attitude: get into sandals get on the site:”
16
     Product portfolio

                                    Other brands:
                                      We produce our own designs
     Rider line                       and also third party brands such
                                      as Guga Kuerten, Mormaii,
        Target: masculine public.
                                      Speedo. Recently, we obtained
        Launched August 1986.
                                      license for the Everlast brand.
        In 3 “archetype”
        segments – Sports,
        Beach, Adventure – in
        line with consumers’ use
        and preference.




                                            Respect for water = Respect for life
17
      Product portfolio
     Melissa line
       Melissa: Synonym of plastic sandals,
       worldwide.
       Top-of-line, totally conceptual design
       and fashion product. Sold only
       through selected channels:
       boutiques, specialized fashion stores,
       design stores – to add value to the      Ilhabela line
       brand, and also to the full-plastic         Target: Young public. Also
       footwear mode.                              operates as a promotional
       Target/achievement: to be a global          line.
       brand.




                                                   Respect for water = Respect for life
18
     Product portfolio



     Grendha line               Ipanema line
       Target: Female public.     Launched July 2001. Flip-flops,
       Launched July 1994.        clogs and sandals. Unisex.
       4 segmentations:           Target: mass consumption market,
       casual, fashion,           with competitive price and focus on
                                  distribution strategy.
       summer, promotional.
                                  Types: Basic, Brazil Masculine
                                  themes, Feminine themes,
                                  Fashion.




                                        Respect for water = Respect for life
19
      Product portfolio
                                           Ipanema Gisele Bündchen line
                                              Launched July 2002, with
                                              endorsement of top model Gisele
                                              Bündchen, dedicated advertising.
                                              Ipanema GB international
                                              contract signed in 2006.
                                              Mission: To be a global brand.


     Kid’s line, Baby line
        For pre-teenager, children and babies. We
        operate with own brands and licenses
        (fashion brands, TV presenters, singers,
        cartoon characters, actors), adding emotional
        appeal to the products.


                                                    Respect for water = Respect for life
20
     Own brands and main licenses




                               Respect for water = Respect for life
21




     New licenses in
           2007




     Respect for water = Respect for life
Grendene - Brazil 2008 - 9th Annual CEO Conference - UBS Pactual
Respect for water = Respect for life
Respect for water = Respect for life
Respect for water = Respect for life
Respect for water = Respect for life
Respect for water = Respect for life
(“Only Ipanema has print all round”)




                        New products
29
     Number of launches each year

                                                       550
                 460    480
                               450
                                         400
          351




          2002   2003   2004   2005     2006          2007


                                      Respect for water = Respect for life
First Hit: Barbie
      Hits




                                       First modality:
                                    Hot Wheels Extreme




                    Respect for water = Respect for life
Respect for water = Respect for life
Marketing
33
      Advertising expenses

                      R$ million, % of net sales revenue

            10.8%
     9.6%                                                  10.1%                        10.1%
                                                                               9.0%
                    8.2% 7.6%             8.1%
                                                    7.3%
                                  6.4%                                6.1%

                                                             38.6
                                                                                          33.2
     24.0    21.9   24.5   24.0                     21.7
                                   14.6   15.9                         15.8     17.8


     1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
             Advertising expenditure (R$ million)               % of Net sales revenue



                                                           Respect for water = Respect for life
Concept store




 Galeria Melissa
 Rua Oscar Freire, 827
 São Paulo, SP
35

                                      MEDIA SCHEDULE




      Mattel fashion
          show




     Movies




                                         Magazines
         Internet
                       Radio
         Hot Site

                               Respect for water = Respect for life
Results
Respect for water = Respect for life
37
     Financial and operational

                              Selected indicators

                                                  Change,                         Change,
      (R$ million)               3Q06     3Q07                9M06      9M07
                                                    %                               %
      Net revenue                 295.5   329.3    11.4%       720.8     786.5      9.1%
      Profit per share (R$)        0.77    0.82      6.5%        1.60      1.60     0.2%
                                                  Change,                         Change,
      Adjusted margins, %        3Q06     3Q07                9M06      9M07        bp
                                                    bp
       Gross                     48.9%    47.2%     (170)     42.0%     41.1%        (90)
       Ebitda                    34.3%    31.0%     (330)     26.5%     25.2%       (130)
       Net                       25.9%    24.8%     (110)     22.2%     20.4%       (180)




                                                        Respect for water = Respect for life
38

        REVENUES




             Domestic
            market and
              exports
     Respect for water = Respect for life
39

     Growth with profitability (R$ million)
                    Gross sales revenue                                                                  Adjusted Ebitda
                                  14.8   %                                                               CAGR(01-06): 15.1%
                     CAGR(01-06):


                                                      **                                                                              **


                             1,525                                                                        354
                                     1,353   1,392                                                              320           317
                     1,276                                                                                             267
              907                                    999 *                                        212                                198 *
        697                                                                           157



       2001   2002    2003   2004    2005    2006    2007*                            2001        2002   2003   2004   2005   2006   2007*


                                                       Adjusted net income
                                                                            21.7%
                                                             CAGR(01-06):

                                                                                             **



                                                             238                    256                  * In 9M07
                                                                    202     195                          ** 2007 expected.
                                                                                            160 *
                                                     117
                                              96


                                             2001    2002    2003   2004    2005    2006    2007*


                                                                                            Respect for water = Respect for life
40
       Seasonality is part of the business

                                                           Seasonality: gross sales revenue

     45%                                                    39.4%                      38.4%
                                                                                                                                                                         34.7%
                                                                                                                33.1%
                           31.8%
                                   30.2%                                                                                                 29.4%
                                                                                                        27.3%                    28.0%                           26.8%
     30%
           21.0%                            26.2%
                                                                            24.1%                                       23.2%
                                                                                               22.1%
                                           19.4%                               18.5%
                                                                                                                         19.3%                   20.5%
     15%                                           14.9%            19.0%                                                                                17.9%
                   17.0%                                                                        17.6%




     0%
           1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06




                                                                                                            Respect for water = Respect for life
41
       Sales volume (millions of pairs)
                                           145                                        **
                                                        130            132
                 116          121           29
                                                         28            32
                  16           27                                                    94*

                                                                                     27*

                                           116
                 100           94                       102            100
                                                                                     67*



                2002         2003         2004          2005          2006          2007
                                 Domestic market        Exports
     * Sales volume in 9M07
     ** Sales volume expected in 2007 – volume increase of approximately 10%

                                                                  Respect for water = Respect for life
Net cash, dividends,
       capex
        Respect for water = Respect for life
43
     Strong cash flow
           Cash and cash equivalents, and short and long-term debt (R$ mn)
30/09/07 103.4 130.3                    765.1

30/06/07 127.6     153.0                        883.0

31/03/07 116.5     162.0                    831.8                                       Dividend yield (%),
                                                                                       Profit per share (R$)
31/12/06 108.9     169.9               658.1                                                                    6.7%

30/09/06 58.4      215.6                698.0
                                                                                               4.0%
             Short-term debt       Long-term debt        Cash and cash
                                                         equivalents          1.9%
30/09/07            531.4                                                                                      1.28261
                                                                             0.64152          0.81181
30/06/07                 602.4
                                          Net cash                            2004             2005             2006
31/03/07             553.3               (R$ million)
31/12/06         379.3                                                          Strong distribution
                                                                                   of dividends
30/09/06          424.0



                                                                             Respect for water = Respect for life
44
     Low need for capex
                                                                                * CAPEX in 9M07




                                          40.7

                 27.5

                                                                  12.2                   14.9*


                 2004                    2005                    2006                    2007*
          Investments (R$ mn)                                 2004       2005        2006       2007*
         Industrial buildings and facilities                   11.3       16.6         2.2         8.3
         Machinery and equipment                               10.7       20.2         6.3         4.0
         IT equipment and software                              2.4        2.3         1.3         1.8
         Other investments (1)                                  3.1        1.6         2.4         0.8
         TOTAL                                                 27.5       40.7        12.2        14.9
         (1) Includes investments in vehicles, aircraft, furniture and utensils, brands and patents.


                                                                          Respect for water = Respect for life
Guidance



Respect for water = Respect for life
46
      Guidance for 2007

                                Guidance given for        Change,            2007 vs. 2006,
            Item
                                  2007 vs. 2006         9M07 vs. 9M06          expected
     Gross revenue                   Higher                 9.9%          Approximately 10% higher
     Volume                          Higher                 5.4%          Approximately 10% higher
     Average price                   In line                4.4%                In line
     Advertising expenses        8% to 9% of NR       8.5% of NR, 9M07       8% to 9% of NR
     NR = Net revenue


     In a market announcement of January 31, 2008, we stated that based on the unaudited
     2007 consolidated financial statements, our expectations for growth of gross revenue,
     volume and average prices were likely to be confirmed; however, margins were not
     expected to be in line with our previous forecast: the expectation for net margin was now
     approximately 150 basis points lower, and for Ebitda margin approximately 50 basis points
     lower.

      The complete financial statements will be published on March 13, 2008, after the close of
      the local (São Paulo) market. A conference call on the results will be held on March 14, at
                   10:30 am (Brazil time), with simultaneous translation to English.


                                                                Respect for water = Respect for life
47
                              Vision for 2008
     Macroeconomic influences              Impacts on the business

     Increase in income                  50% of the increase in the
                                         population’s revenue goes to
     Level of employment                 consumption.

                                         Private consumption is 60% of
     GDP growth                          GDP growth, and is expected to
                                         grow 6.2% in 2008.
     Expansion of credit
                                         Apparel and footwear are 5.7% of
     Inflation stable                    private consumption in Brazil.

     Interest rates falling              Grendene expects to grow 10% in
                                         the first half of 2008.
     Exchange rate stable



                                             Respect for water = Respect for life
DISCLAIMER
This presentation contains statements that can represent expectations about future events or
results. These statements are based on certain suppositions and analyses made by the
company in accordance with its experience, with the economic environment and market
conditions, and expected future developments, many of which are beyond the company’s
control. Important factors could lead to significant differences between real results and the
statements on expectations about future events or results, including the company’s business
strategy, Brazilian and international economic conditions, technology, financial strategy,
developments in the footwear industry, conditions of the financial market, and uncertainty on the
company’s future results from operations, plans, objectives, expectations and intentions –
among other factors. In view of these aspects, the company’s results could differ significantly
from those indicated or implicit in any statements of expectations about future events or results.


                             Grendene Investor Relations team
                                    Francisco Schmitt
                                 Investor Relations Director
                                 schmitt@grendene.com.br
                                     (5554) 2109.9022

                                            Analysts
         Alexandre Vizzotto                                      Lenir Baretta
         avizzotto@grendene.com.br                               lbaretta@grendene.com.br
         (5554) 2109.9011                                        (5554) 2109.9026

                                                               Respect for water = Respect for life
Thank you!
         Further information:
 http://www.grendene.com.br/www/ri
(Press Releases, Annual Report, fact sheet,
           financial statements)




       Respect for water = Respect for life

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Grendene - Brazil 2008 - 9th Annual CEO Conference - UBS Pactual

  • 1. Brazil, 2008 9th Annual CEO Conference February 20, 2008
  • 2. 2 Highlights Grendene is one of the world’s largest producers of synthetic footwear, and the largest in Brazil (by revenue) Production capacity: 176 million pairs/year Average production: 500,000 pairs/day Active employees: 18,000 New products/year: 500 World presence: 85 countries Brands with strong personality Innovation in product, distribution and media Listed on São Paulo’s Novo Mercado; free float 25% Solid capital structure, strong cash flow Respect for water = Respect for life
  • 3. 3 AGENDA • Footwear Sector • Strategy • Plants • Products • Marketing • Results • Guidance Respect for water = Respect for life
  • 4. 4 F O O O Setor de Calçados T W E A R S E C T O R Respect for water = Respect for life
  • 5. 5 The footwear sector Brazil’s footwear sector Main producing countries Million pairs 8,000 producers in 2007 Country 2005 299,000 direct employees ; China 9,000 Production: 764 million pairs in 2007 (796 million pairs in 2006) India 909 World’s 3rd largest producer Brazil 806 Apparent consumption, Brazilian Indonesia 580 domestic market: 616 million pairs; : Vietnam 525 3.31 pairs per capita/year in 2007 Thailand 264 (635 million and 3.41 in 2006). Pakistan 251 Exports: 177 million pairs, to more than Italy 250 100 countries, in 2007 (1.7% less than in 2006). Mexico 197 Turkey 170 Sources: IEMI, Abicalçados, Secex, MDIC, Satra. Others 1,745 Brazil is the world’s 3rd The 10 principal countries produce: largest producer of 12.8 million pairs, 88% of Total world production of footwear 14.5 million pairs. Respect for water = Respect for life
  • 6. 6 The footwear sector in Brazil Brazil 2003 2004 2005 2006 2007 (million pairs) Production 665 800 806 796 764 Imports 5 9 17 19 29 Exports 189 212 190 180 177 Apparent consumption 481 597 633 635 616 Per capita consumption 2.83 3.26 3,.42 3.41 3.31 Consumption - 2005 Country (million pairs) (per capita) USA 2,129 7.3 United Kingdom 376 6.2 France 346 5.7 Japan 620 4.9 Germany 347 4.2 Sources: Decex, Brazilian Trade Ministry, IEMI, Abicalçados. Respect for water = Respect for life
  • 7. 7 Grendene vs. Brazilian footwear sector Brazilian production Grendene: footwear production (million pairs/year) (millions of pairs/year) CAGR: 3.5% 7.0% CAGR(01/06): 800 806 796 ** 764 642 665 145 121 130 132 116 94 95* 2001 2002 2003 2004 2005 2006 2007 * 9M07. ** Estimate for 2007 2002 2003 2004 2005 2006 2007 Grendene has grown faster than Sources: Abicalçados, Secex, Trade Ministry, Satra, US Census. Brazilian GDP, and the Brazilian footwear industry*. *Average growth rates over the period. Respect for water = Respect for life
  • 8. 8 Exports: Grendene vs. Brazil Grendene’s exports were 17.5% of total Brazilian footwear exports in 2006. Grendene’s footwear exports Melissa and Ipanema GB brands: (millions of pairs/year) strategy of globalization 16.4% CAGR (01-06): Brazilian exports 32 29 28 (millions of pairs/year) 27 27* CAGR: 1.5% 212 15 16 189 190 180 177 164 2001 2002 2003 2004 2005 2006 2007 * 9M07 2002 2003 2004 2005 2006 2007 Sources: Abicalçados, Secex, Trade Ministry. Respect for water = Respect for life
  • 9. Strategy Respect for water = Respect for life
  • 10. 10 Value proposition Brands PRODUCTS MARKETING MANAGEMENT Constant Aggressive Scale gains, scope creation of marketing gains products Licenses with Profitability Innovative celebrities Continuous design Segmentation improvement Manufacturing Investment in Financial solidity technology media Sustainable growth Events VALUE FOR STAKEHOLDERS Respect for water = Respect for life
  • 11. 11 Medium and long-term strategy OBJECTIVES EXPECTED RESULTS Focus on organic growth Scale gains Sustainable growth with profitability Scope gains Maintain solid financial Clear view of strong and weak situation points of each operation Operational excellence Long term vision Innovation in product design Investments in marketing Create value for the company (EVA) Segmentation of markets Exports with global brands Reduction of aggregate costs Respect for water = Respect for life
  • 13. 13 Location of industrial plants Brazilian In 3 Brazilian states: states Rio Grande do Sul Sobral Farroupilha - 2 units Ceará Ceará Fortaleza Fortaleza - 2 units Crato Sobral - 7 units Crato - 1 unit Bahia Bahia Teixeira de Teixeira de Freitas - 1 unit Freitas At Farroupilha Directors, DPD, Marketing, Sales, Exports, Finance, Supplies, Plants Carlos Barbosa Farroupilha At Carlos Barbosa Molds Rio Grande do Sul Built area = 270,000m2 Respect for water = Respect for life
  • 14. 14 Industrial plants Built area 270,000 m2 Farroupilha, Rio Fortaleza, Ceará Grande do Sul Sobral, Ceará Main plant (87% of production) Installed capacity: Carlos Barbosa, Rio Crato, Ceará 176,000,000 pairs/year Grande do Sul Respect for water = Respect for life
  • 15. Products The Hell Babes Collection: “TIRED OF BEING A BABE? SO BECOME HELL !” “Show that you’ve got attitude: get into sandals get on the site:”
  • 16. 16 Product portfolio Other brands: We produce our own designs Rider line and also third party brands such as Guga Kuerten, Mormaii, Target: masculine public. Speedo. Recently, we obtained Launched August 1986. license for the Everlast brand. In 3 “archetype” segments – Sports, Beach, Adventure – in line with consumers’ use and preference. Respect for water = Respect for life
  • 17. 17 Product portfolio Melissa line Melissa: Synonym of plastic sandals, worldwide. Top-of-line, totally conceptual design and fashion product. Sold only through selected channels: boutiques, specialized fashion stores, design stores – to add value to the Ilhabela line brand, and also to the full-plastic Target: Young public. Also footwear mode. operates as a promotional Target/achievement: to be a global line. brand. Respect for water = Respect for life
  • 18. 18 Product portfolio Grendha line Ipanema line Target: Female public. Launched July 2001. Flip-flops, Launched July 1994. clogs and sandals. Unisex. 4 segmentations: Target: mass consumption market, casual, fashion, with competitive price and focus on distribution strategy. summer, promotional. Types: Basic, Brazil Masculine themes, Feminine themes, Fashion. Respect for water = Respect for life
  • 19. 19 Product portfolio Ipanema Gisele Bündchen line Launched July 2002, with endorsement of top model Gisele Bündchen, dedicated advertising. Ipanema GB international contract signed in 2006. Mission: To be a global brand. Kid’s line, Baby line For pre-teenager, children and babies. We operate with own brands and licenses (fashion brands, TV presenters, singers, cartoon characters, actors), adding emotional appeal to the products. Respect for water = Respect for life
  • 20. 20 Own brands and main licenses Respect for water = Respect for life
  • 21. 21 New licenses in 2007 Respect for water = Respect for life
  • 23. Respect for water = Respect for life
  • 24. Respect for water = Respect for life
  • 25. Respect for water = Respect for life
  • 26. Respect for water = Respect for life
  • 27. Respect for water = Respect for life
  • 28. (“Only Ipanema has print all round”) New products
  • 29. 29 Number of launches each year 550 460 480 450 400 351 2002 2003 2004 2005 2006 2007 Respect for water = Respect for life
  • 30. First Hit: Barbie Hits First modality: Hot Wheels Extreme Respect for water = Respect for life
  • 31. Respect for water = Respect for life
  • 33. 33 Advertising expenses R$ million, % of net sales revenue 10.8% 9.6% 10.1% 10.1% 9.0% 8.2% 7.6% 8.1% 7.3% 6.4% 6.1% 38.6 33.2 24.0 21.9 24.5 24.0 21.7 14.6 15.9 15.8 17.8 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Advertising expenditure (R$ million) % of Net sales revenue Respect for water = Respect for life
  • 34. Concept store Galeria Melissa Rua Oscar Freire, 827 São Paulo, SP
  • 35. 35 MEDIA SCHEDULE Mattel fashion show Movies Magazines Internet Radio Hot Site Respect for water = Respect for life
  • 36. Results Respect for water = Respect for life
  • 37. 37 Financial and operational Selected indicators Change, Change, (R$ million) 3Q06 3Q07 9M06 9M07 % % Net revenue 295.5 329.3 11.4% 720.8 786.5 9.1% Profit per share (R$) 0.77 0.82 6.5% 1.60 1.60 0.2% Change, Change, Adjusted margins, % 3Q06 3Q07 9M06 9M07 bp bp Gross 48.9% 47.2% (170) 42.0% 41.1% (90) Ebitda 34.3% 31.0% (330) 26.5% 25.2% (130) Net 25.9% 24.8% (110) 22.2% 20.4% (180) Respect for water = Respect for life
  • 38. 38 REVENUES Domestic market and exports Respect for water = Respect for life
  • 39. 39 Growth with profitability (R$ million) Gross sales revenue Adjusted Ebitda 14.8 % CAGR(01-06): 15.1% CAGR(01-06): ** ** 1,525 354 1,353 1,392 320 317 1,276 267 907 999 * 212 198 * 697 157 2001 2002 2003 2004 2005 2006 2007* 2001 2002 2003 2004 2005 2006 2007* Adjusted net income 21.7% CAGR(01-06): ** 238 256 * In 9M07 202 195 ** 2007 expected. 160 * 117 96 2001 2002 2003 2004 2005 2006 2007* Respect for water = Respect for life
  • 40. 40 Seasonality is part of the business Seasonality: gross sales revenue 45% 39.4% 38.4% 34.7% 33.1% 31.8% 30.2% 29.4% 27.3% 28.0% 26.8% 30% 21.0% 26.2% 24.1% 23.2% 22.1% 19.4% 18.5% 19.3% 20.5% 15% 14.9% 19.0% 17.9% 17.0% 17.6% 0% 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Respect for water = Respect for life
  • 41. 41 Sales volume (millions of pairs) 145 ** 130 132 116 121 29 28 32 16 27 94* 27* 116 100 94 102 100 67* 2002 2003 2004 2005 2006 2007 Domestic market Exports * Sales volume in 9M07 ** Sales volume expected in 2007 – volume increase of approximately 10% Respect for water = Respect for life
  • 42. Net cash, dividends, capex Respect for water = Respect for life
  • 43. 43 Strong cash flow Cash and cash equivalents, and short and long-term debt (R$ mn) 30/09/07 103.4 130.3 765.1 30/06/07 127.6 153.0 883.0 31/03/07 116.5 162.0 831.8 Dividend yield (%), Profit per share (R$) 31/12/06 108.9 169.9 658.1 6.7% 30/09/06 58.4 215.6 698.0 4.0% Short-term debt Long-term debt Cash and cash equivalents 1.9% 30/09/07 531.4 1.28261 0.64152 0.81181 30/06/07 602.4 Net cash 2004 2005 2006 31/03/07 553.3 (R$ million) 31/12/06 379.3 Strong distribution of dividends 30/09/06 424.0 Respect for water = Respect for life
  • 44. 44 Low need for capex * CAPEX in 9M07 40.7 27.5 12.2 14.9* 2004 2005 2006 2007* Investments (R$ mn) 2004 2005 2006 2007* Industrial buildings and facilities 11.3 16.6 2.2 8.3 Machinery and equipment 10.7 20.2 6.3 4.0 IT equipment and software 2.4 2.3 1.3 1.8 Other investments (1) 3.1 1.6 2.4 0.8 TOTAL 27.5 40.7 12.2 14.9 (1) Includes investments in vehicles, aircraft, furniture and utensils, brands and patents. Respect for water = Respect for life
  • 45. Guidance Respect for water = Respect for life
  • 46. 46 Guidance for 2007 Guidance given for Change, 2007 vs. 2006, Item 2007 vs. 2006 9M07 vs. 9M06 expected Gross revenue Higher 9.9% Approximately 10% higher Volume Higher 5.4% Approximately 10% higher Average price In line 4.4% In line Advertising expenses 8% to 9% of NR 8.5% of NR, 9M07 8% to 9% of NR NR = Net revenue In a market announcement of January 31, 2008, we stated that based on the unaudited 2007 consolidated financial statements, our expectations for growth of gross revenue, volume and average prices were likely to be confirmed; however, margins were not expected to be in line with our previous forecast: the expectation for net margin was now approximately 150 basis points lower, and for Ebitda margin approximately 50 basis points lower. The complete financial statements will be published on March 13, 2008, after the close of the local (São Paulo) market. A conference call on the results will be held on March 14, at 10:30 am (Brazil time), with simultaneous translation to English. Respect for water = Respect for life
  • 47. 47 Vision for 2008 Macroeconomic influences Impacts on the business Increase in income 50% of the increase in the population’s revenue goes to Level of employment consumption. Private consumption is 60% of GDP growth GDP growth, and is expected to grow 6.2% in 2008. Expansion of credit Apparel and footwear are 5.7% of Inflation stable private consumption in Brazil. Interest rates falling Grendene expects to grow 10% in the first half of 2008. Exchange rate stable Respect for water = Respect for life
  • 48. DISCLAIMER This presentation contains statements that can represent expectations about future events or results. These statements are based on certain suppositions and analyses made by the company in accordance with its experience, with the economic environment and market conditions, and expected future developments, many of which are beyond the company’s control. Important factors could lead to significant differences between real results and the statements on expectations about future events or results, including the company’s business strategy, Brazilian and international economic conditions, technology, financial strategy, developments in the footwear industry, conditions of the financial market, and uncertainty on the company’s future results from operations, plans, objectives, expectations and intentions – among other factors. In view of these aspects, the company’s results could differ significantly from those indicated or implicit in any statements of expectations about future events or results. Grendene Investor Relations team Francisco Schmitt Investor Relations Director schmitt@grendene.com.br (5554) 2109.9022 Analysts Alexandre Vizzotto Lenir Baretta avizzotto@grendene.com.br lbaretta@grendene.com.br (5554) 2109.9011 (5554) 2109.9026 Respect for water = Respect for life
  • 49. Thank you! Further information: http://www.grendene.com.br/www/ri (Press Releases, Annual Report, fact sheet, financial statements) Respect for water = Respect for life