With signs of growth already apparent in the first quarter according to almost all indicators, Randon Companies leaned in to ensure consistent results, wrapping up the semester with an impressive performance. The accrued balance for 2019 saw a total gross revenue of BRL 5.5 billion, a 26.2% increase if compared to the same nine months in 2018. Accompanying this growth is a 24.8% rise in consolidated net revenue, summing BRL 3.8 billion in the first nine months of 2019. Gross profit was calculated at BRL 954.7 million, with a gross margin of 25.1%, while the consolidated EBITDA advanced 21.8%, totaling BRL 530.1 million in the first nine months of the year.
The rise in revenue is chiefly due to the recovery of the domestic market, as the foreign market is rattled by issues like the trade war between China and the United States, not to mention economic instability in Argentina, which affects business and presents a series of challenges, whether through reduced demand or a lack of confidence in new investments. The forecast for the next few months is positive for the road implements and truck industry in Brazil. This will be discussed in more detail in the company outcomes audio conference, scheduled for tomorrow (11/14) and which can be accessed through the investor relations tab on the Randon website.
“Despite market volatility, we managed to generate robust revenues and maintain margins, which reiterates the company’s consistency in terms of action”, stated CFO of Randon Companies, Paulo Prignolato. He further stated that the projected record harvest, aligned with economic stability in Brazil – with low interest rates and inflation – contribute to generating more trust among economics entities. Another positive point was Fenatran, which took place in São Paulo in October. The event contributed through the continuity of good business for the remainder of the year and the one to come. Fenatran is the largest freight transport fair in Latin America and Randon Companies used the occasion to introduce 20 new items and innovations, further highlighting the company among the global players in the freight industry.
The total gross revenue, with taxes and prior to consolidation, was BRL 2.0 billion in 3Q19, 23.7% higher than the revenue obtained during the same period in 2018 (BRL 1.6 billion). In 3Q19, the consolidated net revenue totaled BRL 1.4 billion, a 23.6% rise compared to 3Q18, which summed BRL 1.1 billion. Gross profit for 3Q19 reached BRL 338.6 million, 24.4% higher than the gross figure from the previous year (BRL 272.3 million). The gross margin rose from 24.5% in 3Q18 to 24.7% in 3Q19. The 3Q19 consolidated EBITDA totaled BRL 192.1 million, a 28.6% rise in comparison to the amount obtained in the 2018 quarter (BRL 149.4 million). The EBITDA margin rose from 13.5% in 3Q18 to 14.0% in 3Q19.
Implements & Vehicles – With the increase in production capacity for road implements, over the first two quarters, the Company reassumed market share in the third quarter, attaining 36.3%, above the 31.7% recorded in 1Q19 and the 34.0% from 2Q19. Regarding the total number plate licenses in the domestic market, there were 16,891 units, an increase of 36.5% in relation to 3Q18 (12,378 units). Net revenue for the Vehicle Assembly division grew 21.5% in the third quarter (BRL 627.6 million), thanks to the domestic market (+19.9% on volumes sold by Randon). Sales of implements abroad and through foreign plants dropped 29.7% compared to 3Q18. The railway wagon market is still stagnant, which means the volumes sold by the Company have dropped 14.0% compared to 3Q18.
Auto Parts – The great performance in the truck market has reflected positively on companies from the Auto Parts division, as is the case for JOST, Master, Suspensys and Suspensys WE/ Castertech. For the spare parts market, especially for Fras-le’s area of operation, a more competitive environment has been the norm, notably for friction materials, which has resulted in lower volumes when compared to the same quarter the year before. The Auto Parts division showed a 26.1% growth in quarterly net revenue (BRL 695.8 million in net revenue in 3Q19), when compared to the same period in 2018. In the analysis by product, the leading elements in increasing revenue where the brakes, sold by Master, and the array of products sold by Fras-le, boosted by the sales from the indirectly controlled firm Fremax.
Exports – Randon Companies exports accounted for 11.8% of the consolidated net revenue in 3Q19, against 17.5% in the same period in 2018, totaling US$ 40.7 million in the third quarter of 2019. In the analysis by division, of note is a 30.7% drop in the Vehicle Assembly division, along with a fall of 8.8% in the Auto Parts division, in a quarterly comparison. Elevated stocks at distributors, economic and political crises have impacted business in the foreign market.
Investments – Investments for 3Q19 total BRL 84.8 million, with BRL 8.2 million of this used by controlled firm SuspensysWE/Castertech, for the establishment of Suspensys Mexico, and BRL 8.3 million used by Randon, for the constitution of the controlled firm Randon Triel-HT. The remaining values were largely spent on maintenance, expansion and productivity optimization. For the year to date, investments total BRL 178.0 million and in line with the Company Guidance for the year, namely BRL 220 million.