Multi (MLAS3) soars even after almost 60% greater loss in the 4th quarter

Multi (MLAS3), formerly Multilaser, recorded a loss of R$324.8 million in the fourth quarter of 2023, an annual increase of 58.3%.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter were negative at R$284.0 million, even with the reduction of R$141.5 million in expenses, due to the gross margin negative impact in the mobile devices segment, added to the impact of the constitution of provisions and adjustments in inventories.

Net revenue in 4Q23 was R$840.8 million, a decrease of 24.4% compared to 4Q22.

“Both in the year and in the quarter, we observed a challenging sales scenario for retailers, impacted by low consumption and still relevant stock positions in large retailers. In the government channel, we observed lower purchases and funds postponed until 2024”, explains the company.

MLAS3 fires

Even with the negative result, the company’s shares rose 10%, at around 2:25 pm, quoted at R$2.36.

In a presentation to analysts about the numbers, Multi also listed among its objectives for 2024 a new commercial policy, renewed “good, beautiful and cheap” stock, new partnerships, expansion of scope in sales to the government.

Citi analysts who followed the conference call highlighted that management noted that, despite the many challenges faced by Multi in 2023, the main objective, which was to end the year with net cash, was achieved.

Multi ended 2023 with R$820.2 million in gross debt and R$1.046 billion in cash, resulting in a net cash position of R$225.8 million.

“They also added that the cash generation process continued throughout the first quarter”, say Karina Salva Martins and her team in a report on the conference call.

“They believe that current internal inventory levels have already reached the desired level. Until the company reports negative results, it will continue to operate with liquid cash to ensure that all financial liabilities are covered.”

In addition to the efforts already implemented to reduce expenses, Citi’s report states that the company began working with an efficiency consultancy to achieve additional savings of R$50 million throughout the year.

“They also commented that efforts were made in logistics and inventory efficiency that were not only positive for the balance sheet, but will also eliminate fixed costs for the coming quarters.”

The company also signaled that direct-to-consumer sales continue to gain share and that it expects this trend to persist.

Still according to Citi analysts, mobility continues to be the main issue to be resolved for Multi, which they will do by eliminating products and clearing inventories.

“The company has marked outstanding inventory to market, which essentially means that all mobile sales going forward will have 0% gross margin,” they added.

From the conference call, the bank’s team also reported that some product lines are already showing healthy growth, “which combined should be enough for Multi to provide revenue stability in 2024 – offsetting the negative impact of discontinued lines”.

(With Reuters)