With highest profit in 10 years, Brazil´s notebook producer Positivo surfs the home office wave

RIO DE JANEIRO, BRAZIL – The novel coronavirus pandemic has made the computer personal again. The sector exceeded the expectations of market analysts due to strong demand for home office and distance education, widely adopted in all levels of education.

Positivo Tecnologia, a Brazilian company, has surfed this wave. The company increased its sales of computers and notebooks and had an important tax victory in court. As a result, Positivo posted its largest net profit in the past 10 years: R$195.8 (US$35.56) million, with total revenue of R$2.2 billion.

For Hélio Bruck Rotenberg, CEO of Positivo Tecnologia, the increase in sales of computers and notebooks is directly related to the needs of the so-called “new normal,” with more people working and studying at home. The increase in demand, according to him, was observed in the Positivo brand and also Vaio notebooks, manufactured and distributed by Positivo in Brazil.

“Overnight, increasing the number of computers and notebooks at home was needed. This was a reality in most Brazilian families. Everyone needs their own computer. This wasn’t the case before. Even in middle class families with purchasing difficulties it was a huge effort to buy more computers. Demand was explosive. The large screen, processing and possibility of editing spreadsheets render the personal computer more suitable than a cell phone for work and study, without undervaluing the smartphone,” says Rotenberg.

Part of the Positivo Group, the company was created in 1989 to assemble and sell computers to schools. However, with the freezing of resources in Fernando Collor’s government, in 1990, the company needed to change course and started selling computers to the government. Positivo went into retail sales only 14 years later with the goal of selling electronics at affordable prices. To attend different publics, Positivo forged alliances.

It is a partner of the notebook brand Vaio, which used to belong to Japan’s Sony and is now independent, and of Anker accessories company. In addition, the company has its own brands, such as the smartphone brand Quantum and 2AM gaming computers. A similar strategy is adopted by the Brazilian rival Multilaser, which has about 20 own brands and manufactures HMD Global’s smartphones under Nokia’s brand in Brazil and distributes Rapoo’s PC accessories.

Despite the challenges caused by the pandemic, which led the company to adapt its factory in Manaus to the social distancing standards, Positivo’s year was full of good news. The computer segment represented almost 60% of the revenue and composed a good part of the net income of R$56.8 million related to product sales and the company’s operational efficiency.

New businesses such as payment solutions, educational technology, smart home (IoT), equipment rental and servers were expanded and together represent 19% of Positivo’s total revenue. In the final quarter of 2020, the Vaio notebook line posted 292% growth compared to the same period in 2019. Rotenberg says that the brand’s notebooks represent 46% of sales of devices in the price range of up to R$2,600. The smart home division closed the year with 250,000 users, a growth of 1,485% in the year.

The computer segment in the world recorded 302 million units sold in 2020, a growth of 13% compared to 2019, according to data from U.S. IDC consulting firm. Sales over 300 million units per year had not been recorded since 2014. Given the strong demand for cell phones, the computer sector followed a stable trend between 2016 and 2019 until the unprecedented upturn last year.

Positivo Tecnologia’s net income and revenue

In this new market context, Positivo Tecnologia decided to increase its presence in notebooks by serving an intermediate price range with a new brand already known to Brazilians. Compaq, HP’s American brand, will have its notebooks produced and sold by the Brazilian company. As a result, Positivo now has a brand for each category in the notebook market: entry (Positivo), intermediate (Compaq) and advanced (Vaio). On the announcement day, the company’s shares closed with a 4.7% drop.

From 2021 on, Positivo may occupy a new level in business. Since the end of last year, purchases from public authorities began to return and should continue to grow this year. In addition, the company won a TSE bid to produce 180,000 electronic ballot boxes for the 2022 presidential election, in a deal worth R$799 million, an amount that will make the company’s revenue jump.

Given the high demand for computers, a mismatch in the supply chain of electronic components has caused a shortage of semiconductors used by different sectors of the electronics market.

“The shortage of components is reflected in price increases. LCD was the component that was most in short supply because it is used by all industries. The increasing demand for everything at the same time has caused the price to increase, and there is a limited quantity. We grew last year in quantity, but we didn’t grow any more because of limited supply. Now we have a crisis in computer sound card components. A Taiwanese company [TSMC] used to supply these to the whole world and they don’t have them today,” says Rotenberg, who also points out the increase in prices of notebooks linked to the depreciation of the Brazilian real against the dollar.

“We believe in a normalization of semiconductor supply and demand only at the beginning of next year,” says the CEO, who, however, reinforces that he has the means to manufacture the new Compaq brand notebooks, which will hit the market in May.

The Compaq-branded devices will feature Intel Pentium processors, Core i3 and Core i5 lines, while the Vaio devices will have options with more advanced Core i5 and Core i7 processors. To differentiate itself in the market and compete with multinationals that lead the global sales of computers and notebooks, such as China’s Lenovo, America’s HP and Dell, and South Korea’s Samsung, the Brazilian company is seeking to create a combination of features and technical specifications suited to the needs of Brazilians, in addition to taking advantage of a wide penetration in points of sale throughout the country.

For Vitor Melo, analyst at InvestPro, EXAME’s investment analysis branch, Positivo’s good phase is, in fact, related to the increase in sales and an improvement in the company’s expenses. However, the analyst states that the profit was boosted by R$139 million, out of the total R$195.8 million net profit, due to a lawsuit related to the unconstitutionality of the inclusion of state ICMS (tax on the circulation of goods and transportation and communication services) in the calculation basis of PIS (Program of Social Integration) and COFINS (Contribution for the Financing of Social Security) and administrative processes of ISS (tax on services) disputes.

Consequently, the extremely high profit in relation to the average of the last ten years should not be repeated, despite the company having reached a new level, having a good cash flow and growing in important fronts, such as servers and smart home.

Based on IDC data and estimates, Positivo’s market intelligence area projects a growth in the computer segment for 2021. Again, the niche should have double-digit growth, reaching 12.5% and a total of 340 million units sold. There are challenges ahead, such as lower emergency aid in 2021 than in 2020, circulation restrictions and physical store closures to contain the pandemic of the novel coronavirus, and a shortage of important electronic components.

Still, for the promising scenario for PC and notebook sales, Positivo is more prepared than ever. For a future beyond the computer, the connected home division will be an opportunity for the company to surf on a new consumption wave, whose estimated global revenues are US$99 billion for 2021 and US$176 billion in 2025, according to the German consulting firm Statista.

Source: Exame

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.