Abril Educação S.A. is a publicly traded company with shares listed on BM&F Bovespa. It is the largest Brazilian educational company. In addition to the publishing houses Ática and Scipione, Abril Educação operates five Learning Systems (SER, Anglo, pH, Maxi, Motivo, GEO, Farias Brito), a technical school (ETB) and other schools (pH, Colégio Motivo, Centro Educacional Sigma), preparatory courses (Anglo Vestibulares, Alfacon Preparatórios), a school transformation model (O Líder em Mim), language courses (Red Balloon, Wise Up), an educational mobile network (Edumobi) and MSTech. Abril Educação reaches more than 130 thousand schools and approximately 30 million students throughout Brazil.
Abril Educação was part of Grupo Abril, one of the largest and most influential communication and education groups in Latin America, until February 2015. The company is now controlled by Thunnus Participações, an investment company with funds managed by Tarpon, a Brazil-based company primarily engaged in asset management operations. Tarpon engages in public and private investments in several industries, including retail, agriculture, real estate, energy, steel and financial services.
Analysis & Key Developments
In 2014, Abril Educação’s net revenue was 1.27 billion BRL, up 22% from 1.04 billion BRL in 2013. The adjusted EBITDA was 389 million BRL, a 25% increase from the year before. Growth was due to significant revenue from the Learning Systems and Preparatory Schools and Courses.
In the same year, net revenue from Abril Educação’s publishing houses grew 2.5%, from 510 million BRL in 2013 to 523 million BRL. Purchases under the 2015 National Textbook Program (PNLD led the public segment, with revenue of 245 million BRL for physical books.
In 2014, Ática and Scipione registered a decrease of 30% in book sale volume in the private segment, selling a total of 5.0 million books. The decrease was the result of a non-recurring sale of 1.7 million books to the São Paulo branch of the Foundation for Educational Development (FDE) in 2014. Excluding this effect, volumes declined by 0.4 million books in 2014, which was more than offset by a 10% increase in average price due to the higher share of premium collections.
Marked by a series of advances in its organizational structure, 2014 was one of the most important years in the history of Abril Educação. New assets were consolidated and integrated and the company migrated to the Novo Mercado section of the BM&F Bovespa. Tarpon acquired a 19.91%. share in June 2014 and became its controlling shareholder after acquiring the remaining interest held by Abrilpar, bringing its total interest to 40,64%. The deal was announced on February 9, 2015 and approved by Brazil’s antitrust agency CADE on March 12, 2015.
The transfer to Taropn initiated a structural reorganization. Eduardo Mufarej, the CEO of Tarpon, became CEO of Abril Educação, while Mario Ghio Júnior became CEO of all the Basic Education businesses (Schools, Learning Systems, Publishers and Red Balloon) and Marcelo Bruzzi remained the CEO of all the Language Courses for Adults businesses (Ometz Group).
Abril Educação is focused on the Brazilian market and it has minimal global interaction.
Abril Educação holds a 22.7% investiment in MStech, which serves over 8 million students at nearly 10,000 schools in the public school system. Through the partnership, Abril Educação aims to develop digital interfaces for its entire portfolio and adopt adaptive learning solutions. The group also acquired Edumobi, the first Brazilian mobile teaching platform, in 2012.
The Abril Group, which comprised Abril Educação until February 2015, acquired Xeriph, the largest Brazilian e-book aggregator, in 2013. The group also owned IBA, an e-commerce that sells digital books and magazines. In the second semester of 2014 the group decided to give up its stake in Xeriph and closed the IBA e-bookstore, keeping only its magazine division.
Ática and Scipione, Abril Educação’s publishing division, have been consistently investing in digital content and digital books, but the investment is limited by the Federal Government’s lack of definitive policies for the PNLD.
Total orders under the 2015 PNLD, which took place in 2014, reached 32 million books. 21.7 million of these were initial purchases under the program and 10.3 million were replacement books from previous programs.
Despite Brazil’s unstable economy, with lower-than-expected GDP growth in 2013 and a 15.5% drop on the Brazilian stock exchange, Abril Educação registered a net growth of 1 billion BRL, up 17% from 883.5 million BRL in 2012. Adjusted EBITDA, calculated based on operating income including the amounts related to depreciation and amortization, grew by 23% to 311.9 million BRL.
Ática and Scipione led sales under the country’s National Textbook Program (PNLD), with a market share of 22% in 2013, and were second in the private retail market for textbooks and educational books.
Abril Educação consolidated its position in the growing language school market by acquiring Grupo Ometz, a group of ESL schools, in April. In July, the company acquired Colégio Motivo in Brasilia, the capital city of Brazil. Three months later, it acquired Colégio Sigma in the northeastern city of Recife, expanding into two new school markets. In December, Abril Educação acquired a 22.7% interest in the capital of MStech, an education technology company.
Abril Educação increased the strength and reputation of its five Learning Systems (Anglo, pH, SER, GEO and Maxi), which are present in over 1,800 public and private schools and serve more than 550,000 students. The company claims a market share of 17.6%.
In 2014, Abril Educação plans to drive organic growth by synergizing diverse business units. With its assets and brands consolidated, the company will now focus all of its efforts on the vast potential for integrated operations and eliminate redundancies.
With an objective to strengthen its presence in education technology, Abril Educação acquired a 22.7% interest in MStech in December 2013. MStech has an excellent reputation and serves over 8 million students at nearly 10,000 public schools. Abril Educação plans to develop digital interfaces for its entire portfolio through the partnership, and to adopt adaptive learning solutions for individual student needs.
Abril Educação created Edumobi, the first Brazilian mobile teaching platform, in 2012. All of Edumobi’s courses are developed exclusively for mobile devices.
Abril acquired Xeriph, the largest Brazilian e-book aggregator in 2013. The group also owns IBA, an e-commerce that sells digital books and magazines.
Abril Educação received total orders for 30.0 million books under the 2014 PNLD, including 12.4 million new purchases and 17.6 million replacement books from previous programs.
Private-sector sales increased 7% to 7.1 million books in 2013, while purchases in the public sector decreased from 52.9 million books in 2012 to 31.5 million in 2013.
Key points for analysis
Brazil, which is among the ten largest book markets in the world, hosts one of the most dynamically growing publishing markets worldwide, particularly in the educational field. Since the Federal government administers textbook sales to most Brazilian public schools, it is probably the most important player in the Brazilian book market. In 2012, the government was responsible for 26.4% of the publishers’ revenue. K-12 textbooks represent over 50% of publishers’ sales in Brazil.