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GRUPO SIMEC S A DE CV ADS
Symbol U : SIM
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Grupo Simec Announces Results of Operations for the Third Quarter, of 2012, Ended September 30, 2012

2012-10-26 14:24 ET - News Release

GUADALAJARA, Mexico, Oct. 26, 2012 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (AMEX: SIM) ("Simec") announced today its results of operations for the nine-month period ended September 30, 2012.

Comparative first nine months of 2012 vs. first nine months of 2011

Net Sales

Net sales of the Company increased 9% from Ps. 21,434 million in the first nine months of 2011 to Ps. 23,418 million in the first nine months of 2012. Shipments of finished steel products increased 1% from 1,731 thousand tons in the first nine months of 2011 to 1,742 thousand tons in the first nine months of 2012. Total sales outside of Mexico in the first nine months of 2012 decreased 1% to Ps. 11,608 million compared to Ps. 11,696 million in the first nine months of 2011. Mexican sales increased 21% from Ps. 9,738 million in the first nine months of 2011 to Ps. 11,810 million in the first nine months of 2012.  The increase in sales for the first nine months of 2012 compared to the first nine months of 2011, is due to the combined of better average sales price of 9% and increase in the volume of shipments approximately of 11 thousand  tons  that represent a 1%.

Cost of Sales

Cost of sales increased 5% from Ps. 18,935 million in the first nine months of 2011, to Ps. 19,954 million in the first nine months of 2012. Cost of sales as a percentage of net sales represented 85% in the first nine months of 2012 while in the first nine months of 2011 represented 88%. Cost of sales increase approximately 5% in the first nine months of 2012 compared to the first nine months of 2011, due to the major volume shipment and increase in certain raw materials.

Gross Profit

Gross profit of the Company for the first nine months of 2012 increased 39% from Ps. 2,499 million in the first nine months of 2011, to Ps. 3,464 million in the first nine months of 2012. Marginal profit as percentage of net sales in the first nine months of 2012 was of 15% while in the first nine months of 2011 was of 12%. The gross profit between both periods is due for better in the average sales price and major volume of shipments between both periods.

General, Selling and Administrative Expense

Selling, general and administrative expense increase 25%, from Ps. 694 million in the first nine months of 2011 to Ps. 866 million in the same period 2012, selling, general and administrative expense represented 4%  of the net sales of the first nine months of 2012 and 3% of net sales in the first nine months of 2011.

Other Income (Expenses,) net

The Company recorded other expense net for Ps. 5 million during the first nine months of 2012 while in the same period of 2011 the other income net by this concept was of Ps. 22 million.

Operating Income

Operating income increased 42% from Ps. 1,827 million for the first nine months of 2011 compared to Ps. 2,593 million in the first nine months of 2012. Operating income as percentage of net sales was 11% in the first nine months of 2012 compared to 9% in the same period of 2011. The increase in operating income is due to an increase in revenues and increase in volume of finish good shipments.

EBITDA

The EBITDA of the first nine months of 2012, increase in Ps 679 million or 26% compared to first nine months of 2011, due to a better in the average sales price and to a major volume shipments. The EBITDA passed of Ps. 2,650 million of the first nine months of 2011 to Ps. 3,329 million in the first nine months of 2012.

Comprehensive Financial Cost

Comprehensive financial cost for the first nine months of 2012 represented an expense of Ps. 214 million compared with of Ps. 324 million of income for the first nine months of 2011. The comprehensive financial cost is comprised by the exchange loss of Ps.214 million in the first nine months of 2012 compared with an exchange gain of Ps. 316 million in the first nine months of 2011. Also record a net income interest of Ps. 0 million and Ps. 8 million in 2012 and 2011 respectively. As of September 30, 2012 the Mexican peso record a revaluation of 8% versus dollar compared the exchange rate of Mexican peso to dollar as of December 31, 2011.

Income Taxes

The Company recorded an income of Ps. 35 million for the net income tax during the first nine months of 2012, (comprised for a deferred income tax of Ps. 35 million) compared with an expense of Ps. 442 million for the first nine months of 2011 (comprised for a current expense tax of Ps. 99 million and an expense for deferred expense tax of Ps. 343 million).

Net Income

As a result of the foregoing, the Company record an increase in net income of 49%  to pass of Ps. 1,578 million in the first nine months of 2011 to Ps. 2,353 million of the same period of 2012.

Comparative third quarter of 2012 vs. second quarter of 2012

Net Sales

Net sales of the Company decreased 12% in the third quarter of 2012 compared to the second quarter to pass of Ps. 8,150 million during the second quarter of 2012 to Ps. 7,154 million in the third quarter of 2012. Shipments of finished steel products decreased 6% from 596 thousand tons in the second quarter of 2012 to 558 thousand tons in the third quarter of the same year. Total sales outside of Mexico in the third quarter of 2012 decreased 23% to get to Ps. 3,188 million compared to Ps. 4,132 million of the second quarter of the same year. Mexican sales decreased 1% from Ps. 4,018 million in the second quarter of 2012 to Ps. 3,965 million in the third quarter of the same year. The average sales price decreased 6% in the third quarter of 2012 compared to the second quarter of the same year.

Cost of Sales

Cost of sales decreased 12% from Ps. 6,901 million in the second quarter of 2012 to Ps. 6,093 million in the third quarter of 2012. Cost of sales as a percentage of net sales represented 85% as the second quarter of 2012 as the third quarter of the same year, the average cost of sales by ton record a decrease between both quarters of 6% due to a price decrease in raw materials also a less volume of domestic and foreign sales.

Gross Profit

Gross profit of the Company for the third quarter of 2012 decreased 15% to pass of Ps. 1,249 million in the second quarter of 2012 to Ps. 1,061 million in the third quarter of same year. Gross profit as a percentage of net sales in both quarters of 2012 was of 15%. The decreased in the gross profit in the third quarter of 2012 is caused by less volume of shipments in 38 thousand tons in the third quarter compared to the second quarter of the same year.

General, Selling and Administrative Expense

Selling, general and administrative expense decrease 9%, of Ps. 288 million in the second quarter of 2012 and Ps. 262 million in the third quarter of the same year, and as percentage of net sales represented 4% for both quarters.

Other (Expenses) Income, net

The Company recorded other income net for Ps. 3 million during the third quarter of 2012 compared to other expense net for Ps. 19 million in the second quarter of 2012.

Operating Income

Operating income decreased 15%, of Ps. 942 million in the second quarter of 2012 compared to Ps. 802 of the third quarter of the same year. Operating income as percentage of net sales was 12% in the second quarter of 2012 and 11% in the third quarter of the same year. The decrease in operating income is due principally to a less level of sales in the third quarter.

EBITDA

The EBITDA in the third quarter of 2012 show an decrease of 14% compared to the second quarter of the same year, this is due to previously mentioned. The EBITDA, of the third quarter was of Ps. 1,033 million versus Ps. 1,197 million in the second quarter of 2012.

Comprehensive Financial Cost

Comprehensive financial cost of the Company in the third quarter of 2012 represented an expense of Ps. 187 million compared with an income of Ps. 120 million for the second quarter of 2012. The comprehensive financial cost is comprised for: the net interest expense, of Ps. 1 million in the third quarter of 2012, while that in the second quarter represented a net income interest net of Ps. 2 million. Also we record a net exchange loss net of Ps. 186 million in the third quarter of 2012 compared a net exchange gain of Ps. 118 million in the second quarter of the same year.

Income Taxes

The Company have been recorded an expense of Ps. 14 million of expense tax during the third quarter of 2012, (comprised for a current income tax of Ps. 15 million and an expense for deferred expense tax of Ps. 29 million) compared with the Ps. 19 million of income for the second quarter of the same year, (comprised for a current expense tax of Ps. 14 million and of an income for deferred income tax of Ps. 33 million).

Net Income

As a result of the foregoing, the Company recorded a decrease of 45% from a net income of Ps. 1,048 million in the second quarter of 2012 compared to a net income of Ps. 576 million for the third quarter of 2012.

Liquidity and Capital Resources

As of September 30, 2012, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998,  (accrued interest on September 30, 2011 was U.S. $515,000, or Ps. 6.6 million).  As of December 31, 2011, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, (accrued interest on December 31, 2011 was U.S. $473,000, or Ps. 6.6 million).

Comparative third quarter of 2012 vs. third quarter of 2011

Net Sales

Net sales of the Company decreased 7% from Ps. 7,676 million during the third quarter of 2011 to Ps. 7,154 million in the third quarter of 2012. Sales in tons of finished steel decreased 6% from 592 thousand tons in the third quarter of 2011 compared with 558 thousand tons in the third quarter of 2012. Sales outside of Mexico in the third quarter of 2012 decreased 23% from Ps. 4,120 million in the third quarter of 2011 to Ps. 3,188 million in the third quarter of 2012. Mexican sales increase 12% from Ps. 3,556 million in the third quarter of 2011 to Ps. 3,965 million in the third quarter of 2012. Average sales prices of finished products by ton decreased 1% in the third quarter of 2012 compared to the third quarter of 2011.

Cost of Sales

Cost of sales decreased 11% in the third quarter of 2012 compared to the third quarter of 2011 from Ps. 6,813 million in the third quarter of 2011 to Ps. 6,093 million in the third quarter of 2012. With respect to sales, the cost of sales of the third quarter of 2012 represented 86% compared to 85% for the third quarter of 2011. The average cost of raw materials used to produce steel products decreased 5% in the third quarter of 2012 versus the third quarter of 2011, due to decrease of raw materials, decrease in the volume of shipments and special profiles (SBQ).

Gross (Loss) Profit

Gross profit of the Company for the third quarter of 2012 amount to Ps. 1,061 million compared to Ps.863 million in the third quarter of 2011, this represented an increase of 23% between both periods. Gross profit as a percentage of net sales for the third quarter of 2012 was 15% compared to 11% of the third quarter of 2011. The increase in gross profit is due mainly for a better average of steels mix shipment of the third quarter of 2012 compared with the third quarter of 2011.

General, Selling and Administrative Expense

The selling, general and administrative expense increased 9% in the third quarter of 2012 from Ps. 241 million in the third quarter of 2011 to Ps. 262 million in the third quarter of 2012. Selling, general and administrative expense as a percentage of net sales represented 4% during the third quarter of 2012 and 3% during the third quarter of 2011.

Other Income (Expenses), net

The company recorded other income net of Ps. 3 million in the third quarter of 2012 compared with other income net of Ps. 30 million for the third quarter of 2011.

Operating (Loss) Income

Operating income amounted to Ps. 802 million in the third quarter 2012 compared to Ps. 652 million in the third quarter of 2011, this represent 23% of increase between both quarters. The operating income as a percentage of net sales in the third quarter was 11% in the third quarter of 2012 and 8% in the third quarter of 2011. The increase in the operating income is due to better average of steels mix shipment.

EBITDA

The EBITDA of the third quarter of 2012 increase compared to the same period of 2011 in 6% from Ps 971 million in the third quarter of 2011 to Ps. 1,033 million of the same period of 2012, this is due to the above explained in the operating income.

Comprehensive Financial Cost

Comprehensive financial cost of the Company for the third quarter of 2012 represented a net expense of Ps. 187 million compared with an income of Ps. 495 million for the third quarter of 2011. The comprehensive financial cost is comprised for; the net interest expense of Ps. 1 million in the third quarter of 2012, compared to an net interest income of Ps. 3 million for the same period of 2011. Also record an exchange loss of Ps. 186 million in the third quarter of 2012 and an exchange gain of Ps. 492 million in the third quarter of 2011.

Income Taxes

The company recorded an for expense tax for Ps. 14 million in the third quarter of 2012, (comprised for a current income tax of Ps. 15 million and an income for deferred expense tax of Ps. 29 million) compared to an expense of Ps. 468 million for income tax for the third quarter of 2011, (comprised for an expense of current expense tax of Ps. 82 million and an expense for deferred expense tax of Ps. 386 million).

Net Income (Loss)

As a result of the foregoing, the Company net income was of Ps. 576 million in the third quarter of 2012 compared to Ps. 660 million for the third quarter of 2011, a decrease of 13% between both quarters.

(million of pesos)

9M '12


9M '11


Year '12 vs
'11

Sales

23,418


21,434


9%

Cost of Sales

19,954


18,935


5%

Gross Profit

3,464


2,499


39%

Selling, General and Administrative Expense

866


694


25%

Other Income (Expenses), net

(5)


22


(123%)

Operating Profit

2,593


1,827


42%

EBITDA

3,329


2,650


26%

Net income  

2,353


1,578


49%

Sales Outside Mexico

11,608


11,696


(1%)

Sales in Mexico

11,810


9,738


21%

Total Sales (Tons)

1,742


1,731


1%



Quarter






(million of pesos)

3Q'12

2Q '12

3Q '11

3Q '12 vs
2Q´12

3Q '12 vs
3Q '11

Sales

7,154

8,150

7,676

(12%)

(7%)

Cost of Sales

6,093

6,901

6,813

(12%)

(11%)

Gross Profit

1,061

1,249

863

(15%)

23%

Selling, General and Adm. Expenses

262

288

241

(9%)

9%

Other Income (Expenses), net

3

(19)

30

(116%)

(90%)

Operating Profit

802

942

652

(15%)

23%

EBITDA

1,033

1,197

971

(14%)

6%

Net Income

576

1,048

660

(45%)

(13%)

Sales Outside Mexico

3,188

4,132

4,120

(23%)

(23%)

Sales in Mexico

3,965

4,018

3,556

(1%)

12%

Total Sales (Tons)

558

596

592

(6%)

(6%)



Product

Thousand of Tons

Jan-Sep 2012

Million of Pesos          Jan-Sep 2012

Average Price per Ton

Jan-Sep

2012

Thousand of Tons

Jan – Sep 2011

Million of Pesos  Jan- Sep 2011

Average Price per Ton

Jan-Sep

2011

Commercial Profiles

755

8,482

11,234

669

6,786

10,143

Special Profiles

987

14,936

15,133

1,062

14,648

13,793






















Total

1,742

23,418

13,443

1,731

21,434

12,382



Product

Thousand of Tons

Jul-Sep 2012

Million of Pesos  Jul-Sep 2012

Average Price per Ton

Jul-Sep 2012

Thousand of Tons

Apr-Jun

2012

Million of Pesos      Apr-Jun

2012

Average Price per Ton

Apr-Jun

2012

Thousand of Tons           Jul-Sep

2011

Million of Pesos            Jul-Sep  2011

Average Price per Ton           Jul-Sep

2011

Commercial Profiles

254

2,819

11,098

247

2,717

11,000


248

2,638

10,637

Special Profiles

304

4,335

14,260

349

5,433

15,567


344

5,038

14,645































Total

558

7,154

12,821

596

8,150

13,674

592

7,676

12,966



Any forward-looking information contained herein is inherently subject to various risks, uncertainties and assumptions which, if incorrect, may cause actual results to vary materially from those anticipated, expected or estimated. The company assumes no obligation to update any forward-looking informationcontained herein.

SOURCE Grupo Simec, S.A.B. de C.V.

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