Grupo Simec Announces Results of Operations for the First Six Months of 2014

GUADALAJARA, Mexico, July 24, 2014 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (NYSE: SIM) ("Simec") announced today its results of operations for the sixth-month period ended June 30, 2014.

Comparative first six months of 2014 vs. first six months of 2013

Net Sales
Net sales of the Company increased 5% from Ps. 12,625 million in the first half of 2013 to Ps. 13,204 million in the first half of 2014. Shipments of finished steel products increased 1% from 1,052 thousand tons in the first half of 2013 to 1,066 thousand tons in the first half of 2014. Total sales outside of Mexico in the first half of 2014 increased 11% to Ps. 6,598 million compared to Ps. 5,968 million in the first half of 2013. Mexican sales decreased 1% from Ps. 6,657 million in the first half of 2013 to Ps. 6,606 million in the first half of 2014. The increase in sales for the first half of 2014 compared to the first half of 2013, is due to the combined of increased in the average sales price of 3% and increase in the volume of shipments approximately of 14 thousand tons that represent a 1%.

Cost of Sales
Cost of sales increased 8% from Ps. 11,227 million in the first half of 2013, to Ps. 12,071 million in the first half of 2014. Cost of sales as a percentage of net sales represented 91% in the first half of 2014 while in the first half of 2013 represented 89%. Cost of sales increased due to the higher volume shipment and the increase in the price of certain raw materials.

Gross Profit
Gross profit of the Company for the first half of 2014 decreased 19% from Ps. 1,398 million in the first half of 2013, to Ps. 1,133 million in the first half of 2014. Gross profit as percentage of net sales in the first half of 2014 was of 9% while in the first half of 2013 was of 11%. The gross profit between both periods is given by an increase in the average sales price and a higher volume of shipments between both periods.

Selling, General and Administrative Expense
Selling, general and administrative expense decreased 7%, from Ps. 597 million in the first half of 2013 to Ps. 555 million in the same period 2014, selling, general and administrative expense represented 4% of the net sales of the first half of 2014 and 5% of net sales in the first half of 2013.

Other Income (Expenses,) net
The Company recorded other income net for Ps. 9 million in both periods.

Operating Income
Operating income decreased 28% from Ps. 810 million for the first half of 2013 compared to Ps. 587 million in the first half of 2014. Operating income as percentage of net sales was 4% in the first half of 2014 compared to 6% in the same period of 2013. The decrease in operating income is due to an increase in the average cost of production.

Ebitda
The Ebitda of the first half of 2014, decreased in Ps 287 million or 21% compared to first half of 2013, due to a increase in the average cost of production. The Ebitda passed of Ps. 1,371 million in the first half of 2013 to Ps. 1,084 million in the first half of 2014.

Comprehensive Financial Cost 
Comprehensive financial cost for the first half of 2014 represented an expense of Ps. 28 million compared with of Ps. 224 million of expense for the first half of 2013. The comprehensive financial cost is comprised by the exchange loss of Ps. 13 million in the first half of 2014 compared with an exchange loss of Ps. 223 million in the first half of 2013. Also the Company recorded a net expense interest of Ps. 15 million for the first half of 2014 compared with a net expense interest of Ps.1 million in 2013.

Income Taxes
The Company recorded an income of Ps. 35 million for the net income tax during the first half of 2014, (comprised for a current income tax of Ps. 15 million and an income for deferred income tax of Ps. 50 million) compared with an income of Ps. 103 million of income tax for the first half of 2013 (comprised for a current income tax of Ps. 22 million and an income for deferred income tax of Ps. 81 million).

Net Income
As a result of the foregoing, the Company recorded a decrease in net income of 16%  to pass of Ps. 857 million in the first half of 2013 to Ps. 722 million of the same period of 2014.

Comparative second quarter of 2014 vs. first quarter of 2014

Net Sales
Net sales of the Company increased 1% in the second quarter of 2014 compared to the first quarter of the same period, to pass of Ps. 6,582 million during the first quarter of 2014 to Ps. 6,622 million in the second quarter of 2014. Shipments of finished steel products increased 1% from 530 thousand tons in the first quarter of 2014 to 536 thousand tons in the second quarter of the same year. Total sales outside of Mexico in the second quarter of 2014 increased 8% to get to Ps. 3,423 million compared to Ps. 3,175 million of the first quarter of the same year. Mexican sales show a decrease of 6% from Ps. 3,407 million in the first quarter of 2014 to Ps. 3,199 million in the second quarter of the same year. The sales outside of Mexico had better performance in the second quarter of 2014 compared to the first quarter of the same year.

Cost of Sales
Cost of sales decreased 1% from Ps. 6,057 million in the first quarter of 2014 to Ps. 6,014 million in the second quarter of 2014. Cost of sales as a percentage of net sales represented 92% for the first quarter of 2014 compared to 91% in the second quarter of the same year, the average cost of sales by ton record a decrease between both quarters of 2%.

Gross Profit
Gross profit of the Company for the second quarter of 2014 increased 16% to pass of Ps. 525 million in the first quarter of 2014 to Ps. 608 million in the second quarter of same year. Gross profit as a percentage of net sales represented 8% for the first quarter of 2014 compared to 9% in the second quarter of the same year. The increased in the gross profit in the second quarter of 2014 is caused by a better average cost of sales and a higher volume of sales.

Selling, General and Administrative Expense
Selling, general and administrative expense increase 3%, from Ps. 274 million in the first quarter of 2014 to Ps. 281 million in the second quarter of the same year, and as percentage of net sales represented 4% for both periods.

Other (Expenses) Income, net 
The Company recorded other income net for Ps. 6 million during the second quarter of 2014 compared to other expense net for Ps. 3 million in the first quarter of 2014.

Operating Income
Operating income increased 31%, of Ps. 254 million in the first quarter of 2014 compared to Ps. 333 of the second quarter of the same year. Operating income as percentage of net sales was 4% for the first quarter compared to 5% for the second quarter of the same year. The increase in operating income is due mainly to a reduction in the selling general and administrative expenses of the second quarter 2014.

Ebitda
The Ebitda in the second quarter of 2014 show an increase of 16% compared to the first quarter of the same year, due to previously mentioned. The Ebitda of the second quarter was of Ps. 582 million versus Ps. 501 million in the first quarter of 2014.

Comprehensive Financial Cost
Comprehensive financial cost of the Company in the second quarter of 2014 represented an expense of Ps. 10 million compared with an expense of Ps. 18 million for the first quarter of 2014. The comprehensive financial cost is comprised for; the net interest expense, of Ps. 10 million in the second quarter of 2014, while in the first quarter was of Ps. 4 million. Also we record a net exchange loss of Ps. 0 million in the second quarter of 2014 compared a net exchange loss of Ps. 14 million in the first quarter of the same year.

Income Taxes
The Company have been recorded an income of Ps. 34 million of income tax during the second quarter of 2014, (comprised for an income by current income tax of Ps. 7 million and an income for deferred tax of Ps. 27 million) compared with the Ps. 1 million of income for the first quarter of the same year, (comprised for a current income tax of Ps. 22 million and of an income for deferred tax of Ps. 23 million).

Net Income
As a result of the foregoing, the Company recorded an increase of 21% from a net income of Ps. 327 million in the first quarter of 2014 compared to a net income of Ps. 396 million for the second quarter of 2014.

Liquidity and Capital Resources
As of June 30, 2014, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 3.9 million (accrued interest on June 30, 2014 was U.S. $547,000, or Ps. 7.1 million).  As of December 31, 2013, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 3.9 million (accrued interest on December 31, 2013 was U.S. $527,000, or Ps. 6.9 million).

Comparative second quarter of 2014 vs. second quarter of 2013

Net Sales
Net sales of the Company increased 7% from Ps. 6,182 million during the second quarter of 2013 to Ps. 6,622 million in the second quarter of 2014. Sales in tons of finished steel increased 3% from 522 thousand tons in the second quarter of 2013 compared with 536 thousand tons in the second quarter of 2014. Sales outside of Mexico in the second quarter of 2014 increased 18% from Ps. 2,898 million in the second quarter of 2013 to Ps. 3,423 million in the second quarter of 2014. Mexican sales decrease 3% from Ps. 3,284 million in the second quarter of 2013 to Ps. 3,199 million in the second quarter of 2014. The increase in sales in the second quarter of 2014 compared to the second quarter of 2013 is due to an increase in the average sales price of 4% and an increase in the volume of shipments approximately of 14 thousand of tons.

Cost of Sales
Cost of sales increased 9% in the second quarter of 2014 compared to the second quarter of 2013 from Ps. 5,505 million in the second quarter of 2013 to Ps. 6,014 million in the second quarter of 2014. With respect to sales, the cost of sales of the second quarter of 2014 represented 91% compared to 89% for the second quarter of 2013. The average cost of sales by ton of steel products increased 6% in the second quarter of 2014 versus the second quarter of 2013, due to increase in the price of certain raw materials.

Gross (Loss) Profit
Gross profit of the Company for the second quarter of 2014 amount to Ps. 608 million compared to Ps. 677 million in the second quarter of 2013, this represented a decrease of 10% between both periods. Gross profit as a percentage of net sales for the second quarter of 2014 was 9% compared to 11% of the second quarter of 2013. The decrease in gross profit is mainly due to a higher average cost of sales and a higher volume of shipments in the second quarter of 2014 compared with the second quarter of 2013.

Selling, General and Administrative Expense
The selling, general and administrative expenses increased 6% in the second quarter of 2014 from Ps. 266 million in the second quarter of 2013 to Ps. 281 million in the second quarter of 2014. Selling, general and administrative expense as a percentage of net sales represented 4% for both periods.

Other Income (Expenses), net 
The company recorded other income net of Ps. 6 million in the second quarter of 2014 compared with other expenses net of Ps. 12 million for the second quarter of 2013.

Operating (Loss) Income
Operating income amounted to Ps. 333 million in the second quarter 2014 compared to Ps. 423 million in the second quarter of 2013, this represent 21% of decrease between both quarters. The operating income as a percentage of net sales in the second quarter of 2014 was 5% and 7% in the second quarter of 2013. The decrease in the operating income is due to a higher average cost of sales in the second quarter of 2014 compared to the same period of 2013.

Ebitda
The Ebitda of the second quarter of 2014 decrease compared to the same period of 2013 in 16% from Ps. 692 million in the second quarter of 2013 to Ps. 582 million of the same period of 2014, this is due to the above explained in the operating income.

Comprehensive Financial Cost       
Comprehensive financial cost of the Company for the second quarter of 2014 represented a net expense of Ps. 10 million compared with an expense of Ps. 6 million for the second quarter of 2013. The comprehensive financial cost is comprised for; the net interest expense of Ps. 10 million in the second quarter of 2014, compared to a net interest expense of Ps. 1 million for the same period of 2013. Also record an exchange loss of Ps. 0 million in the second quarter of 2014 and an exchange loss of Ps. 5 million in the second quarter of 2013.

Income Taxes
The company recorded an accrual for income tax of Ps. 34 million in the second quarter of 2014, (comprised for an income by current income tax of Ps. 7 million and an income for deferred tax of Ps. 27 million) compared to an accrual of Ps. 85 million for income tax for the second quarter of 2013, (comprised for an income by current income tax of Ps. 30 million and an income for deferred tax of Ps. 55 million).

Net Income (Loss)
As a result of the foregoing, the Company recorded a net income of Ps. 396 million in the second quarter of 2014 compared to Ps. 551 million for the second quarter of 2013, a decrease of 28% between both quarters.

(millions of pesos)

1H '14


1H '13


Year 14 vs
 '13

Sales

13,204


12,625


5%

Cost of Sales

12,071


11,227


8%

Gross Profit

1,133


1,398


(19%)

Selling, General and Administrative Expense

555


597


(7%)

Other Income (Expenses), net

9


9


0%

Operating Profit

587


810


(28%)

EBITDA

1,084


1,371


(21%)

Net income 

722


857


(16%)

Sales Outside Mexico

6,598


5,968


11%

Sales in Mexico

6,606


6,657


(1%)

Total Sales (Tons)

1,066


1,052


1%

 

Quarter






(millions of pesos)

2Q'14

1Q '14

2Q '13

2Q´14 vs
1Q´14

2Q´14 vs
2Q '13

Sales

6,622

6,582

6,182

1%

7%

Cost of Sales

6,014

6,057

5,505

(1%)

9%

Gross Profit

608

525

677

16%

(10%)

Selling, General and Adm. Expenses

281

274

266

3%

6%

Other Income (Expenses), net

6

3

12

100%

(50%)

Operating Profit

333

254

423

31%

(21%)

EBITDA

582

501

692

16%

(16%)

Net Income

396

327

551

21%

(28%)

Sales Outside Mexico

3,423

3,175

2,898

8%

18%

Sales in Mexico

3,199

3,407

3,284

(6%)

(3%)

Total Sales (Tons)

536

530

522

1%

3%

 

Product

Thousands of Tons

Jan-Jun 2014

Million of Pesos
Jan-Jun 2014

Average Price per Ton

Jan-Jun

2014

Thousands of Tons

Jan – Jun 2013

Million of Pesos 
Jan- Jun 2013

Average Price per Ton

 Jan-Jun

2013

Commercial Profiles

431

4,150

9,629

457

4,519

9,888

Special Profiles

635

9,054

14,258

595

8,106

13,624






















Total

1,066

13,204

12,386

1,052

12,625

12,001








 

Product

Thousands of Tons

Apr-Jun 2014

Million of Pesos     Apr-Jun 2014

Average Price per Ton

Apr-Jun

2014

Thousands of Tons

Jan – Mar

2014

Million
of Pesos 
Jan-Mar
2014

Average Price per Ton

Jan-Mar

2014

Thousands of Tons  Apr-Jun

2013

Million
of Pesos 
Apr-Jun
2013

Average
Price per
Ton  
Apr-Jun

2013

Commercial Profiles

222

2,113

9,518

238

2,320

9,748

 

246

2,380

9,675

Special Profiles

314

4,509

14,360

292

4,262

14,596

 

276

3,802

13,775































Total

536

6,622

12,354

530

6,582

12,419

522

6,182

11,843











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 information contained herein.

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



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