Grupo Simec Announces Results of Operations Audited for the Year of 2010 and 2009

GUADALAJARA, Mexico, May 4, 2011 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (AMEX: SIM) ("Simec") announced today its results of operations Audited for the twelve-month period ended December 31, 2010 and December 31, 2009.

Twelve-Month Period Ended December 31, 2010 compared to Twelve-Month Period Ended December 31, 2009

Certain reclassifications of Indirect Expenses were made from Cost of Sales to General Expenses in 2010 and 2009.

Net Sales

Net sales increased 28% due to increase in shipments of finished steel products and the average price per ton, the sale rose to Ps. 24,576 millions in the twelve-month period ended December 31, 2010 compared to Ps. 19,232 millions in the same period of 2009. Shipments of finished steel products increase 10% to 2,241 thousand tons in the twelve-month period ended December 31, 2010 compared to 2,046 thousand tons in the same period of 2009. Total sales outside of Mexico in the twelve-month period ended December 31,  2010 increased 54% to Ps. 13,777 millions, compared with Ps. 8,935 millions  in the same period of 2009, while total sales in Mexico increased 5% from Ps. 10,297 millions in the twelve-month period ended December 31, 2009 to Ps. 10,799 millions in the same period  of 2010.  The increase in sales is due to an increase shipments during the twelve-month period ended December 31, 2010, compared to the same period in 2009 (195, thousand tons). The average price of steel products increased 17% in the twelve-month period ended December 31, 2010 compared with the same period of 2009.

Direct Cost of Sales

Direct cost of sales increased 19% from Ps. 17,240 millions in the twelve-month period ended December 31, 2009 to Ps. 20,530 millions in the same period of 2010. Direct cost of sales as a percentage of net sales represented 84% in the twelve-month period ended December 31, 2010 compared to 90% in the same period of 2009. The average cost of finished steel produced increased 9% in the twelve-month period ended December 31, 2010 versus the same period of 2009 this is due to the increase of shipments of steel products in The United States of America.

Marginal Profit

Marginal profit in the twelve-month period ended December 30, 2010 was Ps. 4,046 millions compared to Ps. 1,992 millions in the same period of 2009. Marginal profit as a percentage of net sales in the twelve-month period ended December 31, 2010 was 16% compared to 10% in the same period of 2009. The increase in the marginal profit is due to an increase in the average price per ton of finished steel products during the twelve-month period ended December 31, 2010 compared with the same period of 2009.

Operating Expenses

Operating expenses increased 7% to Ps. 2,962 millions in the twelve-month period ended December 31, 2010 compared to Ps. 2,778  millions in the same period of  2009, and represented 12% of net sales in the twelve-month period ended December 2010 and 14% of net sales in the same period  of 2009.

Operating Income

Operating income increased 238% to Ps. 1,084 millions for the twelve-month period ended December 31, 2010 compared for a loss of Ps. 786 millions in the same period of 2009. Operating income as a percentage of net sales was 4% in the twelve-month period ended December 31, 2010 compared to minus 4% in the same period of 2009. The increase in operating income is due to an increase in shipments and average price per ton.

EBITDA

The EBITDA at the twelve-month prior ended December 31, of 2010, increase 733% from  Ps.262 millions in  2009, to Ps 2,182 millions in 2010, these is due to an increase of  shipments of steel products during the 2010, increase in the margin profit.

Comprehensive Financial Cost  

Comprehensive financial cost in the twelve-month period ended December 31, 2010 represented an expense of Ps. 207 millions compared with an expense of Ps. 96 millions in the same period of 2009. Net interest was zero in the twelve-month period ended December 31, 2010 compared with a net interest expenses of Ps. 18 millions in the same period of 2009. At the same time, we registered an exchange loss of Ps. 207 millions in the twelve-month period ended December 31, 2010 compared with an exchange loss of Ps. 78 millions in the same period of 2009, reflecting a 5% increase in the value of the peso versus the dollar in the twelve-month period ended December 31, 2010 compared to December 31, 2009.

Other Expenses (Income) net

The company recorded other net expenses of Ps. 186 millions in the twelve-month period ended December 31, 2010 for expenses incurred in the use of patent industrial compared to other expenses net of Ps. 2,338 millions in the same period of 2009 for the impairment of long-lived assets of the plants of San Luis.

Income Taxes

Income Taxes recorded an expense of Ps. 86 millions in the twelve-month period ended December 31, 2010 (including the income of deferred income tax of Ps. 72 millions) compared with a net income of Ps. 2,045 millions in the same period of 2009 (including the income of Ps. 1,404 millions of deferred income taxes).

Net Income (loss) (After Minority Interest)

As a result of the foregoing, net income increased by 151% to Ps. 605 millions in the twelve-month period ended December 31, 2010 from a net loss of Ps. 1,775 millions in the same period of 2009.  

Liquidity and Capital Resources

As of December 31, 2010, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, Ps. 3.7 millions (accrued interest on December 31, 2010 was U.S. $445,914 or Ps. 5.5 millions).  As of December 31, 2009, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, Ps. 3.9 millions (accrued interest on December 31, 2009 was U.S. $418,176, or Ps. 5.5 millions).

Comparative fourth quarter 2010 vs third quarter 2010

Net Sales

Net sales decreased 9% from Ps. 6,182 millions in the third quarter of 2010 to Ps. 5,635 millions for the fourth quarter of 2010. Sales in tons decreased from 556 thousand ton in the third quarter of 2010 to 522 thousand ton in the fourth quarter of the same period. The total sales outside of Mexico for the fourth quarter of 2010 decreased 13% to Ps. 3,094 millions in the fourth quarter compared with Ps. 3,553 millions in the third quarter of 2010. Total sales in Mexico decreases form 2,629 millions in the third quarter of 2010 compared Ps. 2,541 millions in the fourth quarter of 2010.  Prices of finished products sold in the fourth quarter of 2010 decreased approximately 3% compared to the third quarter of 2010.

Direct Cost of Sales

Direct cost of sales was Ps. 4,794 millions in the fourth quarter of 2010 compared to Ps. 5,297 millions for the third quarter of 2010. With respect to sales, in the fourth quarter of 2010, the direct cost of sales represented 85% and 86% for the third quarter of 2010. The average cost of sales by ton decreased 4% in the fourth quarter of 2010 versus the third quarter of 2010, primarily as a result of the blend of finished steel products sales while the cost of production in both quarter are similar.

Marginal Profit

Marginal profit for the fourth quarter of 2010 decreased 5% to Ps. 841 millions compared to Ps. 885 millions in the third quarter of 2010. The marginal profit as a percentage of net sales for the fourth quarter was of 15% and 14% for the third quarter of 2010 was.

Operating Expenses

Operating expenses increase 12% to Ps. 855 millions in the fourth quarter of 2010 compared to Ps. 765 millions for the third quarter of 2010. Operating expenses as a percentage of net sales represented 15% during the fourth quarter of 2010 and 12% during the third quarter of 2010.

Operating (Loss) Income

Operating Loss represented Ps 14 in the fourth quarter of 2010 compared to an operating income of Ps. 120 millions in the third quarter of 2010. The operating income as a percentage of net sales in the fourth of 2010 represented 0.2% while in the third quarter of 2010 was 2%. The decrease in operating income is due to down in the shipments of finished steel products and average price sales from third to fourth quarter.

Ebitda

The ebitda of the fourth quarter of, 2010 decreased 20% from Ps 381 millions in the third quarter of 2010 to Ps 304 millions in the fourth quarter of 2010 the decrease in the ebitda is due to the above explained

Comprehensive Financial Income (Cost)

Comprehensive financial cost for the fourth quarter for 2010 was an expense of Ps. 119 millions compared with an expense of Ps. 50 millions for the third quarter of 2010 net interest expense in the third quarter was of Ps 5 millions, while in the fourth quarter the income interest was Ps. 2 millions. At the same time we registered an exchange loss of Ps. 45 millions in the third quarter of 2010 compared with an exchange loss of Ps. 121 millions in the fourth quarter of 2010.

Other Expenses (Income) net

The company recorded other net expense of Ps. 144 millions in the fourth quarter of 2010 for expenses incurred in the use of patent industrial compared to other net expense of Ps. 6 millions for the third quarter of 2010.

Income Taxes

Income Taxes for the fourth quarter of 2010 had an expense of Ps. 42 millions (including an income tax deferred for Ps. 53 millions) compared to an expense of Ps. 58 millions for the third quarter of 2010, (including an expense tax deferred of Ps. 27 millions).

Net Income (loss) (After Minority Interest)

As a result of the foregoing, net loss was Ps. 320 millions in the fourth quarter of 2010 compared to Ps. 6 millions of net income in the third quarter of 2010.

Comparative fourth quarter 2010 vs fourth quarter 2009

Net Sales

Net sales increased 14% from Ps. 4,954 millions for the fourth quarter of 2009 to Ps. 5,635 millions for the fourth quarter of 2010. Sales in tons of finished steel in the fourth quarter of 2010 were 522 thousand tons versus to 518 thousand tons in the fourth quarter of 2009. The total sales outside of Mexico for the fourth quarter of 2010 increased 9% to Ps. 3,094 millions in the fourth quarter of 2010 compared with Ps. 2,826 millions for the fourth quarter of 2009. Total sales in Mexico increase 19% from Ps. 2,541 millions in the fourth quarter of 2010 to Ps. 2,128 millions in the fourth quarter of 2009. Prices of finished products sold in the fourth quarter of 2010 increased approximately 13% compared to the fourth quarter of 2009.

Direct Cost of Sales

Direct cost of sales decreased 20% from Ps. 5,966 millions in the fourth quarter of 2009 to Ps. 4,794 millions for the fourth quarter of 2010. With respect to sales, in the fourth quarter of 2010, the direct cost of sales represents 85% compared to 120% for the fourth quarter of 2009. The average cost of raw materials used to produce steel products decreased 20% in the fourth quarter of 2010 versus the fourth quarter of 2009, basically for a provision of certain raw materials in 2009.

Marginal Profit

Marginal profit for the fourth quarter of 2010 increased 183% to Ps. 841 millions in the fourth quarter of 2010 compared to a loss of Ps. 1,012 millions in the fourth quarter of 2009. The marginal profit as a percentage of net sales for the fourth quarter of 2010 was 15% compared with deficit of 20% for the fourth quarter of 2009.

Operating Expenses

Operating expenses increased 10% to Ps. 855 millions in the fourth quarter of 2010 compared to Ps. 776 millions for the fourth quarter of 2009. Operating expenses as a percentage of net sales represented 15% during the fourth quarter of 2010 and 16% during the fourth quarter of 2009.

Operating (Loss) Income

Operating loss was of Ps.14 millions in the fourth quarter of 2010 compared with a loss of Ps. 1,788 millions in the fourth quarter of 2009. The operating income as a percentage of net sales in the fourth quarter of 2010 was 0.2% compared to a deficit of 36% in the fourth quarter of 2009.

Ebitda

The ebitda from the fourth quarter of 2010 increased 120% from a loss of Ps 1,552 millions in the fourth quarter of 2009 to gain Ps 304 millions in the fourth quarter of 2010.

Comprehensive Financial Income (Cost )

Comprehensive financial cost for the fourth quarter of 2010 was an expense of Ps. 119 millions compared with an expense of Ps 47 millions in the fourth quarter of 2009. Net interest expense was Ps. 2 millions in the fourth quarter of 2010 compared with an expense of Ps. 7 millions of net interest expense in the fourth quarter of 2009. At the same time we registered an exchange loss of Ps. 121 millions in the fourth quarter of 2010 compared with an exchange loss of Ps. 54 millions in the fourth quarter of 2009.

Other Expenses (Income) net

The company recorded other net expense of Ps. 144 millions in the fourth quarter of 2010 for expenses incurred in the use of patent industrial compared with other income net of Ps. 2,346 millions for the fourth quarter of 2009 for the impairment of long-lived assets of the plants of San Luis.

Income Taxes

Income Taxes for the fourth quarter of 2010 was an expense of Ps. 42 millions (including a provision of deferred income tax of Ps 53 millions),  compared to Ps. 2,213 millions of income for the fourth quarter of 2009, (including a provision of deferred income tax of Ps. 1,419 millions).

Net Income (loss) (After Minority Interest)

As a result of the foregoing, net loss of Ps. 320 millions in the fourth quarter of 2010 compared to a loss of Ps. 1,968 millions of net income in the fourth quarter of 2009.

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.