Grupo Simec Announces Results Of Operations For The First Quarter, Of 2018, Ended March 31, 2018

GUADALAJARA, Mexico, April 27, 2018 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (NYSE: SIM) ("Simec") announced today its results of operations for the three-month period ended March 31, 2018.

Comparative first quarter of 2018 vs. first quarter of 2017

Net Sales

The net sales of the company were maintained derived from the decrease in shipments of steel and a better sales price. Sales passed from Ps. 7,922 million in the first quarter of 2017 to Ps. 7,949 million in the same period of 2018. Shipments of steel finished goods decreased 6% from 563 thousand tons in the first quarter of 2017 compared to 530 thousand tons in the same period of 2018. Total sales outside of Mexico in the first quarter of 2018 decreased 11% to reach Ps. 3,307 million compared to Ps. 3,703 million in the same period of 2017. The Mexican sales increased 10% from Ps. 4,219 million in the first quarter of 2017 to Ps. 4,642 million in the same period of 2018. The keep in sales can be explained due to a lower volume shipped in 6% compared with the same period of 2017. The average sales price per ton of steel finished goods increase 7% in the first quarter of 2018 compared with the same period of 2017.

Cost of Sales

The cost of sales was maintained from Ps. 6,348 million in the first quarter of 2017 to Ps. 6,339 million in the same period of 2018. In both periods the cost of sales represents the 80% of the net sales. The average cost of sales per ton of steel finished goods increased 6% in the first quarter of 2018 compared to the same period of 2017.

Gross Profit

The gross profit of the company for the same period increased 2% from Ps. 1,574 million in 2017 to Ps. 1,610 million in the same period of 2018. Gross profit as a percentage of net sales in both periods was 20%. The increase in gross profit is due to a better average cost and a competitive cost of the raw materials in the first quarter of 2018 compared with the same period of 2017.

General, Sales and administrative Expenses

General, selling and administrative expenses decreased 30%, from Ps. 388 million in the first quarter of 2017 to Ps. 273 million in the same period of 2018 and representing 3% of net sales in the first quarter of 2018 and 5% to the same period of 2017.

Other Expenses (Income) net

The company recorded other expenses net of Ps. 23 million in the first quarter of 2018 compared to other income net of Ps. 1 million in the same period of 2017.

Operating Income

The operating income increased from Ps. 1,187 million for the first quarter of 2017 compared to Ps. 1,314 million in the same period of 2018. Operating income as a percentage of net sales was 17% in the first quarter of 2018 compared to 15% in the same period of 2017. The increase in operating income is due to a better price of sales and a competitive cost of sales in the first quarter of 2018 compared with the same period of 2017.

EBITDA

The EBITDA of the Company for the first quarter of 2017, show an increase of 79%, by the above mentioned to pass from Ps. 1,583 million in the first quarter of 2017 compared against Ps. 1,582 million of the first quarter of 2018.

Comprehensive Financial Cost 

The Comprehensive financial cost in the first quarter of 2018 represented a net expense of Ps. 313 million compared with an expense of Ps.531 million in the same period of 2017. Net interest was an income of Ps. 9 million in the first quarter of 2018 compared with a net expense of Ps. 2 million in the same period of 2017. At the same time, Simec registered an exchange loss of Ps. 322 million in the first quarter of 2018 compared with an exchange loss of Ps. 529 million in the same period of 2017.

Income Taxes

Income Taxes recorded an expense of Ps. 10 million in the first quarter of 2018 (including the income of Ps. 16 million of deferred income taxes) compared to an income of Ps. 64 million in the same period of 2017 (including the benefits of Ps. 70 million of deferred income taxes).

Net Income (loss) (Before Non- controlling Interest)

As a result of the foregoing, net income increased 38% to Ps. 719 million in the first quarter of 2018 from Ps. 992 million in the same period of previous year.

Financial Situation, Liquidity and Capital Resources

As of March 31, 2018, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 5.5 million (accrued interest on March 31, 2018 was U.S. $647 or Ps. 11.9 million).  As of March 31, 2017, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 5.6 million (accrued interest on March 31, 2017 was U.S. $558.9 or Ps. 10.6 million).

Comparative first quarter of 2018 vs. fourth quarter of 2017

Net Sales

The net sales of the company increased 17% comparing Ps. 6,808 million in the fourth quarter of 2017 to Ps. 7,949 million in the first quarter of 2018. The tons sales increased 12%, from 474 thousand tons in the fourth quarter of 2017 compared to 530 thousand tons in the first quarter of 2018. Total sales outside of Mexico in the first quarter of 2018 increased 12% from Ps. 2,959 million on the last quarter of 2017 compared to Ps. 3,307 million in the first quarter of 2018. The Mexican sales increased 21% from Ps. 3,849 million in the fourth quarter of 2017 to Ps. 4,642 million in the first quarter of 2018. The increase mainly due to a greater volume shipped, better average sales price per ton increased 4% in the first quarter of 2018 compared with the fourth quarter of 2017.

Cost of Sales

Cost of sales increased 9% from Ps. 5,840 million in the fourth quarter of 2017 to Ps. 6,339 million in the first quarter of 2018. Cost of sales as a percentage of net sales in the first quarter of 2018 represented 80% and in the last quarter of 2017 cost of sales represented 86%. The average cost of finished steel products in the first quarter of 2018 increased 3% compared to the fourth quarter of 2017 as a result of an increased on the cost of raw materials.

Gross Profit

Gross profit of the company for the first quarter of 2018 increased to Ps. 1,610 million in 2018 from Ps. 968 million in the last quarter of 2017. Gross profit as a percentage of net sales in the first quarter of 2018 was 20% and for the last period of 2017 was 14%. The increase in gross profit is due to the rise on the production and volume of shipments on the first quarter of 2018 compared with the last quarter of 2017.

General, Sales and administrative Expenses

General, selling and administrative expenses remained to Ps. 273 million in the first quarter of 2018 compared to Ps. 274 million in the fourth quarter of 2017, representing 3% of net sales in the first quarter of 2018 and for the last period of 2017 was 4%.

Other Expenses (Income) net

The company recorded other net expenses of Ps. 23 million in the first quarter of 2018 compared to other net income of Ps. 15 million in the fourth quarter of 2017.

Operating Income

Operating income increased 85% to Ps. 1,314 million for the first quarter of 2018 compared to Ps. 709 million in the last quarter of 2017. Operating income as a percentage of net sales was 17% in the first quarter of 2018, compared to 10% in the last quarter of 2017. The increase in operating income is due to the increase in production and volume of shipments, in the first quarter of 2018 compared with the fourth quarter of 2017.

EBITDA

The EBITDA of the company for the first quarter of 2018 was Ps. 1,084 million compared against Ps. 1,582 million of the last quarter of 2017, a decrease of Ps. 498 million.

Comprehensive Financial Cost 

Comprehensive financial cost in the first quarter of 2018 represented a net expense of Ps. 313 million compared with a net expense of Ps. 47 million in the fourth quarter of 2017. Net interest income of the first quarter of 2018 was of Ps. 9 million compared with an interest net expense of Ps. 4 million in the last quarter of 2017. At the same time, Simec registered an exchange loss of Ps. 322 million in the first quarter of 2018 compared with a loss on exchange rate of Ps. 43 million on the last quarter of 2017.

Income Taxes

Income Taxes recorded an expense of Ps. 10 million in the first quarter of 2018 (including Ps. 16 million of deferred income taxes) compared with an expense of Ps. 1,123 million in the fourth quarter of 2017 (including Ps. 1,252 million of deferred expense taxes).

Net Income (loss) (Before Non- controlling Interest)

As a result of the foregoing, the net income of the first quarter of 2018 is of Ps. 992 million compared with Ps. 461 million of the last period of previous year.

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.

Related Links

http://www.gsimec.com.mx