Grupo Simec Announces Results of Operations for the First Quarter, of 2019, Ended March 31, 2019

GUADALAJARA, Mexico, April 30, 2019 /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, 2019.

Comparative first quarter of 2019 vs. first quarter of 2018

Net Sales
The net sales of the company increased derived from a larger volume shipped of steel and a better sales price. Sales passed from Ps. 7,949 million in the first quarter of 2018 to Ps. 9,503 million in the same period of 2019. Shipments of steel finished goods increased 12% from 530 thousand tons in the first quarter of 2018 compared to 591 thousand tons in the same period of 2019. Total sales outside of Mexico in the first quarter of 2019 increased 45% to reach Ps. 4,783 million compared to Ps. 3,307 million in the same period of 2018. The Mexican sales increased 2% from Ps. 4,642 million in the first quarter of 2018 to Ps. 4,720 million in the same period of 2019. The keep in sales can be explained due to a higher volume shipped in 6% compared with the same period of 2018. The average sales price per ton of steel finished goods increase 7% in the first quarter of 2019 compared with the same period of 2018.

Cost of Sales
The cost of sales increased from Ps. 6,339 million in the first quarter of 2018 to Ps. 8,406 million in the same period of 2019. Cost of sales as a percentage of net sales in the first quarter of 2019 and 2018 represented 88% and 80% respectively. The average cost of sales per ton of steel finished goods increased 19% in the first quarter of 2019 compared to the same period of 2018.

Gross Profit
The gross profit of the company decreased 32% from Ps. 1,610 million in 2018 to Ps. 1,097 million in the same period of 2019. Gross profit as a percentage of net sales in the first quarter of 2019 and 2018 represented 12% and 20% respectively. The decrease in gross profit is due to a higher average cost of the raw materials in the first quarter of 2019 compared with the same period of 2018.

General, Sales and administrative Expenses
General, selling and administrative expenses increased 14%, from Ps. 273 million in the first quarter of 2018 to Ps. 311 million in the same period of 2019 and representing 3% of net sales in both periods 2018 an 2019.

Other Expenses (Income) net
The company recorded other income net of Ps. 67 million in the first quarter of 2019 compared to other expenses net of Ps. 23 million in the same period of 2018.

Operating Income
The operating income decreased from Ps. 1,314 million for the first quarter of 2018 compared to Ps. 853 million in the same period of 2019. Operating income as a percentage of net sales was 9% in the first quarter of 2019 compared to 17% in the same period of 2018. The decrease in operating income is due to a higher production cost and cost of sales in the first quarter of 2019 compared with the same period of 2018.

EBITDA
The EBITDA of the Company was of 1,582 million for the first quarter of 2018, as a result of a net income of Ps. 974 million, plus minority stake of Ps. 17 million, plus income taxes of Ps. 10 million, plus comprehensive financial cost of Ps. 313 million, plus depreciation of Ps. 268 million to Ps 1,127 million in the same period of 2019 as a result of a net income of Ps. 425 million, less minority stake of Ps. 41 million, less income taxes of Ps. 21 million, plus comprehensive financial cost of Ps. 490 million, plus depreciation of Ps. 274.

Comprehensive Financial Cost 
The Comprehensive financial cost in the first quarter of 2019 represented a net expense of Ps. 490 million compared with an expense of Ps.313 million in the same period of 2018. Net interest was an income of Ps. 13 million in the first quarter of 2019 compared with a net income of Ps. 9 million in the same period of 2018. At the same time, Simec registered an exchange loss of Ps. 503 million in the first quarter of 2019 compared with an exchange loss of Ps. 322 million in the same period of 2018.

Income Taxes
Income Taxes recorded an income of Ps. 21 million in the first quarter of 2019 (including the income of Ps. 21 million of deferred income taxes) compared to an expense of Ps. 10 million in the same period of 2018 (including the benefits of Ps. 16 million of deferred income taxes).

Net Income (loss) (Before Non- controlling Interest)
As a result of the foregoing, net income decreased 56% to Ps. 425 million in the first quarter of 2019 from Ps. 974 million in the same period of previous year.

Financial Situation, Liquidity and Capital Resources
As of March 31, 2019, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 5.9 million (accrued interest on March 31, 2019 was U.S. $656 or Ps. 12.7 million).  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).

Comparative first quarter of 2019 vs. fourth quarter of 2018

Net Sales
The net sales of the company increased 8% comparing Ps. 8,798 million in the fourth quarter of 2018 to Ps. 9,503 million in the first quarter of 2019. The tons sales increased 1%, from 585 thousand tons in the fourth quarter of 2018 compared to 591 thousand tons in the first quarter of 2019. Total sales outside of Mexico in the first quarter of 2019 increased 8% from Ps. 4,426 million on the last quarter of 2018 compared to Ps. 4,783 million in the first quarter of 2019. The Mexican sales increased 8% from Ps. 4,372 million in the fourth quarter of 2018 to Ps. 4,720 million in the first quarter of 2019. The increase mainly due to a greater volume shipped, better average sales price per ton increased 7% in the first quarter of 2019 compared with the fourth quarter of 2018.

Cost of Sales
Cost of sales increased 4% from Ps. 8,099 million in the fourth quarter of 2018 to Ps. 8,406 million in the first quarter of 2019. Cost of sales as a percentage of net sales in the first quarter of 2019 represented 88% and in the last quarter of 2018 cost of sales represented 92%. The average cost of finished steel products in the first quarter of 2019 increased 3% compared to the fourth quarter of 2018 as a result of an increased on the cost of raw materials.

Gross Profit
Gross profit of the company for the first quarter of 2019 increased to Ps. 1,097 million in 2019 from Ps. 699 million in the last quarter of 2018. Gross profit as a percentage of net sales in the first quarter of 2019 was 12% and for the last period of 2018 was 8%. The increase in gross profit is due to a better average sales price and volume of shipments on the first quarter of 2019 compared with the last quarter of 2018.

General, Sales and administrative Expenses
General, selling and administrative expenses remained to Ps. 311 million in the first quarter of 2019 compared to Ps. 259 million in the fourth quarter of 2018, representing 3% of net sales for both periods.

Other Expenses (Income) net
The company recorded other net income of Ps. 67 million in the first quarter of 2019 compared to other net expenses of Ps. 5 million in the fourth quarter of 2018.

Operating Income
Operating income increased 96% to Ps. 853 million for the first quarter of 2019 compared to Ps. 435 million in the last quarter of 2018. Operating income as a percentage of net sales was 9% in the first quarter of 2019, compared to 5% in the last quarter of 2018. The increase in operating income is due to the increase in production and volume of shipments, in the first quarter of 2019 compared with the fourth quarter of 2018.

EBITDA
The EBITDA of the Company was of 743 million for the fourth quarter of 2018, as a result of a net income of Ps. 330 million, less minority stake of Ps. 236 million, plus income taxes of Ps. 424 million, less comprehensive financial cost of Ps. 83 million, plus depreciation of Ps. 308 million to Ps 1,127 million in the first quarter of 2019 as a result of a net income of Ps. 425 million, less minority stake of Ps. 41 million, less income taxes of Ps. 21 million, plus comprehensive financial cost of Ps. 490 million, plus depreciation of Ps. 274.

Comprehensive Financial Cost 
Comprehensive financial cost in the first quarter of 2019 represented a net income of Ps. 490 million compared with a net income of Ps. 83 million in the fourth quarter of 2018. Net interest income of the first quarter of 2019 was of Ps. 13 million compared with an interest net income of Ps. 103 million in the last quarter of 2018. At the same time, Simec registered an exchange loss of Ps. 503 million in the first quarter of 2019 compared with a loss on exchange rate of Ps. 20 million on the last quarter of 2018.

Income Taxes
Income Taxes recorded an income of Ps. 21 million in the first quarter of 2019 (including Ps. 21 million of deferred income taxes) compared with an expense of Ps. 424 million in the fourth quarter of 2018 (including Ps. 117 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 2019 is of Ps. 425 million compared with Ps. 330 million of the fourth quarter 2018.

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.

Contact: Sergio Vigil González 
Mario Moreno Cortez
Grupo Simec, S.A.B. de C.V.
Calzada Lázaro Cárdenas 601
44440 Guadalajara, Jalisco, México
52 55 1165 1025
52 33 3770 6734

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

Related Links

http://www.gsimec.com.mx