Grupo Simec Announces Results of Operations for the First Twelve Months of 2010

GUADALAJARA, Mexico, Feb. 14, 2011 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (Amex: SIM) ("Simec") announced today its results of operations for the twelve-month period ended December 31, 2010.

Twelve-Month Period Ended December 31, 2010 compared to Twelve-Month Period Ended December 31, 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. 24,557 million in the twelve-month period ended December 31, 2010 compared to Ps. 19,232 million 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 30, 2010 increased 54% to Ps. 13,777 million, compared with Ps. 8,935 million  in the same period of 2009, while total sales in Mexico increased 5% from Ps. 10,297 million in the twelve-month period ended December 31, 2009 to Ps. 10,780 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 increase). 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 20% from Ps. 17,717 million in the twelve-month period ended December 31, 2009 to Ps. 21,256 million in the same period of 2010. Direct cost of sales as a percentage of net sales represented 87% in the twelve-month period ended December 31, 2010 compared to 92% in the same period of 2009. The average cost of finished steel produced increased 10% 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. 3,301 million compared to Ps. 1,515 million in the same period of 2009. Marginal profit as a percentage of net sales in the twelve-month period ended December 31, 2010 was 13% compared to 8% 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 decreased 9% to Ps. 2,094 million in the twelve-month period ended December 31, 2010 compared to Ps. 2,301  million in the same period of  2009, and represented 9% of net sales in the twelve-month period ended December 2010 and 12% of net sales in the same period  of 2009.

Operating Income

Operating income increased 254% to Ps. 1,207 million for the twelve-month period ended December 31, 2010 compared for a loss of Ps. 786 million in the same period of 2009. Operating income as a percentage of net sales was 5% 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 753% from  Ps. 262 million in  2009, to Ps. 2,235 million in 2010, these is due to an increase of  shipments of steel products during the 2010, increase in the margin profit and reduction of operating expenses.

Comprehensive Financial Cost  

Comprehensive financial cost in the twelve-month period ended December 31, 2010 represented an expense of Ps. 98 million compared with an expense of Ps. 96 million in the same period of 2009. Net interest expenses was Ps. 2 million in the twelve-month period ended December 31, 2010 compared with a net interest expenses of Ps. 18 million in the same period of 2009. At the same time, we registered an exchange loss of Ps. 96 million in the twelve-month period ended December 31, 2010 compared with an exchange loss of Ps. 78 million 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. 56  million in the twelve-month period ended December 31, 2010 compared to other income net of Ps. 30 million in the same period of 2009.

Income Taxes

Income Taxes recorded a provision of Ps. 40 million in the twelve-month period ended December 31, 2010 (including the income of deferred income tax of Ps. 183 million) compared with a net income of Ps. 2,045 million in the same period of 2009 (including the income of Ps. 1,404 million of deferred income taxes).

Net Income (After Minority Interest)

As a result of the foregoing, net income increased by 524% to Ps. 1,369 million in the twelve-month period ended December 31, 2010 from a  net loss of Ps. 323 million 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 (accrued interest on December 31, 2010 was U.S. $445,914).  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 (accrued interest on December 31, 2009 was U.S. $418,176).

Comparative fourth quarter 2010 vs third quarter 2010

Net Sales

Net sales decreased 9% from Ps. 6,182 million in the third quarter of 2010 to Ps. 5,615 million 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 million in the fourth quarter compared with Ps. 3,553 million in the third quarter of 2010. Total sales in Mexico decreases form 2,629 million in the third quarter of 2010 compared Ps. 2,521 million 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. 4,972 million in the fourth quarter of 2010 compared to Ps. 5,511 million for the third quarter of 2010. With respect to sales, in the fourth and third quarter of 2010, the direct cost of sales represents 89%. 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 4% to Ps. 643 million compared to Ps. 671 million in the third quarter of 2010. The marginal profit as a percentage of net sales for the fourth and third quarter of 2010 was 11%.

Operating Expenses

Operating expenses decrease 3% to Ps. 535 million in the fourth quarter of 2010 compared to Ps. 551 million for the third quarter of 2010. Operating expenses as a percentage of net sales represented 10% during the fourth quarter of 2010 and 9% during the third quarter of 2010.

Operating Income

Operating income decreased 10% from an operating income of Ps. 120 million in the third quarter of 2010 to Ps. 108 million of operating income for the fourth quarter of 2010. The operating income as a percentage of net sales in the fourth and 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 7% from Ps. 381 million in the third quarter of 2010 to Ps. 356 million 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. 10 million compared with an expense of Ps. 50 million for the third quarter of 2010 net interest expense in the third quarter was of Ps. 4 million, while in the fourth quarter the interest was zero. At the same time we registered an exchange loss of Ps. 45 million in the third quarter of 2010 compared with an exchange loss of Ps. 10 million in the fourth quarter of 2010.

Other Expenses (Income) net

The company recorded other net expense of Ps. 14 million in the fourth quarter of 2010 compared to other net expense of Ps. 6 million for the third quarter of 2010.

Income Taxes

Income Taxes for the fourth quarter of 2010 was an income of Ps. 85 million (including an income tax deferred for Ps. 164 million) compared to an expense of Ps. 58 million for the third quarter of 2010, (including an expense tax deferred of Ps. 27 million).

Net Income

As a result of the foregoing, net income was Ps. 300 million in the fourth quarter of 2010 compared to Ps. 106 million of net income in the third quarter of 2010.

Comparative fourth quarter 2010 vs fourth quarter 2009

Net Sales

Net sales increased 13% from Ps. 4,954 million for the fourth quarter of 2009 to Ps. 5,615 million 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 million compared with Ps. 2,826 million for the fourth quarter of 2009. Total sales in Mexico increase 18% from Ps. 2,521 million in the fourth quarter of 2010 to Ps. 2,128 million in the fourth quarter of 2009. Prices of finished products sold in the fourth quarter of 2010 increased approximately 12% compared to the fourth quarter of 2009.

Direct Cost of Sales

Direct cost of sales decreased 19% from Ps. 6,107 million in the fourth quarter of  2009 to Ps. 4,972 million for the fourth quarter of 2010. With respect to sales, in the fourth quarter of 2010, the direct cost of sales represents 89% compared to 123% for the fourth quarter of 2009. The average cost of raw materials used to produce steel products decreased 19% 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 156% to Ps. 643 million compared to a loss of Ps. 1,153 million in the fourth quarter of 2009. The marginal profit as a percentage of net sales for the fourth quarter of 2010 was 11% compared with deficit of 23% for the fourth quarter of 2009.

Operating Expenses

Operating expenses decreased 16% to Ps. 535 million in the fourth quarter of 2010 compared to Ps. 635 million for the fourth quarter of 2009. Operating expenses as a percentage of net sales represented 10% during the fourth quarter of 2010 and 13% during the fourth quarter of 2009.

Operating Income

Operating income was of Ps. 108 million in the fourth quarter of 2010 compared with a loss of Ps. 1,788 million in the fourth quarter of 2009. The operating income as a percentage of net sales in the fourth quarter of 2010 was 2% compared to a deficit of 36% in the fourth quarter of 2009.

EBITDA

The EBITDA from  the fourth quarter of  2010 increased 123%  from a loss of Ps. 1,552  million in the fourth quarter of 2009  to Ps. 356 million in the fourth quarter of 2010.

Comprehensive Financial Income (Cost )

Comprehensive financial cost for the fourth quarter of 2010 was an expense of Ps. 10 million compared with an expense of Ps. 47 million in the fourth quarter of 2009. Net interest expense was zero in the fourth quarter of 2010 compared with an expense of Ps. 7 million of net interest expense in the fourth quarter of 2009. At the same time we registered an exchange loss of Ps. 10 million in the fourth quarter of 2010 compared with an exchange loss of Ps. 54 million in the fourth quarter of 2009.

Other Expenses (Income) net

The company recorded other net expense of Ps. 14 million in the fourth quarter of 2010 compared with other income net of Ps. 22 million for the fourth quarter of 2009.

Income Taxes

Income Taxes for the fourth quarter of 2010 was an income of Ps. 85 million (including a provision of deferred income tax of Ps. 164 million),  compared to Ps. 2,213 million of income for the fourth quarter of 2009, (including a provision of deferred income tax of Ps. 1,419 million).

Net Income

As a result of the foregoing, net income was Ps. 300 million in the fourth quarter of 2010 compared to a loss of Ps. 1,492 million 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.