Grupo Simec Announces Results of Operations for the Twelve-Month Period Ended December 31, 2018

GUADALAJARA, Mexico, Feb. 26, 2019 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (NYSE: SIM) ("Simec") announced today its results of operations for the twelve-month period ended December 31, 2018 and December 31, 2017.

Twelve-Month Period Ended December 31, 2018 compared to Twelve-Month Period Ended December 31, 2017

Net Sales
Net sales increased 24% by the combination of higher shipments of finished steel products and a higher average sales price by 22% compared the same period of 2017, the sales increased from Ps. 28,700 million in the twelve-month period ended December 31, 2017 to Ps. 35,715 million in the same period of 2018. Shipments of finished steel products increased 2% to 2 million 128 thousand tons in the twelve-month period ended December 31, 2018 compared to 2 million 091 thousand tons in the same period of 2017. Total sales outside of Mexico on the twelve-month period ended December 31, 2018 increased 26% to Ps. 15,989 million compared with Ps. 12,669 million in the same period of 2017. Total sales in Mexico increased 23% from Ps. 16,031 million in the twelve-month period ended December 31, 2017 to Ps. 19,726 million in the same period of 2018. The increase of 24% in sales is due to a higher average sales price and higher volume of shipments.

Cost of Sales
Cost of sales increased 27% from Ps. 23,994 million in the twelve-month period ended December 31, 2017 to Ps. 30,428 million in the same period of 2018. Cost of sales as a percentage of net sales represented, 85% for 2018 and 2017 84%. The average cost of finished steel produced in the twelve-month period ended December 31, 2018 compared to the same period of 2017 increased 25% due to higher costs of some supplies at year end.

Gross Profit
Gross profit of the Company in the twelve-month period ended December 31, 2018 was of Ps. 5,287 million compared to Ps. 4,706 million in the same period of 2017. Gross profit as a percentage of net sales represented 15% and 16% for the 2018 and 2017 periods respectively.

Operating Expenses
Selling, general and administrative expenses decreased 10% from Ps. 1,239 million in the twelve-month period ended December 31, 2017 to Ps. 1,111 million in the same period of 2018. Selling, general and administrative expenses as a percentage of net sales represented 4% during the twelve-month period ended December 31, 2017 and 3% in the same period of 2018.

Other Expenses (Income) net
The company recorded other net income of Ps. 7 million in the twelve-month period ended December 31, 2017 compared to other net income of Ps. 39 million in the same period of 2018.

Operating Income
Operating income increased 21% from Ps. 3,474 million for the twelve-month period ended December 31, 2017 to Ps. 4,215 million in the same period of 2018. Operating income as a percentage of net sales represented 12% in both periods.

EBITDA
The EBITDA of the Company increased 8% from Ps. 4,940 million in the twelve-month prior ended December 31, of 2017, as a result a net gain of Ps. 1,722, plus income taxes of Ps. 1,098, plus comprehensive financial cost of Ps. 655, plus depreciation of Ps. 1,465 to Ps. 5,327 million in the same period of 2018 generating a net income of Ps. 3,779, less minority stake of  Ps. 159, plus income taxes of Ps. 735, less comprehensive financial cost of Ps. 141, plus depreciation of 1,113.

Comprehensive Financial Cost
Comprehensive financial cost in the twelve-month period ended December 31, 2018 represented a net income of Ps. 141 million compared with a net expense of Ps. 655 million in the same period of 2017. The net interest was an expense of Ps. 18 million in 2018 compared with a net expense of Ps. 0 million in the twelve-month period ended December 31, 2017. As a result, we registered a net exchange income of Ps. 159 million in the twelve-month period ended December 31, 2018 compared with a net exchange loss of Ps. 655 million in the same period of 2017, reflecting a 0.4% decrease in the value of the peso versus the dollar in the twelve-month period ended December 31, 2018 compared to December 31, 2017.

Income Taxes
The Company have recorded an expense net tax of Ps. 735 million in the twelve-month period ended December 31, 2018 (including the expense of deferred income tax of Ps. 384 million) compared with a net expense tax of Ps. 1,098 million in the same period of 2017 (including the tax deferred income of Ps. 1,078 million).

Net Income (loss) (After Minority Interest)
As a result of the foregoing, net income increased by 119% from Ps. 1,722 million in the twelve-month period ended December 31, 2017 to a net income of Ps. 3,779 million in the same period of 2018. 

Liquidity and Capital Resources
As of December 31, 2018, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, Ps. 5.9 million (accrued interest on December 31, 2018 was U.S. $649,044 or Ps. 12.8 million).  As of December 31, 2017, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, Ps. 6.0 million (accrued interest on December 31, 2017 was U.S. $640,017, or Ps. 12.6 million).

Comparative fourth quarter 2018 vs third quarter 2018

Net Sales
Net sales decreased from Ps. 9,858 million in the third quarter of 2018 to Ps. 8,835 million for the fourth quarter of 2018. Sales in tons decreased from 538 thousand ton in the third quarter of 2018 to 522 thousand ton in the fourth quarter of the same period, a decrease of 3%. Total sales outside of Mexico for the fourth quarter of 2018 decreased 2% from Ps. 4,544 million in the third quarter to Ps. 4,457 million in the four quarter of 2018. Sales in Mexico decreased to Ps. 4,378 million in the fourth quarter of 2018 compared Ps. 5,314 million in the third quarter of 2018 a decrease of 18%. Prices of finished products sold in the fourth quarter of 2018 decreased 8% compared with the third quarter of the same period.

Cost of Sales
Cost of sales decreased to Ps. 7,963 million in the fourth quarter of 2018 compared to Ps. 8,420 million for the third quarter of 2018. With respect to sales, in the fourth quarter of 2018, the cost of sales represented 90% in the fourth quarter of 2018, compared to 85% in the third quarter of the same period. The average cost of sales by ton increased 3% in the fourth quarter of 2018 versus the third quarter of 2018.

Gross Profit
Gross profit of the Company for the fourth quarter of 2018 decreased 39% to Ps. 872 million compared to Ps. 1,438 million in the third quarter of 2018. The gross profit as a percentage of net sales for the third and fourth quarter of 2018 was of 15% and 10% respectively.

Operating Expenses
Selling, general and administrative expenses increased 9% to Ps. 290 million in the fourth quarter of 2018 compared to Ps. 267 million for the third quarter of 2018. Selling, general and administrative expenses as a percentage of net sales represented 3% for both periods.

Other Expenses (Income) net
The company recorded other net income of Ps. 18 million in the fourth quarter of 2018 compared to other net income of Ps. 0 million for the third quarter of 2018.

Operating (Loss) Income
Operating income was of Ps. 600 million in the fourth quarter of 2018 compared to an operating income of Ps. 1,171 million in the third quarter of 2018. The operating income as a percentage of net sales represented 7% and 12% for the third quarter and fourth quarter periods respectively.

EBITDA
The EBITDA was Ps. 1,449 million in the third quarter of 2018 as a result a net income of Ps. 1,391, plus minority stake of Ps. 51, plus income taxes of Ps. 107, less comprehensive financial cost of Ps. 378, plus depreciation of Ps. 278 compared to Ps. 908 million for the fourth quarter of 2018, as a result a net income of Ps. 593, less minority stake of Ps. 188, plus income taxes of Ps. 484, less comprehensive financial cost of Ps.289, plus depreciation of Ps. 308.

Comprehensive Financial Income (Cost)
Comprehensive financial cost for the fourth quarter for 2018 was a net income of Ps. 289 million compared with a net income of Ps. 378 million for the third quarter of 2018. The net interest expense in the fourth quarter was Ps. 1 million compared with a net income of Ps. 4 million in the third quarter of 2018. At same time we registered an exchange net gain of Ps. 374 million in the third quarter of 2018 compared with an exchange net gain of Ps. 290 million in the fourth quarter of 2018.

Income Taxes
Income Taxes for the fourth quarter of 2018 had an expense net tax of Ps. 107 million (including an expense tax deferred for Ps. 123 million) compared to an expense of Ps. 484 million for the third quarter of 2018, (including an income tax deferred of Ps. 261 million).

Net Income (loss) (After Minority Interest)
As a result of the foregoing, the Company had a net income of Ps. 593 million in the fourth quarter of 2018 compared to Ps. 1,391 million of net income in the third quarter of 2018.

Comparative fourth quarter 2018 vs fourth quarter 2017

Net Sales
Net sales increased 30% from Ps. 6,808 million for the fourth quarter of 2017 to Ps. 8,835 million for the fourth quarter of 2018. Sales in tons of finished steel in the fourth quarter of 2017 were 474 thousand tons versus to 522 thousand tons in the fourth quarter of 2018. Total sales outside of Mexico increased 51% from Ps. 2,959 million for the fourth quarter of 2017 to Ps. 4,457 million in the fourth quarter of 2018. Sales in Mexico increased 14% from Ps. 3,849 million in the fourth quarter of 2017 to Ps. 4,378 million in the fourth quarter of 2018. The average sales prices of finished products sold in the fourth quarter of 2018 increased 18%, compared to the same period of 2017.

Cost of Sales
Cost of sales increased 36% from Ps. 5,840 million in the fourth quarter of 2017 compared to Ps. 7,963 million for the fourth quarter of 2018. With respect to sales, the cost of sales represented 90% during the fourth quarter of 2018 and 86% during the fourth quarter of 2017. The average cost of steel products increased 24% in the fourth quarter of 2018 versus the fourth quarter of 2017.

Gross Profit
Gross profit for the fourth quarter of 2018 decreased 10% from Ps. 968 million in the fourth quarter of 2017 compared to Ps. 872 million in the fourth quarter of 2018. The gross profit as a percentage of net sales represented 14% for the fourth quarter of 2017 compared to 10% of the fourth quarter of 2018.

Operating Expenses
Selling, general and administrative expenses increased 6% from Ps. 274 million in the fourth quarter of 2017 compared to Ps. 290 million for the fourth quarter of 2018. Selling, general and administrative expenses as a percentage of net sales represented 4% for the fourth quarter of 2017 and 3% for the fourth quarter of 2018.

Other Expenses (Income) net
The company recorded other income net of Ps. 15 million in the fourth quarter of 2017 compared with other income net of Ps. 18 million for the fourth quarter of 2018.

Operating (Loss) Income
Operating income was of Ps. 600 million in the fourth quarter of 2018 compared to an operating income of Ps. 709 million in the fourth quarter of 2017. The operating income as a percentage of net sales in the fourth quarter of 2018 was 7%, compared to an operating income of 10% in the fourth quarter of 2017.

EBITDA
The EBITDA was Ps. 1,084 million in the fourth quarter of 2017 as a result a net loss of Ps. 310, less minority stake of Ps. 151, plus income taxes of Ps. 1,123, plus comprehensive financial cost of Ps. 47, plus depreciation of Ps. 375 compared to a profit of Ps 908 million in the fourth quarter of 2018 as a result a net income of Ps. 593, less minority stake of Ps. 188, plus income taxes of Ps. 484, plus comprehensive financial cost of Ps. 289, plus depreciation of Ps. 308.

Comprehensive Financial Income (Cost)
Comprehensive financial cost for the fourth quarter of 2018 was a net income of Ps. 289 million compared with a net expense of Ps 47 million in the fourth quarter of 2017. Net interest expense was of Ps. 1 million in the fourth quarter of 2018 compared with a net interest expense of Ps. 4 million in the fourth quarter of 2017. At same time we registered a net exchange gain of Ps. 290 million in the fourth quarter of 2018 compared with an exchange loss of Ps. 43 million in the fourth quarter of 2017.

Income Taxes
The Company recorded an expense net taxes for the fourth quarter of 2018 of Ps. 484 million (including an expense of deferred tax of Ps. 260 million), compared to an expense taxes of Ps. 1,123 million for the fourth quarter of 2017, (including an income tax deferred of Ps. 1,252 million).

Net Income (loss) (After Minority Interest)
As a result of the foregoing, the Company recorded a net income of Ps. 593 million in the fourth quarter of 2018 compared to Ps. 310 million of net loss in the fourth quarter of 2017.

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