Organizacion Cultiba Announces Fourth Quarter and Full Year 2014 Preliminary Financial Results

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Organizacion Cultiba, S.A.B. de C.V.

Feb 12, 2015, 07:28 ET

MEXICO CITY, Feb. 12, 2015 /PRNewswire/ -- Organizacion Cultiba, S.A.B. de C.V. ("Cultiba") (BMV: CULTIBA.B), today reported preliminary financial results for the quarter and twelve-month period ended December 31, 2014.

Select Operating and Financial Information

(Ps. in Millions)	Fourth Quarter			Twelve Months
	2014	2013²	% Chg	2014	2013²	% Chg
OPERATING HIGHLIGHTS
Total Case Volume (MM unit cases)¹	383.9	384.4	-0.1%	1,614.0	1,607.4	0.4%
Soft Drinks & Bottled Water	199.3	198.8	0.2%	810.0	806.9	0.4%
Jug Water	184.6	185.6	-0.5%	804.0	800.6	0.4%
FINANCIAL HIGHLIGHTS (CONSOLIDATED)
Total Revenue³	8,126	7,932	2.4%	34,333	33,453	2.6%
Income from Operations	32	-254	NM	229	409	-44.1%
Operating Margin	0.4%	-3.2%	360 bp	0.7%	1.2%	-56 bp
Total EBITDA⁴	638	465	37.2%	2,590	2,917	-11.2%
EBITDA Margin	7.8%	5.9%	199 bp	7.5%	8.7%	-118 bp
Net Income	(1,670)	(356)	NM	(1,887)	204	NM
Majority Net Income	(1,728)	(251)	NM	(1,931)	37	NM
FINANCIAL HIGHLIGHTS (BEVERAGES)	2014	2013	%Chg	2014	2013	%Chg
Revenue³	7,651	7,563	1.2%	31,449	31,184	0.8%
Income from Operations	73	-29	NM	301	467	-35.5%
Operating Margin	1.0%	-2.0%	300 bp	0.96%	1.5%	-54 bp
EBITDA⁴	627	494	27%	2,461	2,589	-5.1%
EBITDA Margin	8.2%	6.5%	167 bp	7.8%	8.3%	-48 bp
Non-recurring expenses	90	101		397	101
Net Income	120	-212	NM	94	352	-73%

¹1 unit case = 24 servings of 8 US fluid oz each; 5.678 liters. ²2013 numbers show audited data. ³Preliminary results for 4Q14 are reported by the Company without including income from excise tax in the beverages division. This accounting change is applicable for 4Q14; hence, 1Q14 thru 3Q14 periods incorporated income from excise tax and presented figures before and after excluding such effect. ⁴EBITDA = Net income plus (1) Depreciation and amortization, (2) Net financing cost, (3) Provision for taxes, (4) Non-cash impacts of Ps.1,600 million related to good will reduction of sugar assets

FINANCIAL AND OPERATING HIGHLIGHTS

Volumes in the beverages division still recovering from consumption slowdown and excise tax impacts; total case volume decreased 0.1% year-over-year in 4Q14 and increased 0.4% year-over-year in 2014
Beverages pricing through the year remained below inflation in sugary categories to alleviate excise tax impacts; revenue-per-case increased 1.3% year-over-year in 4Q14 and 0.4% in 2014.
Consolidated EBITDA of Ps.2,590 million for full year 2014; in line with expectations but slightly below 2013 levels, mainly impacted by below-inflation pricing in beverages and by material non-recurring expenses related to savings program in the beverages division
Non-recurring expenses of Ps.397 million during 2014 related to cost-savings plan in the beverages division. In addition to Ps.101 million incurred during 2013, totaling Ps.408 million since the savings program was launched in late 2013
Net loss of Ps.1,670 million in 4Q14 and Ps.1,887 million 2014 impacted by extraordinary events compared to prior year; (1) non-cash impact from Mexican peso devaluation as the company holds dollar-denominated debt, and (2) non cash impact of $1,600 million as a result of goodwill adjustment to the value of sugar assets reflecting changing market conditions in a lower price environment

CEO COMMENT

Commenting on the quarter's results, Mr. Juan Gallardo, Chairman and CEO stated,"2014 was one of the most challenging years that our company has experienced, not only because of macroeconomic factors but also due to several industry-specific events that both of our businesses faced. Sluggish consumption recovery in addition to the new disproportionate excise tax on sweetened beverages impacted volume growth for the soft drinks industry. The higher prices that resulted from implementation of the excise tax made it difficult for our beverages division to increase prices above inflation in impacted categories. In our sugar division, the excise tax on food with high caloric content also stalled sugar consumption from industrial clients in Mexico. A low-price environment also impacted sugar revenues, and the anti-dumping investigation initiated by the USA Department of Commerce brought further instability and overall delays in sugar exports through the second half of the year and the beginning of 2015.

However, in anticipation of these factors, we took timely and proactive measures to adapt to the new reality in both of our businesses. Such measures allowed us to work through the challenges as we positioned our businesses to deliver profitable growth in the years to come without weakening our financial position. In our beverages division, our cost-efficiencies program enabled us to mitigate lower volumes and prices through a leaner cost structure that has already shown improvements in profitability through the end of 2014 and should continue to do so in 2015. Commitment to our innovation pipeline also alleviated external pressures, bringing incremental volumes through line extensions deployed in our portfolio with very good consumer response. Also, by reformulating our price-packaging architecture we sustained volumes by providing alternatives for consumers to adjust to the new pricing reality. Furthermore, we stayed committed to our Capex plan, sustaining our modernization and excellence programs in order to remain competitive and deliver profitable results in the years to come. Our sugar division also transitioned successfully through the hurdles of 2014, by focusing financial and human resources in cost reduction initiatives that maintained our mills competitively positioned as low-cost producers in a commodity-driven industry.

As we begin a new year, some uncertainties remain, but we are confident that gradual recovery will continue through the year. The anticipated recovery, in addition to the leaner cost structure that is resulting from our transformational programs should put us back on track with our profitability goals for the years to come." concluded Mr. Gallardo.

4Q14 FULL REPORT

To read the full report in English please follow the link: http://cultibaphp.abardev.net/eng/1/events-and-presentations/press-releases

To read the full report in Spanish please follow the link: http://cultibaphp.abardev.net/esp/1/eventos-y-presentaciones/comunicados

CONFERENCE CALL INFORMATION

Management of Cultiba will host a conference call with the investment community to discuss fourth quarter 2014 results. The call will take place on Friday, February 13, 2015 at 1:00 p.m. Mexico City Time (2:00 p.m. ET Time). To access the call, please dial 1-888-587-0615 if calling from the United States or 001-800-514-1067 if calling within Mexico or 1-719-325-2281 if calling from other countries. The passcode is 6503029. The conference call will also be webcast and can be accessed from the Company's website www.cultiba.mx in the Events and Presentations/Events Calendar section or from the following link: http://public.viavid.com/index.php?id=113065. A replay will be available from 4:00 p.m. Mexico City Time (5:00 p.m. ET Time) on February 13, 2015 until 10:59 p.m. (Mexico City Time; 11:59 p.m. ET Time) on February 20, 2015. The dial-in info for this replay is 1-877-870-5176 from within the United States and 1-858-384-5517 from outside the United States. The passcode for the replay is 6503029.

ABOUT CULTIBA

Organizacion Cultiba, S.A.B. de C.V. is a holding company with a majority interest in one of Mexico's largest bottlers of soft drinks and jug water, and the exclusive bottler of PepsiCo beverage products in Mexico. Carbonated, non-carbonated soft drinks and jug water are marketed under its beverages division's own brands as well as third-party brands. Its beverages division has 44 bottling facilities in Mexico and is the only bottler with nationwide distribution. As a holding company, Cultiba also owns and operates 3 sugar mills and has a 49% interest in a first one in the western region of Mexico. The Company is listed on the Bolsa Mexicana de Valores, where it trades under the symbol CULTIBA.B. For more information, please visit www.cultiba.mx.

SOURCE Organizacion Cultiba, S.A.B. de C.V.