Organizacion Cultiba Announces Third Quarter and Nine Months 2014 Financial Results

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

Oct 22, 2014, 07:14 ET

MEXICO CITY, Oct. 22, 2014 /PRNewswire/ -- Organizacion Cultiba, S.A.B. de C.V. ("Cultiba") (BMV: CULTIBAB), today reported consolidated financial results for the quarter and nine-month period ended September 30, 2014.

Select Operating and Financial Information

(Ps. in Millions)	Third Quarter			Nine Months
	2014	2013	% Chg	2014	2013	% Chg
OPERATING HIGHLIGHTS
Total Case Volume (MM unit cases)¹	422.4	409.2	3.2%	1,230	1,223	0.6%
Soft Drinks & Bottled Water	213.9	206.0	3.9%	610.8	608.0	0.5%
Jug Water	208.5	203.3	2.6%	619.3	615.0	0.7%
FINANCIAL HIGHLIGHTS (CONSOLIDATED)
Total Revenue	10,010	8,514	17.6%	28,876	25,521	13.1%
Total Revenue excluding excise tax²	9,034	8,514	6.1%	26,207	25,521	2.7%
Income from Operations	176	200	-12.0%	197	664	-70.3%
Operating Margin³	1.9%	2.3%	-40 bp	0.8%	2.6%	-185 bp
Total EBITDA⁴	699	855	-18.0%	1,953	2,452	-20.4%
EBITDA Margin³	7.7%	10.0%	-232 bp	7.5%	9.6%	-216 bp
Net Income	-62	189	NM	-217	561	NM
Majority Net Income	-86	41	NM	-203	288	NM
FINANCIAL HIGHLIGHTS (BEVERAGES)	2014	2013	%Chg	2014	2013	%Chg
Revenue	9,190	7,928	15.9%	24,467	23,622	12.0%
Revenue net of excise tax	8,214	7,928	3.6%	23,798	23,622	0.7%
Income from Operations	152	217	-29.9%	228	496	-54.0%
Operating Margin³	1.8%	2.7%	-90 bp	0.95%	2.0%	-105 bp
EBITDA	696	765	-9.0%	1,834	2,043	-10.2%
EBITDA Margin³	8.5%	9.6%	-118 bp	7.7%	8.6%	-94 bp
Non-recurring expenses	153	-		307	-
Net Income	50	310	-84%	-26	564	NM

¹1 unit case = 24 servings of 8 US fluid oz each; 5.678 liters. ²Excise tax applicable to beverages division; 1 peso per liter for all beverages containing caloric sweeteners. ³All margins calculated as a percentage of revenues excluding excise tax. ⁴EBITDA = Net income plus (1) Depreciation and amortization, (2) Net financing cost, (3) Income (loss) from share in joint ventures and (4) Provision for taxes

FINANCIAL AND OPERATING HIGHLIGHTS

Continued improvements in marginal contribution; gross profit per case increased 5.2% year-over-year in 3Q14 and 5.5% year-over-year in the first nine months of 2014
Non-recurring expenses in the beverages division related to cost-savings plan were Ps. 153 million in 3Q14 and Ps. 307 million in the nine months ended September 30 2014
Consolidated EBITDA of Ps. 699 million in 3Q14 decreased 18.0% year-over year; impacted by delayed price increases to align with inflation and material non-recurring expenses related to savings program
Gradual volume recovery in the beverages division; total case volume rose 3.2% year-over-year in 3Q14 and 0.6% year-over-year in the nine months accumulated through September 30 2014; bottled beverages slowly recovering in the quarter from the new excise tax despite slow economic growth
Net loss of Ps. 62 million in 3Q14 and Ps. 217 million in the first nine months of 2014 impacted by extraordinary events compared to prior year; tax provisions in 2014 vs. non-cash tax benefits in 2013, and charges related to sugar mill in which the sugar division has a non-controlling interest of 49%

CEO COMMENT

Commenting on the quarter's results, Mr. Juan Gallardo, Chairman and CEO stated, "Amidst all the challenges that 2014 has brought to the industries in which we operate, we continue staying the course of our business strategy. In our beverages division, a slow economic recovery has taken a toll on volume growth; and the implementation of a new excise tax on sugared soft drinks has made it more difficult to increase prices above inflation in most categories. Even within these challenges we have sustained our modernization and excellence programs by consistently investing in technology and innovation to make our infrastructure, portfolio, and processes ever more competitive for the future in which we envision ourselves operating. Keeping up with our goals has required extraordinary efforts from our management and exceptional execution from our operations teams. Our cost-efficiencies program remains on target and has enabled us to sustain profitability and somewhat mitigate the challenges in our top line. This program has resulted in a leaner cost structure that eventually will be further strengthened by volume recovery to foster greater margin expansion. In addition, we continue consolidating our portfolio through an efficient price-packaging architecture and focusing execution on winning brands, introducing new line extensions to further enhance brand equity in those brands. Such is the case of Epura Bebe, which we recently launched to the market under the umbrella of our successful water brand with a very good consumer response. Portfolio innovations will continue to come through the end of this year and the first half of 2015 as part of our plan to meet top-line growth goals and continue outperforming the industry, even within a slow consumption environment.

Our sugar division has successfully transitioned through difficult times in 2014. Within this environment we have been able to continue improving efficiencies to position the mills that we operate on a very competitive place as low-cost producers. Additionally, through timely investments that foster cost savings, the sugar division has been able to preserve profitability in a very challenging year and continues to strengthen its balance sheet according to plan," concluded Mr. Gallardo.

3Q14 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 third quarter 2014 results. The call will take place on Thursday, October 23, 2014 at 1:00 p.m. Mexico City Time (2:00 p.m. ET Time). To access the call, please dial 1-888-510-1785 if calling from the United States or 001-800-514-1067 if calling within Mexico or 1-719-457-2689 if calling from other countries. The passcode is 6863710. The conference call will also be webcast and can be accessed from the Company's website www.cultiba.mx in the Events and Presentations section or from the following link: http://public.viavid.com/index.php?id=111346. A replay will be available from 4:00 p.m. Mexico City Time (5:00 p.m. ET Time) on October 23, 2014 until 10:59 p.m. (Mexico City Time; 11:59 p.m. ET Time) on October 30, 2014. 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 6863710.

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. For more information, please visit www.cultiba.mx.

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