Grupo Simec Announces Results of Operations for the Twelve-m

|May 7|magazine32 min read

GUADALAJARA, Mexico, May 7, 2020 /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, 2019 and December 31, 2018. Audited

Twelve-Month Period Ended December 31, 2019 compared to Twelve-Month Period Ended December 31, 2018 audited

Net Sales
Net sales decreased 4% by the combination of higher shipments of finished steel products and a lower average sales price by 11% compared to the same period of 2018, the sales decreased from Ps. 35,678 million in the twelve-month period ended December 31, 2018 to Ps. 34,171 million in the same period of 2019. Shipments of finished steel products increased 7% to 2 million 349 thousand tons in the twelve-month period ended December 31, 2019 compared to 2 million 191 thousand tons in the same period of 2018. Total sales outside of Mexico on the twelve-month period ended December 31, 2019 increased 5% to Ps. 16,736 million compared with Ps. 15,958 million in the same period of 2018. Total sales in Mexico decreased 12% from Ps. 19,720 million in the twelve-month period ended December 31, 2018 to Ps. 17,435 million in the same period of 2019. The decrease of 4% in sales is due to a lower average sales price and higher volume of shipments.

Cost of Sales
Cost of sales decreased 2% from Ps. 30,563 million in the twelve-month period ended December 31, 2018 to Ps. 30,067 million in the same period of 2019. Cost of sales as a percentage of net sales represented, 88% for 2019 and 2018 86%. The average cost of finished steel produced in the twelve-month period ended December 31, 2019 compared to the same period of 2018 decreased 8% 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, 2019 was of Ps. 4,104 million compared to Ps. 5,115 million in the same period of 2018. Gross profit as a percentage of net sales represented 12% and 14% for the 2019 and 2018 periods respectively.

Operating Expenses
Selling, general and administrative expenses increased 52% from Ps. 1,080 million in the twelve-month period ended December 31, 2018 to Ps. 1,637 million in the same period of 2019. Selling, general and administrative expenses as a percentage of net sales represented 3% during the twelve-month period ended December 31, 2018 and 5% in the same period of 2019.

Other Expenses (Income) net 
The company recorded other net income of Ps. 15 million in the twelve-month period ended December 31, 2018 compared to other net expenses of Ps. 137 million in the same period of 2019.

Operating Income
Operating income decreased 42% from Ps. 4,050 million for the twelve-month period ended December 31, 2018 to Ps. 2,330 million in the same period of 2019. Operating income as a percentage of net sales represented 7% and 11% for the 2019 and 2018 periods respectively.

EBITDA
The EBITDA of the Company decreased 33% from Ps. 5,162 million in the twelve-month prior ended December 31, of 2018, as a result a net gain of Ps. 3,653, less minority stake of Ps. 206, plus income taxes of Ps. 752, less comprehensive financial cost of Ps. 149, plus depreciation of Ps. 1,112 to Ps. 3,439 million in the same period of 2019 generating a net loss of Ps. 1,636, less minority stake of  Ps. 3, plus income taxes of Ps. 3,276, plus comprehensive financial cost of Ps. 694, plus depreciation of Ps. 1,108.

Comprehensive Financial Cost  
Comprehensive financial cost in the twelve-month period ended December 31, 2019 represented a net expense of Ps. 694 million compared with a net income of Ps. 149 million in the same period of 2018. The net interest was an income of Ps. 91 million in 2019 compared with a net income of Ps. 296 million in the twelve-month period ended December 31, 2018. As a result, we registered a net exchange loss of Ps. 785 million in the twelve-month period ended December 31, 2019 compared with a net exchange loss of Ps. 147 million in the same period of 2018, reflecting a 4% decrease in the value of the peso versus the dollar in the twelve-month period ended December 31, 2019 compared to December 31, 2018.

Income Taxes
The Company have recorded an expense net tax of Ps. 3,276 million in the twelve-month period ended December 31, 2019 (including the income of deferred tax of Ps. 202 million) compared with a net expense tax of Ps. 752 million in the same period of 2018 (including the tax deferred expense of Ps. 241 million).

Net Income (loss) (After Minority Interest)
As a result of the foregoing, net income decreased by 145% from Ps. 3,653 million in the twelve-month period ended December 31, 2018 to a net loss of Ps. 1,636 million in the same period of 2019. 

Liquidity and Capital Resources
As of December 31, 2019, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, Ps. 5.7 million (accrued interest on December 31, 2019 was U.S. $676,745 or Ps. 12.8 million).  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).

 

Comparative fourth quarter 2019 vs third quarter 2019

Net Sales
Net sales decreased from Ps. 8,328 million in the third quarter of 2019 to Ps. 7,315 million for the fourth quarter of 2019. Sales in tons decreased from 596 thousand ton in the third quarter of 2019 to 570 thousand ton in the fourth quarter of the same period, a decrease of 4%. Total sales outside of Mexico for the fourth quarter of 2019 decreased 16% from Ps. 4,148 million in the third quarter to Ps. 3,497 million in the four quarter of 2019. Sales in Mexico decreased to Ps. 3,818 million in the fourth quarter of 2019 compared Ps. 4,180 million in the third quarter of 2019 a decrease of 9%. Prices of finished products sold in the fourth quarter of 2019 decreased 8% compared with the third quarter of the same period.

Cost of Sales
Cost of sales decreased to Ps. 6,835 million in the fourth quarter of 2019 compared to Ps. 6,996 million for the third quarter of 2019. With respect to sales, in the fourth quarter of 2019, the cost of sales represented 93% in the fourth quarter of 2019, compared to 84% in the third quarter of the same period. The average cost of sales by ton increased 2% in the fourth quarter of 2019 versus the third quarter of 2019.

Gross Profit
Gross profit of the Company for the fourth quarter of 2019 decreased 64% to Ps. 480 million compared to Ps. 1,332 million in the third quarter of 2019. The gross profit as a percentage of net sales for the third and fourth quarter of 2019 was of 16% and 7% respectively.

Operating Expenses
Selling, general and administrative expenses increased 22% to Ps. 530 million in the fourth quarter of 2019 compared to Ps. 433 million for the third quarter of 2019. Selling, general and administrative expenses as a percentage of net sales for the third and fourth quarter of 2019 was of 7% and 5% respectively.

Other Expenses (Income) net 
The company recorded other net expenses of Ps. 298 million in the fourth quarter of 2019 compared to other net income of Ps. 7 million for the third quarter of 2019.

Operating (Loss) Income
Operating loss was of Ps. 348 million in the fourth quarter of 2019 compared to an operating income of Ps. 906 million in the third quarter of 2019. The operating income as a percentage of net sales represented -5% and 11% for the third quarter and fourth quarter periods respectively.

EBITDA
The EBITDA was Ps. 1,169 million in the third quarter of 2019 as a result a net income of Ps. 817, less minority stake of Ps. 38, plus income taxes of Ps. 129, less comprehensive financial cost of Ps. 2, plus depreciation of Ps. 263 compared to Ps. -42 million for the fourth quarter of 2019, as a result a net loss of Ps. 3,229, plus minority stake of Ps. 124, plus income taxes of Ps. 2,970, less comprehensive financial cost of Ps. 213, plus depreciation of Ps. 306.

Comprehensive Financial Income (Cost)
Comprehensive financial cost for the fourth quarter for 2019 was a net income of Ps. 213 million compared with a net income of Ps. 2 million for the third quarter of 2019. The net interest expenses the fourth quarter was Ps. 40 million compared with a net income of Ps. 101 million in the third quarter of 2019. At same time we registered an exchange net loss of Ps. 99 million in the third quarter of 2019 compared with an exchange net income of Ps. 253 million in the fourth quarter of 2019.

Income Taxes
Income Taxes for the third quarter of 2019 had an expense net tax of Ps. 129 million (including an income tax deferred for Ps. 47 million) compared to an expense of Ps. 2,970 million for the fourth quarter of 2019, (including an income tax deferred of Ps. 128 million).

Net Income (loss) 
As a result of the foregoing, the Company had a net loss of Ps. 3,229 million in the fourth quarter of 2019 compared to Ps. 817 million of net income in the third quarter of 2019.

 

Comparative fourth quarter 2019 vs fourth quarter 2018

Net Sales
Net sales decreased 17% from Ps. 8,798 million for the fourth quarter of 2018 to Ps. 7,315 million for the fourth quarter of 2019. Sales in tons of finished steel in the fourth quarter of 2018 were 585 thousand tons versus to 570 thousand tons in the fourth quarter of 2019. Total sales outside of Mexico decreased 21% from Ps. 4,426 million for the fourth quarter of 2018 to Ps. 3,497 million in the fourth quarter of 2019. Sales in Mexico decreased 13% from Ps. 4,372 million in the fourth quarter of 2018 to Ps. 3,818 million in the fourth quarter of 2019. The average sales prices of finished products sold in the fourth quarter of 2019 decreased 15%, compared to the same period of 2018.

Cost of Sales
Cost of sales decreased 16% from Ps. 8,099 million in the fourth quarter of 2018 compared to Ps. 6,835 million for the fourth quarter of 2019. With respect to sales, the cost of sales represented 93% during the fourth quarter of 2019 and 92% during the fourth quarter of 2018. The average cost of steel products decreased 13% in the fourth quarter of 2019 versus the fourth quarter of 2018.

Gross Profit
Gross profit for the fourth quarter of 2019 decreased 31% from Ps. 699 million in the fourth quarter of 2018 compared to Ps. 480 million in the fourth quarter of 2019. The gross profit as a percentage of net sales represented 8% for the fourth quarter of 2018 compared to 7% of the fourth quarter of 2019.

Operating Expenses
Selling, general and administrative expenses increased 105% from Ps. 259 million in the fourth quarter of 2018 compared to Ps. 530 million for the fourth quarter of 2019. Selling, general and administrative expenses as a percentage of net sales represented 3% for the fourth quarter of 2018 and 7% for the fourth quarter of 2019.

Other Expenses (Income) net 
The company recorded other expenses net of Ps. 5 million in the fourth quarter of 2018 compared with other expenses net of Ps. 298 million for the fourth quarter of 2019.

Operating (Loss) Income
Operating loss was of Ps. 348 million in the fourth quarter of 2019 compared to an operating income of Ps. 435 million in the fourth quarter of 2018. The operating income as a percentage of net sales in the fourth quarter of 2019 was -5%, compared to an operating income of 5% in the fourth quarter of 2018.

EBITDA
The EBITDA was Ps. 743 million in the fourth quarter of 2018 as a result a net income of Ps. 467, less minority stake of Ps. 237, plus income taxes of Ps. 502, less comprehensive financial cost of Ps. 297, plus depreciation of Ps. 308 compared to a loss of Ps -42 million in the fourth quarter of 2019 as a result a net loss of Ps. 3,229, plus minority stake of Ps. 124, plus income taxes of Ps. 2,970, less comprehensive financial cost of Ps. 213, plus depreciation of Ps. 306.

Comprehensive Financial Income (Cost)
Comprehensive financial cost for the fourth quarter of 2019 was a net income of Ps. 213 million compared with a net income of Ps 297 million in the fourth quarter of 2018. Net interest expense was of Ps. 40 million in the fourth quarter of 2019 compared with a net interest income of Ps. 313 million in the fourth quarter of 2018. At same time we registered a net exchange income of Ps. 253 million in the fourth quarter of 2019 compared with an exchange loss of Ps. 16 million in the fourth quarter of 2018.

Income Taxes
The Company recorded an expense net taxes for the fourth quarter of 2019 of Ps. 2,970 million (including an income of deferred tax of Ps. 128 million), compared to an expense taxes of Ps. 502 million for the fourth quarter of 2018, (including an expense tax deferred of Ps. 117 million).

Net Income (loss)
As a result of the foregoing, the Company recorded a net loss of Ps. 3,229 million in the fourth quarter of 2019 compared to Ps. 467 million of net income in the fourth quarter of 2018.

 

(million of pesos)

Jan - Dec '19


Jan - Dec '18


Year 19 vs
 '18

Sales

34,171


35,678


(4%)

Cost of Sales

30,067


30,563


(2%)

Gross Profit

4,104


5,115


(20%)

Selling, General and Administrative Expense

1,637


1,080


52%

Other Income (Expenses), net

(137)


15


(1,013%)

Operating Profit

2,330


4,050


(42%)

EBITDA

3,439


5,162


(33%)

Net income 

(1,636)


3,653


(145%)

Sales Outside Mexico

16,736


15,958


5%

Sales in Mexico

17,435


19,720


(12%)

Total Sales (Tons)

2,349


2,191


7%

Cost by ton

12,800


13,949


(8%)

 

 

Quarter






(million of pesos)

4Q'19

3Q '19

4Q '18

4Q´19vs
3Q´19

4Q´19 vs
4Q '18

Sales

7,315

8,328

8,798

(12%)

(17%)

Cost of Sales

6,835

6,996

8,099

(2%)

(16%)

Gross Profit

480

1,332

699

(64%)

(31%)

Selling, General and Adm. Expenses

530

433

259

22%

105%

Other Income (Expenses), net

(298)

7

(5)

(100%)

100%

Operating Profit

(348)

906

435

(138%)

(180%)

EBITDA

(42)

1,169

743

(104%)

(106%)

Net Income

(3,229)

817

467

(495%)

(791%)

Sales Outside Mexico

3,497

4,148

4,426

(16%)

(21%)

Sales in Mexico

3,818

4,180

4,372

(9%)

(13%)

Total Sales (Tons)

570

596

585

(4%)

(3%)

Cost per Ton

11,991

11,738

13,844

2%

(13%)

 

 

Product

Thousands
of Tons
Jan-Dec 2019

Millions
of Pesos
Jan-Dec 2019

Average Price
per Ton
Jan-Dec 2019

Thousands
of Tons
Jan – Dec 2018

Millions
of Pesos 
Jan- Dec 2018

Average Price
per Ton

 Jan-Dec 2018

Special Profiles

851

15,384

18,078

956

18,609

19,465

Commercial Profiles

1,498

18,787

12,541

1,235

17,069

13,821

Total Tons

2,349

34,171

14,547

2,191

35,678

16,284

 

 

Product

Thousands
of Tons

Oct-Dec
2019

Millions

of Pesos 
Oct-Dec
2019

Average Price
per Ton

Oct-Dec
2019

Thousands
of Tons

Jul-Sep

2019

Millions
of Pesos
Jul-Sep

2019

Average Price
per Ton

Jul-Sep

2019

Thousands
of Tons 
Oct-Dec

2018

Millions
of Pesos 
Oct-Dec
2018

Average Price
per Ton 
Oct-Dec

2018

Special Profiles

191

3,042

15,927

206

3,595

17,451

287

5,492

19,136

Commercial Profiles

379

4,273

11,274

390

4,733

12,136

298

3,306

11,094

Total Tons

570

7,315

12,833

596

8,328

13,973

585

8,798

15,039

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

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