Market Overview

Grupo Simec Announces Results of Operations for the First Six Months of 2018

Share:

Grupo Simec Announces Results of Operations for the First Six Months of 2018

PR Newswire

GUADALAJARA, Mexico, July 23, 2018 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (NYSE:SIM) ("Simec") announced today its results of operations for the sixth-month period ended June 30th, 2018.

Comparative first six months of 2018 vs. first six months of 2017

Net Sales
Net sales of the Company increased from Ps. 15,082 million in the first half of 2017 to Ps. 17,022 million in the first half of 2018. Shipments increased 1% from 1,084 thousand tons in the first half of 2017 to 1,092 thousand tons in the first half of 2018. Total sales outside of Mexico in the first half of 2018 increased 2% to Ps. 6,988 million compared to Ps. 6,855 million in the first half of 2017. Mexican sales increased 22% from Ps. 8,227 million in the first half of 2017 to Ps. 10,034 million in the first half of 2018. Sales increased for the first half of 2018 compared to the first half of 2017, is due to the combined of increased in the average sales price of 12% and increase in the volume of shipments approximately of 8 thousand tons that represent a 1%.

Cost of Sales
Cost of sales increased 14% from Ps. 12,297 million in the first half of 2017, to Ps. 14,045 million in the first half of 2018. Cost of sales as a percentage of net sales represented 83% in the first half of 2018 while in the first half of 2017 represented 82%. Cost of sales increased due to mix products and the higher volume of products shipped.

Gross Profit
Gross profit of the Company for the first half of 2018 increased 7% from Ps. 2,785 million in the first half of 2017, to Ps. 2,977 million in the first half of 2018. Gross profit as percentage of net sales in the first half of 2018 was of 17%, while in the first half of 2017 was of 18%. The gross profit between both periods is given by better mix products shipped and better average sales price.

Selling, General and Administrative Expense
Selling, general and administrative expense decreased 25%, from Ps. 739 million in the first half of 2017 to Ps. 554 million in the same period 2018, selling, general and administrative expense represented 5% of the net sales in the second quarter of 2017 and 3% in the second quarter of 2018.

Other Income (Expenses,) net
The Company recorded other income net for Ps. 20 million in the first half of 2018 million compared to other expenses Ps. 13 million in the same period of 2017.

Operating Income
Operating income increased 20% from Ps. 2,033 million for the first half of 2017 compared to Ps. 2,443 million in the first half of 2018. Operating income as percentage of net sales was 14% in the first half of 2018 compared to 13% in the same period of 2017. The increase in operating income is due to better average sales price and the mix of products shipped.

Ebitda
The Ebitda amounted to Ps. 2,784 million in the first half of 2017 as a result of a net income of Ps. 1,294 million, plus minority stake of Ps. 38 million, less income taxes of Ps. 51 million, plus comprehensive financial cost of Ps. 752 million, plus depreciation of Ps. 751 million to Ps 2,969 million in the first quarter of 2018 as a result a net income of Ps. 1,656 million, less minority stake of Ps. 22 million, plus income taxes of Ps. 283 million, plus comprehensive financial cost of Ps. 526 million, plus depreciation of Ps. 526 million.

Comprehensive Financial Cost 
Comprehensive financial cost for the first half of 2018 represented an expense of Ps.526 million compared with an expense of Ps. 752 million for the first half of 2017. The comprehensive financial cost is comprised by the exchange loss of Ps. 504 million in the first half of 2018 compared with an exchange loss of Ps. 750 million in the first half of 2017. Likewise the Company recorded a net expense interest of Ps. 22 million for the first half of 2018 compared with a net expense interest of Ps.2 million in 2017.

Income Taxes
The Company recorded an expense of Ps. 283 million for the net income tax during the first half of 2018, (comprised for a current expense tax of Ps. 143 million and an expense for deferred income tax of Ps. 140 million) compared with an income of Ps. 51 million to the first half of 2017 (comprised for a current expense tax of Ps. 71 million and an income for deferred income tax of Ps. 122 million).

Net Income
As a result of the foregoing, the Company recorded an increase in net income of 28% to pass of Ps. 1,294 million in the first half of 2017 to Ps. 1,656 million of the same period of 2018.

Comparative second quarter of 2018 vs. first quarter of 2018

Net Sales
Net sales of the Company increased 14% in the second quarter of 2018 compared to the first quarter of the same period, to pass of Ps. 7,949 million during the first quarter of 2018 to Ps. 9,073 million in the second quarter of 2018. Shipments of finished steel products increased 1% from 530 thousand tons in the first quarter of 2018 to 537 thousand tons in the second quarter of the same year. Total sales outside of Mexico in the second quarter of 2018 increased 11% to get to Ps. 3,681 million compared to Ps. 3,307 million of the first quarter of the same year. Domestic sales show an increase of 16% from Ps. 4,642 million in the first quarter of 2018 to Ps. 5,392 million in the second quarter of the same year. The sales mainly increased due to a greater shipped by 7 thousand tons compared with the first quarter that represent a 1% and a better sales price in 13%.

Cost of Sales
Cost of sales increased 22% from Ps. 6,339 million in the first quarter of 2018 to Ps. 7,706 million in the second quarter of 2018. Cost of sales as a percentage of net sales represented 80% for the first quarter of 2018 compared to 85% in the second quarter of the same year, the average cost of sales by ton record an increase between both quarters of 20%.

Gross Profit
Gross profit of the Company for the second quarter of 2018 decreased 15% to pass of Ps. 1,610 million in the first quarter of 2018 to Ps. 1,367 million in the second quarter of same year. Gross profit as a percentage of net sales represented 20% for the first quarter of 2018 compared to 15% in the second quarter of the same year. The gross profit in the second quarter of 2018 is caused by a higher cost in purchase of supplies.

Selling, General and Administrative Expense
Selling, general and administrative expense increased 3%, from Ps. 273 million in the first quarter of 2018 to Ps. 281 million in the second quarter of the same year, and as percentage of net sales represented 3% for both periods.

Other (Expenses) Income, net 
The Company recorded other income net for Ps. 43 million during the second quarter of 2018 compared to other expenses net for Ps. 23 million in the first quarter of 2018.

Operating Income
Operating income decreased 14%, of Ps. 1,314 million in the first quarter of 2018 compared to Ps. 1,129 million of the second quarter of the same year. Operating income as percentage of net sales was 17% for the first quarter of 2018 compared to 12% for the second quarter of the same year. The operating income is due mainly to a increase in the purchase of certain supplies.

Ebitda
The Ebitda amounted to Ps. 1,582 million in the first quarter of 2018 as a result of a net income of Ps. 974 million, plus minority stake of Ps. 17 million, plus income taxes of Ps. 10 million, plus comprehensive financial cost of Ps. 313 million, plus depreciation of Ps. 268 million to Ps 1,387 million in the second quarter of 2018 as a result of a net income of Ps. 682 million, less minority stake of Ps. 40 million, plus income taxes of Ps. 274 million, plus comprehensive financial cost of Ps. 213 million, plus depreciation of Ps. 258 million.

Comprehensive Financial Cost
Comprehensive financial cost of the Company in the second quarter of 2018 represented an expense of Ps. 213 million compared with of Ps. 313 million for the first quarter of 2018. The comprehensive financial cost is comprised for the net interest expense of Ps. 31 million in the second quarter of 2018, while in the first quarter was a net income of Ps. 9 million. Likewise we record a net exchange loss of Ps. 182 million in the second quarter of 2018 compared a net exchange loss of Ps. 322 million in the first quarter of the same year.

Income Taxes
The Company have been recorded an expense of Ps. 274 million of income tax during the second quarter of 2018, (comprised for an expense by current income tax of Ps. 118 million and an expense for deferred tax of Ps. 156 million) compared with the Ps. 10 million of expense for the first quarter of the same year, (comprised for a current expense tax of Ps. 26 million and of an income for deferred tax of Ps. 16 million).

Net Income
As a result of the foregoing, the Company recorded a decrease of 30% from a net income of Ps. 974 million in the first quarter of 2018 compared to a net income of Ps. 682 million for the second quarter of 2018.

Liquidity and Capital Resources
As of June 30th, 2018, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 6.0 million (accrued interest on June 30th, 2018 was U.S. $654,000, or Ps. 13.0 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, or Ps. 6.0 million (accrued interest on December 31, 2017 was U.S. $640,000, or Ps. 12.6 million).

Comparative second quarter of 2018 vs. second quarter of 2017

Net Sales
Net sales of the Company increased 27% from Ps. 7,159 million during the second quarter of 2017 to Ps. 9,073 million in the second quarter of 2018. Sales in tons of finished steel increased 3% from 521 thousand tons in the second quarter of 2017 compared with 537 thousand tons in the second quarter of 2018. Sales outside of Mexico in the second quarter of 2018 increased 17% from Ps. 3,152 million in the second quarter of 2017 to Ps. 3,681 million in the second quarter of 2018. Domestic sales increased 35% from Ps. 4,007 million in the second quarter of 2017 to Ps. 5,392 million in the second quarter of 2018. The increase in sales in the second quarter of 2018 compared to the second quarter of 2017 is due to an increase in the average sales price of 23% and an increase in the volume of shipments approximately of 16 thousand of tons that represent 3%.

Cost of Sales
Cost of sales increased 30% in the second quarter of 2018 compared to the second quarter of 2017 from Ps. 5,949 million in the second quarter of 2017 to Ps. 7,706 million in the second quarter of 2018. With respect to sales, the cost of sales of the second quarter of 2018 represented 85% compared to 83% for the second quarter of 2017. The average cost of sales by ton of steel products increased 26% in the second quarter of 2018 versus the second quarter of 2017, due to the cost of certain raw materials mainly scrap, electric power and electrodes.

Gross (Loss) Profit
Gross profit of the Company for the second quarter of 2018 amount to Ps. 1,367 million compared to Ps. 1,210 million in the second quarter of 2017, this represented an increase of 13% between both periods. Gross profit as a percentage of net sales for the second quarter of 2018 was 15% compared to 17% of the second quarter of 2017. The increase in gross profit is mainly due to a higher average price of sales and a higher volume of shipments in the second quarter of 2018 compared with the second quarter of 2017.

Selling, General and Administrative Expense
The selling, general and administrative expenses decreased 20% in the second quarter of 2018 from Ps. 350 million in the second quarter of 2017 to Ps. 281 million in the second quarter of 2018. Selling, general and administrative expense as a percentage of net sales represented 3% in the second quarter of 2018 compared to 5% of the second quarter of 2017.

Other Income (Expenses), net 
The company recorded other income net of Ps. 43 million in the second quarter of 2018 compared with other expenses net of Ps. 14 million for the second quarter of 2017.

Operating (Loss) Income
Operating income amounted to Ps. 1,129 million in the second quarter 2018 compared to Ps. 846 million in the second quarter of 2017, this represent 33% of increase between both quarters. The operating income as a percentage of net sales was 12% in both periods. The increase in the operating income is due to the higher volume shipment, better average sales price and a decrease of selling, general and administrative expense.

Ebitda
The Ebitda amounted to Ps. 1,201 million in the second quarter of 2017 as a result of a net income of Ps. 614 million, less minority stake of Ps. 1 million, plus income taxes of Ps. 12 million, plus comprehensive financial cost of Ps. 221 million, plus depreciation of Ps. 355 million to Ps 1,387 million in the second quarter of 2018 as a result of a net income of Ps. 682 million, less minority stake of Ps. 40 million, plus income taxes of Ps. 274 million, plus comprehensive financial cost of Ps. 213 million, plus depreciation of Ps. 258 million.

Comprehensive Financial Cost 
Comprehensive financial cost of the Company for the second quarter of 2018 represented a net expense of Ps. 213 million compared with a net expense of Ps. 221 million for the second quarter of 2017. The comprehensive financial cost is comprised for the net interest expense of Ps. 31 million in the second quarter of 2018, compared to a net interest income of Ps. 1 million for the same period of 2017. Also record an exchange loss of Ps. 182 million in the second quarter of 2018 and an exchange loss of Ps. 220 million in the second quarter of 2017.

Income Taxes
The company recorded an expense of Ps. 274 million of income tax in the second quarter of 2018, (comprised by current expense tax of Ps. 118 million and an expense for deferred tax of Ps. 156 million) compared to an expense accrual of Ps. 12 million for income tax for the second quarter of 2017, (comprised by current expense tax of Ps. 64 million and an income for deferred tax of Ps. 52 million).

Net Income (Loss)
As a result of the foregoing, the Company recorded a net income of Ps.682 million in the second quarter of 2018 compared to Ps. 614 million for the second quarter of 2017, an increase of 11% between both quarters.

(millions of pesos)

1H '18


1H '17


Year 18 VS
 '17

Sales

17,022


15,082


13%

Cost of Sales

14,045


12,297


14%

Gross Profit

2,977


2,785


7%

Selling, General and Administrative Expense

554


739


(25%)

Other Income (Expenses), net

20


-13


(254%)

Operating Profit

2,443


2,033


20%

EBITDA

2,969


2,784


7%

Net Income 

1,656


1,294


28%

Sales Outside Mexico

6,988


6,855


2%

Sales in Mexico

10,034


8,227


22%

Total Sales (Tons)

1,092


1,084


1%

 

 

Quarter






(millions of pesos)

2Q'18

1Q '18

2Q '17

2Q'18 vs
1Q'18

2Q'18 vs
2Q '17

Sales

9,073

7,949

7,159

14%

27%

Cost of Sales

7,706

6,339

5,949

22%

30%

Gross Profit

1,367

1,610

1,210

(15%)

13%

Selling, General and Adm. Expenses

281

273

350

3%

(20%)

Other Income (Expenses), net

43

-23

(14)

(287%)

(407%)

Operating Profit

1,129

1,314

846

(14%)

33%

EBITDA

1,387

1,582

1,201

(12%)

15%

Net Income

682

974

614

(30%)

11%

Sales Outside Mexico

3,681

3,307

3,152

11%

17%

Sales in Mexico

5,392

4,642

4,007

16%

35%

Total Sales (Tons)

537

530

521

1%

3%

 

 

Product

Thousands
of Tons

Jan-Jun 2018

Million of
Pesos
Jan-Jun
2018

Average
Price per
Ton

Jan-Jun

2018

Thousands
of Tons

Jan – Jun
2017

Million of
Pesos
Jan- Jun
2017

Average
Price per
Ton

 Jan-Jun

2017

Commercial
Profiles

645

8,303

12,873

643

7,234

11,250

Special Profiles

447

8,719

19,505

441

7,848

17,796















Total

1,092

17,022

15,588

1,084

15,082

13,913

 

 

Product

Thousands
of Tons

Apr-Jun 2018

Million of
Pesos
Apr-Jun
2018

Average
Price per
Ton

Apr-Jun

2018

Thousands
of Tons

Jan – Mar

2018

Million of
Pesos
Jan- Mar

2018

Average
Price per
Ton

Jan-Mar

2018

Thousands
of Tons
Apr-Jun

2017

Million of
Pesos
Apr-Jun
2017

Average
Price per
Ton
Apr-Jun

2017

Commercial
Profiles

339

4,888

14,419

325

4,151

12,772

308

3,358

10,903

Special Profiles

198

4,185

21,136

205

3,798

18,527

213

3,801

17,845





















Total

537

9,073

16,896

530

7,949

14,998

521

7,159

13,741

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

Cision View original content:http://www.prnewswire.com/news-releases/grupo-simec-announces-results-of-operations-for-the-first-six-months-of-2018-300685179.html

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

View Comments and Join the Discussion!