Grupo Simec Announces Results of Operations for the First Six Months of 2017

GUADALAJARA, Mexico, July 20, 2017 /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, 2017.

Comparative first six months of 2017 vs. first six months of 2016

Net Sales

Net sales of the Company increased from Ps. 12,844 million in the first half of 2016 to Ps. 15,082 million in the first half of 2017. Shipments of finished steel products decreased 2% from 1,102 thousand tons in the first half of 2016 to 1,084 thousand tons in the first half of 2017. Total sales outside of Mexico in the first half of 2017 increased 30% to Ps. 6,855 million compared to Ps. 5,272 million in the first half of 2016. Mexican sales increased 9% from Ps. 7,572 million in the first half of 2016 to Ps. 8,227 million in the first half of 2017. Sales increased for the first half of 2017 compared to the first half of 2016, is due to the combined of increased in the average sales price of 19% and decrease in the volume of shipments approximately of 18 thousand tons that represent a 2%.

Cost of Sales

Cost of sales increased 18% from Ps. 10,460 million in the first half of 2016, to Ps. 12,297 million in the first half of 2017. Cost of sales as a percentage of net sales represented 82% in the first half of 2017 while in the first half of 2016 represented 81%. Cost of sales increased due to mix products, the less volume shipment and the price of certain raw materials as scrap.

Gross Profit

Gross profit of the Company for the first half of 2017 increased 17% from Ps. 2,384 million in the first half of 2016, to Ps. 2,785 million in the first half of 2017. Gross profit as percentage of net sales in the first half of 2017 was of 18%, while in the first half of 2016 was of 19%. The gross profit between both periods is given by a better mix products shipped.

Selling, General and Administrative Expense

Selling, general and administrative expense increased 20%, from Ps. 616 million in the first half of 2016 to Ps. 739 million in the same period 2017, selling, general and administrative expense represented 5% of the net sales in both periods 2016 and 2017.

Other Income (Expenses,) net

The Company recorded other expenses net for Ps. 13 million in the first half of 2017 million compared to other income Ps. 131 million in the same period of 2016.

Operating Income

Operating income increased 7% from Ps. 1,899 million for the first half of 2016 compared to Ps. 2,033 million in the first half of 2017. Operating income as percentage of net sales was 13% in the first half of 2017 compared to 15% in the same period of 2016. The increase in operating income is due to the average cost of production and the mix of products shipped.

Ebitda

The Ebitda of the first half of 2017, increased in Ps 317 million or 13% compared to first half of 2016, due to the better mix shipment. The Ebitda passed of Ps. 2,467 million in the first half of 2016 as a result a net profit of Ps. 2,803 less taxes of Ps. 5 less minority stake of Ps 95 less interests of Ps.11 less exchange loss of Ps.793 plus depreciation of Ps. 568 to Ps. 2,784 million in the first half of 2017 as a result a net profit of Ps. 1,294 less taxes of Ps. 51 plus minority stake of Ps. 38 plus interests of Ps. 2 plus exchange gain of Ps. 750 plus depreciation of Ps. 751.

Comprehensive Financial Cost

Comprehensive financial cost for the first half of 2017 represented an expense of Ps.752 million compared with an income of Ps. 804 million for the first half of 2016. The comprehensive financial cost is comprised by the exchange loss of Ps. 750 million in the first half of 2017 compared with an exchange gain of Ps. 793 million in the first half of 2016. Also the Company recorded a net expense interest of Ps. 2 million for the first half of 2017 compared with a net income interest of Ps.11 million in 2016.

Income Taxes

The Company recorded an income of Ps. 51 million for the net income tax during 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) compared with an income of Ps. 5 million to the first half of 2016 (comprised for a current expense tax of Ps. 60 million and an income for deferred income tax of Ps. 65 million).

Net Income

As a result of the foregoing, the Company recorded an decrease in net income of 54%  to pass of Ps. 2,803 million in the first half of 2016 to Ps. 1,294 million of the same period of 2017.

Comparative second quarter of 2017 vs. first quarter of 2017

Net Sales

Net sales of the Company decreased 10% in the second quarter of 2017 compared to the first quarter of the same period, to pass of Ps. 7,922 million during the first quarter of 2017 to Ps. 7,159 million in the second quarter of 2017. Shipments of finished steel products decreased 7% from 563 thousand tons in the first quarter of 2017 to 521 thousand tons in the second quarter of the same year. Total sales outside of Mexico in the second quarter of 2017 decreased 15% to get to Ps. 3,152 million compared to Ps. 3,703 million of the first quarter of the same year. Mexican sales show a decrease of 5% from Ps. 4,219 million in the first quarter of 2017 to Ps. 4,007 million in the second quarter of the same year. The sales mainly decreased due to a less shipped by 42 thousand tons compared with the first quarter to represent a 9%.

Cost of Sales

Cost of sales decreased 6% from Ps. 6,348 million in the first quarter of 2017 to Ps. 5,949 million in the second quarter of 2017. Cost of sales as a percentage of net sales represented 80% for the first quarter of 2017 compared to 83% in the second quarter of the same year, the average cost of sales by ton record an increase between both quarters of 1%.

Gross Profit

Gross profit of the Company for the second quarter of 2017 decreased 23% to pass of Ps. 1,574 million in the first quarter of 2017 to Ps. 1,210 million in the second quarter of same year. Gross profit as a percentage of net sales represented 20% for the first quarter of 2017 compared to 17% in the second quarter of the same year. The gross profit in the second quarter of 2017 is caused by a less average cost of sales and less products shipped.

Selling, General and Administrative Expense

Selling, general and administrative expense decrease 10%, from Ps. 388 million in the first quarter of 2017 to Ps. 350 million in the second quarter of the same year, and as percentage of net sales represented 5% for both periods.

Other (Expenses) Income, net

The Company recorded other expenses net for Ps. 14 million during the second quarter of 2017 compared to other income net for Ps. 1 million in the first quarter of 2017.

Operating Income

Operating income decreased 29%, of Ps. 1,187 million in the first quarter of 2017 compared to Ps. 846 million of the second quarter of the same year. Operating income as percentage of net sales was 15% for the first quarter of 2017 compared to 12% for the second quarter of the same year. The operating income is due mainly to a decrease products shipped.

Ebitda

The Ebitda in the second quarter of 2017 show an decrease of 24% compared to the first quarter of the same year, due to previously mentioned. The Ebitda, of the second quarter was of Ps. 1,201 million as a result a net profit of Ps. 614 plus taxes of Ps. 12 less mirority stake of Ps. 1 plus interests of Ps. 1 plus exchange gain of Ps. 220 plus depreciation of Ps. 355 versus Ps. 1,583 million in the first quarter of 2017 as a result a net profit of Ps. 681 less taxes of Ps. 64 plus minority stake of Ps. 39 plus interests of Ps. 2 plus exchange gain of Ps. 529 plus depreciation of Ps. 396.

Comprehensive Financial Cost

Comprehensive financial cost of the Company in the second quarter of 2017 represented an expense of Ps. 221 million compared with of Ps. 531 million for the first quarter of 2017. The comprehensive financial cost is comprised for the net interest expense of Ps. 1 million in the second quarter of 2017, while in the first quarter was of Ps. 2 million. Also we record a net exchange loss of Ps. 529 million in the second quarter of 2017 compared a net exchange loss of Ps. 220 million in the first quarter of the same year.

Income Taxes

The Company have been recorded an expense of Ps. 12 million of income tax during the second quarter of 2017, (comprised for an expense by current income tax of Ps. 64 million and an income for deferred tax of Ps. 52 million) compared with the Ps. 64 million of income for the first quarter of the same year, (comprised for a current expense tax of Ps. 6 million and of an income for deferred tax of Ps. 70 million).

Net Income

As a result of the foregoing, the Company recorded an decrease of 10% from a net income of Ps. 681 million in the first quarter of 2017 compared to a net income of Ps. 614 million for the second quarter of 2017.

Liquidity and Capital Resources

As of June 30th, 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. 5.4 million (accrued interest on June 30th, 2017 was U.S. $519,000, or Ps. 9.4 million).  As of December 31, 2016, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 6.2 million (accrued interest on December 31, 2016 was U.S. $506,000, or Ps. 10.5 million).

Comparative second quarter of 2017 vs. second quarter of 2016

Net Sales

Net sales of the Company increased 6% from Ps. 6,742 million during the second quarter of 2016 to Ps. 7,159 million in the second quarter of 2017. Sales in tons of finished steel decreased 9% from 574 thousand tons in the second quarter of 2016 compared with 521 thousand tons in the second quarter of 2017. Sales outside of Mexico in the second quarter of 2017 increased 10% from Ps. 2,861 million in the second quarter of 2016 to Ps. 3,152 million in the second quarter of 2017. Mexican sales increased 3% from Ps. 3,881 million in the second quarter of 2016 to Ps. 4,007 million in the second quarter of 2017. The increase in sales in the second quarter of 2017 compared to the second quarter of 2016 is due to an increase in the average sales price of 17% and an increase in the volume of shipments approximately of 53 thousand of tons that represent 9%.

Cost of Sales

Cost of sales increased 12% in the second quarter of 2017 compared to the second quarter of 2016 from Ps. 5,302 million in the second quarter of 2016 to Ps. 5,949 million in the second quarter of 2017. With respect to sales, the cost of sales of the second quarter of 2017 represented 83% compared to 79% for the second quarter of 2016. The average cost of sales by ton of steel products increased 24% in the second quarter of 2017 versus the second quarter of 2016, due to the cost of certain raw materials mainly scrap.

Gross (Loss) Profit

Gross profit of the Company for the second quarter of 2017 amount to Ps. 1,210 million compared to Ps. 1,440 million in the second quarter of 2016, this represented an decrease of 16% between both periods. Gross profit as a percentage of net sales for the second quarter of 2017 was 17% compared to 21% of the second quarter of 2016. The decrease in gross profit is mainly due to a higher average cost of sales and a higher volume of shipments in the second quarter of 2017 compared with the second quarter of 2016.

Selling, General and Administrative Expense

The selling, general and administrative expenses increased 26% in the second quarter of 2017 from Ps. 278 million in the second quarter of 2016 to Ps. 350 million in the second quarter of 2017. Selling, general and administrative expense as a percentage of net sales represented 5% in the second quarter of 2017 compared to 4% of the second quarter of 2016.

Other Income (Expenses), net

The company recorded other expenses net of Ps. 14 million in the second quarter of 2017 compared with other income net of Ps. 135 million for the second quarter of 2016.

Operating (Loss) Income

Operating income amounted to Ps. 846 million in the second quarter 2017 compared to Ps. 1,297 million in the second quarter of 2016, this represent 35% of decrease between both quarters. The operating income as a percentage of net sales in the second quarter of 2017 was 12% and 19% in the second quarter of 2016. The decrease in the operating income is due to the lower volume shipment, and the cost of certain raw materials mainly scrap.

Ebitda

The Ebitda of the second quarter of 2017 decreased compared to the same period of 2016 in 24% from Ps 1,584 million in the second quarter of 2016 as a result a net profit of Ps. 1771 less taxes of Ps. 22 plus minority stake of Ps. 83 less interest of Ps. 10 less exchange loss of Ps. 525 plus depreciation of Ps. 287 to Ps. 1,201 million of the same period of 2017 as a result a net profit of Ps. 614 plus taxes of Ps. 12 less minority stake of Ps. 1 plus interests of Ps. 1 plus exchange gain of Ps. 220 plus depreciation of Ps. 355, this is due to the above explained in the operating income.

Comprehensive Financial Cost

Comprehensive financial cost of the Company for the second quarter of 2017 represented a net expense of Ps. 221 million compared with a net income of Ps. 535 million for the second quarter of 2016. The comprehensive financial cost is comprised for the net interest expense of Ps. 1 million in the second quarter of 2017, compared to a net interest expense of Ps. 10 million for the same period of 2016. Also record an exchange loss of Ps. 220 million in the second quarter of 2017 and an exchange gain of Ps. 525 million in the second quarter of 2016.

Income Taxes

The company recorded an expense of Ps. 12 million of income tax in the second quarter of 2017, (comprised by current expense tax of Ps. 64 million and an income for deferred tax of Ps. 52 million) compared to an income accrual of Ps. 22 million for income tax for the second quarter of 2016, (comprised by current expense tax of Ps. 18 million and an income for deferred tax of Ps. 40 million).

Net Income (Loss)

As a result of the foregoing, the Company recorded a net income of Ps. 614 million in the second quarter of 2017 compared to Ps. 1,771 million for the second quarter of 2016, a decrease of 65% between both quarters.

 

 

 

 

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.

 

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