In its announcement of its unaudited results for the fourth quarter 2014 and full year 2014, Vitro reported increased consolidated sales, increased EBITDA, and the 5th consecutive year of EBITDA growth.
Vitro, S.A.B. de C.V., the leading glass producer in Mexico, has announced its unaudited results for the fourth quarter 2014 and full year 2014.
Consolidated sales increased 0.8% year-on-year to USD 394 million, affected by the peso depreciation of 7.4% during 4Q 2014; excluding this effect, sales would have increased by 5.1%. Sales growth was mainly driven by a solid performance in the domestic beer, soft drinks and food categories in the Glass Containers business unit, as well as the domestic Original Equipment Manufacturers (OEM) and Automotive Glass Replacement (AGR) segments, in the Flat Glass business unit. These factors offset the impact of tough industry conditions in the Cosmetics, Fragrances and Toiletries (CFT) segment and lower domestic and export sales to the construction market.
EBITDA increased by 42.7% during 4Q 2014, mainly reflecting higher sales volumes to the beer segment in the Glass Containers business unit, and to the Automotive market in the Flat Glass business unit, along with an improved price-mix in the domestic construction segment and the impact of certain non-operating effects in 4Q 2013, the latter affecting YoY comparison. This more than compensated for the impact from a 7.4% YoY peso devaluation (quarterly average), as well as lower capacity utilization in one of the Company’s float glass furnaces early in the quarter, which particularly affected the Flat Glass business unit.
A positive cash flow generation during 4Q 2014 enabled the company to make a debt partial prepayment of USD 35 million, which along with current debt amortization reduced Total Debt by USD 74 million to USD 1,188 from USD 1,262 in 4Q 2013 and Total Net debt by USD 62 million to USD 1,009 million, from USD 1,071 million recorded at the end of December 2013.
Commenting on Vitro’s outlook and performance, Adrián Sada Cueva, Chief Executive Officer, said “We are pleased to inform that despite challenging economic conditions, the Company has been able to deliver for the fifth consecutive year an increase of EBITDA and an SG&A reduction, contributing to our goal of increasing value for our shareholders. This was achieved due to our strong focus to strengthen and grow our relationships with our customers, and the company’s continuous efforts to reduce costs. We also remained on track with our financial objective of further reducing debt levels. The strong cash flow generated during the quarter allowed us to pre-pay debt and close the year with a Net Debt/EBITDA ratio of 2.8x, the lowest since we ended our debt restructuring process. This was achieved while moving ahead on our capital investment program to further drive cost efficiencies and organic growth in the future.”
“Our Glass Containers business continued to report a strong performance. Results benefited from the first incremental sales to Constellation Brands as per the contract entered into earlier this year and a good performance in other categories like food and soft drinks. At Flat Glass, despite ongoing growth in the automotive segment, the business still remained partially affected by capacity constraints at one of our float glass furnaces. We have finalized the repairs of this furnace during February and are seeing an improved performance as of today.”
“Consolidated EBITDA for the quarter increased 42.7% YoY, positively contributing to the 3.1% full year growth. Incremental sales, a healthy product mix and a reduction in costs and expenses were the main drivers supporting this strong performance. Most importantly, this was achieved despite the negative impact of the devaluation of the peso and lower capacity utilization at Flat Glass.”
On the balance sheet, Claudio Del Valle, Chief Administrative and Financial Officer, noted: “We continued to strengthen our financial position and further enhanced our debt profile. Robust cash flow generation in the quarter – up USD 37 million YoY – allowed us to pre-pay USD 35 million of our USD 235 million Note issued on 8 April 2013 while financing a portion of our capex program through internally generated funds. Simultaneously, we also extended the maturity of this Note to 23 January 2016, which provides additional flexibility to continue deploying the Company’s expansion plans while analyzing several alternatives in our markets. As a result, Total Net Debt declined by USD 62 million to USD 1,009 million YoY. Net income, however, was impacted by a foreign exchange loss resulting from the 12.7% peso devaluation during the year.”
“Significant progress was achieved this year as we pursue our operating, financial and investment objectives. Strong cash flow generation further supported our solid cash levels and allowed us to move ahead on our planned investments utilizing internally generated funds. Looking ahead, the successful execution of our growth plans is anticipated to drive additional cash flow generation, further reduce leverage and strengthen our balance sheet. We are also very pleased to have received the consent from holders of our Senior Limited Recourse Notes due 20 December 2018 to waive certain covenants relating to Vitro’s ability to incur or permit liens, debt and capital expenditures and enter into certain hedging agreements. This aligns the Senior Notes with three expansion projects we plan to implement in the near future, including the new furnace at the Monterrey plant to fulfil our long-term contract with Constellation Brands, the glass containers plant in Brazil to serve the CFT segments as well as our capacity expansion in Alcali to double our capacity production of Calcium Chloride. This is also a reflection of the confidence of our debt holders in Vitro’s expansion plan which is expected to further enhance cash flow generation and support continued reduction in leverage and strengthen our balance sheet,” noted Sada.
“In summary, we face the future well positioned with a healthy revenue base and a keen focus on cost controls. The foundation has been set as revenues increased at a CAGR of 4.2% between 2009 and 2014, SG&A fell at a CAGR of 7.4% and EBITDA expanded at a 5.7% CAGR, and 2014 represented the 5th consecutive year of EBITDA growth. Although the macro environment still presents some challenges, we participate in attractive industries and are excited about the opportunities that lie ahead for us,” concluded Sada.