Company reports a sales rise of 1.3 percent year on year and a 5.1 percent decline in earnings before interest, taxes, depreciation, and amortization.
Vitro, S.A.B. de C.V. (BMV: VITROA), the leading glass producer in Mexico, announced its unaudited results for the third quarter 2014.
Third Quarter 2014 Highlights:
– Consolidated sales were up 1.3 percent year-on-year (YoY) to 433 million USD driven by positive results in the Glass Containers business unit across all segments, except CFT (Cosmetics, Fragrance and Toiletries). In the Flat Glass business unit, a solid performance in sales to the automotive market partially compensated for the impact of lower domestic and export sales to the construction segment.
– A strong performance in Glass Containers, driven by increasing sales volume and a strong price-mix, along with positive automotive market sales in Flat Glass, partially offset the decline in EBITDA. During third quarter 2014, EBITDA was 100 million USD, reflecting lower sales volumes to the construction segment, both domestic and exports, lower capacity utilization in one of our float glass furnaces, a 15.3 percent increase in average natural gas prices and a 0.9 percent year-over-year peso depreciation (quarterly average).
– Aided by higher a cash balance and current debt amortization, Net debt decreased by 34 million USD to 990 million USD, from 1,024 USD recorded in the previous quarter and by 81 million USD from 1,071 USD in December 2013.
Commenting on Vitro’s outlook and performance, Mr. Adrián Sada Cueva, Chief Executive Officer, said “This past quarter we achieved important milestones in our strategy and laid the foundations for the future profitable growth of our company. After many months of hard work, our team was able to earn a very important long term contract to supply beer bottles to Constellation Brands with an estimated sales value of approximately 950 million USD during the next 7 years. Our board also authorized an investment for a furnace in Brazil to supply the CFT market, for which we entered into an agreement with the state of Bahia to install our new plant in that state. We expect to see the benefits of the Constellation contract starting November of this year and expect to be sourcing the full run rate of the contract on January, 2016 after starting up a furnace exclusively dedicated to this project. Regarding our plant in Brazil, we expect to see the positive effect during the second half of 2016, when we have the Brazilian plant installed and operational.”
“Regarding the financial results of this quarter, our Glass Containers business delivered a very strong performance with sales up 6.8 percent and EBITDA growth of 14.7 percent, despite continued soft macro conditions in some of our markets. Sales to the Beer segment remained very strong, while the Soft Drinks, Food and Wine and Liquor segments all reported a good performance resulting in a solid price mix. These developments more than offset continued weak industry conditions for CFT. Our flat glass automotive business also continued to report sustained positive results driven by the continued recovery of the OEM market.”
“During this quarter, one of our float glass furnaces, which represents around a third of our capacity, had an unexpected technical issue, which ended affecting dramatically the capacity utilization of the furnace. As a consequence, overall Flat Glass results were impacted by lower sales volumes to the construction market, reflecting our capacity constrains during this quarter. We did, however, benefit from a more favorable price mix, which did help to partially offset the impact of lower sales volumes and higher cost absorption. Nevertheless, Flat Glass EBITDA was down significantly this quarter, when compared to the same period of the prior year mainly due to this incident. Corrective measures have been implemented and we have significantly improved our flat glass output to be able to adequately supply the market going forward.”
Strengthening the balance sheet has been a key priority for the Company. Mr. Claudio Del Valle, Chief Administrative and Financial Officer, noted: “We achieved a significant increase in our cash balance, reaching 251 million USD from 213 million USD YoY. Net debt, in turn, declined by 34 million USD to 990 million USD, from 1,024 million USD in the previous quarter, while compared with the closing of 2013, net debt has been reduced by 81 million USD, from 1,071 USD in December 2013, reflecting a higher cash balance and a reduction in gross debt. All in all, we remain focused on further strengthening our balance sheet, with plans to refinance our 235 million USD note due April 2015.”
“Despite the productivity incident in the Flat Glass business unit and the soft industry conditions in some of the markets Vitro serves, we continue to make headway in further building our business and consolidating Vitro as a stronger, more productive and innovative Company, expecting to close this year with overall improved results.”
“Our outlook for the end of the year is positive,” concluded Mr. Sada. “We are expecting a solid last quarter, with strong demand expected in the container segments supported by the start of supply to Constellation as well as better availability of flat glass to serve our market.”