Grupo Simec Announces Results Of Operations For The Twelve-month Period Ended December 31, 2017

GUADALAJARA, Mexico, Feb 26, 2018 /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, 2017 and December 31, 2016.

Twelve-Month Period Ended December 31, 2017 compared to Twelve-Month Period Ended December 31, 2016

Net Sales
Net sales increased 4% by the combination of higher shipments of finished steel products and a higher average sales price by 4% compared the same period of 2016, the sales increased from Ps. 27,516 million in the twelve-month period ended December 31, 2016 to Ps. 28,674 million in the same period of 2017. Shipments of finished steel products practically remained to 2 million 093 thousand tons in the twelve-month period ended December 31, 2017 compared to 2 million 085 thousand tons in the same period of 2016. Total sales outside of Mexico on the twelve-month period ended December 31, 2017 increased 6% to Ps. 12,666 million compared with Ps. 11,900 million in the same period of 2016. Total sales in Mexico increased 3% from Ps. 15,616 million in the twelve-month period ended December 31, 2016 to Ps. 16,008 million in the same period of 2017.  The increase of 4% in sales is due to a higher average sales price.

Cost of Sales
Cost of sales increased 5% from Ps. 22,776 million in the twelve-month period ended December 31, 2016 to Ps. 23,933 million in the same period of 2017. Cost of sales as a percentage of net sales in both periods represented 83%. The average cost of finished steel produced in the twelve-month period ended December 31, 2017 compared to the same period of 2016 increased 5% 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, 2017 was of Ps. 4,741 million compared to Ps. 4,740 million in the same period of 2016. Gross profit as a percentage of net sales represented 17% in both periods.

Operating Expenses
Selling, general and administrative expenses decreased 3% from Ps. 1,277 million in the twelve-month period ended December 31, 2016 to Ps. 1,241 million in the same period of 2017. Selling, general and administrative expenses as a percentage of net sales represented 5% during the twelve-month period ended December 31, 2016 and 4% in the same period of 2017.

Other Expenses (Income) net
The company recorded other expenses of Ps. 36 million in the twelve-month period ended December 31, 2016 compared to other net income of Ps. 25 million in the same period of 2017.

Operating Income
Operating income increased 3% from Ps. 3,427 million for the twelve-month period ended December 31, 2016 to Ps. 3,525 million in the same period of 2017. Operating income as a percentage of net sales represented 12% in both periods.

EBITDA
The EBITDA of the Company increased 3% from Ps. 4,856 million in the twelve-month prior ended December 31, of 2016, as a result a net gain of Ps. 4,343 plus income taxes of Ps. 926 less comprehensive financial cost of Ps. 1,843 plus depreciation of Ps. 1,430 to Ps. 4,991 million in the same period of 2017 generating a net income of Ps. 1,199 plus income taxes of Ps. 2,079 plus comprehensive financial cost of Ps. 247 plus depreciation of 1,466.

Comprehensive Financial Cost 
Comprehensive financial cost in the twelve-month period ended December 31, 2017 represented a net expense of Ps. 247 million compared with a net income of Ps. 1,843 million in the same period of 2016. The net interest was an expense of Ps. 5 million in 2017 compared with a net interest income of Ps. 68 million in the twelve-month period ended December 31, 2016. As a result, we registered a net exchange loss of Ps. 242 million in the twelve-month period ended December 31, 2017 compared with a net exchange income of Ps. 1,775 million in the same period of 2016, reflecting a 4% decrease in the value of the peso versus the dollar in the twelve-month period ended December 31, 2017 compared to December 31, 2016.

Income Taxes
The Company have recorded an expense net tax of Ps. 2,079 million in the twelve-month period ended December 31, 2017 (including the expense of deferred income tax of Ps. 2,090 million) compared with a net expense tax of Ps. 926 million in the same period of 2016 (including the tax deferred income of Ps. 869 million).

Net Income (loss) (After Minority Interest)
As a result of the foregoing, net income decreased by 72% from Ps. 4,343 million in the twelve-month period ended December 31, 2016 to a net income of Ps. 1,199 million in the same period of 2017. 

Liquidity and Capital Resources
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, Ps. 6.0 million (accrued interest on December 31, 2017 was U.S. $640,017 or Ps. 12.6 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, Ps. 6.2 million (accrued interest on December 31, 2016 was U.S. $505,710, or Ps. 10.5 million).

Comparative fourth quarter 2017 vs third quarter 2017

Net Sales
Net sales decreased slightly from Ps. 6,810 million in the third quarter of 2017 to Ps. 6,782 million for the fourth quarter of 2017. Sales in tons decreased from 533 thousand ton in the third quarter of 2017 to 476 thousand ton in the fourth quarter of the same period, a decrease of 11%. Total sales outside of Mexico for the fourth quarter of 2017 increased 4% from Ps. 2,855 million in the third quarter to Ps. 2,956 million in the four quarter of 2017. Sales in Mexico decreased to Ps. 3,826 million in the fourth quarter of 2017 compared Ps. 3,955 million in the third quarter of 2017 a decrease of 3%. Prices of finished products sold in the fourth quarter of 2017 increased 12% compared with the third quarter of the same period.

Cost of Sales
Cost of sales decreased to Ps. 5,780 million in the fourth quarter of 2017 compared to Ps. 5,856 million for the third quarter of 2017. With respect to sales, in the fourth quarter of 2017, the cost of sales represented 85% and third quarter represented 86%. The average cost of sales by ton increased 11% in the fourth quarter of 2017 versus the third quarter of 2017.

Gross Profit
Gross profit of the Company for the fourth quarter of 2017 increased 5% to Ps. 1,002 million compared to Ps. 954 million in the third quarter of 2017. The gross profit as a percentage of net sales for the third and fourth quarter of 2017 was of 14% and 15% respectively.

Operating Expenses
Selling, general and administrative expenses increased 22% to Ps. 276 million in the fourth quarter of 2017 compared to Ps. 227 million for the third quarter of 2017. Selling, general and administrative expenses as a percentage of net sales represented 4% during the fourth quarter of 2017 and 3% for the third quarter of 2017.

Other Expenses (Income) net
The company recorded other net income of Ps. 34 million in the fourth quarter of 2017 compared to other net income of Ps. 5 million for the third quarter of 2017.

Operating (Loss) Income
Operating income was of Ps. 760 million in the fourth quarter of 2017 compared to an operating income of Ps. 732 million in the third quarter of 2017. The operating income as a percentage of net sales in the both periods represented 11%.

EBITDA
The EBITDA was Ps. 1,072 million in the third quarter of 2017 as a result a net income of Ps. 850 plus income taxes of Ps. 27 less comprehensive financial cost of Ps. 145 plus depreciation of Ps. 340 compared to Ps. 1,135 million for the fourth quarter of 2017, as a result a net loss of Ps. 984 plus income taxes of Ps. 2,104 less comprehensive financial cost of Ps. 360 plus depreciation of 375.

Comprehensive Financial Income (Cost)
Comprehensive financial cost for the fourth quarter for 2017 was a net income of Ps. 360 million compared with a net income of Ps. 145 million for the third quarter of 2017. The net interest expense in the fourth quarter was Ps. 1 million compared to Ps. 1 million in the third quarter of 2017. At same time we registered an exchange net gain of Ps. 146 million in the third quarter of 2017 compared with an exchange net gain of Ps. 361 million in the fourth quarter of 2017.

Income Taxes
Income Taxes for the fourth quarter of 2017 had an expense net tax of Ps. 2,104 million (including an expense tax deferred for Ps. 2,263 million) compared to an expense of Ps. 27 million for the third quarter of 2017, (including an income tax deferred of Ps. 51 million).

Net Income (loss) (After Minority Interest)
As a result of the foregoing, the Company had a net loss of Ps. 984 million in the fourth quarter of 2017 compared to Ps. 850 million of net income in the third quarter of 2017.

Comparative fourth quarter 2017 vs fourth quarter 2016

Net Sales
Net sales decreased 15% from Ps. 8,001 million for the fourth quarter of 2016 to Ps. 6,782 million for the fourth quarter of 2017. Sales in tons of finished steel in the fourth quarter of 2016 were 429 thousand tons versus to 476 thousand tons in the fourth quarter of 2017. Total sales outside of Mexico decreased 19% from Ps. 3,634 million for the fourth quarter of 2016 to Ps. 2,956 million in the fourth quarter of 2017. Sales in Mexico decreased 12% from Ps. 4,367 million in the fourth quarter of 2016 to Ps. 3,826 million in the fourth quarter of 2017. The average sales prices of finished products sold in the fourth quarter of 2017 decreased 23%, compared to the same period of 2016.

Cost of Sales
Cost of sales decreased 16% from Ps. 6,881 million in the fourth quarter of 2016 compared to Ps. 5,780 million for the fourth quarter of 2017. With respect to sales, the cost of sales represented 85% during the fourth quarter of 2017 and 86% during the fourth quarter of 2016. The average cost of steel products decreased 24% in the fourth quarter of 2017 versus the fourth quarter of 2016.

Gross Profit
Gross profit for the fourth quarter of 2017 decreased 11% from Ps. 1,120 million in the fourth quarter of 2016 compared to Ps. 1,002 million in the fourth quarter of 2017. The gross profit as a percentage of net sales represented 15% during the fourth quarter of 2017 and 14% during the fourth quarter of 2016.

Operating Expenses
Selling, general and administrative expenses decreased 20% from Ps. 344 million in the fourth quarter of 2016 compared to Ps. 276 million for the fourth quarter of 2017. Selling, general and administrative expenses as a percentage of net sales represented 4% for both periods.

Other Expenses (Income) net
The company recorded other expenses net of Ps. 237 million in the fourth quarter of 2016 compared with other income net of Ps. 34 million for the fourth quarter of 2017.

Operating (Loss) Income
Operating income was of Ps. 760 million in the fourth quarter of 2017 compared to an operating income of Ps. 539 million in the fourth quarter of 2016. The operating income as a percentage of net sales in the fourth quarter of 2017 was 11%, compared to an operating income of 7% in the fourth quarter of 2016.

EBITDA
The EBITDA was Ps. 1,067 million in the fourth quarter of 2016 as a result a net income of Ps. 183 plus income taxes of Ps. 989 less comprehensive financial cost of Ps. 632 plus depreciation of Ps. 527 compared to a profit of Ps 1,135 million in the fourth quarter of 2017 as a result a net loss of Ps. 984 plus income taxes of Ps. 2,104 less comprehensive financial cost of Ps. 360 plus depreciation of 375.

Comprehensive Financial Income (Cost)
Comprehensive financial cost for the fourth quarter of 2017 was a net income of Ps. 360 million compared with a net income of Ps 632 million in the fourth quarter of 2016. Net interest expense was of Ps. 1 million in the fourth quarter of 2017 compared with a net interest income of Ps. 13 million in the fourth quarter of 2016. At same time we registered a net exchange income of Ps. 361 million in the fourth quarter of 2017 compared with an exchange income of Ps. 619 million in the fourth quarter of 2016.

Income Taxes
The Company recorded an expense net taxes for the fourth quarter of 2017 of Ps. 2,104 million (including an expense of deferred tax of Ps. 2,263 million), compared to an expense taxes of Ps. 989 million for the fourth quarter of 2016, (including an income tax deferred of Ps. 959 million).

Net Income (loss) (After Minority Interest)
As a result of the foregoing, the Company recorded a net loss of Ps. 984 million in the fourth quarter of 2017 compared to Ps. 183 million of net income in the fourth quarter of 2016.

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 informationcontained herein.

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