SAN PEDRO GARZA GARCIA, NUEVO LEON, Mexico, Feb. 27 /PRNewswire-FirstCall/ -- Vitro S.A.B. de C.V. (BMV: VITROA; NYSE: VTO) one of the world's largest producers and distributors of glass products, today announced 4Q'08 unaudited results. Year over year consolidated net sales declined 17.7 percent mostly affected by a 28.2 percent peso depreciation during the quarter while EBITDA decreased 41.6 percent. The consolidated EBITDA margin decreased to 10.9 percent from 15.3 percent in the same period last year.
FINANCIAL HIGHLIGHTS* 4Q'08 4Q'07 % Change ----- ----- -------- Consolidated Net Sales 542 659 -17.7% Glass Containers 275 337 -18.5% Flat Glass 259 312 -17.0% ---------- --- --- ----- Cost of Sales 395 436 -9.3% ------------- --- --- ---- Gross Income 146 223 -34.3% ------------ --- --- ----- Gross Margins 27.0% 33.8% -6.8 pp ------------- ---- ---- ------- SG&A 131 143 -8.8% ---- --- --- ---- SG&A % of sales 24.1% 21.8% 2.3 pp --------------- ---- ---- ------ EBIT 16 79 -80.2% ---- -- -- ----- EBIT Margins 2.9% 12.1% -9.2 pp ------------ --- ---- ------- EBITDA 59 101 -41.6% Glass Containers 50 76 -34.1% Flat Glass 7 30 -75.9% ---------- - -- ----- EBITDA Margins 10.9% 15.3% -4.4 pp -------------- ---- ---- ------- * Million US$ Nominal ---------------------
Commenting on the results for the quarter, Mr. Hugo Lara, Chief Executive Officer, said, "This was a difficult quarter for Vitro as the worldwide recession and tight credit markets clearly impacted results. It is also clear that Vitro's strong market position and franchise, a long standing diversified blue chip client base and the investments in our manufacturing facilities over the past ten years constitute an important foundation in these challenging times. But most importantly, we are confident we are taking all the necessary steps to continue business as usual although at a lower capacity while maintaining ongoing relationships with customers and suppliers. In fact, we are focused on actively controlling costs, managing our liquidity, and generating cash flow, while we restructure our financial obligations."
Mr. Claudio del Valle, Chief Administrative and Financial Officer, commented, "In the face of global declining demand, Glass Container sales volumes were down in all segments reflecting overall weak conditions. As a result, domestic and export sales declined year-over-year by 16.9 percent and 14.1 percent, respectively. While EBITDA benefited somewhat by cost reduction initiatives we reported a 34.1 percent year-over-year drop for glass containers. On a comparable basis, excluding Comegua which was deconsolidated since December 2008, EBITDA would have decreased 30.6 percent YoY. Looking forward, our goal is to optimize production lines to assure continuity and have launched several programs to increase volumes."
"Flat Glass sales fell 17 percent this quarter mainly driven by continued tough industry conditions in the North American Automotive business, as well as the US and Spanish construction segments. In the Mexican construction market, we maintained our market share despite an industry wide volume decrease. Auto glass volumes to the OEM market fell 10 percent in the face of a 26 percent industry drop as a result of weakening demand, which translated into a market share gain from 14 percent to 17 percent in the NAFTA region. Float glass exports remained strong with volume up 22 percent year-over-year. EBITDA, in turn, declined during the period, mainly as a result of lower fixed-cost absorption. Looking ahead, our goal is to build sales through marketing programs for the domestic automotive glass replacement aftermarket, expansion of Vitro Cristalglass product offerings, increasing float glass exports to new markets. For Vitro America, the focus is on value added products and areas where we can differentiate our products. In all Flat Glass, we are analyzing demand and expect to rationalize capacity where required."
Addressing the restructuring process, Mr. Lara commented, "Today we are in the process of negotiations with counterparties to determine alternatives for restructuring derivative obligations. An additional element of the restructuring involves our bondholders and other financial counterparties. A committee has been formed and we have been negotiating with bondholders. At this point, we are in the process of developing a business plan that outlines our strategy and expected performance which will be presented to creditors in the next few weeks."
"We have also taken steps to revitalize the Company, including cost reduction initiatives throughout every aspect of our company, while optimizing production capacity to maximize utilization and efficiencies consistent with the current level of operations. Together, these initiatives will represent annualized savings of between US$80 and US$120 million once fully implemented. During 2008, US$40 million were implemented and will have their full benefit in 2009. To further maximize our cash position we have also reduced capital expenditures to US$74 million for 2009 and sold several minor non-productive assets."
"In summary, we are taking decisive steps to better position Vitro for the future and will continue to maintain constant communication with creditors, financial institutions, clients and suppliers as we advance our plans in 2009," Mr. Lara closed.
To obtain the full text of this earnings release, please visit our Investor Relations website at http://www.vitro.com/ under the Download Center section, or click on the following link
http://phx.corporate-ir.net/phoenix.zhtml?c=108614&p=irol-reportsother Dec-08 Dec-07 Inflation in Mexico Quarter 2.5% 1.5% Accumulated 6.5% 3.8% Inflation in USA Quarter -4.8% 0.7% Accumulated 0.3% 4.1% Exchange Rate Closing 13.8325 10.8662 Devaluation Quarter 28.2% -0.5% Accumulated 27.3% 0.5%
All figures provided in this announcement are in accordance with Mexican Financial Reporting Standards (Mexican FRS or NIFs) issued by the Mexican Board for Research and Development of Financial Reporting Standards (CINIF), except otherwise indicated. Dollar figures are in nominal US dollars and are obtained by dividing nominal pesos for each month by the end of month fix exchange rate published by Banco de Mexico. In the case of the Balance Sheet, US dollar translations are made at the fix exchange rate as of the end of the period. Certain amounts may not sum due to rounding. All figures and comparisons are in US dollar terms, unless otherwise stated, and may differ from the peso amounts due to the difference between inflation and exchange rates.
This announcement contains historical information, certain management's expectations, estimates and other forward-looking information regarding Vitro, S.A.B. de C.V. and its Subsidiaries (collectively the "Company"). While the Company believes that these management's expectations and forward looking statements are based on reasonable assumptions, all such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated in this report. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political, governmental and business conditions worldwide and in such markets in which the Company does business, changes in interest rates, changes in inflation rates, changes in exchange rates, the growth or reduction of the markets and segments where the Company sells its products, changes in raw material prices, changes in energy prices, particularly gas, changes in the business strategy, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The Company does not assume any obligation, to and will not update these forward-looking statements. The assumptions, risks and uncertainties relating to the forward-looking statements in this report include those described in the Company's annual report in form 20-F file with the U.S. Securities and Exchange Commission, and in the Company's other filings with the Mexican Comision Nacional Bancaria y de Valores.
This report on Form 6-K is incorporated by reference into the Registration Statement on Form F-4 of Vitro, S.A.B. de C.V. (Registration Number 333-144726).
EFFECTS OF INFLATION -- NIF B-10, Effects of Inflation.- CINIF defines two economic environments: a) inflationary environment, when cumulative inflation of the three preceding years is 26 percent or more, in which case, the effects of inflation should be recognized using the comprehensive method; and b) non-inflationary environment, when cumulative inflation of the three preceding years is less than 26 percent, in which case, no inflationary effects should be recognized in the financial statements. Additionally, NIF B-10 eliminates the replacement cost and specific indexation methods for inventories and fixed assets, respectively, and requires that the cumulative gain or loss from holding non-monetary assets be reclassified to retained earnings, if such gain or loss is realized; the gain or loss that is not realized will be maintained in stockholders' equity and charged to current earnings of the period in which the originating item is realized. -- INIF 9, Presentation of Comparative Financial Statements Prepared under NIF B-10.- INIF 9 states that financial data for year 2008 is presented in nominal pesos while for previous periods it is expressed in constant pesos as of December 31, 2007. SPECIAL NOTE REGARDING NON-GAAP FINANCIAL MEASURES
A body of generally accepted accounting principles is commonly referred to as "GAAP". A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. We disclose in this report certain non-GAAP financial measures, including EBITDA. EBITDA for any period is defined as consolidated net income (loss) excluding (i) depreciation and amortization, (ii) non-cash items related to pension liabilities, (iii) total net comprehensive financing cost (which is comprised of net interest expense, exchange gain or loss, monetary position gain or loss and other financing costs and derivative transactions), (iv) other expenses, net, (v) income tax, (vi) provision for employee retirement obligations, (vii) cumulative effect of change in accounting principle, net of tax and (viii) (income) loss from discontinued operations.
In managing our business we rely on EBITDA as a means of assessing our operating performance and a portion of our management's compensation and employee profit sharing plan is linked to EBITDA performance. We believe that EBITDA can be useful to facilitate comparisons of operating performance between periods and with other companies because it excludes the effect of (i) depreciation and amortization, which represents a non-cash charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax and tax on assets and statutory employee profit sharing, which is similar to a tax on income and (iv) other expenses or income not related to the operation of the business. EBITDA is also a useful basis of comparing our results with those of other companies because it presents operating results on a basis unaffected by capital structure and taxes.
We also calculate EBITDA in connection with covenants related to some of our financings. We believe that EBITDA enhances the understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness as well as to fund capital expenditures and working capital requirements. EBITDA is not a measure of financial performance under U.S. GAAP or Mexican FRS. EBITDA should not be considered as an alternate measure of net income or operating income, as determined on a consolidated basis using amounts derived from statements of operations prepared in accordance with Mexican FRS, as an indicator of operating performance or as cash flows from operating activity or as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of a company's overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes, depreciation, pension plan reserves or capital expenditures and associated charges. The EBITDA presented herein relates to Mexican FRS, which we use to prepare our consolidated financial statements.
Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), is one of the largest glass manufacturers in the world. Through our subsidiary companies we offer products with the highest quality standards and reliable services to satisfy the needs of two distinct business sectors: glass containers and flat glass. Our manufacturing facilities produce, process, distribute and sell a wide range of glass products that offer excellent solutions to multiple industries that include: wine, beer, cosmetic, pharmaceutical, food and beverage, as well as the automotive and construction industry. Also, we supply raw materials, machinery and industrial equipment to different industries. Our World Headquarters are located in Monterrey, Mexico where Vitro was founded in 1909 and now embarks major facilities and a broad distribution network in ten countries in the Americas and Europe. Additionally, it exports its products to over 50 countries around the World. For more information, you can access Vitro's Website at: http://www.vitro.com/
Fourth Quarter 2008 results Conference Call and Web cast Wednesday, March 4, 2009 11:00 AM U.S. EST - 10:00 A.M. Monterrey time
A live web cast of the conference call will be available to investors and the media at http://www.vitro.com/. A replay of the web cast will be available through the end of the day on March 11, 2009. For inquiries regarding the conference call, please contact Danielle Birrer or Susan Borinelli of Breakstone Group via telephone at (646) 452-2336, or via email at
