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September 08, 2008


Grupo Simec Q1 net sale up by 17% YoY

Mexico based steel producer Grupo Simec SAB de CV announced its results of operations for the three month period ended March 31st 2008.

Net sales during the period increased by 17% YoY to MXN 7,288 million in the first quarter 2008 compared to MXN 6,237 million in the same period 2007. Shipments of finished steel products increased 6% YoY to 745,000 tonnes in the first quarter 2008 compared to 704,000 tonnes in the same period 2007.

Total sales outside of Mexico in the first quarter 2008 increased by 24% YoY to MXN 5,423 million compared with MXN 4,360 million in the same period 2007, while total Mexican sales decreased 1% from MXN 1,877 million in the first quarter 2007 to MXN 1,865 millions in the same period 2008. The increase in sales can be explained due to higher shipments during the first quarter 2008, comparing with the same period in 2007 and the 10% increase in the average price of steel products.

Gross profit in the first quarter 2008 was MXN 1,238 million compared to MXN 1,242 million in the same period 2007. Gross profit as a percentage of net sales in the first quarter 2008 was 17% YoY compared to 20% in the same period 2007. The decline in gross profit is due to the increase in cost of goods sold due to the reasons previously mentioned.

Operating profit was the same MXN 878 million for the first quarter 2008 and the first quarter 2007. Operating profit as a percentage of net sales was 12% YoY in the first quarter 2008 compared to 14% in the same period 2007. The decline in operating profit is due to the increase in cost of goods sold due to the reasons previously mentioned.

The company reached an agreement in February this year to acquire compatriot steel company Corporación Aceros DM and some of its affiliates, collectively known as Grupo San, for USD 850 million. Through the transaction Simec, owned by Mexico's Industrias CH will become the second largest producer of rebar and the largest steel producer in Mexico, with a production capacity of some 4.5 million tonne per year liquid steel and 3.8 million tonne per year finished products.