GRUPO SIMEC ANNOUNCES RESULTS OF OPERATIONS FOR THE FIRST NINE MONTHS OF 2023

Rhea-AI Summary

Grupo Simec reports decrease in net sales and gross profit for the first nine months of 2023 compared to the same period in 2022. Operating income and Ebitda also decreased. Selling, general, and administrative expenses decreased. The company recorded a decrease in net income of 52%. Liquidity and capital resources remained stable. Net sales decreased in the third quarter of 2023 compared to the second quarter of the same year. Gross profit and operating income also decreased. Ebitda decreased by 15%.

Positive

• Simec reports decrease in net sales and gross profit for the first nine months of 2023 compared to the same period in 2022. Selling, general, and administrative expenses decreased. Liquidity and capital resources remained stable.

Negative

• Operating income and Ebitda decreased for the first nine months of 2023 compared to the same period in 2022. Net income decreased by 52%. Net sales, gross profit, and operating income decreased in the third quarter of 2023 compared to the second quarter of the same year. Ebitda decreased by 15%.

GUADALAJARA, Mexico, Oct. 25, 2023 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (NYSE: SIM) ("Simec") announced today its results of operations for the nine-month period ended September 30, 2023.

Comparative first nine months of 2023 vs. first nine months of 2022 

Net Sales
Net sales of the Company decreased to Ps. 32,401 million in the first nine months of 2023 compared to Ps. 44,012 million in the first nine months of 2022. Shipments of finished steel products decreased 5% to 1 million 640 thousand tons in the first nine months of 2023 compared to 1 million 720 thousand tons in the first nine months of 2022. Total sales outside of Mexico in the first nine months of 2023 decreased 35% to Ps. 13,571 million compared to Ps. 20,812 million in the same period of 2022. Mexican sales decreased 19% from Ps. 23,200 million in the first nine months of 2022 to Ps. 18,830 million in the same period of 2023. The decrease in sales for the first nine months of 2023 is due to a decrease in the average selling price in 23% and with a lower volume of shipments compared to the first nine months of 2022. 

Cost of Sales
Cost of sales decreased 25% from Ps. 32,243 million in the first nine months of 2022, to Ps. 24,305 million in the first nine months of 2023. Cost of sales as a percentage of net sales represented 75% in the first nine months of 2023 while in the first nine months of 2022 represented 73%. Cost of sales by steel ton decreased approximately 21% in the first nine months of 2023 over the same period of 2022 due to a lower price in inputs, mainly steel scrap. 

Gross Profit
Gross profit of the Company for the first nine months of 2023 decreased 31% from Ps. 11,769 million in the first nine months of 2022, to Ps. 8,096 million in the first nine months of 2023. Marginal profit as percentage of net sales in the first nine months of 2023 was of 25% while in the first nine months of 2022 was of 27%. The decrease in gross profit is due to a decrease in the average selling price and with a lower volume of shipments compared to the first nine months of 2022.

General, Selling and Administrative Expenses
Selling, general and administrative expenses decreased 8%, to Ps. 1,587 million in the first nine months of 2023 from Ps. 1,725 million in the same period of 2022, selling, general and administrative expenses represented 5% to the 2023 and 4% to the 2022 of the net sales for both periods.

Other Income (Expenses,) net 
The Company recorded other income net for Ps. 167 million during the first nine months of 2023 while in the same period of 2022 the other income net by this concept was of Ps. 7 million. 

Operating Income
Operating income decreased 34% to Ps. 6,676 million for the first nine months of 2023 compared to Ps. 10,051 million in the first nine months of 2022. Operating income as percentage of net sales was 21% in the first nine months of 2023 and 23% in the same period of 2022. The decrease in operating income is due to a lower average sales price and to a lower volume shipped during the nine months ended September 30, 2023 compared to the same period in 2022.

Ebitda
The Ebitda decreased 31%, from Ps. 10,885 million in the first nine months of 2022 as a result of a net income of Ps. 8,037 million, plus income taxes of Ps. 1,950 million, plus comprehensive financial cost of Ps. 64 million, plus depreciation of Ps. 834 million to Ps 7,499 million in the same period of 2023 as a result of a net income of Ps. 3,821 million, less minority stake of Ps. 4 million, plus income taxes of Ps. 1,541 million, plus comprehensive financial cost of Ps. 1,318 million, plus depreciation of Ps. 823 million.                        

                                                                                     

Consolidated	Comparative first nine months of 2023 vs first nine months of 2022,
Million
	2023		2022
Net income (loss)	3,821		8,037
Loss attributable to	(4)
noncontrolling interests
Net income (loss)	3,817		8,037
Depreciation, depletion, and amortization	823			834
Income taxes	1,541	1,950
Financial results income (loss)	1,318		64
EBITDA	7,499	10,885
Items to reconciled adjusted EBITDA
Equity results and other results in associates and joint ventures	0	0
Dividends received and interest from associates and joint ventures (i)	0	0
Impairment and disposal of non-current assets	0		0
Adjusted EBITDA	7,499		10,885

 

Comprehensive Financial Cost
Comprehensive financial cost for the first nine months of 2023 represented an expense of Ps. 1,318 million compared with an expense of Ps. 64 million for the first nine months of 2022. The net interest income was of Ps. 392 million for the first nine months of 2023, compared with a net interest income of Ps. 103 million in the same period of 2022. Likewise, we record an exchange loss of Ps. 1,754 million in the first nine months of 2023 compared with an exchange loss of Ps. 198 million in the first nine months of 2022, and other financial income for Ps 44 million for the first nine months of 2023 compared to Ps 31 million in the same period last year 2022, dividends earned on purchase of shares.

Income Taxes
The Company recorded an expense of Ps.1,541 million for during the first nine months of 2023, (includes a deferred income tax of Ps. 8 million) compared with an expense of Ps. 1,950 million for the first nine months of 2022 (includes a deferred expense tax of Ps. 47 million). 

Net Income
As a result of the foregoing, the Company recorded a decrease in net income of 52% to pass of Ps. 8,037 million in the first nine months of 2022 to Ps. 3,821 million of the same periods of 2023. 

Liquidity and Capital Resources
At September 30, 2023, Simec's total consolidated debt consisted of U.S. $ 302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 5.3 million (accrued interest on September 30, 2023 was U.S. $ 806,000, or Ps.

14.2 million).  At September 30, 2022, Simec's total consolidated debt consisted of U.S. $ 302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 6.1 million (accrued interest on September 30, 2022 was U.S. $ 691,000, or Ps. 14.0 million).

Comparative third quarter of 2023 vs. second quarter of 2023
Net Sales
Net sales of the Company decreased to pass of Ps. 10,122 million during the second quarter of 2023 to Ps. 9,454 million in the third quarter of 2023. Shipments of finished steel products increased to 531 thousand tons in the third quarter of 2023 from 505 thousand tons in the second quarter of the same year. Total sales outside of Mexico in the third quarter of 2023 decreased 12% to get to Ps. 3,932 million compared to Ps. 4,458 million of the second quarter of the same year. Mexican sales in the third quarter of 2023 decreased to Ps. 5,522 million compared to Ps. 5,664 million in the second quarter of the same year. The average selling price decreased 11% in the third quarter of 2023 compared to the second quarter of the same year. 

Cost of Sales
Cost of sales decreased to P s. 7,177 million in the third quarter of 2023 from Ps.7,510 million in the second quarter of 2023. Cost of sales as a percentage of net sales represented 76% in the third quarter of 2023 and 74% in the second quarter of the same year. The cost of sales decrease 9% in the third quarter of 2023 compared to the second quarter of the same year, due mainly to a decrease of some supplies for the manufacture of steel.

Gross Profit
Gross profit of the Company for the third quarter of 2023 decreased 13% to pass of Ps. 2,612 million in the second quarter of 2023 to Ps. 2,277 million in the third quarter of same year. Gross profit as a percentage of net sales in the third quarter of 2023 was of 24% compared to 26% in the second quarter of the same year. The decreased in the gross profit is due to decrease in average selling price in the third quarter compared to the second quarter of 2023. 

General, Selling and Administrative Expenses
Selling, general and administrative expenses decreased 6% to of Ps. 485 million in the third quarter of 2023 from Ps. 515 million the second quarter of the same year, and as percentage of net sales represented 5% for both periods quarter of the same year.

Other (Expenses) Income, net 
The Company recorded other income net for Ps. 24 million during the third quarter of 2023 compared to other income net for Ps. 85 million in the second quarter of 2023. 

Operating Income
The Operating income was of Ps. 1,816 million in the third quarter of 2023 compared to Ps. 2,182 million in the second quarter of the same year. Operating income as percentage of net sales represented 19% for the third quarter of 2023 and 22% for the second quarter of 2023.

Ebitda
The Ebitda show a decrease of 15%, to pass of Ps 2,460 million in the second quarter of 2023 as a result of a net income of Ps. 987 million, less minority stake of Ps. 2 million, plus income taxes of Ps. 712 million, plus comprehensive financial cost of Ps. 484 million, plus depreciation of Ps. 279 million to Ps. 2,079 million in the third quarter of the same year as a result of a net income of Ps. 1,802 million, less minority stake of Ps. 2 million, plus income taxes of Ps. 298 million, less comprehensive financial cost of Ps. 283 million, plus depreciation of Ps. 264 million.

                                                                                     

Consolidated	Comparative third quarter of 2023 vs second quarter of 2023,
Million
	Third quarter 2023		Second quarter 2023
Net income (loss)	1,802		987
Loss attributable to noncontrolling interests	(2)		(2)
Net income (loss)	1,800		985
Depreciation, depletion and amortization	264		279
Income taxes	298	712
Financial results income (loss)	(283)		484
EBITDA	2,079	2,460
Items to reconciled adjusted EBITDA
Equity results and other results in associates and joint ventures	0	0
Dividends received and interest from associates and joint ventures (i)	0	0
Impairment and disposal of non-current assets	0		0
Adjusted EBITDA	2,079		2,460

Comprehensive Financial Cost 
Comprehensive financial cost of the Company in the third quarter of 2023 represented an income of Ps. 283 million compared with an expense of Ps. 484 million for the second quarter of 2023. The comprehensive financial cost is comprised for the net interest income of Ps. 28 million in the third quarter of 2023 compared to net interest income of 175 million in the second quarter of the same year. Also, we record a net exchange income of Ps. 255 million in the third quarter of 2023 compared a net exchange loss of Ps. 703 million in the second quarter of the same year, and other financial income for Ps 44 million in the second quarter of 2022, dividends earned on purchase of shares.

Income Taxes
The Company have been recorded Ps. 298 million of expense tax during the third quarter of 2023, (includes a deferred income tax of Ps. 8 million) compared with the Ps. 712 million of expense for the second quarter of the same year, (includes a deferred expense tax of Ps. 1 million). 

Net Income
As a result of the foregoing, the Company recorded a net income of Ps. 1,802 million in the third quarter of 2023 compared to a net income of Ps. 987 million for the second quarter of 2023.

Comparative third quarter of 2023 vs. third quarter of 2022 

Net Sales
Net sales of the Company decreased 30% from Ps. 13,433 million during the third quarter of 2022 to Ps. 9,454 million in the third quarter of 2023. Sales in tons of finished steel decreased to 531 thousand tons in the third quarter of 2023 from 541 thousand tons in the third quarter of 2022. Sales outside of Mexico decreased 40% from Ps. 6,559 million in the third quarter of 2022 to Ps. 3,932 million in the third quarter of 2023. Mexican sales decreased 20% from Ps. 6,874 million in the third quarter of 2022 to Ps. 5,522 million in the third quarter of 2023. The average sales price decreased approximately 28% in the third quarter of 2023, compared to the same period of 2022.

Cost of Sales
Cost of sales decreased 30% in the third quarter of 2023 compared to the third quarter of 2022 from Ps. 10,271 million in the third quarter of 2022 to Ps. 7,177 million in the third quarter of 2023. With respect to sales, the cost of sales of the third quarter of 2022 represented 76% compared to 76% for the third quarter of 2023. The average cost of raw materials used to produce steel products decreased in 29%, due to a decrease of raw materials prices, mainly steel scrap. 

Gross (Loss) Profit
Gross profit of the Company for the third quarter of 2023 decreased 28% from Ps. 3,162 million in the third quarter of 2022 compared to Ps. 2,277 million in the third quarter of 2023. Gross profit as a percentage of net sales for the third quarter of 2023 was 24% compared to 24% of the third quarter of 2022. The decrease in gross profit originates mainly from a lower average sales price and a decrease in prices of some inputs.

General, Selling and Administrative Expenses
The selling, general and administrative expenses decreased 18% in the third quarter of 2023 to Ps. 485 million in the third quarter of 2023 from Ps. 595 million in the third quarter of 2022. Selling, general and administrative expense as a percentage of net sales represented 5% periods quarter 2023 compared to 4% for the third quarter of 2022.

Other Income (Expenses), net 
The company recorded other income net of Ps. 24 million in the third quarter of 2023 compared with other income net of Ps. 5 million for the third quarter of 2022. 

Operating (Loss) Income
Operating income decreased from Ps. 2,572 million in the third quarter of 2022 compared to Ps. 1,816 million in the third quarter of 2023, this represents 29% of decrease between both quarters. The operating income as a percentage of net sales was 19% in both periods of 2022 and 2023. The decrease in operating income is due to a lower average sales price and a decrease in the price of some inputs. 

Ebitda
The Ebitda of the Company decreased 27% from Ps 2,857 million in the third quarter of 2022 as a result of a net income of Ps. 1,940 million, less minority stake of Ps. 1 million, plus income taxes of Ps. 798 million, less comprehensive financial cost of Ps. 165 million, plus depreciation of Ps. 285 million to Ps. 2,079 million of the same period of 2023, as a result of a net income of Ps. 1,802 million, less minority stake of Ps. 2 million, plus income taxes of Ps. 298 million, less comprehensive financial cost of Ps. 283 million, plus depreciation of Ps. 264 million.                                                                                     

Consolidated	Comparative third quarter of 2023 vs third quarter of 2022,
Million
	Third quarter 2023		Third quarter 2022
Net income (loss)	1,802		1,940
Loss attributable to  noncontrolling interests	(2)		(1)
Net income (loss)	1,800		1,939
Depreciation, depletion and amortization	264		285
Income taxes	298		798
Financial results income (loss)	(283)		(165)
EBITDA	2,079		2,857
Items to reconciled adjusted EBITDA
Equity results and other   results in associates and joint  ventures	0		0
Dividends received and interest from associates and joint ventures (i)	0		0
Impairment and disposal of non-current assets	0		0
Adjusted EBITDA	2,079		2,857

Comprehensive Financial Cost 
Comprehensive financial cost of the Company for the third quarter of 2023 represented a net income of Ps. 283 million compared with an income of Ps. 165 million for the third quarter of 2022. The comprehensive financial cost is comprised for the net interest income of Ps. 104 million in the third quarter of 2022, compared to a net interest income of Ps. 28 million for the same period of 2023. Also record an exchange income of Ps. 30 million in the third quarter of 2022 and an exchange income of Ps. 255 million in the third quarter of 2023, and other financial income for Ps 31 million was recorded as of September 30, 2022, dividends earned on purchase of shares.

Income Taxes
The company recorded an expense tax for Ps. 298 million in the third quarter of 2023, (includes a deferred income tax of Ps. 8 million) compared to an expense tax of Ps. 798 million for the third quarter of 2022, (includes an accrual of deferred expense tax of Ps. 60 million).

Net Income (Loss)
As a result of the foregoing, the Company recorded a net income of Ps. 1,802 million in the third quarter of 2023 compared to a net income of Ps. 1,940 million for the same period of 2022.

(millions of pesos)	Jan - Sep '23		Jan - Sep '22		Year 23 vs  '22
Sales	32,401		44,012		(26 %)
Cost of Sales	24,305		32,243		(25 %)
Gross Profit	8,096		11,769		(31 %)
Selling, General and Administrative Expense	1,587		1,725		(8 %)
Other Income (Expenses), net	167		7		(2286 %)
Operating Profit	6,676		10,051		(34 %)
EBITDA	7,499		10,885		(31 %)
Net income	3,821		8,037		(52 %)
Sales Outside Mexico	13,571		20,812		(35 %)
Sales in Mexico	18,830		23,200		(19 %)
Total Sales (Tons)	1,640		1,720		(5 %)
Cost by ton	14,820		18,746		(21 %)

 

Quarter
(millions of pesos)	3Q'23	2Q '23	3Q '22	3Q´23vs   2Q´23	3Q´23 vs   3Q '22
Sales	9,454	10,122	13,433	(7 %)	(30 %)
Cost of Sales	7,177	7,510	10,271	(4 %)	(30 %)
Gross Profit	2,277	2,612	3,162	(13 %)	(28 %)
Selling, General and Adm. Expenses	485	515	595	(6 %)	(18 %)
Other Income (Expenses), net	24	85	5	(72 %)	380 %
Operating Profit	1,816	2,182	2,572	(17 %)	(29 %)
EBITDA	2,079	2,460	2,857	(15 %)	(27 %)
Net Income	1,802	987	1,940	83 %	(7 %)
Sales Outside Mexico	3,932	4,458	6,559	(12 %)	(40 %)
Sales in Mexico	5,522	5,664	6,874	(3 %)	(20 %)
Total Sales (Tons)	531	505	541	5 %	(2 %)
Cost per Tons	13,516	14,871	18,985	(9 %)	(29 %)

 

Product	Thousands of Tons Jan-Sep 2023	Millions of Pesos        Jan-Sep 2023	Average Price per Ton Jan-Sep 2023	Thousands of Tons Jan – Sep 2022	Millions of Pesos Jan- Sep 2022	Average Price per Ton  Jan-Sep 2022
Special Profiles	479	10,795	22,537	573	16,502	28,799
Commercial Profiles	1,161	21,606	18,610	1,147	27,510	23,984
Total	1,640	32,401	19,757	1,720	44,012	25,588

 

Product	Thousands of Tons Jul-Sep 2023	Millions of Pesos Jul-Sep 2023	Average Price per Ton Jul-Sep 2023	Thousands of Tons Apr-Jun 2023	Millions of Pesos Apr-Jun 2023	Average Price perTon Apr-Jun 2023	Thousands of Tons Jul-Sep 2022	Millions of Pesos Jul-Sep 2022	Average Price per Ton Jul-Sep 2022
Special Profiles	155	3,468	22,374	151	3,549	23,503	170	4,706	27,682
Commercial Profiles	376	5,986	15,920	354	6,573	18,568	371	8,727	23,523
Total	531	9,454	17,804	505	10,122	20,044	541	13,433	24,830

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 information contained herein. 

CONTACT: José Luis Tinajero
Mario Moreno Cortez
Grupo Simec, S.A.B. de C.V.
Calzada Lázaro Cárdenas 601
44440 Guadalajara, Jalisco, México
52 55 1165 1000
52 33 3770 6734

View original content:https://www.prnewswire.com/news-releases/grupo-simec-announces-results-of-operations-for-the-first-nine-months-of-2023-301967996.html

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

FAQ

What were the net sales and gross profit for the first nine months of 2023 compared to the same period in 2022?

Net sales and gross profit decreased for the first nine months of 2023 compared to the same period in 2022.

Did selling, general, and administrative expenses decrease?

Yes, selling, general, and administrative expenses decreased.

What happened to net income?

Net income decreased by 52%.

Were there any changes in liquidity and capital resources?

Liquidity and capital resources remained stable.

How did net sales and gross profit change in the third quarter of 2023 compared to the second quarter of the same year?

Net sales and gross profit decreased in the third quarter of 2023 compared to the second quarter of the same year.

What happened to operating income and Ebitda?

Operating income and Ebitda decreased in the first nine months of 2023 compared to the same period in 2022. Ebitda also decreased in the third quarter of 2023 compared to the second quarter of the same year.