Grupo Simec Announces Results Of Operations For The First Nine Months Of 2020

Rhea-AI Summary

Grupo Simec reported a 4% decline in net sales to Ps. 25,739 million for the first nine months of 2020 compared to 2019. Despite lower sales, gross profit rose 35% to Ps. 4,884 million due to a 13% reduction in cost of sales. Net income surged 117% to Ps. 3,463 million, bolstered by improved operational efficiency. In Q3 2020, net sales increased 16% year-over-year to Ps. 9,643 million, driven by higher shipment volumes. Cost per ton decreased by 3%.

Positive

• Gross profit increased 35% to Ps. 4,884 million.
• Net income surged 117% to Ps. 3,463 million.
• Operating income grew 41% to Ps. 3,784 million.
• EBITDA rose by 36% to Ps. 4,742 million.
• Sales in Q3 2020 increased 16% compared to Q3 2019.

Negative

• Net sales decreased 4% in the first nine months of 2020.
• Mexican sales were down 6% year-over-year.
• Selling, general and administrative expenses increased 19% to Ps. 1,316 million.

GUADALAJARA, Mexico, Oct. 28, 2020 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V.(NYSE: SIM; BMV: SIMEC-B) ("Simec") announced today its results of operations for the nine-month period ended September 30, 2020.

Comparative first nine months of 2020 vs. first nine months of 2019

Net Sales
Net sales of the Company decreased to Ps. 25,739 million in the first nine months of 2020 compared to Ps. 26,856 million in the first nine months of 2019. Shipments of finished steel products increased 3% to 1 million 839 thousand tons in the first nine months of 2020 compared to 1million 779 thousand tons in the first nine months of 2019. Total sales outside of Mexico in the first nine months of 2020 decreased 2% to Ps. 12,993 million compared to Ps. 13,239 million in the same period of 2019. Mexican sales decreased 6% from Ps. 13,617 million in the first nine months of 2019 to Ps. 12,746 million in the same period of 2020. The decrease in sales for the first nine months of 2020 is due to a decrease in the average selling price in 7% and it is compensated with a higher volume of shipments compared to the first nine months of 2019 (60 thousand tons equivalent to 3% increase).

Cost of Sales
Cost of sales decreased 10% from Ps. 23,232 million in the first nine months of 2019, to Ps. 20,855 million in the first nine months of 2020. Cost of sales as a percentage of net sales represented 81% in the first nine months of 2020 while in the first nine months of 2019 represented 87%. Cost of sales by steel ton decreased approximately 13% in the first nine months of 2020 over the same period of 2019 due to a lower price in inputs.

Gross Profit
Gross profit of the Company for the first nine months of 2020 increased 35% from Ps. 3,624 million in the first nine months of 2019, to Ps. 4,884 million in the first nine months of 2020. Marginal profit as percentage of net sales in the first nine months of 2020 was of 19% while in the first nine months of 2019 was of 13%. The gross profit increase is given by a lower average cost of purchase, compared to 2019

General, Selling and Administrative Expense
Selling, general and administrative expenses increased 19%, to Ps. 1,316 million in the first nine months of 2020 from Ps. 1,107 million in the same period of 2019, selling, general and administrative expenses represented 5% to the 2020 and 4% to the 2019 of the net sales for both periods.

Other Income (Expenses,) net
The Company recorded other income net for Ps. 216 million during the first nine months of 2020 while in the same period of 2019 the other income net by this concept was of Ps. 161 million.

Operating Income
Operating income increased 41% to Ps. 3,784 million for the first nine months of 2020 compared to Ps. 2,678 million in the first nine months of 2019. Operating income as percentage of net sales was 15% in the first nine months of 2020 and 10% in the same period of 2019. The increase in operating income is due to a better average cost during the nine months ended September 30, 2020 compared to the same period in 2019.

Ebitda
The Ebitda increased 36%, from Ps. 3,481 million in the first nine months of 2019 as a result of a net income of Ps. 1,593 million, less minority stake of Ps. 128 million, plus income taxes of Ps. 306 million, plus comprehensive financial cost of Ps. 907 million, plus depreciation of Ps. 803 million to Ps 4,742 million in the same period of 2020 as a result of a net income of Ps. 3,463 million, less minority stake of Ps. 3 million, plus income taxes of Ps. 1,303 million, less comprehensive financial cost of Ps. 979 million, plus depreciation of Ps. 958.

Comprehensive Financial Cost
Comprehensive financial cost for the first nine months of 2020 represented an income of Ps. 979 million compared with an expense of Ps. 907 million for the first nine months of 2019. The net interest income was of Ps. 39 million for the first nine months of 2020, compared with a net interest income of Ps. 131 million in the same period of 2019. Likewise, we record an exchange income of Ps. 940 million in the first nine months of 2020 compared with an exchange loss of Ps. 1,038 million in the first nine months of 2019 due to the increased slip in the exchange rate of the Ps. against the dollar of 18.6% in the first nine months of 2020.

Income Taxes
The Company recorded an expense of Ps.1,303 million for the net income tax during the first nine months of 2020, (includes a deferred expense tax of Ps. 15 million) compared with an expense of Ps. 306 million of income tax for the first nine months of 2019 (includes a deferred income tax of Ps. 74 million).

Net Income
As a result of the foregoing, the Company recorded an increase in net income of 117% to pass of Ps. 1,593 million in the first nine months of 2019 to Ps. 3,463 million of the same periods of 2020.

Liquidity and Capital Resources
At September 30, 2020, Simec's total consolidated debt consisted of U.S. $ 302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 6.8 million (accrued interest on September 30, 2020 was U.S. $ 643,000, or Ps. 14.4 million).  At December 31, 2019, Simec's total consolidated debt consisted of U.S. $ 302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 5.9 million (accrued interest on December 31, 2019 was U.S. $ 658,000, or Ps. 12.9 million).

Comparative third quarter of 2020 vs. second quarter of 2020

Net Sales
Net sales of the Company increased to pass of Ps. 7,596 million during the second quarter of 2020 to Ps. 9,643 million in the third quarter of 2020. Shipments of finished steel products increased to 676 thousand tons in the third quarter of 2020 from 540 thousand tons in the second quarter of the same year. Total sales outside of Mexico in the third quarter of 2020 increased 18% to get to Ps. 4,824 million compared to Ps. 4,072 million of the second quarter of the same year. Mexican sales in the third quarter of 2020 increased to Ps. 4,819 million compared to Ps. 3,524 million in the second quarter of the same year. The average selling price increased 1% in the third quarter of 2020 compared to the second quarter of the same year.

Cost of Sales
Cost of sales increased to P s. 7,682 million in the third quarter of 2020 from Ps. 6,213 million in the second quarter of 2020. Cost of sales as a percentage of net sales represented 80% in the third quarter of 2020 and 82% in the second quarter of the same year. The cost of sales by ton decrease 1% in the third quarter of 2020 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 2020 increased 42% to pass of Ps. 1,383 million in the second quarter of 2020 to Ps. 1,961 million in the third quarter of same year. Gross profit as a percentage of net sales in the third quarter of 2020 was of 20% compared to 18% in the second quarter of the same year. The increased in the gross profit is due to the volume shipped in the third quarter compared to the second quarter of 2020. 

General, Selling and Administrative Expense
Selling, general and administrative expense increased 3% to pass of Ps. 436 million in the second quarter of 2020 to Ps. 449 million in the third quarter of the same year, and as percentage of net sales represented 6% in the second quarter and 5% in the third quarter of the same year.

Other (Expenses) Income, net
The Company recorded other income net for Ps. 56 million during the third quarter of 2020 compared to other income net for Ps. 58 million in the second quarter of 2020.

Operating Income
The Operating income was of Ps. 1,568 million in the third quarter of 2020 compared to Ps. 1,005 million in the second quarter of the same year. Operating income as percentage of net sales represented 16% for the third quarter of 2020 and 13% for the second quarter of 2020.

Ebitda
The Ebitda show an increase of 43%, to pass of Ps 1,325 million in the second quarter of 2020 as a result of a net income of Ps. 546 million, plus minority stake of Ps. 17 million, plus income taxes of Ps. 373 million, plus comprehensive financial cost of Ps. 69 million, plus depreciation of Ps. 320 million to Ps. 1,891 million in the third quarter of the same year as a result of a net income of Ps. 1,003 million, less minority stake of Ps. 1 million, plus income taxes of Ps. 352 million, plus comprehensive financial cost of Ps. 214 million, plus depreciation of Ps. 323 million.

Comprehensive Financial Cost
Comprehensive financial cost of the Company in the third quarter of 2020 represented an expense of Ps. 214 million compared with an expense of Ps. 69 million for the second quarter of 2020. The comprehensive financial cost is comprised for: the net interest expense of Ps. 6 million in the third quarter of 2020 compared to net interest income of 1 million in the second quarter of the same year. Also, we record a net exchange loss of Ps. 208 million in the third quarter of 2020 compared a net exchange loss of Ps. 70 million in the second quarter of the same year.

Income Taxes
The Company have been recorded Ps. 352 million of expense tax during the third quarter of 2020, (includes a deferred expense tax of Ps. 18 million) compared with the Ps. 373 million of expense for the second quarter of the same year, (includes a deferred expense tax of Ps. 9 million).

Net Income
As a result of the foregoing, the Company recorded a net income of Ps. 1,003 million in the third quarter of 2020 compared to a net income of Ps. 546 million for the second quarter of 2020.

Comparative third quarter of 2020 vs. third quarter of 2019

Net Sales
Net sales of the Company increased 16% from Ps. 8,328 million during the third quarter of 2019 to Ps. 9,643 million in the third quarter of 2020. Sales in tons of finished steel increased to 676 thousand tons in the third quarter of 2020 from 596 thousand tons in the third quarter of 2019. Sales outside of Mexico increased 16 from Ps. 4,148 million in the third quarter of 2019 to Ps. 4,824 million in the third quarter of 2020. Mexican sales increased 15% from Ps. 4,180 million in the third quarter of 2019 to Ps. 4,819 million in the third quarter of 2020. The average sales price increased approximately 2% in the third quarter of 2020, compared to the same period of 2019.

Cost of Sales
Cost of sales increased 10% in the third quarter of 2020 compared to the third quarter of 2019 from Ps. 6,996 million in the third quarter of 2019 to Ps. 7,682 million in the third quarter of 2020. With respect to sales, the cost of sales of the third quarter of 2019 represented 84% compared to 80% for the third quarter of 2020. The average cost of raw materials used to produce steel products decreased in 3%, due to a decrease of raw materials prices.

Gross (Loss) Profit
Gross profit of the Company for the third quarter of 2020 increased 47% from Ps. 1,332 million in the third quarter of 2019 compared to Ps. 1,961 million in the third quarter of 2020. Gross profit as a percentage of net sales for the third quarter of 2020 was 20% compared to 16% of the third quarter of 2019. The increase in gross profit is given by to higher volume of products shipped.

General, Selling and Administrative Expense
The selling, general and administrative expense increased 4% in the third quarter of 2020 to Ps. 449 million in the third quarter of 2020 from Ps. 433 million in the third quarter of 2019. Selling, general and administrative expense as a percentage of net sales represented 5% in the third quarter of 2020 and 5% in the third quarter of 2019.

Other Income (Expenses), net
The company recorded other income net of Ps. 56 million in the third quarter of 2020 compared with other income net of Ps. 7 million for the third quarter of 2019.

Operating (Loss) Income
Operating income increased from Ps. 906 million in the third quarter of 2019 compared to Ps. 1,568 million in the third quarter of 2020, this represent 73% of increase between both quarters. The operating income as a percentage of net sales was 16% for the third quarter of 2020 compared to 11% for the third quarter of 2019. The increase in the operating income is due to higher volume of products shipped.

Ebitda
The Ebitda of the Company increased 62% from Ps 1,169 million in the third quarter of 2019 as a result of a net income of Ps. 817 million, less minority stake of Ps. 38 million, plus income taxes of Ps. 129 million, less comprehensive financial cost of Ps. 2 million, plus depreciation of Ps. 263 million to Ps. 1,891 million of the same period of 2020, as a result of a net income of Ps. 1,003 million, less minority stake of Ps. 1 million, plus income taxes of Ps. 352 million, plus comprehensive financial cost of Ps. 214 million, plus depreciation of Ps. 323 million.

Comprehensive Financial Cost
Comprehensive financial cost of the Company for the third quarter of 2020 represented a net expense of Ps. 214 million compared with an income of Ps. 2 million for the third quarter of 2019. The comprehensive financial cost is comprised for: the net interest income of Ps. 101 million in the third quarter of 2019, compared to a net interest expense of Ps. 6 million for the same period of 2020. Also record an exchange loss of Ps. 99 million in the third quarter of 2019 and an exchange loss of Ps. 208 million in the third quarter of 2020.

Income Taxes
The company recorded an expense tax for Ps. 352 million in the third quarter of 2020, (includes a deferred expense tax of Ps. 18 million) compared to an expense tax of Ps. 129 million for the third quarter of 2019, (includes an accrual of deferred income tax of Ps. 47 million).

Net Income (Loss)
As a result of the foregoing, the Company recorded a net income of Ps. 1,003 million in the third quarter of 2020 compared to a net income of Ps. 817 million for the same period of 2019.

(millions of pesos)	Jan - Sep '20		Jan - Sep '19		Year 20 vs  '19
Sales	25,739		26,856		(4%)
Cost of Sales	20,855		23,232		(10%)
Gross Profit	4,884		3,624		35%
Selling, General and Administrative Expense	1.316		1,107		19%
Other Income (Expenses), net	216		161		34%
Operating Profit	3,784		2,678		41%
EBITDA	4,742		3,481		36%
Net income	3,463		1,593		117%
Sales Outside Mexico	12,993		13,239		(2%)
Sales in Mexico	12,746		13,617		(6%)
Total Sales (Tons)	1,839		1,779		3%
Cost by ton	11,340		13,059		(13%)

    

Quarter
(millions of pesos)	3Q'20	2Q '20	3Q '19	3Q´20vs 2Q´20	3Q´20 vs 3Q '19
Sales	9,643	7,596	8,328	27%	16%
Cost of Sales	7,682	6,213	6,996	24%	10%
Gross Profit	1,961	1,383	1,332	42%	47%
Selling, General and Adm. Expenses	449	436	433	3%	4%
Other Income (Expenses), net	56	58	7	(3%)	700%
Operating Profit	1,568	1,005	906	56%	73%
EBITDA	1,891	1,325	1,169	43%	62%
Net Income	1,003	546	817	84%	23%
Sales Outside Mexico	4,824	4,072	4,148	18%	16%
Sales in Mexico	4,819	3,524	4,180	37%	15%
Total Sales (Tons)	676	540	596	25%	13%
Cost per Tons	11,364	11,506	11,738	(1%)	(3%)

     

Product	Thousands of Tons Jan-Sep 2020	Million of Pesos          Jan-Sep 2020	Average Price per Ton Jan-Sep 2020	Thousands of Tons Jan – Sep 2019	Million of Pesos      Jan- Sep 2019	Average Price per Ton  Jan-Sep 2019
Special Profiles	571	9,695	16,979	659	12,342	18,728
Commercial Profiles	1,268	16,044	12,653	1,120	14,514	12,959
Total	1,839	25,739	13,996	1,779	26,856	15,096

    

Product	Thousands of Tons Jul-Sep 2020	Million of Pesos     Jul-Sep 2020	Average Price per Ton Jul-Sep 2020	Thousands of Tons Apr-Jun 2020	Million of Pesos     Apr-Jun 2020	Average Price per Ton Apr-Jun 2020	Thousands of Tons          Jul-Sep 2019	Million of Pesos           Jul-Sep 2019	Average Price per Ton          Jul-Sep 2019
Special Profiles	215	3,551	16,516	132	2,424	18,363	206	3,595	17,451
Commercial Profiles	461	6,092	13,215	408	5,172	12,676	390	4,733	12,136
Total	676	9,643	14,265	540	7,596	14,066	596	8,328	13,973

  

Contact: Jose Luis Tinajero R
Mario Moreno Cortez
Grupo Simec, S.A.B. de C.V.
Calzada Lazaro Cárdenas 601
44440 Guadalajara, Jalisco, México
52 55 1165 1025
52 33 3770 6734

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

FAQ

What was Grupo Simec's net income for the first nine months of 2020?

Grupo Simec reported a net income of Ps. 3,463 million for the first nine months of 2020.

How much did net sales decline in 2020 compared to 2019?

Net sales for Grupo Simec decreased by 4% in the first nine months of 2020 compared to the same period in 2019.

What is the EBITDA figure for Grupo Simec for the first nine months of 2020?

Grupo Simec's EBITDA for the first nine months of 2020 was Ps. 4,742 million.

How did Grupo Simec's cost of sales change in 2020?

Cost of sales decreased 10% in the first nine months of 2020 compared to 2019.

What were the sales figures for Grupo Simec in Q3 2020?

In Q3 2020, Grupo Simec reported net sales of Ps. 9,643 million, a 16% increase from Q3 2019.