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GCC Reports Third Quarter 2009 Results Company Registers Growth in Consolidated Sales, EBITDA and Free Cash Flow CHIHUAHUA, Mexico--(BUSINESS WIRE)--Grupo Cementos de Chihuahua, S.A.B. de C.V. (“GCC” or “the Company”)
(BMV:GCC*), a leading cement and concrete producer in the markets where
it competes in Mexico, the United States and Bolivia, today announced
consolidated results for the quarter ended September 30, 2009. Consolidated net sales rose 6.9% and 7.9% in the third quarter and first nine months of 2009 respectively, compared to the same periods of last year. Similarly, EBITDA rose 9.5% and 3.5% in the third quarter and nine months over the year ago periods. EBITDA margin was 32.5% in the third quarter, higher than in the same period of last year. Free cash flow was 73.8% and 169.2% greater than in the third quarter and first nine months of 2008, respectively. Highlights from the quarter
FINANCIAL RESULTS Net Sales in the third quarter of 2009 rose 6.9% over the year ago period, totaling $2,776.3 million pesos. This rise was the result of a 14.2% increase in the United States and 54.6% in Bolivia, as well as a 22.9% decline in Mexico. In the United States, sales in pesos rose 14.2% compared to the third quarter of 2008, as a result of a more favorable pricing environment in cement and concrete, and the depreciation of the peso against the dollar. The public infrastructure and commercial sectors were strongest, while there was a slowdown in residential activity. In Mexico, sales totaled $603.5 million pesos in the third quarter of 2009, a lower figure than in the year ago period. The DIY and industrial (maquiladoras) sectors were the primary drivers of sales; there was a better pricing environment in cement but lower volumes across all products due to the delayed start of infrastructure and housing projects. GCC’s proportional sales in Bolivia rose 54.6% during the third quarter of 2009, compared to the same period of last year. This strong increase was due to greater demand in the DIY and public sectors, as well as the depreciation of the peso against the Bolivia peso. Consolidated net sales rose 7.9% in the first nine months of 2009, compared to the year ago period.
The Cost of Sales in the third quarter of the year was $1,920.0 million pesos and represented 69.2% of sales. In Mexico, variable costs declined 5.8 percentage points as a percentage of sales, compared to the third quarter of 2008, reflecting lower energy and freight costs and lower operating expenses and payroll as a result of cost reduction initiatives. In the United States, variable and production costs declined 1.3 and 1.0 percentage points as a percentage of sales respectively, compared to the third quarter of 2008. This reduction partially offset the impact of the higher exchange rate between the peso and dollar. At the consolidated level, the cost of sales reflected the depreciation of the peso against the dollar and the Bolivian peso, as well as greater depreciation. During the first nine months of 2009, the cost of sales was $5,120.3 million pesos. In Mexico, variable costs declined 4.0 percentage points as a percentage of sales compared to the year ago period. In the United States, there was a 0.2 percentage point reduction in the cost of production as a percentage of sales, partially offsetting the effect of the depreciation of the peso against the dollar. Sales and Administrative Expenses in the third quarter of 2009 were $220.3 million pesos. Due to the expense reduction program implemented in the beginning of the year, these expenses declined 7.9% and 16.0% in Mexico and the United States respectively compared to the third quarter of 2008. The increase in these expenses on the consolidated level is primarily the result of the depreciation of the peso against the dollar and the Bolivian peso, as well as higher expenses in Bolivia due to an increase in personnel. In the first nine months of 2009, sales and administrative expenses were $684.5 million pesos. In Mexico and the United States, these expenses declined 4.4% and 4.5% respectively compared to the first nine months of 2008. Operating Income in the third quarter of 2009 rose 3.3% over the year ago period and totaled $636.0 million pesos. In the first nine months of 2009, operating income was $1,224.6 million pesos. EBITDA in the third quarter of the year rose 9.5% over the same quarter of last year and comprised 32.5% of sales, 0.8 percentage points higher than in the third quarter of 2008. In the first nine months of 2009, EBITDA rose 3.5% compared to the same period of last year and totaled $2,016.0 million pesos. GCC registered Other Expenses of $26.9 million pesos in the third quarter of 2009. In the first nine months of 2009 other expenses totaled $68.4 million pesos. The Comprehensive Financing Result in the third quarter of the year was a $353.2 million peso cost compared to a $162.6 million peso cost registered in the same period of last year. This variation is due to higher net financial expenses resulting from the depreciation of the peso against the dollar and an increase in the cost of debt due to the renegotiation of financing terms. In the first nine months of 2009, the comprehensive financing result was a $596.3 million peso cost compared to a $252.0 million peso cost in the year ago period. This variation is the result of higher net financial expenses and an exchange loss. Consolidated Net Income was $209.2 million pesos, lower than the $353.7 million pesos registered in the third quarter of 2008, due primarily to higher comprehensive financing costs. Net income in the first nine months of 2009 was $468.6 million pesos. Free Cash Flow was $886.2 million pesos in the third quarter of the year, compared to $509.9 million pesos registered in the third quarter of 2008. This increase in free cash flow is mainly the result of a combination of the following factors: higher EBITDA, a decrease in working capital as a result of initiatives implemented to reduce it, lower taxes paid in cash and lower capital expenditures. In the first nine months of 2009, GCC generated free cash flow of $1,326.2 million, compared to the $492.7 million pesos in the same period of last year, as a result of the aforementioned factors.
GCC’s Interest-Bearing Debt in pesos as of September 30, 2009 was $10,138.7 million pesos. Net debt totaled $8,584.1 million pesos.
GCC’s Total Assets as of September 30, 2009 totaled $26,364.6 million pesos, an increase of 20.5% compared to the same period of last year, reflecting an increase in the value of assets in the United States due to the depreciation of the peso against the dollar, as well as the following projects: the modernization of the Chihuahua plant, the dry mix plant, the concrete panels plant and the aggregates plant in Samalayuca. Other Developments GCC signed a temporary waiver and extension with its creditors, under which they shall refrain from any rights they may have under their debt contracts. The Company continues negotiations to reach a satisfactory final agreement with its creditors. BASIS OF PREPARATION OF FINANCIAL STATEMENTS All figures herein were prepared in accordance with Mexican Financial Reporting Standards, and are expressed in nominal Mexican pesos, except for long-term debt at September 30, 2009, which was not reported as short-term debt as required by Mexican Financial Reporting Standards in cases where breaches of debt agreement covenants were not renegotiated before September 30, 2009. Unless otherwise stated, all percentage changes refer to the 2009 figures compared to those of 2008. GCC consolidates its 47.02% stake in Sociedad Boliviana de Cemento, S.A. (SOBOCE) and subsidiaries in which it holds common control. The consolidation is undertaken in accordance with the proportional consolidation method set out in International Accounting Standards “Financial Reporting of Interest in Joint Ventures" (IAS 31). Pro forma results excluding SOBOCE are provided in the full financial statements. ABOUT GCC GCC is a leading supplier of cement, aggregates, concrete and construction-related services in Mexico and the United States, and holds a significant share in Bolivia’s largest cement company. The Company’s annual cement production capacity is 5.0 million tons. Founded in 1941, the Company’s shares trade on the Mexican Stock Exchange under the ticker symbol GCC*. This document contains forward-looking statements relating to Grupo Cementos de Chihuahua S.A.B. de C.V. and subsidiaries (GCC) based upon management projections. These projections reflect GCC’s opinion on future events that may be subject to a number of risks and uncertainties. Various factors may cause actual results to differ from those expressed herein, including, among others, changes in macroeconomic, political, governmental or business conditions in the markets where GCC operates; changes in interest rates, inflation rates and currency exchange rates; construction industry performance; pricing, business strategy and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. GCC assumes no obligation to update or correct the information contained in this press release. (Full financial statements are available on GCC’s website at www.gcc.com) Contact: Grupo Cementos de Chihuahua Luis Carlos Arias, (52) 614.442.3217 Víctor Barriguete, (52) 614.442.3189 inversionistas@gcc.com Source: Grupo Cementos de Chihuahua, S.A.B. de C.V.
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