/raid1/www/Hosts/bankrupt/TCRLA_Public/040728.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, July 28, 2004, Vol. 5, Issue 148
Headlines
A R G E N T I N A
ASOCIACION CULTURAL: Initiates Bankruptcy Proceedings
CONSTRUCTORA BERUTTI: Claims Validation Deadline Approaches
CORBIET S.A.: Court OKs Restructuring Request
CORES Y COMPANA: Court Orders Liquidation
JUAN MINETTI: Common Shares Boosted to Category 1 Level
JUAN STABIO: Court Elevates Liquidation to Reorganization
HENRI BLANC: Court Posts New Liquidation Schedule
HERNANDEZ Y CIA: Trustee Readies Individual Reports
KERFOL: Reports Submission Schedule Set
LUCCA SPINELLO: Individual Reports Due Friday
NII HOLDINGS: SEC Says Resale Registration Statement Effective
SOCIEDAD DE BENEFICENCIA: Restructuring Approval Now Official
TRANA S.A.: Court Schedules Informational Meeting
B R A Z I L
KLABIN: Domestic Sales Push Net Revenue to BRL660M
PARMALAT: Restructuring Plan Gets Government Approval
PARMALAT: Raises Profitability in First Half 2004
TAM: Buys 10 Airbus A320 Aircraft
C H I L E
TELEFONICA CTC: TEM Accepts Adjusted Price for Mobile Unit
M E X I C O
GRUPO MEXICO: Decision to Strike at Cananea Delayed Till Aug 10
GRUPO SIMEC: Net Sales Soar 66% in 1H 2004
TV AZTECA: Posts $82M 2Q04 EBITDA
VITRO: Records Strong 2Q04 Performance
N I C A R A G U A
* Russia Cancels Nicaragua's Remaining Debt
P A R A G U A Y
* Republic of Paraguay Long-Term Ratings Raised to 'B-'
V E N E Z U E L A
EDC: Fitch Affirms Ratings At 'B-'
- - - - - - - - - -
=================
A R G E N T I N A
=================
ASOCIACION CULTURAL: Initiates Bankruptcy Proceedings
-----------------------------------------------------
A local commercial court in Salta declared Asociacion Cultural
Educativa S.R.L. (A.C.E. S.R.L.) "Quiebra," reports Infobae.
Mr. Luis Enrique Garcia Bes, who has been appointed as trustee,
will verify creditors' claims until August 27, 2004 and then
prepare the individual reports based on the results of the
verification process.
The individual reports will be submitted in court on October 8,
2004, followed by the general report on November 19, 2004.
CONTACT: Mr. Luis Enrique Garcia Bes, Trustee
Las Higueras 104
Salta
CONSTRUCTORA BERUTTI: Claims Validation Deadline Approaches
-----------------------------------------------------------
Creditors of bankrupt firm Constructora Berutti S.A. must
present proofs of their claims to Ms. Maria Isabel Carrizo, the
court-appointed trustee, before the verification period closes
on Friday, July 30, 2004. Failure to submit claims before the
deadline will mean disqualification from any post-liquidation
payments that will be conducted.
CONTACT: Constructora Berutti S.A.
Alem 1399
Banfield
Lomas de Zamora
Ms. Maria Isabel Carrizo, Trustee
Alem 271
Montegrande
Lomas de Zamora
CORBIET S.A.: Court OKs Restructuring Request
---------------------------------------------
Corbiet S.A. is ready to outline a settlement plan for its
creditors after Court No. 6 of Cordoba's Civil and Commercial
Tribunal approved its "concurso preventivo" petition, relates
Infobae. The company will be placed under the oversight of a
court-appointed trustee during the course of the reorganization.
CONTACT: Corbiet S.A.
Leandro N. Alem 734
Buenos Aires
CORES Y COMPANA: Court Orders Liquidation
-----------------------------------------
Lomas de Zamora based Cores Y Compana S.A. prepares to wind-up
its operations after Court No. 11 of the city's Civil and
Commercial Tribunal ordered its liquidation.
The declaration effectively prohibits the company from
administering its assets, control of which will be transferred
to a court-appointed trustee.
Mr. Pedro Bonis will serve as trustee during the Company's
liquidation, says Infobae. He will be reviewing creditors'
proofs of claims until September 14, 2004. The verified claims
will be used as basis for the individual reports to be presented
for court approval on October 27, 2004. The trustee will also
submit a general report on November 24, 2004.
CONTACT: Mr. Pedro Bonis, Trustee
Del Valle Iberlucea 3027
Lanus
JUAN MINETTI: Common Shares Boosted to Category 1 Level
-------------------------------------------------------
Fitch Ratings raised its rating on the ordinary shares of
Argentina's second largest cement company, Juan Minetti, to
Category 1 from Category 2. The rating, according to Business
News Americas, reflects the stock's high market liquidity, with
Buenos Aires stock market presence percentages of 99%.
In June, the Company, controlled by Swiss cement giant Holcim,
paid bank and financial creditors US$13 million as part of a
debt restructuring. At the end of 2003, increased sales and a
successful financial restructuring helped Minetti post a net
profit of ARS121 million, recovering from a net loss of ARS210
million the year before.
CONTACT: Juan Minetti SA
87 Ituzaingo
Cordoba
Argentina 5000
Phone: +54 51 26 7529
Fax: +54 51 24 4709
Home Page: http://www.juanminetti.com.ar
Contacts:
Dr. Manuel Augusto J. Baltazar Ferrer, Chairman
Atty. Carlos Buhler, Executive Vice Chairman & General
Manager
JUAN STABIO: Court Elevates Liquidation to Reorganization
---------------------------------------------------------
Jaun Stabio S.A. proceeds with reorganization after Court No. 2
of the Cordoba Civil and Commercial Tribunal converted the
Company's ongoing bankruptcy into a "concurso preventivo",
states Infobae.
Under Insolvency protection, the Company will be able to draft a
proposal designed to settle its debts with creditors. The
reorganization also prevents the Company's outright liquidation.
Mr. Victorino Americo Castro will supervise the proceedings as
the court-appointed trustee.
CONTACT: Mr. Victorino Americo Castro, Trustee
Larra¤aga 62
Cordoba
HENRI BLANC: Court Posts New Liquidation Schedule
-------------------------------------------------
Court No. 4 of Mar del Plata's Civil and Commercial Tribunal has
reset the timetable for the Henri Blanc S.A. bankruptcy to the
following dates:
1. Claims Verification deadline - August 19, 2004
2. Individual Reports submission - September 30, 2004
3. General Report submission - November 11, 2004.
Infobae reports that Mr. Alberto Jose Iturralde will supervise
the bankruptcy proceedings as the court-appointed trustee. All
claims must be submitted to the trustee before the verification
deadline in order to qualify for any post-liquidation payments.
Clerk No. 7 assists the court on this case.
CONTACT: Mr. Alberto Jose Iturralde, Trustee
25 de Mayo 2980
Mar del Plata
HERNANDEZ Y CIA: Trustee Readies Individual Reports
---------------------------------------------------
Cordoba Court No. 3 is set to receive individual reports on the
Hernandez y Cia S.R.L. bankruptcy case on Friday, July 30,2004.
Mr. Carlos Alberto Ortiz, the trustee, will prepare these
reports from claims forwarded by creditors during the
verification period.
CONTACT: Hernandez y Cia S.R.L.
Ovidio Lagos 216
Cordoba
Mr. Carlos Alberto Ortiz, Trustee
Arturo M Bas 60
Cordoba
KERFOL: Reports Submission Schedule Set
---------------------------------------
Mr. Pablo Kademian, the trustee supervising the liquidation of
Kerfol Corporation S.A., will submit validated individual claims
for court approval on August 6, 2004. These reports explain the
basis for the accepted and rejected claims. The trustee will
also submit a general report of the bankruptcy on November 15,
2004.
Infobae states that Corodoba Court No. 2 has jurisdiction over
this bankruptcy case.
CONTACT: Kerfol Corporation S.A.
General Paz 2720
Cordoba
Mr. Pablo Kademian, Trustee
Coronel Olmedo 51
Cordoba
LUCCA SPINELLO: Individual Reports Due Friday
---------------------------------------------
Mr. Romualdo A. Caniza, the trustee overseeing the liquidation
of Lucca Spinello S.R.L., is scheduled to present individual
reports in court on Friday, July 30, 2004. These reports are
based on the claims forwarded by the company's creditors during
the verification period, which closed last May 31, 2004.
Infobae reports that Salta Court No. 2 has jurisdiction over
this case.
CONTACT: CONTACT: Lucca Spinello S.R.L.
F de Gurruchaga 88
Salta
NII HOLDINGS: SEC Says Resale Registration Statement Effective
--------------------------------------------------------------
NII Holdings, Inc. (Nasdaq: NIHD - News) announced Monday that
the Securities and Exchange Commission declared effective at
12:00 p.m., July 22, 2004 its registration statement on Form S-3
for the resale by selling security holders of notes and
underlying shares of common stock relating to its $300 million
aggregate principal amount 2 7/8% convertible notes due 2034.
The notes were privately placed in January and February 2004 and
were subject to a registration rights agreement. The filing and
subsequent effectiveness of the registration statement satisfies
NII's requirements under the registration rights agreement.
NII Holdings, Inc., a publicly held company based in Reston,
Va., is a leading provider of mobile communications for business
customers in Latin America. NII Holdings, Inc. has operations in
Argentina, Brazil, Mexico and Peru, offering a fully integrated
wireless communications tool with digital cellular service,
text/numeric paging, wireless Internet access and Nextel Direct
Connectr, a digital two-way radio feature. NII Holdings, Inc.
trades on the Nasdaq market under the symbol NIHD.
Nextel, the Nextel logo, Nextel Online, Nextel Business Networks
and Nextel Direct Connect are trademarks and/or service marks of
Nextel Communications, Inc.
CONTACTS: Investor Relations
Mr. Tim Perrott
(703) 390-5113
tim.perrott@nii.com
Media Relations
Ms. Claudia E. Restrepo
(786) 251-7020
claudia.restrepo@nii.com
Web Site: www.nii.com
SOCIEDAD DE BENEFICENCIA: Restructuring Approval Now Official
-------------------------------------------------------------
Court No. 6 of Cordoba's Civil and Commercial Tribunal approved
the reorganization petition filed by Sociedad de Beneficencia
Hospital Italiano, says Infobae. Under insolvency protection,
the Company will be able to draft a settlement plan for its
creditors in order to avoid a straight liquidation.
CONTACT: Sociedad de Beneficencia Hospital Italiano
Roma 550
Cordoba
TRANA S.A.: Court Schedules Informational Meeting
-------------------------------------------------
Trana S.A., a company operating in the city of San Luis, is
slated to present a debt restructuring plan to its creditors
during the informative assembly on December 12, 2004.
Court No. 1 of the city's Civil and Commercial Tribunal
authorized Trana's reorganization after the Company defaulted on
its debt payments.
CONTACT: Trana S.A.
Gutierrez 470
San Luis
===========
B R A Z I L
===========
KLABIN: Domestic Sales Push Net Revenue to BRL660M
--------------------------------------------------
Highlights:
- Sales volume totaled 330 thousand tons.
- Net revenue amounted to R$ 660 million.
- Net revenue in the domestic market reached R$ 450 million.
- Exports revenue reached US$ 69 million, accounting for 32% of
the total net revenue.
- Cash generation (EBITDA) totaled R$ 230 million.
Net revenue in the 2Q04 reached R$ 660 million, 14% and 5%
higher than in the 2Q03 and 1Q04, respectively, mainly due to
the increase in the domestic market revenue which topped up to
R$ 450 million. Net profit within the quarter amounted to R$ 111
million, totaling R$ 231 million in the first half.
The preferred share liquidity level of Klabin in the first half
of 2004 was more than twice the level relative to the same
period in 2003, presenting an average daily traded volume of R$
4,707 thousand (R$ 2,116 thousand 1H03).
Initial Considerations:
As the restructuring process completed in 2003 does not permit
an appropriate comparison among the Company's 2Q04, 2Q03, 1H04
and 1H03 operating and financial figures, pro forma financial
statements have been prepared for 2Q03 and 1H03, disregarding
all the business operations that are no longer part of Klabin
S.A.
The information presented on the Company's operations and
finances in 2Q04, 2Q03 and 1Q04 consists of consolidated figures
stated in local currency as per Brazilian Accounting Rules,
except where otherwise indicated.
Economic and Financial Performance:
Sales Volume and Net Revenue
Sales volume, excluding wood, totaled 330 thousand tons in the
2Q04, up 15% from 2Q03 and down 3% from 1Q04. The sales volume
in 1H04 topped 670 thousand tons, that is, 17% higher than 1H03.
Exports sales volume in 2Q04 totaled 135 thousand tons, 18%
higher than 2Q03 (114.2 thousand tons) and 16% lower than 1Q04
(160.3 thousand tons). This reduction is due to extra shipment
in 1Q04 that had been retained in ports in 4Q03.
Exports share in sales volume amounted to 41% in 2Q04. During
1H04 exports volume reached 295 thousand tons, accounting for a
36% increase compared to 1H03 (217 thousand tons). Exports share
in sales volume in 1H04 amounted to 44% (38% in 1H03). This
increase in exports figure is due, mainly, to the production
shift from newsprint to kraftliner at the machine 6 in Monte
Alegre (PR) which occurred in April 2003.
Domestic market sales amounted to 195 thousand tons in 2Q04, up
12% and 8% from 2Q03 and 1Q04 respectively. This volume reached
375 thousand tons in 1S04, 6% higher than 1S03.
Net revenue (including wood) reached R$ 660 million in 2Q04, up
14% and 5% from 2Q03 and 1Q04 respectively while totaling R$
1,290 million in 1H04, 11% higher than in 1H03.
Exports share in net revenue remained steady in 2Q04 mainly
because Real devaluated 6.8%, which compensated for the
reduction in exports sales volume.
Operating Result
Gross profit amounted to R$ 298 million, up 14% from 2Q03 and 3%
from 1Q04.
Operating result before financial expenses (EBIT) reached R$ 171
million in 2Q04, up 22% from 2Q03 and steady when compared to
1Q04.
Operating margin in 2Q04 totaled 26%, versus 24% in 2Q03 and 28%
in 1Q04. In 1H04 the margin was 27%, down 3 percentage points
from 1H03. This reduction is due to the increase in selling
expenses, which are mainly affected by exports freight. In 2Q04
freight expenses amounted to R$ 52 million versus R$ 43 million
in 2Q03, a 21% rise. In 1H04 it totaled R$ 99 million versus R$
80 million in 1H03, a 24% rise.
EBITDA
Operating cash generation (EBITDA) amounted to R$ 230 million in
2Q04, unchanged when compared to 1Q04 and up 13% from 2Q03.
Within the first half, the EBITDA totaled R$ 460 million, down
4% from 1H03. EBITDA margin reached 35% in 2Q04, slightly lower
than the 1Q04. In 1H04 the margin was 36%.
Financial Results and Indebtedness
Net financial expenses amounted to R$ 41 million in 2Q04 versus
R$ 22 million in 1Q04. This increase is a result of 6.8%
devaluation of the Real against the U.S. dollar compared to
1Q04.
In 1H04 the EBITDA/Net Financial Expenses ratio was 7.3 x. Net
debt rose from R$ 513 million at the end of 2003 to R$ 581
million in June 2004. In April 12th the Company paid R$ 200
million in dividends.
The Company's financial strategy consists in extending the terms
to maturity of its debt repayments and reducing its average cost
of debt while increasing the percentage share of funding in
Brazilian Reais. At the end of June 2004, long -term gross debt
represented 75% of total indebtedness, versus 66% in late 2003.
Debt denominated in local currency represented 45% from the
total, in June 2004, versus 38% in December 2004. The average
term to maturity was increased to 26 months in 2Q04 (as compared
to 21 months in 4Q03), with due dates extending to 2010.
Debt denominated in foreign currency amounted to US$ 266 million
or 55% of Klabin's total indebtedness. Eighty-two percent (82%)
of this amount refers to trade finance (natural hedging). Hedge
as of June 30th 2004 totaled US$ 127 million. Net debt
corresponds to 22% of Total Capitalization, and the Net
Debt/EBITDA ratio is 0.6x.
Net Result
The net profit reported in 2Q04 was R$ 111 million (R$ 120
million in 1Q04). Net profit of 1H04 reached R$ 231 million.
Earnings per share totaled R$ 0.25.
Business Evolution
PACKAGING PAPER
The packaging paper exports volume, which consists of boards and
kraftliner, amounted to 122 thousand tons in 2Q04, down 20% from
1Q04. This reduction is due to extra shipment in 1Q04 that had
been retained in ports in 4Q03.
Despite difficulties in shipping products abroad over 2Q04 -
e.g. federal tax auditors on strike and a severe shortage of
ships and containers - the exports volume of packaging paper in
2Q04 was up 15% versus 2Q03.
The beginning of the recovery in Brazilian economy in 2Q04
enabled 15% of increase in comparison to 1Q04 in the sales
volume of packaging paper in the domestic market.
Klabin's packaging paper mills are running at full capacity.
BOARDS
Boards sales totaled 78 thousand tons in 2Q04, up 18% from 2Q03
and 9% from 1Q04. The net revenue amounted to R$ 150 million, up
10% from 2Q03 and 6% from 1Q04.
A highlight in this business segment in 2Q04 was the domestic
market sales growth, which totaled 59 thousand tons, 15% higher
than that of 2Q03 and 1Q04. Exports volume amounted to 19
thousand tons, up 29% from 2Q03 and down 6% from 1Q04. Exports
revenue reached R$ 42 million in 2Q04 (up 44% from 2Q03 and down
6% from 1Q04. Domestic market net revenue amounted to R$ 109
million, up 1% from 2Q03 and 12% from 1Q04.
The strategy of the board segment aims to double its capacity of
320 thousand tons/year to 650 thousand tons/year focusing on the
international market. To achieve this, the customer base is
being enlarged with new international partnerships. In this
sense, the main goal of the commercial department is to acquire
new customers for the boards "Carrier Board" and "Folding Box
Board", especially in Europe, United States and Asia.
Liquid Packaging Board (LPB) strategy involves strengthening the
partnership with Tetra Pak by enlarging the current share in
China and developing new consumer markets, mainly within the
south hemisphere, consolidating the Company as a Tetra Pak's
Global Supplier.
KRAFTLINER
Kraftliner sales volume totaled 115 thousand tons in 2Q04, a 12%
growth compared to 2Q03 and a 19% drop compared to 1Q04. Net
revenue reached R$ 146 million, 18% higher than 2Q03 and 4%
lower tha n 1Q04.
Kraftliner exports totaled 103 thousand tons in 2Q04, up 14%
from 2Q03 and down 21% from 1Q04. This reduction is also due to
extra shipment in 1Q04 that had been retained in ports in 4Q03.
The exports net revenue reached R$ 133 million, a 22% increase
over 2Q03 and a 5% drop from 1Q04. The negative difference over
the exported volume has not reflected over net revenue because
of price increases and the 6.8% exchange devaluation in the
2Q04.
Kraftliner's price delivered to Northern Europe has reassured
its recovering tendency in 2Q04, being on average US$ 430 / ton,
higher than 1Q04 (US$ 410).
CORRUGATED BOXES
Brazilian shipments of corrugated boxes, sheet and accessories
totaled 528 thousand tons in 2Q04 (up 16% from 2Q03), totaling
1,019 thousand tons in the semester, 11% higher than the same
period the year before, as per preliminary data provided by the
Brazilian Association of Corrugated Boxes Manufacturers (ABPO).
This growth is mostly driven by exporters and by domestic
economy recovery.
Klabin has maintained its leadership in this business segment,
with a sales volume of 102 thousand tons in 2Q04, up 15% and 10%
from 2Q03 and 1Q04, respectively. Sales volume over the semester
reached 195 thousand tons, 6% higher than 1H03. Net revenue
reached R$ 194 million in 2Q04, up 6% and 9% from 2Q03 and 1Q04.
The reference price level for corrugated boxes has been kept. On
the other hand, costs are being impelled by freight, diesel, OCC
and PIS/ COFINS rates increases causing pressure over the
margins.
Recycled paper mills are now working full capacity, while
corrugated boxes plants run at their 90% printers' capacity.
Klabin's strategy for this segment consists in the following:
1. obtain a sustainable return on capital investments,
2. develop new products and become the prime supplier for buyers
of packaging products, by offering customers technical support
for their use and adding value to such products through greater
competitiveness, higher quality and timely delivery.
BAGS AND ENVELOPES
Sales volume totaled 29 thousand tons in 2Q04, up 5% from 2Q03
and 3% from 1Q04. Net revenue amounted to R$ 87 million in 2Q04,
increasing 14% in relation to 2Q03 and 8% when compared to 1Q04.
A highlight in the domestic market was the amount sold to
customers engaged in agribusiness (seeds), which grew 15% in
comparison with the same period last year.
The building industry showed some improvement in 2Q04, therefore
bringing cement bags sales up 14% from 1Q04. This reflects
government's actions that had been promised for this sector.
Despite all the obstacles to the outflow of products through
Brazilian ports, exports sales reached 8 thousand tons in 2Q04,
up 10% and 9% from 2Q03 and 1Q04 respectively accounting for 27%
of the Company's total sales volume (against 26% and 25% in 2Q03
and 1Q04 respectively).
Main buyers of such products are Mexico, Venezuela, Costa Rica,
Panama, Nicaragua and the Dominican Republic. Exports net
revenue reached R$ 22 million, up 16% from 2Q03 and 8% from
1Q04.
WOOD
Klabin harvested 2 million tons of pine and eucalyptus logs in
2Q04, 1.2 million tons of which were transferred to its own
mills in Paran , Santa Catarina and Sao Paulo. Sales to third
parties amounted to 824 thousand tons in 2Q04, up 51% from 2Q03
and 9% from 1Q04. Such increase is due to the high demand from
the American building industry. Net revenue from sales to third
parties totaled R$ 71 million, an increase of 44% and 16% when
compared to 2Q03 and 1Q04, respectively.
At the end of 2Q04, Klabin owned 351 thousand hectares of
forestlands, including 184 thousand hectares of planted forests
and 120 thousand hectares of preserved native forests.
Capital Expenditures
The investments made in the first half of 2004 and the year
forecasts are as follows:
R$ Million 1H04 2004
Debottlenecking project
in Monte Alegre 43 156
Packaging and Recycled Paper 17 40
Environment project
in Santa Catarina 10 30
Forestry: planting and maintenance 12 61
Current Investments and
other projects 28 113
Total 110 400
Klabin's preferred shares (KLBN4) were quoted at R$ 4.10 at the
end of trading on June 30th, 2004.
KLBN4 dropped 2.1% in 2Q04 while Ibovespa [Sao Paulo Stock
Exchange Index] fell 4.5%. The second quarter of 2004 registered
11,826 transactions involving 76 million of preferred shares.
In 2Q04 there was a significant increase in the liquidity level
of Klabin's preferred shares, with an average daily traded
volume of R$ 4,773 thousand (versus R$ 3,599 thousand in 2Q03).
The capital stock of Klabin S.A. as of June 30th, 2004 was
represented by 918.8 million shares, segregated as follows:
317.0 million common shares and 601.8 million preferred shares.
The Company had 1.1 million treasury stocks on that date.
DIVIDENDS
On April 12, 2004, shareholders received complementary dividends
in a total amount of R$ 200 million, that is, R$ 0.20479 per
common share (ON) and R$ 0.22527 per preferred share (PN).
Company stocks went into ex-dividend trading on April 1st, 2004.
Thus, the total dividends related to the fiscal year of 2003 was
R$ 266 million or 28% of the retained earnings over the same
period, net of the legal reserve (5%).
CORPORATE GOVERNANCE
In addition to integrating the Ibovespa stock portfolio, Klabin
is regarded as a Level I Corporation in terms of corporate
governance by the Sao Paulo Stock Exchange, meaning that it has
assumed the commitment to provide open and clear information to
investors and stockholders.
This seal is also a token of Klabin's ethical conduct and
profound respect for the environment and local communities
around the areas where its industrial facilities have been
installed.
From May 2004 on, Klabin's preferred shares were added to the
MSCI EM Index (Morgan Stanley Capital International Inc. -
Emerging Markets).
In 2003, Klabin began implementing modern management techniques
oriented towards the creation of value, by aligning its tools
for investment analysis, business profitability evaluation and
remuneration. Highlighting the EVA. EVA is currently implemented
in all units and it is used for investment analysis and business
performance analysis.
Outlook
The consistent operational results presented in 2Q04 and 1H04
reveal the company's successful strategy, focusing on the
following business segments:
1. Wood for self paper supply and log sales;
2. Packaging paper. Supplying for own corrugated boxes and bag
conversion units and kraftliner production oriented to exports
(over 70% of the total);
3. Liquid Packaging Board (LPB), including a 100% supplying for
both domestic and Latin America markets as well as a growing
share in global markets;
4. Packaging board for a number of different products and
markets, specially: powder soap, groceries, frozen and
refrigerated food such as pizza, hamburger, nuggets and others.
In addition to multiple packaging board found in containers of
beer, yogurt, etc. Sales include the domestic market and a
growing international market share.
5. Corrugated boxes used mainly in the domestic market shipment,
displaying boards for advertisement in grocery outlets as well
as highly added-valued boxes for the packaging of tobacco and
rubber for both domestic and exports markets;
6. Bags and envelopes, with special attention to cement and seed
bags, 25% of which meant for the export market.
Second quarter of 2004 witnessed an improvement in the domestic
market, which made up for part of the contraction in the exports
volume for the quarter.
The shortage of containers and break bulk ships seen in the
first semester still lingers on, causing shipment delays and
higher freight costs. Klabin holds long-term contracts with
break-bulk ship brokers responsible for the company's main
export destination (Europe) to where the costs raised up to 10%
in dollars.
As to the markets in Asia, Middle East and Central America,
where there's the need for containers, prices have gone up to 25
to 30% in dollars.
Exports in the 1H04 accounted for 44% of the total sales volume
and 33% of the net revenue. The company's main goal is to bring
the exports net revenue up to 40% of the total net revenue. In
order to do so, the company shall announce, by the end of 2004,
an expansion project which will take the production of packaging
boards and papers from 1.5 million tons/year to 2 million
tons/year, with emphasis on the increment of the board
production capacity from current 320 thousand tons/year to 650
thousand tons/year.
This increase in the production capacity will be focused on
export markets. Capex for 2004 will amount to R$ 400 million. As
previously announced, the debottlenecking Project at Monte
Alegre (PR) will increase the production as of the beginning of
2005 as follows: 100 thousand tons of pulp for own supply, 30
thousand tons of Kraftliner for exports and 20 thousand tons of
sack kraft which will supply the bag production units.
We call the attention for the investment on forest planting,
which should increase the net planted area in 8,000 ha (15,000
ha planted and 7,000 ha cut down).
The company is also investing on the conversion and recycling
units as well as the paper machines so as to increase their
competitive advantage.
The environmental awareness increases as Klabin invests on
bettering the gas emission control systems at the paper plants
in Santa Catarina.
The adoption of the EVA system as a business managing and
investment nalysis tool will help with the directions
established by the Company Administration in the creation of
value to the shareholders.
In addition, the company has set financial policy goals based on
the guidelines below:
1. Net debt/ EBITDA less than 1.5 x;
2. Net debt / Total Capitalization at 35 / 65.
To view financial statements, visit:
http://bankrupt.com/misc/KLBY_2Q04.doc
CONTACT: Mr. Ronald Seckelmann
Financial and IR Director
Mr. Luiz Marciano Candalaft
IR Manager
Ph: +55 (11) 3225-4045
marciano@klabin.com.br
Ms. Tatiana Milan
IR Analyst
Ph: +55 (11) 3225-4046
tmilan@klabin.com.br
Web Site: www.klabin.com.br
PARMALAT: Restructuring Plan Gets Government Approval
-----------------------------------------------------
Minister for Production Activities, in agreement with the
Minister of Agriculture and Forestry Policy, approves on July
23rd 2004 Parmalat Restructuring Plan:
- Minister's approval signals conclusion after seven months of
the first phase of Parmalat's restructuring.
- Decision triggers steps that will conclude in a vote of
creditors on the proposed Composition with Creditors contained
within the Restructuring Plan.
- The Extraordinary Commissioner has made amendments to the Plan
and to the proposed Composition with Creditors, taking into
account comments by creditors and MPA, Rules governing Board of
Directors of Assumptor.
- Dividend policy connected to future proceeds from claw back
and other legal actions established.
- Committee to be established to advise Assumptor's Chief
Executive on contentious issues arising out of the insolvency of
companies subject to the proposed Composition with Creditors.
- Threshold for allocation of warrants to creditors increased to
cover the first 650 shares (previously the first 500 shares)ú
According to Delegated Judge's decisions and as soon as
possible, the final Plan (approved by MPA) and the final
proposed Composition with Creditors will be available to view on
the Parmalat website (www.parmalat.com), section "Extr.
Admin.",sub-section "Parmalat Restructuring Plan"
A. Approval by the Ministry of Production Activities of
Restructuring Plan and proposed Composition with Creditors.
The Minister of Production Activities ("MPA") Antonio Marzano,
in agreement with the Minister of Agriculture and Forestry
Policy Gianni Alemanno, has today approved on July 23rd 2004 the
Restructuring Plan for Parmalat (the "Plan"), together with the
proposed Composition with Creditors (the "Agreement") filed by
Extraordinary Commissioner Dr.
Enrico Bondi on 21 June 2004.
This clears the way, under the terms of Law 5/7/04 no. 166 (the
"Law") for the following steps to be taken:
1. Within three days, according Article 4-bis, comma 4, of the
Law, the Restructuring Plan as approved by the MPA and the
Agreement will be transmitted to the Court of Parma;
2. With procedures to be addressed by the Delegated Judge,
Publication of extracts of the Extraordinary Commissioner's
report on the causes of the Group's insolvency and attached the
list of creditors indicating their respective claims and pre-
emption rights and the Plan according to Article 4, commas 2 and
2-bis, of the Law;
3. Publication of the Agreement and the provision by which the
Delegated Judge will establish the date by which creditors and
any other interested party can communicate to the Court their
comments on the List of Creditors as referred to in the previous
point according to Article 4-bis, comma 5, of the Law;
4. During the sixty days following the end of the period
referred to in point 3 above, the Delegated Judge, working with
the Extraordinary Commissioner, will work to produce the
definitive lists of accepted claims, claims accepted with
reservation and excluded claims indicating the relevant quantum
of such claims according to Article 4-bis, commas 6 to 9 of the
Law as well as the setting of the final date for possible
challenges to these lists according to Article 4-bis, comma 7,
of the Law (respectively fifteen and thirty days for creditors
resident in Italy and outside Italy);
5. At the same time as the Lists mentioned in point 4 above are
made available, the Delegated Judge will set the terms and the
timing within the sixty day period under which accepted claims
and claims accepted with reservation will be called to vote on
the proposed Composition with Creditors. He will also establish
the criteria by which holders
of financial instruments whose total value has been recognized
for voting purposes will be eligible to vote.
6. Announcement of the public availability of list of creditors
and decree by Delegated Judge regarding the foregoing points 4
and 5 The Agreement will be approved if it receives a favourable
vote from creditors representing the majority of claims as
defined Article 4-bis, commas 8 and 9 of the Law.
B. Changes proposed by the MPA and applied to the Plan and the
Agreement
Also taking into account comments by creditors and MPA, the
Extraordinary Commissioner has made amendments to the Plan and
to the Agreement. These relate to the following:
a) The Plan and the draft By-laws of the Assumptor have been
modified in order to set in place temporary rules for the
composition of the Assumptor's Board of Directors until such
time as at least 50.1 % of the shares representing the corporate
share capital has been assigned to shareholders other than the
Foundation Creditori Parmalat and in any case for no longer than
12 months from the date of registration in the Companies'
Register of the purchase of the entire corporate capital of the
company by the Foundation Creditori Parmalat. More precisely:
(i) until the first general shareholder meeting to take place
following the approval of the Agreement, the Board of Directors
should be composed of three members (these as indicated in the
Agreement) with the Chairman having all the necessary powers to
carry out all the ordinary and extraordinary administration of
the business;
(ii) from the point at which the general shareholder meeting
gives its approval to the above in point (i) until at least
50.1% of the shares representing the share capital of the
Assumptor has been assigned to shareholders other than the
Foundation Creditori Parmalat, the Board of Directors should be
composed of at least seven members of whom three should be
independent;
(iii) once the Foundation Creditori Parmalat has distributed to
creditors at least 50.1% of the share capital of the Assumptor
and in any case no later than the period indicated above in sub-
point (ii), the Board of Directors of the Assumptor will
automatically resign and call a meeting of shareholders to name
a new Board of Directors according to the By-laws of the
company. The relevant modification has been made to Chapter VII
of the Plan.
b) The Agreement has been modified in order to accommodate the
distribution to shareholders of the Assumptor of 50% of
distributable profits arising from the next 15 years' annual
results of the Assumptor, including any eventual proceeds
derived from revocatory actions or actions for damages
(including out of court settlements).
The Agreement also foresees that in the case that the
distributable profits for any single year represent less than 1%
of the capital of the company, no distribution will take place
but this sum will be brought forward to be distributed with the
profits of future years once the percentage figure indicated
above has been reached.
c) The Agreement has been revised to accommodate the commitment
by the Assumptor to establish, within the Board of Directors of
the Assumptor a Committee composed of a majority of independent
directors to act in an advisory capacity to the Chief Executive
Officer in relation to contentious issues arising from the
insolvency of those companies that are subject to the Agreement
(e.g. relating to revocatory actions, actions for damages,
actions relating to personal liability). Meetings of this
Committee will be attended by the Chief Counsel of the
Assumptor.
The rules governing the Committee will provide that should any
member of the Board of Directors of the Assumptor or of the
Committee find himself in conflict of interest as a result of
relations and/or connections with any person against which the
Assumptor is making a claim, the Director and/or Member of the
Committee in conflict of interest must abstain from voting on
the relevant motions of the Board of Directors and/or of the
Committee and not take part in any meetings where matters
relating to any claim or action which give rise to the Directors
and/or Committee Members conflict of interest are discussed.
d) The Plan and Agreement have been modified to accommodate the
granting of a warrant for each share allocated to creditors
covering the first 650 shares rather than the first 500 shares
as previously proposed. This change has been also made to
Chapter VI of the Plan.
The rest of the Plan remains as already posted (in the non-final
version prior to the approval of the MPA) on the Parmalat
website on 14 July 2004 and as referred to in the press release
of the same day to which readers are directed for further
details of the Plan.
According to Delegated Judge's decisions and as soon as possible
the Plan and the Agreement, including the modifications listed
above, in final version as approved by the MPA will be available
to view on the Parmalat website (section "Extr.
Admin.",subsection "Parmalat Restructuring Plan").
It should be noted that in the final version of the Plan a
number of minor errors have been corrected and some explanatory
notes have been inserted in order to render the document more
accessible.
CONTACT: Parmalat Finanziaria
Sede amministrativa:
20122 Milano - Piazza Erculea, 9
Tel.: (39) 02.8068801
Fax: (39) 02.8693863
e-mail: x_affari_societari_it@parmalat.net
Web Site: www.parmalat.com
PARMALAT: Raises Profitability in First Half 2004
-------------------------------------------------
- Group revenues lower at EUR2.37 billion (2003: EUR2.68
billion)
- Group Ebitda higher at EUR79.4 million (2003: EUR73.6 million)
- Italy, South Africa, Canada and Australia are strongest Core
Activity Ebitda performers
- Parmalat Group Net Financial Position substantially stable
Parmalat Finanziaria S.p.A. in Extraordinary dministration
communicates the financial resutls for the Parmalat Group as at
30 June 2004.
Core Activities:
Parmalat's Core Activity revenues have generally held up well
when compared to the same period in the previous year
(EUR1,784.8 million compared to EUR1,820.3 million), while
Ebitda improved by 7.9% to EUR124.6 million compared to EUR115.4
for the same period in 2003.
This improvement in operating results is largely down to
initiatives of a commercial nature and thanks to operating and
structural cost reduction measures.
In particular, reviewing the Group's main geographical areas of
operation, the following can be noted:
Italy
Revenues for the period reached EUR692.0 million, down 6.8%
compared to the EUR742.7 million recorded in the same period in
2003. But while revenues fell, Ebitda improved by 17.1% from
EUR40.4 million at 30 June 2003 to EUR47.3 at 30 June 2004.
The trend therefore remains a positive one even if somewhat
reduced compared to the previous months as a result of a lower
contribution from fruit juices compared to the same period last
year owing to the different weather conditions and to the
seasonality of pasteurized milk the level of whose sales fall in
the summer months and which has translated into a lower
contrbution to results.
Spain
Revenues for the period were EUR114.3 million compared to the
EUR115.5 million achieved as at 30 June 2003. Ebitda for the
same period was down from EUR11.3 million to EUR7.9 million. The
factors underlying the decrease in Ebitda were an 8% increase in
the cost of milk and a lower contribution from the seasonally
influenced Royne branded ice creams given the less clement
weather conditions than were seen in the same period last year.
South Africa
Revenues as at 30 June 2004 of EUR113.1 million grew 30.9%
compared to the EUR86.4 million of the same period in 2003.
Ebitda also grew significantly from EUR6.7 million to EUR9.3
million (+38.8%). This increase in profitability was principally
due to the acquisition of new brands (Simonsberg) as well as the
appreciation of the South African Rand against the Euro (+7.5%).
Venezuela
The absence of sufficient credit lines for the import of raw
materials (powdered milk) led to a reduction in revenues which
fell from EUR 96.5 million as at 30 June 2003 to EUR74.8 million
as the end of Maggio 2004 (- 22.5%) and, above all, the strong
decrease in operating profitability which fell from EUR13.5
million to EUR2.1 million as a result of increased raw material
costs in the local market and higher relative structural costs.
Canada
The Canadian market maintained the slight growth trend of the
previous months at the revenue level moving from EUR546.2
million to EUR557.6 million, while Ebitda of EUR35.6 million at
the end of Jine 2004 was stable compared to the same period in
2003 (EUR35.7 million).
Australia
Revenues reached EUR182.6 million, up 4.2% compared to the
EUR175.3 million of the same period in 2003. Similarly, Ebitda
for the period was EUR13.8 million compared to EUR12.7 million
last year (+8.7%). The improvement in results derives from the
favorable movement of exchange rates, and, at the Ebitda level
also from a reduction in general and promotional costs.
Non-Core Activities and Activities Subject to Special
Procedures"
The negative result for the businesses covered under these
headings is mainly down to the performance of the Brazilian and
US operations.
Brazil
Revenues fell from EUR183.8 million to EUR66.0 million (-64.1%)
while Ebitda worsened from a negative EUR13.1 to a negative
EUR21.6 million as a result of the serious financial crisis
faced by the company. This said, the continuing pick-up in sales
should be noted.
The Brazilian business has filed all the documentation necessary
to be admitted to the Concordata procedure and is currently
awaiting the response of the presiding Judge.
USA
The consolidated figures show a reduction in revenues (from
EUR409.7 million as at 30 June 2003 to EUR342.4 million as at 30
June 2004) and a reduction in operating results which fell from
a negative EUR6.1 million in the period in 2003 to a negative
EUR8.5 million at the end of June 2004.
The Dairy activities were hit by the Group's serious financial
crisis and have been placed under Chapter 11 protection. This
crisis has resulted in a significant reduction in revenues and a
worsening of Ebitda.
The Bakery activities saw a reduction in revenues but a
significant improvement in operating profitability (even if this
remains in negative territory) thanks to the restructuring and
reorganistaion process now under way in the business.
Net Financial Position
Highlights
Values in millions
of Euros Situation Situation
as at as at
30 June 2004 31 December 2003
Short term
financial assets (143.1) (121.4)
of which:
Liquid financial assets (9.6) (20.9)
Available liquidity (133.5) (100.5)
Accruals on financial assets (62.4) (61.9)
Total short term
financial assets (205.5) (183.3)
Financial debt 13,768.9 13,457.5
Accruals on
financial liabilities 260.1 256.2
Total financial
liabilities 14,029.0 13,713.7
Financial indebtedness
/(Positive fin. position) 13,823.5 13,530.4
In addition, further financial debt if EUR132 million must be
taken into account in relation to the situation as at 31
December 2003 relating to companies that are not totally
consolidated and towards connected and controlling companies.
This amount is substantially unchanged as at 30 June 2004
compared to 31 December 2003.
The above figures still contain an element of uncertainty as
regards some of the companies in the Group that are subject to
restrictions as a result of local procedures (in particular
Brazil and US Dairy).
Financial debt should be considered as being largely short-term
in nature, given the current situation of theoretical default on
the covenants underlying the financial contracts.
A number of companies are currently in talks to renegotiate
their debt in order to consolidate it. Amongst these it should
be noted that the Group's Canadian operating companies have
finalized during the course of July the refinancing of their
debt. This entailed a EUR43.7 million penalty for the early
redemption of the previous debt as a result of the default
situation in which the company found itself. Following payment
of this penalty new financing was put in place that will be
repaid by 2012 and that has been included in the calculation of
the Group's financial position as at 30 June of this year.
Even given the above, the Group's net financial position is
substantially unchanged and has been effected by two factors:
1. on the asset side there has been an increase in the level of
available liquidity, thanks largely to the attention paid to the
management of available resources and to the disposal of
Parmalat S.p.A.'s holdings in MCC S.p.A. and Banca di Roma
S.p.A. and of Parmalat Finanziaria S.p.A.'s disposal of its
holding in Fondo Alfieri.
2. On the liability side there has been a small increase almost
entirely resulting from a worsening of the rate of exchange
between the Euro and currencies in countries outside Europe
where the Group operates, and an increase in accruals for
liabilities for interest. No use has been made until now of the
line of credit of EUR105.8 million provided by a pool of banks
on 4 March 2004.
Significant Events in June and July:
The following summarises the principal events that occured
during the course of June and July up until the date of this
announcement and which have already been communicated via
specific press releases.
4 June - Meeting with creditors to present the key aspects of
the Group's Industrial and Financial Restructuring Plan.
7 June - The filing of requests for insolvency with the Court of
Parma by the Group's German based companies, Deutsche Parmalat
Gmbh and Parmalat Molkerei Gmbh, controlled by Parmalat Spa in
Extraordinary Administration. The companies, by decree of the
Ministry of Production Activities, were admitted on 3 June 2004
to the Extraordinary Administratiion procedure and Dott. Enrico
Bondi was appointed Extraordinary Commissioner for the above
companies.
21 June - Filing with the Minister of Production Activities
Onorevole Antonio Marzano of the Restructuring Plan for the
Parmalat Group companies subject to the Proposed Composition
with Creditors.
22 June - Publication of the draft text of the new Parmalat's
corporate governance.
12 July - Completion of the refinancing of the Group's Canadian
sunbsidiaries.
14 July - Communication of the recovery ratios featured in the
Proposed Composition with Creditors and publication of sections
of the Group's Restructuring Plan in a non-final version.
19 July - Publication of the financial and economic situation of
Parmalat S.p.A. in Extraordinary Administration, Parmalat
Finanziaria S.p.A. in Extraordinary Administration and a
consolidated statement for the Parmalat Group. In relation to
the latter a short report was published covering the Group's
business performance along with the Auditor's Report.
19 July - Divestment of the assets of Parmalat de Mexico SA de
CV and signing of contracts covering brand licencing.
CONTACT: Parmalat Finanziaria
Sede amministrativa:
20122 Milano - Piazza Erculea, 9
Tel.: (39) 02.8068801
Fax: (39) 02.8693863
e-mail: x_affari_societari_it@parmalat.net
Web Site: www.parmalat.com
TAM: Buys 10 Airbus A320 Aircraft
---------------------------------
TAM Linhas Aereas SA, Brazil's second-biggest airline, is buying
10 Airbus passenger jets for an undisclosed transaction. The
move is part of the airline's planned fleet expansion as an
economic recovery boosts demand for air travel.
Delivery of the A320s will take place over a four-year period
starting next year, TAM said. TAM also has an option to buy 20
more Airbus 320s and will decide whether to exercise those
options after reviewing prospects for the air passenger market
in South America, the airline said.
The carrier already has 53 Airbus jets.
In the first quarter of the year, TAM reported net income of
BRL17 million (US$5.5 million) compared with a loss of BRL88
million in the same period a year earlier.
The airline is looking to raise between US$100 million and
US$200 million early next year by selling stock in Sao Paulo and
New York. The planned issue aims to reinforce TAM's cash
position.
The deal would effectively be an initial public offering for
TAM, which currently lists only about 0.5% of its stock on the
Sao Paulo market. Brazil's Rolim family owns 73% of the
airline's capital, while investment funds hold the remaining
27%.
CONTACT: TAM - Linhas Aereas
Av. Jurandir, 856
Jd. Aeroporto - Sao Paulo - SP
Zip code: 04072-000
PABX: (011) 5582-8811
Web site: http://www.tam.com.br
=========
C H I L E
=========
TELEFONICA CTC: TEM Accepts Adjusted Price for Mobile Unit
----------------------------------------------------------
Telefonica Moviles (TEM) accepted the terms of the proposal of
Telefonica CTC Chile (CTC) for the acquisition by TEM of 100% of
the shares of Telefonica Movil Chile, a subsidiary of CTC.
The price offered by TEM for the purchase of 100% of the shares
of Telefonica Movil Chile was US$1.007 billion. TEM assumes the
debt of Telefonica Movil Chile, which at 31 March 2004 stood at
US$243 million.
CTC has notified Telefonica Moviles that on 15 July 2004, the
extraordinary shareholders' meeting of CTC accepted the purchase
offer made by Telefonica Moviles, provided the price was
increased by up to a maximum of US$51 million, to compensate for
the fiscal cost of the transaction to CTC. The remainder of the
conditions proposed by Telefonica Moviles in its offer of 18 May
2004 have not been modified.
After the notification from CTC was analyzed by the Board of
Directors of TEM, the purchase/sale contract was signed on July
23, by which TEM acquires 100% of the shares of Telefonica Movil
Chile. CTC is 43.6% owned by the Telefonica Group. TEM has been
managing Telefonica Movil Chile, S.A. since 2000.
CONTACT: Ms. Sofia Chellew (schelle@ctc.cl)
Ms. Veronica Gaete (vgaete@ctc.cl)
Mr. Maria Jose Rodriguez (mjrodri@ctc.cl)
Ms. Florencia Acosta (macosta@ctc.cl)
TELEFONICA CTC CHILE
Tel.: 562-691-3867
Fax: 562-691-2392
Web Site: www.telefonicactcchile.cl
===========
M E X I C O
===========
GRUPO MEXICO: Decision to Strike at Cananea Delayed Till Aug 10
---------------------------------------------------------------
An official from the National Mining, Metallurgical and Similar
Workers Union said the group extended a strike decision at Grupo
Mexico's Cananea copper mine from July 26 to August 10. But
while workers at Cananea continued negotiating, workers at Grupo
Mexico's La Caridad copper mine entered their third week of
protest.
Both La Caridad and Cananea are located in the northwestern
state of Sonora, across the border from Arizona. Workers from
both mines are seeking profit-sharing, payment of overtime and
temporary promotions, as well as improved safety measures and a
return in the size of work crews to between 11 and 14.
Already, Mexican labor officials have declared the La Caridad
strike illegal, urging the strikers to go back to work.
The ruling also blocks a possible strike at the Cananea mine.
CONTACT: Mr. German Larrea Mota Velasco
Chairman & CEO
GRUPO MEXICO
Av. Baja California No. 200
Colonia Roma Sur
06760 Mexico, D.F.
Tel. Conm. 52 (55) 5080-0050
GRUPO SIMEC: Net Sales Soar 66% in 1H 2004
------------------------------------------
Grupo Simec, S.A. de C.V. (Amex: SIM - News; "Simec") announced
Monday its results of operations for the six-month period ended
June 30, 2004. Net sales increased 66% to Ps. 2,199 million in
the first six months of 2004, compared to Ps. 1,323 million in
the same period of 2003, primarily due to higher finished
product prices and also resulting from higher production levels.
Primarily as a result of the foregoing, Simec recorded net
income of Ps. 546 million in the first half of 2004 versus net
income of Ps. 165 million for the first half of 2003.
In May 2004, Simec announced that it intends to acquire the
Mexican steel manufacturing facilities of Industrias Ferricas
del Norte, S.A. If consummated, this transaction is expected to
significantly increase Simec's installed capacity, its net sales
and the number of its employees. The purchase price of the
acquisition is $92 million, and Simec will also incur certain
taxes and expenses in connection with the acquisition of the
properties. Simec will acquire the inventories, land, buildings,
machinery and equipment and will assume liabilities associated
with seniority premiums of employees. On July 12, 2004, the
shareholders of Simec approved this transaction at an
extraordinary shareholders' meeting.
Simec sold 327,329 metric tons of basic steel products during
the six-month period ended June 30, 2004, an increase of 7% as
compared to 304,989 metric tons in the same period of 2003.
Exports of basic steel products were 50,340 metric tons in the
first half of 2004 versus 34,031 metric tons in the same period
of 2003. Additionally, Simec sold 39,512 tons of billet in the
six-month period ended June 30, 2004, as compared to 27,636 tons
of billet in the same period of 2003. Prices of finished
products sold in the first six months of 2004 increased 52% in
real terms versus the same period of 2003.
Simec's direct cost of sales was Ps. 1,293 million in the six-
month period ended June 30, 2004, or 59% of net sales, versus
Ps. 870 million, or 66% of net sales, for the 2003 period.
Indirect manufacturing, selling, general and administrative
expenses (including depreciation) was Ps. 232 million during the
six-month period ended June 30, 2004, compared to Ps. 240
million in the same period of 2003.
Simec's operating income increased 216% to Ps. 674 million
during the six-month period ended June 30, 2004, from Ps. 213
million in the second quarter of 2003. Operating income was 31%
of net sales in the six-month period ended June 30, 2004,
compared to 16% of net sales in the same period of 2003.
Simec recorded other income, net, from other financial
operations of Ps. 12 million in the six-month period ended June
30, 2004, compared to other income, net, of Ps. 1 million in the
same period of 2003. In addition, Simec recorded a provision for
income tax and employee profit sharing of Ps. 137 million in the
six-month period ended June 30, 2004, versus a provision of Ps.
22 million in the same period of 2003.
Simec recorded financial expense of Ps. 3 million in the six-
month period ended June 30, 2004, compared to financial expense
of Ps. 27 million in the same period of 2003 as a result of (i)
no net interest expense in the six-month period ended June 30,
2004, compared to net interest expense of Ps. 15 million in the
same period of 2003; (ii) an exchange gain of Ps. 8 million in
the six-month period ended June 30, 2004, compared to an
exchange loss of Ps. 15 million in the same period of 2003,
reflecting lower debt during the six-month period ended June 30,
2004, and a decrease of 1.6% in the value of the peso versus the
dollar in each of the six-month periods ended June 30, 2004, and
in the 2003 period; and (iii) a loss from monetary position of
Ps. 11 million in the six-month period ended June 30, 2004,
compared to a gain from monetary position of Ps. 3 million in
the same period of 2003, reflecting the domestic inflation rate
of 1.6% in the six-month period ended June 30, 2004, compared to
the domestic inflation rate of 1.2% in the same period in 2003
and lower debt levels during the 2004 period.
At June 30, 2004, Simec's total consolidated debt consisted of
US$302,000 of 8-7/8% MTN's due 1998 (accrued interest at June
30, 2004, was $269,108), which were issued in 1993 as part of a
$68 million issuance. At December 31, 2003, Simec had
outstanding approximately $2 million of U.S. dollar- denominated
debt. Simec's lower debt level at June 30, 2004, reflected the
prepayment of $1.7 million of the remainder of its bank debt in
March 2004.
All figures were prepared in accordance with Mexican generally
accepted accounting principles and are stated in constant Pesos
at June 30, 2004.
Simec is a mini-mill steel producer in Mexico and manufactures a
broad range of non-flat structural steel products.
CONTACT: Grupo Simec SA de CV
Calzada Lazaro Cardenas #601
Guadalajara
Jalisco, 44440,
Email: simecweb@prodigy.net.mx
Web Site: www.simec.com.mx
TV AZTECA: Posts $82M 2Q04 EBITDA
---------------------------------
TV Azteca, S.A. de C.V. (NYSE: TZA; BMV: TVAZTCA), one of the
two largest producers of Spanish language television programming
in the world, announced Monday all-time high second quarter net
sales of Ps.1,971 million (US$173 million), up 5% from the same
period of 2003. Second quarter EBITDA was Ps.930 million (US$82
million), 1% above the same period a year ago, and a six-year
record high for a second quarter. EBITDA margin for the quarter
was 47%.
"Dynamic operations in Mexico and in the U.S. allowed for
continued sales growth and solid profitability," said Carlos
Hesles, Chief Financial Officer of TV Azteca. "Consistent with
the plan for uses of cash, we geared our positive results to
further debt reductions while preserving a sound cash position.
During the quarter we also made distributions to shareholders of
US$33 million."
As previously detailed, the company's plan for uses of cash
entails reducing TV Azteca's debt by approximately US$250
million, and making cash distributions to shareholders above
US$500 million by 2008.
Second Quarter Results:
Net sales grew 5% to a record high of Ps.1,971 million (US$173
million), up from Ps.1,874 million (US$164 million) for the same
quarter of 2003. Total costs and expenses rose 9% to Ps.1,041
million (US$91 million), from Ps.957 million (US$84 million) for
the same period of last year. As a result, the company reported
EBITDA of Ps.930 million (US$82 million), 1% higher than Ps.917
million (US$80 million) in the second quarter of 2003. Net
income was Ps.443 million (US$39 million), 23% below the net
income of Ps.574 million (US$50 million) for the same period of
2003.
On a proforma basis, excluding revenue and costs recorded in the
second quarter of the prior year in connection with the
political advertising for the 2003 mid-term elections, of Ps.110
million (US$10 million) and Ps.18 million (US$2 million),
respectively, net sales grew 12% and EBITDA 13%.
Millions of pesos(1) and dollars(2)
except percentages and per share amounts.
2Q 2003 2Q 2004 Change
US$ %
Net Sales
Pesos Ps. 1,874 Ps. 1,971
US$ US$ 164 US$ 173 9 +5%
EBITDA(3)
Pesos Ps. 917 Ps. 930
US$ US$ 80 US$ 82 2 +1%
Net Income
Pesos Ps. 574 Ps. 443
US$ US$ 50 US$ 39 (11) -23%
Income per ADS4
Pesos Ps. 3.07 Ps. 2.36
US$ US$ 0.27 US$ 0.21 (0.06) -23%
Notes:
1 Pesos of constant purchasing power as of June 30, 2004.
2 Conversion based on the exchange rate of Ps.11.41 per US
dollar as of June 30, 2004.
3 EBITDA is Profit Before Depreciation and Amortization under
Mexican GAAP.
4 Calculated based on 187 million ADSs outstanding as of June
30, 2004.
Net Sales
"Domestic advertising sales continued their positive trend in
line with increased dynamism of the Mexican economy," added Mr.
Hesles. "Our sales force triggered compelling ad solutions for
the full day's programming grid, congruent with advertisers'
needs to tap rising purchasing power in the period."
Second quarter net revenue includes sales from Azteca America-
the company's wholly-owned broadcasting network focused on the
U.S. Hispanic market-of Ps.95 million (US$8 million), compared
with Ps.13 million (US$1 million) for the same period a year
ago. Azteca America revenue is composed of Ps.53 million (US$5
million) in sales from the Los Angeles station KAZA-TV, and
Ps.42 million (US$4 million) from network sales.
During the quarter TV Azteca also reported sales of programming
abroad of Ps.47 million (US$4 million), compared with Ps.45
million (US$4 million) for the same period of the prior year.
The primary programs exported were the company's novelas La Hija
del Jardinero and Catalina y Sebastian, which were sold in Asian
markets, and Como en el Cine, which was sold in Europe.
During the second quarter TV Azteca reported content and
advertising sales to Todito.com of Ps.45 million (US$4 million),
and Ps.32 million (US$3 million) in advertising sales to Unefon.
In the same period of 2003, sales to Todito and Unefon were
Ps.39 million (US$3 million) and Ps.29 million (US$3 million),
respectively.
In accordance with the terms of the advertising contract between
Unefon and TV Azteca, during the second quarter Unefon paid to
TV Azteca in cash the Ps.32 million (US$3 million) of
advertising purchases placed within the prior three month
period. Additionally, Unefon paid Ps.59 million (US$5 million)
in cash, which corresponds to the third of four semi annual
installments coming from deferred payments for television
advertising made prior to 2003.
During the quarter barter sales were Ps.66 million (US$6
million), compared with Ps.51 million (US$5 million) in the same
period of the prior year. Inflation adjustment of advertising
advances was Ps.72 million (US$6 million), compared with Ps.49
million (US$4 million) for the second quarter of 2003.
Costs and Expenses:
The 9% increase in second quarter costs and expenses resulted
from the combined effect of an 11% rise in programming,
production and transmission costs to Ps.780 million (US$68
million), from Ps.706 million (US$62 million) in the prior year
period, and a 4% growth in administration and selling expense to
Ps.261 million (US$23 million), from Ps.251 million (US$22
million) in the same quarter a year ago.
"We continued developing production initiatives to expand
commercial opportunities within specific timeslots at the Los
Angeles station and the Azteca America Network this quarter,
which were not present a year ago," added Mr. Hesles. "The
incremental costs prompted solid revenue growth from the U.S.
Hispanic market, and we expect to continue strengthening our
sales stream in upcoming quarters."
Congruent with the growing production efforts, TV Azteca
increased its overall number of hours of internally produced
programming during the three month period, to 2,146 from 2,028
in the same quarter of the previous year.
The 4% increase in administration and selling expense primarily
results from the company's rising domestic and international
operations.
EBITDA and Net Income:
The 5% increase in second quarter net sales, combined with the
9% growth in costs and expenses, resulted in EBITDA of Ps.930
million (US$82 million), up 1% from Ps.917 million (US$80
million) a year ago.
Second quarter net income decreased 23% to Ps.443 million (US$39
million) from Ps.574 million (US$50 million). The decline was
primarily influenced by a Ps.32 million (US$3 million) exchange
loss following a 2% peso depreciation against the dollar during
the three month period, compared with an Ps.84 million (US$7
million) exchange gain resulting from a 3% appreciation of the
peso in the same period of 2003.
During the quarter the company recorded other expense of Ps.129
million (US$11 million), compared with Ps.124 million (US$11
million) a year ago. Other expense for the quarter was primarily
composed of Ps.41 million (US$4 million) of advisory fees, Ps.35
million (US$3 million) of charitable donations, Ps.16 million
(US$1 million) from the recognition of 50% of the net loss of
Todito.com in TV Azteca's financial statements, Ps.15 million
(US$1 million) of provisions for non-operating uncollectible
accounts receivable, and Ps.22 million (US$2 million) for the
net effect of the recognition of gains from Monarcas, TV
Azteca's soccer team, and other expenses.
Provision for income tax during the quarter was Ps.58 million
(US$5 million), compared with Ps.56 million (US$5 million) in
the same period of the prior year, coming from a similar taxable
base among the quarters.
Uses of Cash:
The company noted its sound financial results allowed for
continued cash generation during the three month period, and
that it is in line with targets to create free cash-before debt
payment and distributions to shareholders-of US$150 million in
2004.
Adhering to the timetable of the company's plan for uses of
cash, TV Azteca made a US$33 million cash distribution to
shareholders during the quarter, equivalent to US$0.17 per ADR
Within the cash plan the company has made aggregate
distributions of US$173 million, composed of a US$125 million
distribution made on June 30, 2003, another of US$15 million
made on December 5, 2003, and this quarter's US$33 million
disbursement. The accumulated distributions are equivalent to an
11% yield based on the closing price of the ADR as of July 23,
2004.
On April 15, TV Azteca's Annual Ordinary Shareholders' Meeting
also approved a distribution of approximately US$22 million,
which is scheduled for November 11, 2004.
The company also reduced its total debt by US$17 million,
compared with the balance as of March 31, 2004, through cash
amortizations of bank loans at maturity. Aggregate reductions in
total debt for the last twelve months are US$79 million, on a
nominal U.S. dollar basis.
Debt Outstanding
As of June 30, 2004, the company's total outstanding debt was
Ps.5,998 million (US$526 million). TV Azteca's cash balance was
Ps.1,522 million (US$133 million), resulting in net debt of
Ps.4,476 million (US$393 million). The total debt to last twelve
months (LTM) EBITDA ratio was 1.7 times, and net debt to EBITDA
was 1.3 times. LTM EBITDA to net interest expense ratio was 6.1
times.
The company noted that excluding-for analytical purposes-
Ps.1,367 million (US$120 million) debt due 2069, total debt was
Ps.4,631 million (US$406 million), and total debt to EBITDA
ratio was 1.3 times.
First Half Results
Millions of pesos(1) and dollars(2)
except percentages and per share amounts.
1H 2003 1H 2004 Change
US$ %
Net Sales
Pesos Ps. 3,297 Ps. 3,512
US$ US$ 289 US$ 308 19 +7%
EBITDA(3)
Pesos Ps. 1,474 Ps. 1,532
US$ US$ 129 US$ 134 5 +4%
Net Income
Pesos Ps. 652 Ps. 627
US$ US$ 57 US$ 55 (2) -4%
Income per ADS4
Pesos Ps. 3.49 Ps. 3.35
US$ US$ 0.31 US$ 0.29 (0.02) -4%
Notes:
1 Pesos of constant purchasing power as of June 30, 2004.
2 Conversion based on the exchange rate of Ps.11.41 per US
dollar as of June 30, 2004.
3 EBITDA is Profit Before Depreciation and Amortization under
Mexican GAAP.
4 Calculated based on 187 million ADSs outstanding as of June
30, 2004.
Company Profile:
TV Azteca is one of the two largest producers of Spanish
language television programming in the world, operating two
national television networks in Mexico, Azteca 13 and Azteca 7,
through more than 300 owned and operated stations across the
country. TV Azteca affiliates include Azteca America Network, a
broadcast television network focused on the rapidly growing US
Hispanic market, and Todito.com, an Internet portal for North
American Spanish speakers.
To see financial statements, visit:
http://bankrupt.com/misc/TZA_2Q04.doc
CONTACT: Investor Relations:
Mr. Bruno Rangel
5255 3099 9167
jrangelk@tvazteca.com.mx
Mr. Omar Avila
5255 3099 0041
oavila@tvazteca.com.mx
VITRO: Records Strong 2Q04 Performance
--------------------------------------
Vitro S.A. de C.V. (BMV: VITROA; NYSE: VTO) one of the world's
largest producers and distributors of glass products, announced
Monday 2Q04 unaudited results, posting a 0.8 percent YoY decline
in consolidated sales.
Consolidated EBITDA rose YoY by 7.0 percent, driven by
significantly improved performance at the Glass Containers
business unit, which more than compensated for the decline in
Flat Glass and Glassware.
Consolidated EBIT for the quarter, however, declined by 2.0
percent, with decreases at both the Flat Glass and Glassware
business units.
Consolidated EBITDA margins rose by 120 basis points and EBIT
fell slightly by 9 basis points. EBITDA for the LTM improved to
US$371 million as of June 30, 2004 from US$365 million as of
March 31, 2004.
Between 2Q'03 and 2Q04, Vitro divested two companies, Vitro
Fibras (VIFISA) and Envases Cuautitl n (ECSA). On a pro-forma
basis, excluding these two companies, sales would have increased
2.8 percent YoY, EBIT would have increased 7.6 percent YoY, and
EBITDA would have posted a 13.5 percent YoY increase.
The most important changes in the pro-forma calculations are
Flat Glass, with the sale of Vifisa, and Glassware with the sale
of ECSA. On a pro-forma basis these business units had an EBITDA
growth of 7.7 percent and a decline of 15.5 percent,
respectively.
Alvaro Rodriguez, Chief Financial Officer, commented:
"Performance was in line with the expectations and our guidance.
We are pleased with the quarter's two-digit EBITDA growth, on a
pro-forma basis. Glass Containers provided the strongest growth
both in sales and EBITDA this quarter, and with this we once
again recognize the strength of Vitro's portfolio of businesses
to stabilize cash flow generation and provide a solid
operational base. Glass Containers EBITDA gained over 20% YoY
demonstrating its ability to generate cash flow."
"Our 12% export growth this quarter is evidence of our
increasing penetration of international markets," Mr. Rodriguez
continued. "Exports for the quarter increased to 30% of sales
from 26% in the same quarter last year. These gains are built on
several of Vitro's strengths - high product quality and our
value added niche market positioning supported by flexibility to
rapidly and efficiently respond to customers' specific needs."
Mr. Rodriguez commented, "We continued to improve Vitro's
capital structure through various financing activities. On July
23, 2004 we placed $170 million senior secured guaranteed notes
due July 2011, exceeding original expectations by almost 15%.
These notes were issued by Vitro Envases Norteamerica our Glass
Containers divison. This transaction significantly improved life
of debt at Glass Containers to six years from two years. Net
proceeds were applied to refinance existing debt and reduced the
business unit's short-term debt percentages to 12%, from 56%."
"The transaction at Vitro Glass Containers was ground braking
since it's the first capital markets transaction at the the
level of a Vitro operating unit. This is the first step towards
a new financing strategy at Vitro. It was also innovative in the
sense that it was the first ever secured transaction issued in
the international capital markets by a Mexican corporation."
"In addition", he continued, "during the quarter, we closed
several other financing transactions. We refinanced most of
Glassware's debt through a US$75 million syndicated loan
facility at that business unit, and finalized a three year
securitization agreement at Vitro America, our Flat Glass
distribution subsidiary in the US, providing an additional $10
million in liquidity. As a result of these transactions, on a
pro forma basis including the senior secured guaranteed notes,
the average life of debt improved to 4.5 years from 3.9 years in
1Q'04."
Mr. Rodriguez concluded, "The overall performance of the
Company, demonstrates once again our progress on all fronts, as
we continue to build on our position as a leading global glass
producer."
Sales
Consolidated net sales decreased 0.8 percent during the second
quarter of 2004, compared with the second quarter of 2003.
Similarly, LTM Consolidated net sales decreased 0.8 percent.
Flat glass recorded a 1.1 percent YoY decrease in sales. Sales
at the Containers business unit increased YoY 0.9. In the same
period, Glassware's sales decreased by 8.9 percent.
Domestic sales decreased 6.9 percent YoY, while export sales
increased 12.0 percent YoY and sales by foreign subsidiaries
decreased 3.0 percent in the same period.
On a pro-forma basis, excluding Vitro Fibras and Envases
Cuautitl n, consolidated net sales would have increased 2.8
percent YoY, and 1.9 percent LTM. Excluding Vitro Fibras from
Flat Glass, sales would have increased 3.4 percent YoY.
Excluding Envases Cuautitl n from Glassware, sales would have
decreased 0.7 percent YoY.
EBIT and EBITDA
Consolidated EBIT for 2Q04 was US$41 million, a 2.0 percent YoY
decline; EBIT margins decreased 9 basis points YoY. Two of the
main factors affecting EBIT were an increase in the cost of
natural gas and an increase in depreciation expense mentioned in
the last quarter of 2003 for Containers' forming machines.
Despite the mentioned increase in the costs of natural gas and
electricity, consolidated EBITDA increased YoY by 7.0 percent.
Consolidated EBIT reflects a YoY decrease of 20.2 percent and
39.9 percent for Flat Glass and Glassware, respectively, while
Containers improved 14.3 percent.
The Company's consolidated EBITDA increase was mainly
attributable to Containers' 20.4 percent improvement for the
quarter. During the same period, Flat Glass' EBITDA declined by
5.7 percent, while Glassware's decreased by 23.1 percent.
On a pro forma basis, excluding Vitro Fibras and Envases
Cuautitlan, consolidated EBIT would have 7.6 percent YoY, and
EBITDA would have increased 13.5 percent YoY. Excluding Vitro
Fibras, Flat Glass' EBIT would have decreased 6.6 percent YoY,
and EBITDA would have increased 7.7 percent YoY. Excluding
Envases Cuautitlan, Glassware would have posted a 33.0 YoY
percent decrease in EBIT, and a 15.5 YoY percent decrease in
EBITDA.
As expected, natural gas was an important contributor to the
margin reduction. The magnitude of this effect was partly
mitigated through a decrease in the average volume consumption
of natural gas, mainly because of the use of pet coke, and
improved furnace efficiencies and utilization. The Company is
actively working towards the use of alternative sources of
energy in its furnaces as a way to decrease costs.
Furnaces in Containers' Monterrey facilities have been fully
converted, as is our VF-2 Flat Glass' furnace. The full project
is expected to be concluded by the end of 2005. Approximately 50
percent of the Company's natural gas requirements for the
remainder of the year are hedged. SG&A expenses were stable as a
percentage of consolidated sales.
The reduction of administrative, selling and other general
expenses as a percentage of consolidated sales, were mainly
offset by increased distribution costs. During the quarter,
distribution costs increased mainly as a result of higher export
sale volumes and a higher amount of exports as a percentage of
sales. During 2004, the Company expects to continue working on
reducing SG&A as a percentage of sales.
Consolidated Financing Cost
Consolidated financing cost rose to US$82 million, from US$15
million in the second quarter of 2003, primarily due to a
foreign exchange loss of US$43 million during 2Q04, as compared
to a foreign exchange gain of US$15 million during 2Q'03. A
positive effect was that lower debt levels on a YoY basis
contributed to lower interest expense, from US$38 million in
2Q'03 to US$32 million in 2Q04. Other financial expenses
increased YoY mainly due to the costs associated with the
unwinding of an interest rate derivative during the quarter.
On an accumulated basis, consolidated financing cost increased
to US$95 million during the 6 month period of 2004 from US$59
million during the same period in 2003, mainly due to a higher
exchange loss generated in 2004 of US$38 million, compared to
US$8 million during the same period of 2003.
Taxes
Both for the quarter and on an accumulated basis, deferred
income taxes decreased as a result of higher tax losses in the
operating subsidiaries, mainly as a result of the devaluation of
the Mexican Peso against the US dollar.
Consolidated Net Loss
During the quarter, the Company recorded a Consolidated Net Loss
of US$41 million compared to a Consolidated Net Income of US$5
million in 2Q'03. The result came mainly from higher YoY total
financing cost, due to an exchange loss.
Capital Expenditures
Capital expenditures (CAPEX) for the second quarter totaled
US$16 million, compared with US$48 million spent on 2Q'03. Flat
Glass accounted for 48 percent or US$8 million, mainly used for
the pet coke transformation initiative and some automation
processes within the auto segment. Another 39 percent, or US$6
million, was spent at Glass Containers, mainly for furnace
maintenance purposes, as well as continued investments in the
pet coke conversion project. Glassware's capital expenditures
were of US$2 million, and were mainly used for maintenance
purposes.
Consolidated Financial Position
Consolidated gross debt as of June 30, 2004 totaled US$1,383
million, a QoQ decrease of US$12 million. The decrease was
achieved mainly through the sale of Vitro Fibras. Net debt,
which considers cash and equivalents as well as cash
collateralizing debt accounted for in other long-term assets,
decreased QoQ by US$18 million to US$1,230 million. On a YoY
comparison, gross debt decreased by US$103 million and net debt
by US$54 million.
On July 23, 2004, the Company placed US$170 million of Senior
Secured Guaranteed Notes due July 23, 2011 at Vitro Envases
Norteamerica, Vitro's Glass Containers subsidiary. Net proceeds
from the offering were applied to retire most of the short-term
and long-term debts of this business unit, as well as to pay
some inter company debt to the holding company. As a result of
this transaction, on a pro forma basis, average life of
consolidated debt increased from 4.0 years to approximately 4.5
years and short-term debt is reduced to 21 percent from 27
percent.
At the Glass Containers level, average life of debt increased
from 2 years to 6 years. In addition, short term debt decreased
from 56 percent to 12 percent. During the quarter, the Company
completed various financing activities that included a
Syndicated facility at Glassware for US$75 million with an
average life of debt of approximately 3 years.
Also, at the Flat Glass Division we executed a securitization
agreement with ABN Amro Bank and Finacity as arranger of non
recourse trade receivables. The transaction provides
approximately US$10 million in additional liquidity for Vitro
America, the flat glass distribution subsidiary in the U.S.
In May 2004, the Company unwound some of its derivative
transactions, including exchange rate swaps and an interest rate
cap. Unwinding the exchange rate swaps had the non-cash effect
of increasing debt by US$29 million. The sale of the derivatives
represented a cash outflow of US$2.6 million. The Company is
currently hedged against exchange rate fluctuations with
exchange rate calls.
As of 2Q04, Vitro had a cash balance of US$153 million, of
which, US$113 million were registered as cash and equivalents
and US$40 million were classified as other long term assets. As
of June 30, 2004, 22 percent of this cash balance was
unrestricted. On a pro forma basis, considering VENA's Notes, 30
percent of the cash balance would be unrestricted.
- The Company's average life of debt as of 2Q04 was 4.0 years.
On a pro forma basis, considering the new Senior Notes at Glass
Containers, average life of debt increases to 4.5 years
approximately.
- Short term debt was reduced from 31 percent of total debt as
of 1Q'04 to 27 percent as of June 30, 2004, a US$53 million
decline. These amounts include current maturities of long term
debt. On a pro forma basis, including the Senior Notes at Glass
Containers, short term debt is reduced to 21 percent of total
debt.
- Revolving short-term debt, including trade related, accounts
for 48 percent of total short-term debt. This type of debt is
usually renewed within periods of 28 to 180 days.
- Current maturities of long term debt are reduced, on a pro
forma basis considering VENA's Senior Notes, by 39 percent or
US$47 million to US$74 million.
- Market debt is mostly short-term Euro Commercial Paper and
"Certificados Burs tiles" that the Company uses on a regular
basis to finance short-term needs. During the month of July, the
Company placed an additional US$16.5 million in Euro Commercial
Paper.
- Debt maturities during 2005 are mainly due at the operating
subsidiary level and basically come from syndicated facilities.
On a pro forma basis, considering the new Senior Notes issued at
Glass Containers, debt maturing during the years 2004 and 2005
is reduced by approximately US$100 million, a 22 percent
reduction.
- For 2006, market maturities include medium-term notes
denominated in UDI's. Maturities for 2007 include the Senior
Notes at the Holding Co. level.
- Market maturities from 2008, 2009 and thereafter, include the
"Certificados Burs tiles", a Private Placement and the Senior
Notes due 2013 at the Holding Co. level.
Cash Flow
Working capital needs for the quarter reflect an investment in
inventory and customers, mainly as a result of increased export
sales, which were offset by better conditions negotiated with
suppliers. Lower interest expense as a result of lower debt
levels YoY and lower CAPEX YoY, increased cash flow generated
from operations and helped compensate higher cash taxes paid
during the quarter. Proceeds of cash flow from operations for
the quarter were mainly used to fund of the Company's pension
plan and severance payments.
KEY DEVELOPMENTS:
VENA Senior Secured Notes
On July 19, 2004, Vitro announced that Its subsidiary Vitro
Envases Norteamerica S.A. de C.V. ("VENA"), Vitro's glass
containers division, agreed to sell US$170 million aggregate
principal amount of senior secured guaranteed notes due 2011.
The coupon is 10.75%. The closing of this sale occurred on July
23, 2004. VENA used the proceeds of the issuance to repay
existing indebtedness.
The Notes were issued by VENA and guaranteed by VENA's principal
Mexican subsidiaries and Vitro Packaging, VENA's trading company
in the United States. The Notes are secured by first priority
liens on most of VENA's and its subsidiaries' assets.
Glassware Syndicated Loan
On April 14, 2004 Vitrocrisa Comercial, S.de R.L. de C.V.
secured a credit facility in an aggregate principal amount of
US$75 million, refinancing approximately 90% of its debt through
the transaction. The syndicated loan comprises two tranches.
1. Tranche A consists of a US$42 million, 5-year term loan and a
US$10 million, 3-year committed revolving line of credit.
2. Tranche B consists of a US$23 million, 3-year term loan.
Vitrocrisa Comercial used most of the proceeds of the facility
to pay down short-term maturities, extending the average life of
its debt from 1.1 year in March 31, 2004 to 3.7 years as of June
30, 2004.
Vitro America Securitization
On May 11, 2004, Vitro America, Vitro's Flat Glass business unit
in the U.S., successfully closed a securitization transaction
with ABN AMRO Bank and Finacity as the arranger. The three-year
agreement is expected to provide Vitro cash proceeds of up to
US$40 million through the ongoing purchase, without recourse, of
trade receivables generated by its flat glass operations in the
U.S. The transaction offers better terms than our previous
securitization arrangement by providing an additional
approximate amount of US$10 million to Vitro America. This
enhances Vitro America's liquidity position while maintaining
its financial flexibility.
Vitromart
In June, our Flat Glass division launched Vitromart. In this
first phase, Vitromart will bring 150 of Vitro's best customers,
distributors of flat glass for the construction industry, under
a network that share the Vitro brand and the company's marketing
efforts, as well as a similar "look and feel" of the stores,
similar product offerings and systems.
Traditionally, end customers have gone to installers, a very
fragmented market with an exceedingly heterogeneous mix of
price, quality and service to satisfy their glass product needs.
Under the Vitromart concept, the end customer can walk directly
into one of its stores to find a high quality, standardized
product offering, receive advice by skilled attendants, to make
an informed decision of his needs on competitively priced
products.
Through this project, Vitro will better contribute to the value
chain, and be closer to the end customer, while strengthening
relationships with its customers. Benefits to distributors
include sharing in Vitro's marketing and brand awareness,
receiving technical training, sharing standardized systems, and
participate in scale purchasing for indirect products, including
aluminum sidings and insurance among others.
Flat Glass' International Growth
On June Vitro's flat glass subsidiary in Spain, Cristalglass,
started operations in Asturias and Valencia. In July it started
operations in Galicia. The facilities primarily consist mainly
of double glazing plants supplying flat glass to the
construction industry in the region.
With these plants, Cristalglass totals seven processing
facilities and two distribution centers in Spain and Portugal,
consolidating its position in Europe and following its strategy
of manufacturing value added glass products.
FLAT GLASS:
(49 percent of LTM Consolidated Sales)
Sales
Flat Glass' consolidated sales decreased YoY by 1.1 percent, to
US$273. This decline is mostly attributable to the divestiture
of Vitro Fibras S.A. (VIFISA) in March 2004. Excluding VIFISA,
consolidated net sales at the Flat Glass division would have
increased 3.4%.
Domestic sales decreased 13.7 percent. In the domestic market,
one of the main segments that registered a decline in sales was
the distributor segment, despite increased sales volumes which
translated to an increase market share. Excluding VIFISA,
domestic sales would have decreased 5.3 percent YoY.
Sales to the domestic automotive segment increased 1%, with a
reduction in sales to the replacement market being more than
offset by increased sales to OEMs, as platform's supplied to
OEMs by the Company experienced strong demand during the
quarter.
Export sales increased 21.7 percent driven mostly by increased
sales to OEMs in the U.S. Sales by foreign subsidiaries
decreased 4.9 percent YoY. Vitro America, Flat Glass'
distribution arm in the U.S. registered an increase in sales of
approximately 5%, mostly driven by increased sales to
distributors, as a result of the upturn in the construction
cycle.
Sales by Vitemco, the Company's flat glass subsidiary in South
America increased over 40%, as a result of increased demand by
the automotive segment. Sales by the Spanish subsidiary
decreased approximately 13 percent, having registered a low
percentage of monumental construction projects during the
quarter.
During the quarter, Vitro launched Vitromart, a distribution
network encompassing 150 distributors of construction and
architectonic glass in over 100 cities in Mexico. Through this
project, Vitro aims to contribute to the value chain, being
closer to the end consumer, while strengthening relationships
with its customers. Among other benefits, distributors under the
Vitromart umbrella will derive the benefit of Vitro's brand
awareness and marketing efforts. Customers entering Vitromart
stores will find a high quality, standardized product offering,
receive advice by skilled attendants on competitively priced
products.
EBIT & EBITDA
EBIT decreased 20.2 percent YoY, from US$23 million to US$18
million. EBITDA decreased 5.7 percent YoY, from US$36 million to
US$34 million.
VIFISA's divestiture makes for an unfavorable comparison, since
the Company's fiber glass unit was divested on March 31, 2004.
Excluding VIFISA, EBIT would have decreased 6.6 percent, and
EBITDA would have increased 7.7 percent.
EBITDA Margins at the Flat Glass business unit are improving. On
a pro forma basis, excluding VIFISA, the 6M EBITDA margin
decreased from 13.0 percent to 11.5 percent in 2003 vs. 2004. In
the second quarter, however, EBITDA margins improved from 11.9
percent in 2Q'03 to 12.4 percent in 2Q04.
Apart from the divestiture of VIFISA, the main factors
negatively affecting EBIT and EBITDA were an increased cost of
natural gas, as well as increased distribution costs arising
from increased exports and higher freight rates.
The main factor positively impacting EBIT and EBITDA generation
was an increase in sales volume, which improves fixed costs
absorption. During 2Q'03, a major maintenance was performed to
the VF2 furnace which forced the division to purchase a portion
of its float glass requirements from a third party, at prices
higher than its own production costs.
GLASS CONTAINERS:
(40 percent of LTM Consolidated Sales)
Sales
During the quarter, Glass Containers' consolidated net sales
increased 0.9 percent YoY, to US$232 million. Domestic sales
decreased by 2.5 percent. Sales to the beer segment more than
doubled in 2Q04, reflecting an unusually low 2Q'03. Sales to the
wine and liquor segment increased YoY, as did sales to the
Cosmetics Fragrance and Toiletries (CFT) segment.
These sales increases were partially offset by a decrease in
sales to the domestic returnable soft drinks market. The
majority of Containers' domestic sales are linked to the Mexican
Peso (MXN).
In 2Q04, a YOY devaluation of approximately 10.5 percent of the
MXN versus the U.S. Dollar negatively affected Containers' sales
in dollar terms. In Constant Peso terms, Domestic sales
increased 3.4 percent.
As substantiation of the Containers business unit's flexible
operations and ability to target value added niche markets,
export sales increased 5.1 percent YoY, mainly driven by
increased sales of wine and perfume bottles.
This increase was partly offset by a 7% reduction in sales to
the soft drink segment, partly as a result of a weakened product
mix within the soft drink segment.
Sales by foreign subsidiaries increased 7.9% YoY, driven by
increased in sales in Central America and the Caribbean, as a
result of improved economic conditions in the region.
EBIT and EBITDA
Despite the aforementioned increase in depreciation expense,
EBIT increased YoY 14.3 percent to US$21.1 million, while EBITDA
increased 20.4 percent to US$48.8 million. In dollar terms, EBIT
margin improved 1.1 basis points, to 9.1 percent.
EBITDA margin improved 3.4 basis points, to 21.0 percent. This
EBITDA margin is in line with Container's EBITDA margin of 20.0
percent in 2001 and 21.9 percent in 2002, but above the 18.6
percent posted in 2003, which was mainly affected by low
capacity utilization during 2003. The 21.0 percent margin posted
in 2Q04 positions Vitro's Glass containers unit as one of the
most profitable public glass containers companies in the world.
The increase in EBIT and EBITDA was mainly due to a reduction in
our fixed cost, payroll expenses, and increased capacity
utilization, which in turn improves absorption of fixed costs.
The main factors negatively affecting EBIT and EBITDA generation
were, increased distribution costs arising from increased
exports and higher freight rates, higher energy costs and a
devaluation of the Mexican Peso, which reduces our margins due
to a higher costs denominated in dollars in proportion with our
dollar denominated sales.
GLASSWARE:
(11 percent of LTM Consolidated Sales)
Sales
At the Glassware business unit, consolidated net sales decreased
8.9 percent YoY, to US$58 million. Envases Cuautitlan S.A.
(ECSA), one of our plastics operations, was divested in
September 2003; on a pro forma basis, excluding ECSA, net sales
would have decreased 0.7 percent YoY.
Sales in the domestic market decreased 14.9 percent. Excluding
ECSA from 2Q'03, sales would have decreased 3.2 percent YoY
despite stable prices and volumes, principally as a reflection
of a weaker product.
The majority of Glassware's domestic sales are denominated in
Mexican Pesos (MXN). In 2Q04, a YOY devaluation of approximately
10.5 percent of the MXN versus the U.S. Dollar negatively
affected Glassware's sales in dollar terms. In Constant Peso
terms, sales decreased 4.9 percent. Excluding ECSA, sales in
constant peso terms would have increased 3.3 percent.
Export sales increased 4.2 percent YoY. Exports to other Latin
American countries nearly doubled during the quarter, mainly
driven by increased glassware sales to Central America and the
Caribbean, which experienced improved economic conditions. YoY,
export sales to the OEM segment decreased, mainly due to a slow
recovery of the small kitchen appliances segment. Exports to the
Middle East and Africa nearly doubled, principally driven by
increased sales of ovenware products
EBIT and EBITDA
EBIT for 2Q04 was US$3.2 million, and EBITDA US$9.0 million,
representing 39.9 and 23.1 percent decreases, respectively. EBIT
margins decreased 2.8 percentage points, to 5.5 percent. EBITDA
margins decreased 2.8 percentage points, to 15.5 percent.
Excluding ECSA, on a pro forma basis, EBIT would have been US$5
and EBITDA US$11 million, representing 33.0 and 15.9 percent YoY
decreases, respectively.
The main factors affecting EBIT and EBITDA generation included
increased energy costs and the devaluation of the Mexican Peso
versus the US Dollar, and a weaker sales mix. These factors were
partly offset by increased capacity utilization, which improved
fixed costs absorption.
CONTACT: Investor Relations
Ms. Beatriz Martinez
Investor Relations Manager
bemartinez@vitro.com
Tel: +52 (81) 8863 1258
Corporate Office
Av. Ricardo Margain 440
Col. Valle del Campestre,
Garza Garc¡a, Nuevo Le¢n
C.P.66265 M‚xico
Tel: (52) 8863-1200
Web Site: www.vitro.com
=================
N I C A R A G U A
=================
* Russia Cancels Nicaragua's Remaining Debt
-------------------------------------------
Russia canceled Monday the remaining US$344 million debt owed it
by Nicaragua, Europe Intelligence Wire reports. Mr. Sergey
Kolotukhin, the head of the Russian Finance Ministry's debt
directorate, recalls that in 1999, Russia wrote off 90% of
Nicaragua's debt, which amounted to US$3.4 billion at the time.
Military supplies made up the majority of the debt, though there
were also some commercial loans to Nicaragua, says the minister.
Meanwhile, Russian Foreign Minister Sergey Lavrov and his
Nicaraguan counterpart, Norman Caldera, agreed Monday to step up
bilateral relations by intensifying political dialogue and trade
relations.
"We have declared the intensification of bilateral relations,
and we have set concrete guidelines to expand trade and economic
cooperation in the areas of fishing and energy," Lavrov told a
press conference.
===============
P A R A G U A Y
===============
* Republic of Paraguay Long-Term Ratings Raised to 'B-'
-------------------------------------------------------
Standard & Poor's Rating Services raised its long-term foreign
currency sovereign credit rating on the Republic of Paraguay to
'B-' from 'SD'. At the same time, Standard & Poor's raised its
long-term local currency sovereign credit rating on the republic
to 'B-' from 'CCC'. In addition, Standard & Poor's raised its
short-term foreign currency sovereign credit rating on Paraguay
to 'C' from 'SD', and affirmed its 'C' short-term local foreign
currency sovereign credit rating. The outlook on both the long-
and short-term ratings is stable.
The upgrades follow the completion of the distressed debt
exchange that cured Paraguay's bond default. "The foreign
currency rating on Paraguay was lowered to 'SD' on Feb. 13,
2003, following the government's failure to honor put clauses on
domestically issued U.S. dollar-denominated bonds in late
January 2003," explained Standard & Poor's credit analyst
Sebastian Briozzo. "The government subsequently fell into
payment arrears on a series of domestically issued U.S. dollar-
denominated bonds totaling US$138 million, maturing between 2003
and 2006. The exchange does not involve any reduction in the
face value of the debt. The new bonds are being issued in
several series at a reduced interest rate and falling due
between September 2004 and 2008, during the term of the current
administration," he added.
Standard & Poor's said that after lengthy negotiations with
bondholders--55% of the bonds were held by domestic financial
institutions--the government announced on July 15, 2004, that
US$103 million (74% of total) of the outstanding amount had
already been exchanged. The actual exchange of bonds (which
exist in physical form) is currently taking place and formally
cures the government's default. The government expects another
US$20 million (14% of total) of outstanding debt, the principal
of which has not yet come due, to also be exchanged as it
matures between August and December 2004-bringing the acceptance
level to around 88% by year-end.
"With three-quarters of the defaulted bonds tendered and
reasonable prospects for near complete acceptance over time, we
view this default as cured," said Mr. Briozzo. "The risk that
holdout investors could destabilize government finances does not
exceed other risk facing Paraguay. This risk emanates from a
weak institutional environment, deficient public debt
management, and a narrow, underdeveloped economy," he noted.
Paraguay is the seventh sovereign rated by Standard & Poor's to
emerge from default.
The stable outlook on the ratings incorporates greater political
stability in Paraguay since President Nicanor Duarte Frutos took
office in August 2003. The administration has reached an
agreement with the International Monetary Fund (November 2003);
has passed pension reform (December 2003) and tax legislation
(June 2004); and has cured its default (July 2004).
"Notwithstanding these achievements, Standard & Poor's expects
only moderate progress on the government's remaining agenda,
particularly on the reform of public administration or the
public banks," said Mr.
Briozzo. "However, with ongoing fiscal consolidation and
relatively low debt levels (net general government debt is
estimated at about 28% of GDP in 2004), upside and downside risk
on Paraguay's creditworthiness appears balanced at the current
rating level," he concluded.
ANALYSTS: Sebastian Briozzo, New York 212-438-7342
Lisa M Schineller, New York (1) 212-438-7352
=================
V E N E Z U E L A
=================
EDC: Fitch Affirms Ratings At 'B-'
----------------------------------
Fitch Ratings affirmed the international foreign currency and
local currency ratings of C.A. La Electricidad de Caracas (EDC)
at 'B-' and 'B', respectively. The foreign currency rating of
EDC is constrained by the Venezuelan sovereign rating of 'B-'.
All ratings maintain a Stable Rating Outlook.
EDC's credit quality is supported by its position as the largest
private electric utility company in Venezuela and as a low-cost,
vertically integrated company. These factors place the company
in a relatively strong competitive position to operate in the
evolving Venezuelan electricity market. EDC's long history as a
profitable, reliable private entity helps provide comfort to the
company's and management's ability and willingness to meet its
financial obligations in the event of material adverse events.
The ratings also incorporate the many adverse economic and
political challenges that have pressured the credit quality of
the company and Venezuelan sovereign alike. Positively, EDC has
effectively managed several issues despite facing severe
economic and political volatility during 2003 and 2004.
The company has been successful in repaying and rolling over
maturing debt obligations despite the imposition of foreign-
exchange controls since January 2003, rolling over approximately
$65 million of foreign denominated debt during 2003 and $27
million through March 2004. In addition to demonstrating
continued access to financing, both locally and abroad, EDC has
received approval from Comision de Administracion de Divisas
(CADIVI), the federal entity that controls access to foreign
currency, for $173.7 million and $46.1 million of U.S. dollar
payments to lenders, to insurance providers and for imports in
2003 and through first quarter of 2004, respectively. EDC also
received CADIVI approval to obtain U.S. dollars for the payment
of dividends 2004. Despite EDC's continued success in receiving
U.S. dollars, liquidity concerns persist given the tumultuous
sovereign environment and the discretionary process of CADIVI.
On the regulatory side, EDC was positively able to receive
average tariff increases of 39% during 2003, a period of
material political and economic stress, illustrating the
company's ability to navigate the challenging Venezuelan
environment. So far in 2004, EDC has received two adjustments
totaling 4.5% reflecting the scheduled beginning of the year
increase and higher gas prices charged by PDVSA. The next tariff
adjustment should have come in July 2004, but realization of
full adjustments is uncertain given the current political
environment. Fitch believes it is more likely that tariff
increases may be delayed until the next scheduled adjustment.
Positively, in the past, EDC has ultimately been successful in
negotiating with the government to reduce the effect on earnings
of any delay in tariff adjustments.
Operationally, EDC reported an increase in EBITDA to interest
coverage to 3.6 times (x) through March 2004 from 2.9x for the
comparable period of 2003, levels that are considered strong for
the rating category.
The company has materially reduced debt over the past few years
to $651 million at March 31, 2004 from $794 million at Dec. 31,
2002 and over $1.0 billion at Dec. 31, 2001, reflecting both
amortization of maturing debt and the effect of devaluation on
Bolivar-denominated debt. Total Debt-to-EBITDA (annualized) was
approximately 2.3x as of March 2004 with a total debt to
capitalization ratio of 32%. EDC's debt amortization profile is
manageable given its proven ability to roll over local currency
obligations and supported by recent financing activities. The
company also maintains substantial offshore cash balances, which
may be available to cover part of the foreign debt service, if
necessary.
EDC is the largest private-sector electric utility in Venezuela
and generates, transmits, distributes and markets electricity
primarily to metropolitan Caracas and its surrounding areas. The
AES Corporation acquired 87% of EDC in June 2000 through a
public-tender offer
CONTACT: Jason T. Todd +1-312-368-3217, Chicago
Carlos Fiorillo +58212-286-3356, Caracas
MEDIA RELATIONS: Kenneth Reed +1-212-908-0540, New York
***********
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Copyright 2004. All rights reserved. ISSN 1529-2746.
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