DETAILED FINANCIAL INFORMATION
Sales
Consolidated sales decreased YoY by 3.2 percent to US$556
million for the quarter and by 4.5 percent to US$2,238 million for the year.
The decline for the fourth quarter was mainly driven by a 7.1 percent decrease
in Glass Containers' sales. Glassware sales declined by 10.7 percent half of
which is explained by the unfavorable YoY comparisons due to the divestiture of
Envases Cuautitlan (ECSA), in 3Q03. In contrast, Flat Glass' sales increased
YoY by 0.9 percent.
For the full year, consolidated net sales dropped by 4.5
percent, of which; 0.8 percent, 8.7 percent and 8.0 percent were at Flat Glass,
Glass Containers and Glassware, respectively.
Table 1: Total
Sales
Table 1
Sales
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003 2002
Change
Constant Pesos
Total
Consolidated Sales 6,263 6,320
(0.9) 24,954 25,426 (1.9)
Flat Glass 3,012 2,940
2.5 12,169 12,048
1.0
Glass
Containers 2,522 2,638
(4.4) 9,928 10,536
(5.8)
Glassware 657 706
(7.0) 2,612 2,719
(3.9)
-- --
Domestic
Sales 2,970 3,070
(3.2) 11,282 11,807 (4.4)
Export
Sales 1,544 1,461
5.7 6,470 6,379
1.4
Foreign
Subsidiaries 1,744 1,789
(2.5) 7,197 7,240
(0.6)
Nominal Dollars
Total
Consolidated Sales 556 574
(3.2) 2,238 2,343
(4.5)
Flat Glass 267 265 0.9 1,089
1,098 (0.8)
Glass
Containers 224 241
(7.1) 891 977
(8.7)
Glassware 58 65
(10.7) 236 256
(8.0)
-- --
Domestic
Sales 263 285
(7.7) 1,020 1,129
(9.7)
Export
Sales 137 133
3.2 580 586
(1.0)
Foreign
Subsidiaries 155 156
(0.7) 638 628
1.6
% Foreign
Currency Sales* /
Total
Sales 52.6% 50.3% 2.3 pp 54.4% 51.8% 2.6 pp
% Export Sales
/ Total
Sales 24.6% 23.1% 1.5 pp 25.9% 25.0% 0.9 pp
* Exports +
Foreign Subsidiaries
EBIT and EBITDA
Consolidated EBIT for the quarter improved 57.0 percent YoY
to US$40 million, while EBITDA rose YoY by 24.1 percent to US$97 million. These
increases consider an extraordinary charge of US$9 million that took effect
during 4Q02 related to the write-off of obsolete inventories at Flat Glass, as
well as ECSA's divestiture during 3Q03. Excluding these effects, EBIT &
EBITDA during the period would have increased YoY by 18.0 percent and 11.8
percent, respectively. Despite improvements posted during the last two
consecutive quarters, for the year consolidated EBIT declined by 14.9 percent
to US$165 million, and consolidated EBITDA was down by 9.7 percent to US$364
million.
Flat Glass was the largest contributor to the YoY
improvement in EBIT for the fourth quarter increasing from US$8 million to
US$21 million or 166.5 percent, while Glass Containers declined by 43.6 percent
or US$10 million and Glassware increased by 23.0 percent or US$1 million.
Consolidated EBITDA for the quarter reflects YoY
improvements of 42.5 percent and 6.3 percent at Flat Glass and Glassware
respectively and a decline of 4.2 percent at Glass Containers.
As a result of the overall cost and expense reduction
program, SG&A expenses declined YoY by US$ 9 million during the quarter,
and US$22 million on an accumulated basis. Overhead expenses were also reduced
at the corporate level.
Table 2
EBIT and EBITDA
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003
2002 Change
Constant
Pesos
Consolidated
EBIT 453 290 56.5 1,847
2,117 (12.8)
Margin 7.2% 4.6% 2.6 pp 7.4%
8.3% -0.9 pp
Flat
Glass 231 91
153.2 1,020 911
12.1
Glass
Containers 145 249
(42.0) 783 1,251
(37.5)
Glassware 78 62
25.9 187 275
(32.2)
Consolidated
EBITDA 1,089 852 27.8 4,052
4,308 (5.9)
Margin 17.4% 13.5%
3.9 pp 16.2% 16.9%
-0.7 pp
Flat
Glass 411 285
44.2 1,728 1,631
5.9
Glass
Containers 492 494
(0.3) 1,840 2,261
(18.6)
Glassware 149 135
10.5 474 564
(16.0)
Nominal
Dollars
Consolidated
EBIT 40 26 57.0 165
194 (14.9)
Margin 7.3% 4.5%
2.8 pp 7.4% 8.3%
-0.9 pp
Flat
Glass 21 8
166.5 91 82
11.2
Glass
Containers 13 23
(43.6) 70 117
(40.1)
Glassware 7 6 23.0 17
26 (34.3)
Consolidated
EBITDA 97 78 24.1 364
403 (9.7)
Margin 17.4% 13.5%
3.9 pp 16.3% 17.2%
-0.9 pp
Flat
Glass 37 26
42.5 155 150
3.1
Glass
Containers 44 46
(4.2) 166 214
(22.5)
Glassware 13 12
6.3 43 53
(19.8)
Approximately 70 percent of the Company's natural gas
requirements for 1Q04 and 50 percent of its requirements for the remainder of
the year have been hedged. Natural gas costs represent approximately 4 percent
of Vitro's total costs and expenses as a percentage of sales. The Company is
actively working towards the use of alternative sources of energy in its
furnaces as a way to decrease costs. During 2003, the Company invested US$8.1
million in the start up of this project, and it expects to invest an additional
US$16.1 million during 2004. The Company estimates that the conversion process
will conclude at the end of 2005.
During 2004, the Company expects to continue working on
reducing SG&A as a percentage of sales.
Financing Cost
Consolidated financing cost rose to US$45 million, from
US$31 million in the fourth quarter of 2002, primarily due to a gain in
monetary position of US$20 million compared with US$29 million during 4Q02. In
addition, other net financial expenses rose to US$14 million, from US$4 million
in 4Q02, due mainly to the interest collected associated with a tax refund in
4Q02 that was accounted for as other financial income at the time. Also, during
4Q03 there was a charge derived from the anticipated amortization of the
deferred cost associated with the long-term debt that was repaid with the issue
of the 2013 Senior Notes.
For the year, consolidated financing cost decreased to
US$178 million from US$223 million in 2002, despite higher net interest
expenses, mainly due to a lower exchange loss generated in 2003 by the 7.6
percent depreciation of the Mexican peso against the U.S. dollar during 2003.
This compares with the foreign exchange loss generated in 2002 by the 13.8
percent depreciation of the Mexican peso against the U.S. dollar during the
period.
The weighted average cost of debt ("WACD") for the
fourth quarter decreased to 8.5 percent from 8.8 percent in 4Q02. The resulting
decrease is mainly due to lower interest rates both in Mexican pesos and in
U.S. dollars. WACD considers actual interest paid to banks and to the market.
Table 3: Total
Financing Cost
Table 3
Total Financing Cost
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003
2002 Change
Constant Pesos
Interest
Expense 421 410
2.7 1,564 1,354
15.5
Interest
Income (51) (23)
126.4 (154) (61) 149.9
Foreign
Exchange Loss
(Gain) 198 214
(7.6) 781 1,605
(51.4)
Monetary
Position (Gain) (228) (306)
(25.4) (570) (809) (29.6)
Other Financial
Expenses
(Net)* 162
41 297.5 375
264 42.0
Total
Financing Cost
(Gain) 501 336
49.2 1,996 2,353
(15.2)
Nominal Dollars
Interest
Expense 37 38
(2.2) 141 129 9.3
Interest
Income (5) (2)
124.0 (14) (6) 148.0
Foreign
Exchange Loss
(Gain) 18 20
(10.6) 67 152
(55.5)
Monetary
Position (Gain) (20) (29)
(29.7) (51) (78) (34.1)
Other Financial
Expenses
(Net)* 14 4
274.6 34 25
33.4
Total
Financing Cost
(Gain) 45 31
43.7 178 223
(20.3)
* Net of non
related interest products.
Taxes
The YoY decrease in accrued tax, both for the quarter and
the year was due primarily to the reduction in taxable gains of some of our
Mexican operations and foreign subsidiaries that do not consolidate for Mexican
tax purposes.
As mentioned in previous quarters, on an accumulated basis,
YoY deferred income tax comparisons reflect the initial recognition during 2002
of the gradual decrease in Income Tax rates from 35 percent in 2002 to 32
percent in 2005. Also, the effect of a higher devaluation of the Mexican peso
during 2002 versus 2003 resulted in higher fiscal losses for Mexican
subsidiaries.
Table 4:
Taxes and Profit Sharing to Workers
Table 4
Taxes and Profit Sharing to Workers
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003
2002 Change
Constant
Pesos
Accrued
Income Tax (116) 118
-- 198 393
(49.7)
Deferred
Income Tax 114 (78)
-- (150) (878)
(82.9)
Total
Income Tax (2) 39
-- 48 (485)
--
Profit Sharing
to
Workers (22) (29)
24.6) 38 49
(23.1)
Total Taxes
and PSW (24) 11
-- 85 (436)
--
Nominal
Dollars
Accrued
Income Tax (10) 10
-- 18 36 (50.3)
Deferred
Income Tax 10 (7)
-- (13) (85)
(85.2)
Total
Income Tax (0) 3
-- 5 (49)
--
Profit
Sharing to Workers (2) (3) (33.7)
4 5 (25.5)
Total Taxes
and PSW (2) 1
-- 9 (44)
--
Consolidated Net
Loss
Even though operating income for the quarter was up 57.0
percent YoY, higher total financing costs YoY resulted in a consolidated Net
Loss of US$12 million for the quarter. A US$10 million loss from the write-off
of certain fixed assets and severance payments in connection with
restructurings primarily implemented at Glass Containers and Flat Glass also
contributed to the Net Loss.
Capital Expenditures
Capital expenditures (CAPEX) for the fourth quarter totaled
US$44 million. Flat Glass accounted for 61 percent or US$27 million, mainly
used for the completion of the joint venture facility at Mexicali, as well as
for several automation projects in the floats and automotive production lines
and the project to use alternative sources of energy. Another 32 percent, or
US$14 million, was spent at Glass Containers, mainly for maintenance purposes
and for the already mentioned project to use alternative sources of energy.
Total capital expenditures for 2003 were slightly above original budget, at
US$160 million, mainly because of the alternative sources of energy project,
which was not considered in budget.
Consolidated Financial Position
Consolidated gross debt as of December 31, 2003 totaled
US$1,409 million, a QoQ decrease of US$2 million. The 2.0 percent depreciation
of the Mexican Peso against the U.S. dollar during the quarter also contributed
to lower the peso denominated debt when measured in dollar terms. Net debt
decreased QoQ by US$17 million to US$1,283 million. On a YoY comparison, gross
debt decreased by US$46 million.
On October 15, 2003, the Company placed US$225 million
11.75% Senior Notes due November 1, 2013. Net proceeds from the offering were
applied to retire a portion of the short-term and long-term debt of its holding
company, Vitro, S.A. de C.V. As a result, average life of debt at the holding
company level increased from 4.1 years to 5.7 years. In addition, at year-end,
short term debt only represented 8 percent of total holding company debt.
During 2003, the Company was able to improve the average
life of its debt from 3.1 years to 4.1 years as a result of various financing
activities that included a 6 year peso-denominated note issued on the Mexican
market for approximately US$250 million and a syndicated facility at the flat
glass division for $201 million with an average life of debt of 3.0 years, as
well as the above mentioned 10-year Senior Notes issued in the international
markets.
As reported in 3Q03 results, foreseeing that the calculation
of certain financial ratio covenants would be affected by the exchange rate as
of the end of September and the last twelve month EBITDA trailing, the Company
proactively amended the contracts to temporarily stretch such covenants. The
Company is currently in compliance with all its financial obligations and
expects to continue being in compliance as results are improving.
As of 4Q03, Vitro had cash and cash equivalents of US$126
million, of which approximately 34 percent were unrestricted.
Table 5: Debt
Indicators
Table 5
Debt Indicators
(Million dollars; except as indicated)
4Q'03 3Q'03
2Q'03 1Q'03 4Q'02
Interest
Coverage
(EBITDA/ Total
Net Financial Exp.)
(Times)
LTM 2.3 2.3
2.3 2.6 2.8
Leverage
(Total Debt /
EBITDA) (Times)
LTM 3.9
4.1 4.2 4.2
3.7
Total
Debt 1,409 1,411
1,486 1,576 1,455
Short-Term
Debt(1) 400 480
456 495 458
Long-Term
Debt 1,009 932
1,030 1,080 997
Currency Mix
(%) dlls / Pesos /
UDI's 61/39/0 54/46/0 53/47/0
57/43/0 66/34/0
Weighted
Average Cost of
Debt (%) 8.5 8.0
8.8 9.2 8.8
(1) Short term debt includes current
maturities of long-term debt.
Debt Profile as
of December 31, 2003*
-- The Company's average life of debt as of
4Q03 was 4.1 years, up
1 year from
the 3Q03 debt profile.
-- At the Holding Company level, the average
life of debt was
5.7 years,
up from 4.1 years as of 3Q03.
-- Short term debt was reduced from 34 percent
of total debt as of 3Q03
to 28
percent as of December 31, 2003, a US$80 million decline.
--
46.5 percent of debt maturing during 2004, approximately US$186
million, is
related to trade finance.
* Debt profile considers swaps and derivatives
transactions when
including
rate and currency mix.
-- Revolving short-term debt, including trade
related, accounts for
43.5
percent of total short-term debt. This type of debt is usually
renewed
within periods of 28 to 180 days.
-- Market debt is mostly short-term Euro
Commercial Paper and
"Certificados Bursatiles" that the Company uses on a regular
basis
to finance
short-term needs as a way to maintain its presence in
these
markets.
-- Debt maturities during 2005 are all due at
the operating subsidiary
level and
basically come from syndicated facilities.
-- For 2006, market maturities include
medium-term notes denominated in
UDI's,
swapped to pesos. Maturities for 2007 include the Senior
Notes.
-- Market maturities from 2008, 2009 and
thereafter, include the
"Certificados Bursatiles", a Private Placement, and the new
Senior
Notes due
2013, all at the Holding Co. level.
Cash Flow
Working capital needs for the quarter decreased mainly as a
result of the effort to lower balances in accounts receivable, especially at
Glass Containers, as well as better conditions negotiated with suppliers across
the three business units. Cash taxes paid for the quarter compared unfavorable
YoY due to an asset tax refund in 4Q02. Proceeds of cash flow from operations
for the quarter were mainly used to cover deferred fees incurred during the
period, and the payment of the funding of the Company's pension plan and
severance payments.
For the year, cash flow from operations was affected by a
lower YoY EBITDA and higher than expected CAPEX. However, the steps taken to
reduce inventories, especially at Glass Containers and Glassware, resulted in
lower working capital needs compared to 2002. The Company also reduced dividend
payments and cash taxes paid on a YoY basis.
Table 6: Cash
Flow Analysis
Table 6
Cash Flow from Operations Analysis(1)
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003
2002 Change
Constant Pesos
EBITDA 1,089 852
27.8 4,052 4,308 (5.9)
(-) Net
Interest Expense(2) 547 558
(2.1) 1,716 1,586 8.1
(-)
Capex 500 362
38.3 1,776 1,067 66.4
(+/-) Working
Capital(3) (384) (193)
99.5 347 875
(60.4)
(-)
Dividends - 7 -- 239
368 (35.0)
(-) Cash
Taxes paid 100 (90)
-- 106 213
(50.2)
Net
Free Cash Flow 326 207
57.5 (130) 200
--
Nominal
Dollars
EBITDA 97 78
24.1 364 403 (9.7)
(-) Net
Interest Expense(2) 48 52
(7.6) 155 151
2.8
(-)
Capex 44 34
32.4 160 101
59.4
(+/-) Working
Capital(3) (34) (18)
92.0 29 85
(65.8)
(-) Dividends -
1 -- 22
35 (36.6)
(-) Cash
Taxes paid 9 (8)
-- 10 21
(53.4)
Net
Free Cash Flow 29 17
67.7 (13) 10
--
(1) This
statement is a Cash Flow statement and it does not represent a
Statement of
Changes in Financial Position according with the Mexican
GAAP
(2) Includes
other financial expenses and products.
(3) Includes;
Clients, Inventories, suppliers and other current assets
and
liabilities
Key Developments
Debt Refinancing
On October 15, 2003, The Company announced that it completed
the issuance and sale of US$225 million aggregate principal amount at the
Holding Company level, Vitro, S.A. de C.V.'s 11.75% senior unsecured Notes due
2013.
The offering is consistent with Vitro's strategy to
strengthen its balance sheet and to enhance liquidity by increasing the average
life of its debt.
Vitro applied the net proceeds from the offering to retire a
portion of the short-term and long-term debt of its holding company, Vitro,
S.A. de C.V. As of year-end, short term debt at the holding company level
represented only 8 percent of its total debt. There are no material market
maturities until late 2006.
Divestiture Plan
On January 26, 2004, the Company announced that it reached a
preliminary agreement to sell its 60 percent interest in Vitro Fibras, S.A. to
its joint venture partner Owens Corning for approximately US$71.5 million in
cash. Vitro has also agreed to pay Vitro Fibras approximately US$22 million to
pay down its bank debt at the close of negotiations, so net proceeds will be in
the order of US$49.5 million. The transaction will be closed at an estimated
EBITDA multiple of 5.5x, in line with other market transactions for similar
companies.
Proceeds from the transaction are expected to be received
during 2Q04 and will be used to reduce net debt.
The divestiture is consistent with Vitro's strategy to focus
on its glass-related core businesses.
Flat Glass
(49 percent of Consolidated Sales)
Sales
Flat Glass' consolidated sales for the fourth quarter of
2003 increased by 0.9 percent to US$267 million YoY, and decreased 0.8 percent
for the full year to US$1,089 million from US$1,098 million in 2002. For the
quarter, the increase was mainly attributable to sales from the new Mexicali
float, which started operations on November 2003, ahead of schedule and under
budget.
Within the construction segment, during 2003, Flat Glass
experienced stronger domestic sales due to the recovery of long-term contracts
with some major distributors and the new float facility at Mexicali. Going
forward, this market shows positive prospects, as the Mexican government is
favoring housing construction at all levels. During 2003 Vitro Cristalglass,
our Spanish subsidiary, increased its market penetration in Portugal, and
showed a YoY growth in sales of over 40 percent, reaching US$117 million at
year-end. Vitro Cristalglass was also awarded significant contracts, which
provided access to new markets, such as the Euro one million contracts to
supply architectonic glass to the Spanish retailer El Corte Ingles. In the case
of Vitro America, sluggish demand in the US non-residential construction market
was largely responsible for the decline in sales in the segment. Going forward,
the Company plans to expand its exposure to the growing residential
construction segment and increase synergies by raising the amount of glass sold
to its US subsidiary.
Sales within the OEM auto industry were down YoY since this
market continued to show weak demand in both the domestic and export segments.
Going forward, the Company expects to increase its sales to OEMs as it has
secured long-term contracts of new platforms being introduced in 2005. The YoY
increase in sales to the export auto-replacement market partially compensated
the decrease in OEMs, but strong competition in the US and the domestic market
forced price adjustments that were necessary to maintain market share in such
segment.
By geographic segment, overall domestic sales decreased by
4.2 percent YoY driven by lower sales in the OEM auto segment, while the 3.7
percent increase in export sales is mainly attributable to the auto-replacement
market and new contracts within the fiber glass operations. Foreign
subsidiaries increased sales by 2.8 percent, with Spanish sales leading the
growth in sales while U.S. operations remained weak during 2003.
Table 7
Flat Glass
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003 2002 Change
Constant
Pesos
Consolidated
Net sales 3,012 2,940
2.5 12,169 12,048
1.0
Net Sales
Domestic
Sales 848 850
(0.3) 3,342 3,385
(1.3)
Exports 725 663
9.3 2,816 2,827
(0.4)
Foreign
Subsidiaries 1,439 1,426
0.9 6,010 5,837
3.0
EBIT 231 91 153.2 1,020 911 12.1
EBITDA 411 285 44.2
1,728 1,631 5.9
EBIT
Margin 7.7% 3.1%
4.6 pp 8.4% 8.4%
0 pp
EBITDA
Margin 13.6% 9.7%
3.9 pp 14.2% 14.2% 0 pp
Nominal
Dollars
Consolidated
Net sales 267 265
0.9 1,089 1,098
(0.8)
Domestic
Sales 75 78
(4.2) 302 320
(5.8)
Export
Sales 64 62
3.7 255 272
(6.3)
Foreign
Subsidiaries 128 125
2.8 532 506
5.2
EBIT 21 8 166.5 91 82 11.2
EBITDA 37 26
42.5 155 150
3.1
EBIT
Margin 7.7% 2.9%
4.8 pp 8.4% 7.6%
0.8 pp
EBITDA
Margin 13.6% 9.7% 3.9 pp 14.2% 13.5% 0.7 pp
Volumes
Flat Glass
(Thousands of
Metric
Tons) 171.7 164.5
4.4 640.7 666.9
(3.9)
Fiber Glass
(Thousands
of Metric
Tons) 9.8 8.7
12.3 37.1 35.1
5.5
Capacity
utilization
Flat Glass
furnaces(1)(2) 94% 106%
-12 pp 93% 104%
-11 pp
Flat Glass
auto segment 78% 87%
-9 pp 77% 90%
-13 pp
Fiber Glass
Insulation 98% 87%
11 pp 91% 78% 13 pp
Fiber Glass
Composites 93% 85%
8.7 pp 93% 92%
1.1 pp
(1) 2003
considers the refurbishment of one float, which represents
approximately 39% of total capacity, during 2Q'03
(2) Capacity
utilization may sometimes be greater than 100 percent
because
pulling capacity is calculated based on a certain number of
changes in
glass color & thickness, determined by historical
averages.
EBIT and EBITDA
EBIT and EBITDA for the fourth quarter of 2003 increased YoY
by 166.5 percent to US$21 million and 42.5 percent to US$37 million
respectively. This mainly reflected a non-recurrent US$9 million charge in the
fourth quarter of 2002 from inventory write-offs. Excluding this effect, EBIT
and EBITDA for the period would have increased YoY by 22.2 and 3.8 percent,
respectively. Increased efficiencies at the float and auto production
facilities as well as lower distribution expenses contributed to the
improvement in results for the quarter.
On an accumulated basis, EBIT and EBITDA increased by 11.2
percent and 3.1 percent, respectively, to US$91 million and US$155 million.
During 2003, and in line with Vitro's commitment to cost cutting and product
mix realignment, Flat Glass focused on increasing efficiencies at its
facilities by automating certain processes, and by reducing expenses especially
within the sales and distribution lines.
Glass Containers
(41 percent of Consolidated Sales)
Sales
During the fourth quarter, consolidated sales at Glass
Containers decreased YoY by 7.1 percent to US$224 million, mainly the result of
weak sales to one of the Company's main customers, as a consequence of lower
than expected demand from its markets on an historical basis. For the year,
sales decreased by 8.7 percent to US$891 million, from US$977 million in 2002,
a record year for Glass Container's sales. Results for 2002 also include US$9
million in sales from Ampolletas, a non-core business divested during 2Q02.
Excluding Ampolletas, sales for 2003 would have declined by 7.6 percent.
In 2003, weather and general economic conditions negatively
impacted the business unit's main products, particularly beer bottle shipments,
which fell YoY by 55.6 percent, in peso terms. However, domestic sales of
non-returnable beverages, a high profitable market, increased YoY by 22.6
percent in peso terms and sales of new value added products increased from 12
percent as a percentage of sales in 2002, to 18 percent in 2003, reflecting the
Company's successful focus on niche value-added products.
Even in this difficult environment, exports for the year,
primarily to the United States, posted record sales levels and profits,
increasing by 5.2 percent. This was mainly the result of the Company's focus on
value added niche products like specialty colors, labels, molds, its continuous
commitment to ware classes of high-value, and future potential in glass such as
wine, liquor and cosmetics.
Sales from Glass Container's foreign subsidiaries dropped
YoY by 13.6 percent or US$17 million, as a result of lower shipments of generic
food containers within their domestic market and wine & liquor bottles to
other export markets.
Table 8: Glass
Containers
Table 8
Glass Containers
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003
2002 Change
Constant
Pesos
Consolidated Net sales 2,522
2,638 (4.4) 9,928
10,536 (5.8)
Net Sales
Domestic Sales 1,612 1,669
(3.4) 5,941 6,426
(7.5)
Exports 600 606 (1.0)
2,795 2,707 3.2
Foreign
Subsidiaries 304 363
(16.0) 1,187 1,403
(15.4)
EBIT 145 249
(42.0) 783 1,251
(37.5)
EBITDA 492
494 (0.3) 1,840
2,261 (18.6)
EBIT
Margin 5.7% 9.5% -3.8 pp 7.9% 11.9% -4 pp
EBITDA
Margin 19.5% 18.7%
0.9 pp 18.5% 21.5%
-3 pp
Nominal
Dollars
Consolidated Net sales 224 241
(7.1) 891 977
(8.7)
Domestic Sales 143 156
(8.5) 538 619
(13.1)
Export Sales 53 53
0.7 248 236
5.2
Foreign
Subsidiaries 27 32
(14.5) 105 122
(13.6)
EBIT 13 23
(43.6) 70 117
(40.1)
EBITDA 44 46
(4.2) 166 214
(22.5)
EBIT
Margin 5.8% 9.5% -3.7 pp 7.9% 12.0% -4.1pp
EBITDA
Margin 19.5% 18.9%
.6 pp 18.6% 21.9%
-3.3pp
Glass
Containers
Domestic
(Millions of
Units) 919 1,046
(12.2) 3,626 4,115
(11.9)
Exports
(Millions of
Units) 261 262
(0.3) 1,136 1,145
(0.8)
Total 1,179 1,307
(9.8) 4,762 5,260
(9.5)
Capacity
utilization
(furnaces) 75% 90%
(16.7) 77% 93%
(17.2)
Capacity
utilization
(production lines) 82% 90%
(8.9) 83% 91%
(8.8)
Soda Ash
(Thousands
Tons) 143.1 140.0
2.2 549.1 543.7
1.0
Capacity
utilization 100% 99%
1.1 97% 96%
0.8
Aluminium
Cans
(Million
of Units) 313.3 260.1
20.5 1,065.1 978.0
8.9
Capacity
utilization 75% 69%
8.2 71% 66%
6.3
EBIT and EBITDA
EBIT and EBITDA at Glass containers for the fourth quarter
of 2003 were down YoY by 43.6 and 4.2 percent to US$13 million and US$44
million, respectively. The steep decline in EBIT was due to a reduction in the
average useful life of the containers forming machines used at our production
lines in order to upgrade them to continue improving productivity and reduce
maintenance expenses. This is consistent with industry practices and provides
competitiveness to the business unit. It has no impact on EBITDA results.
Despite the difficult comparisons between 2002 and 2003,
fourth quarter results demonstrate an improving trend in margins, with EBITDA
margins increasing YoY by 60 basis points.
For the year, EBIT and EBITDA declined YoY by 40.1 percent
and 22.5 percent, to US$70 million and US$166 million respectively. The
decrease in EBITDA for the year was mainly due to lower sales across our
business lines, mainly in the beer segment, which covers most of the
operation's fixed costs. As a result, wages and salaries, energy, maintenance
costs and depreciation, increased as a percentage of sales. During the year,
inventories were reduced by US$15 million, which affected capacity utilization
levels and the EBITDA comparison YoY.
Glassware
(10 percent of Consolidated Sales)
Sales
Consolidated sales at the Glassware business unit were down
YoY for the fourth quarter by 10.7 percent, to US$58 million. For the year,
sales declined by 8.0 percent to US$236 million.
Results mainly reflect the divestiture in September of 2003
of Envases Cuautitlan (ECSA), one of our plastic business units. Excluding
ECSA, Glassware sales would have decreased by only 5 percent for the fourth
quarter and by 7 percent for the year. This decline reflected weak credit
conditions in the wholesaler segment which offset an improved consumer demand,
especially to the export markets. In addition, sales to the industrial segment
during 4Q02 were unusually high as the candleholder segment made advanced
purchases in prevention of an announced increase in prices.
The business unit continues to focus on aligning its supply
chain system to increase capacity utilization and achieve further market
entrenchment. During 2003, the Company introduced 97 new products, which
represented 30 percent of sales, up from 16 percent for 2002. This strategy
resulted in YoY increases in sales for 2003 of 11 percent in the retail segment,
22 percent to the direct segment, and 10 percent to the promotional segment.
Table 9:
Glassware
Table 9
Glassware
(Millions)
YoY% YoY%
4Q'03 4Q'02 Change 2003 2002 Change
Constant
Pesos
Consolidated
Net sales 657 706
(7.0) 2,612 2,719 (3.9)
Net Sales
Domestic
Sales 439 514
(14.7) 1,753 1,873 (6.4)
Exports
219 192 13.8
859 845 1.6
EBIT 78 62
25.9 187 275
(32.2)
EBITDA 149 135
10.5 474 564
(16.0)
EBIT
Margin 11.9% 8.8%
3.1pp 7.2% 10.1%
-2.9pp
EBITDA
Margin 22.6% 19.1%
3.5pp 18.1% 20.7%
-2.6pp
Nominal
Dollars
Consolidated
Net sales 58 65
(10.7) 236 256
(8.0)
Domestic
Sales 39 48
(18.1) 158 178
(11.1)
Export
Sales 19 18
8.9 78 78
(1.1)
EBIT 7
6 23.0 17
26 (34.3)
EBITDA 13 12
6.3 43 53
(19.8)
EBIT
Margin 11.9% 8.6%
3.3pp 7.1% 10.0%
-2.9pp
EBITDA Margin 22.6% 19.0%
3.6pp 18.1% 20.8%
-2.7pp
Sales mix
glassware products
(Volume
terms)
Retail 32.2% 23.7%
8.5pp 35.3% 31.4%
3.9pp
Wholesaler
22.2% 27.5% -5.3pp 25.3%
24.2% 1.1pp
Industrial
40.9% 45.1% -4.2pp 34.6%
39.6% -5 pp
OEM 4.7% 3.7%
1 pp 4.9% 4.8%
0.1pp
Capacity
utilization
(furnaces)
77% 80% -3 pp 77%
80% -3 pp
Capacity
utilization
(production
lines) 77% 64% 12.8pp 70% 73% -2.5pp
EBIT and EBITDA
EBIT and EBITDA for the fourth quarter of 2003 increased YoY
by 23.0 percent and 6.3 percent respectively, to US$7 million and US$13 million
despite ECSA's divestiture, due to increased capacity utilization and a better
sales mix.
The YoY increase in the forth quarter's EBIT and EBITDA also
reflects cost cutting measures, as well as the simplification of manufacturing
processes, which have increased efficiencies and improved speeds, while
offering color production flexibility with minimum machine and furnace
downtime. As a result, a variety of new value-added molds have been introduced
to the market at record speeds, improving the business unit's bottom line.
For the year, EBIT and EBITDA decreased YoY 34.3 percent and
19.8 percent respectively, to US$17 million and US$43 million. The improving
trend in the second half of the year was not enough to offset poor results
during the first half of the year. Also, the decrease in inventories during
1Q03, affected capacity utilization, thus decreasing fixed cost absorption
during such period.
EBITDA Reconciliation
EBITDA consists of operating income plus depreciation,
amortization and reserves for seniority premiums and pensions. The concept of
EBITDA is presented because some of our investors have indicated to us that
they consider it an appropriate measurement of funds available to service our
debt. EBITDA is not intended to represent cash flow from operations as defined
by generally accepted accounting principles and should not be considered as an
alternative to net income to measure our operating performance or to resources
generated by continuing operations as a measure of our liquidity. Because not
all companies calculate EBITDA identically, our presentation of EBITDA may not
be comparable to other similarly entitled measures used by other companies.
The following table sets forth, for the periods indicated,
the reconciliation of EBITDA to resources generated from continuing operations
of each of our business units.
Table 10:
EBITDA Reconciliation
Table 10
EBITDA
Reconciliation
(Millions of Constant Pesos)
4Q'03 4Q'02
2003 2002
Flat
Glass:
EBITDA 411
285 1,728 1,631
Other
expense net of witte-
off of
assets (61) 18
(81) (18)
Income
and assets tax and
workers'
profit sharing, net
of deferred
taxes 183 1
(66) (255)
Amortization of cost of debt
issue
3 -- 11 --
Gain
(loss) from sale of
subsidiaries --
-- -- --
Total
Financing Cost (110) (147)
(536) (677)
Changes
in working capital (88) 192
(360) (17)
Resources
generated from
operations
338 349 695 665
Glass
Containers:
EBITDA
492 494 1,840
2,261
Other
expense net of witte-
off of
assets (13) (22) 4 (1)
Income
and assets tax and
workers'
profit sharing, net
of
deferred taxes (22) (24)
(139) (127)
Amortization of cost of debt
issue 3 3 14 18
Gain
(loss) from sale of
subsidiaries
-- -- -- --
Total
Financing Cost (203) (167)
(846) (1,132)
Changes
in working capital 234 (102) 2 (817)
Resources
generated from
operations
491 182 875 202
Glassware
EBITDA
149 135 474 564
Other
expense net of witte-
off of
assets (9) (19)
(18) (31)
Income
and assets tax and
workers'
profit sharing, net
of
deferred taxes 13 (10)
(22) (37)
Amortization of cost of debt
issue
-- -- 1 1
Gain
(loss) from sale of
subsidiaries
-- -- -- --
Total
Financing Cost (26) (28)
(119) (171)
Changes
in working capital (35) (151)
(22) (262)
Resources
generated from
operations 92 (73) 293 64
Corporate
and other
eliminations:
EBITDA
37 (62) 11
(148)
Other
expense net of witte-
off of
assets (6) 66 70 39
Income
and assets tax and
workers'
profit sharing, net
of
deferred taxes (17) (56)
12 (22)
Amortization of cost of debt
issue 10 5 38 34
Gain
(loss) from sale of
subsidiaries
-- -- (35) (68)
Total
Financing Cost (162) 6
(495) (373)
Changes
in working capital (54) 84
(105) 89
Resources
generated from
operations
(193) 43 (504) (449)
Consolidated Results:
EBITDA 1,089 852
4,052 4,308
Other
expense net of witte-
off of
assets (89) 43
(25) (11)
Income
and assets tax and
workers'
profit sharing, net
of deferred taxes 157 (89) (215) (441)
Amortization of cost of debt
issue
16 8 64 53
Gain
(loss) from sale of
subsidiaries
-- -- (35) (68)
Total
Financing Cost (501) (336)
(1,996) (2,353)
Changes
in working capital 56 24
(485) (1,007)
Resources
generated from
operations 728
501 1,360 481
Suma 0 (0) (0) 0
VITRO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003 (IN MILLIONS)
Fourth Quarter
INCOME
STATEMENT Constant
Pesos Nominal Dollars
Item 2003 2002 % Var. 2003 2002
% Var.
1 Consolidated Net Sales 6,263
6,320 (0.9) 556
574 (3.2)
2 Cost of Sales 4,513
4,659 (3.1) 401
424 (5.6)
3 Gross Income 1,750
1,661 5.4 155
150 3.6
4 SG&A Expenses 1,297 1,372 (5.4) 115
124 (7.3)
5 Operating Income 453 290 56.5
40 26 56.3
6 Interest Expense 579 524 10.5
51 49 5.3
7 Interest Income 47 96 (51.2)
4 9 (52.5)
8 Exchange Loss (Gain) 198
214 (7.6) 18
20 (10.6)
9 Gain from Monet. Position 228
306 (25.4) 20
29 (29.7)
10 Total Financing Cost 501 336 49.2
45 31 43.7
11 Other Income (109)
(80) (35.0) (10)
(7) (29.5)
12 Share in Net Income of
Non-Consol.
Assoc.
Companies
-- -- -- --
13
Inc. (loss) bef. Tax &
PSW (157) (127)
(23.5) (14) (13) (10.1)
14 Income Tax and PSW (24) 11 -- (2)
1 --
15 Net Inc. (loss) Cont.
Opns. (133) (138)
3.4 (12) (13)
9.4
16 Income (loss)of Discont.
Oper. -- 75 -- 7
17 Net Income (Loss) (133) (63) (111.7) (12) (6) (87.0)
18 Net Income (loss) of
Maj. Int. (175)
(110) (58.8) (16)
(11) (46.6)
19 Net Income (loss) of
Min.
Int. 42 48
(11.0) 4 4
(14.7)
January - December
INCOME STATEMENT Constant Pesos Nominal Dollars
Item 2003 2002
% Var. 2003 2002 % Var.
1 Consolidated Net Sales 24,954
25,426 (1.9) 2,238
2,343 (4.5)
2 Cost of Sales 18,047
18,110 (0.3) 1,620
1,673 (3.2)
3 Gross Income 6,907
7,316 (5.6) 618
670 (7.7)
4 SG&A Expenses 5,059 5,199 (2.7) 453
475 (4.7)
5 Operating Income 1,847 2,117
(12.8) 165 194 (15.0)
6 Interest Expense 1,973 1,701 16.0
178 162 9.9
7 Interest Income 188
144 30.1 17
13 28.8
8 Exchange Loss (Gain) 781
1,605 (51.4) 67
152 (55.5)
9 Gain from Monet. Position 570
809 (29.6) 51
78 (34.1)
10 Total Financing Cost 1,996
2,353 (15.2) 178
223 (20.3)
11 Other Income (150)
(433) 65.4 (14)
(43) 68.5
12
Share in Net Income of
Non-Consol.
Assoc.
Companies
(0) (0) 4.9
(0) (0) 16.1
13 Inc. (loss) bef. Tax &
PSW (298) (669)
55.4 (26) (72) 63.7
14 Income Tax and PSW
85 (436) --
9 (44) --
15 Net Inc. (loss) Cont.
Opns. (384) (233) (65.0) (35) (27) 28.2)
16 Income (loss)of Discont.
Oper. -- 359
-- -- 35
--
17 Net Income (Loss) (384) 127 -- (35)
7 --
18 Net Income (loss) of
Maj.
Int. (569) (20)
-- (51) (5) (894.9)
19 Net Income (loss) of
Min.
Int. 186 146
26.9 16 13
30.5
VITRO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003 (IN MILLIONS)
Constant
Pesos Nominal Dollars
Item BALANCE SHEET 2003
2002 % Var. 2003
2002 % Var.
20 Cash & Cash Equivalents 1,413 2,367
(40.3) 126 2 14
(41.2)
21 Trade Receivables 2,218
2,170 2.2 197
196 0.7
22 Inventories 3,924
4,044 (3.0) 349
365 (4.3)
23 Other Current Assets 1,331
1,101 20.9 118
99 19.4
24 Total Current Assets 8,886
9,683 (8.2) 791
874 (9.5)
25 Inv. in Uncons. Subs. --
-- -- --
-- --
26 Prop., Plant &
Equipment
19,329 19,349 (0.1) 1,720 1,771 (2.9)
27 Deferred Assets 1,876 1,929 (2.8)
167 174 (3.9)
28 Other Long-Term Assets 791
618 28.0 70
56 24.6
29 Total Assets 30,881
31,579 (2.2) 2,748 2,875
(4.4)
30 Short-Term & Curr. Debt 4,499 4,996
(10.0) 400
458 (12.5)
31 Trade Payables 2,181 2,414 (9.6)
194 220 (11.7)
32 Other Current
Liabilities
2,261 2,124 6.5
201 192 5.0
33 Total Curr. Liab. 8,941
9,534 (6.2) 796
869 (8.5)
34 Long-Term Debt 11,340 10,840 4.6
1,009 997 1.2
35 Other LT Liabilities 1,950
2,028 (3.8) 174
185 (6.1)
36 Total Liabilities 22,232
22,402 (0.8) 1,978 2,052
(3.6)
37 Majority interest 5,775
6,340 (8.9) 514
570 (9.8)
38 Minority Interest 2,875
2,837 1.3 256
254 0.9
39 Total Shar. Equity 8,650
9,177 (5.7) 770
824 (6.5)
FINANCIAL
INDICATORS
4Q'03 4Q'02
20 Debt/EBITDA (LTM, times) 3.9 3.7
21 EBITDA/ Total Net Fin. Exp. (LTM,
times) 2.3 2.8
22 Debt / Firm Value (times) 0.6 0.6
23 Debt/Equity (times) 1.8 1.7
24 Curr. Assets/Curr. Liab. (times) 1.0 1.0
25 Sales/Assets (times) 0.8 0.8
26 EPS (Ps$) * (0.58) (0.37)
27 EPADR (US$) * (0.16) (0.11)
OTHER DATA
# Shares Issued
(thousands) 324,000 324,000
# Average Shares
Outstanding
(thousands)
300,647 300,647
# Employees
25,829 27,173
VITRO, S.A. DE C.V. AND SUBSIDIARIES
SEGMENTED INFORMATION
AS OF DECEMBER 31, 2003 (IN MILLIONS)
Fourth Quarter
Constant Pesos Nominal Dollars
2003 2002 % 2003
2002 %
FLAT GLASS
Net
Sales 3,060 2,956
3.5% 272 267
1.9%
Interd.
Sales 48 16
194.8% 4 2
179.7%
Con. N.
Sales 3,012 2,940
2.5% 267 265
0.9%
Expts. 725 663
9.3% 64 62
3.7%
EBIT 231 91
153.2% 21 8
166.5%
Margin
(1) 7.7% 3.1% 7.7% 2.9%
EBITDA 411 285
44.2% 37 26
42.5%
Margin
(1) 13.6% 9.7% 13.6% 9.7%
Flat Glass
Volumes
(Thousand
Tons)
Const +
Auto
172 165 4.4%
Fiberglass
(Thousand Tons)
9.8 8.7 12.3%
GLASS
CONTAINERS
Net
Sales 2,556 2,663
-4.0% 227 243
-6.7%
Interd.
Sales 34 25
37.0% 3 2
33.0%
Con. N.
Sales 2,522 2,638
-4.4% 224 241
-7.1%
Expts. 600 606
-1.0% 53 53
0.7%
EBIT 145
249 -42.0% 13
23 -43.6%
Margin
(1) 5.7% 9.5% 5.8% 9.5%
EBITDA 492 494
-0.3% 44 46
-4.2%
Margin
(1) 19.5% 18.7% 19.5% 18.9%
Glass
containers volumes
(MM Pieces)
Domestic
919 1,046 -12.2%
Exports
261 262 -0.3%
Total:Dom.+Exp. 1,179 1,307 -9.8%
Soda Ash
(Thousand Tons)
134 137 -2.1%
Aluminum Cans
(MM Pieces)
268 250 7.2%
GLASSWARE
Net
Sales 665 713 -6.7% 59 66
-10.5%
Interd.
Sales 8 6
29.0% 1 1
22.8%
Con. N.
Sales 657 706
-7.0% 58 65
-10.7%
Expts. 219 192
13.8% 19 18
8.9%
EBIT 78 62
25.9% 7 6
23.0%
Margin
(1) 11.9% 8.8% 11.9% 8.6%
EBITDA 149 135
10.5% 13 12
6.3%
Margin
(1) 22.6% 19.1% 22.6% 19.0%
GLASSWARE
(Sales Mix %)
Retail
32.2% 23.7%
Wholesale
22.2% 27.5%
Industrial 40.9% 45.1%
OEM
4.7% 3.7%
CONSOLIDATED
(2)
Net
Sales 6,416 6,394
0.4% 569 581
-2.0%
Interd.
Sales 153 74
106.8% 14 7
97.8%
Con. N.
Sales 6,263 6,320
-0.9% 556 574
-3.2%
Expts. 1,544 1,461
5.7% 137 133
3.2%
EBIT 453 290
56.5% 40 26
57.0%
Margin (1) 7.2%
4.6% 7.3% 4.5%
EBITDA 1,089 852
27.8% 97 78
24.1%
Margin
(1) 17.4% 13.5% 17.4% 13.5%
VITRO, S.A. DE C.V. AND SUBSIDIARIES
SEGMENTED INFORMATION
AS OF DECEMBER 31, 2003 (IN MILLIONS)
January - December
Constant Pesos Nominal Dollars
2003 2002 % 2003
2002 %
FLAT GLASS
Net
Sales 12,316 12,160 1.3%
1,102 1,109 -0.6%
Interd.
Sales 147 112
31.5% 13 11
22.9%
Con. N.
Sales 12,169 12,048 1.0%
1,089 1,098 -0.8%
Expts. 2,816 2,827
-0.4% 255 272
-6.3%
EBIT 1,020 911
12.1% 91 82
11.2%
Margin
(1) 8.4%
7.6% 8.4% 7.5%
EBITDA 1,728 1,631
5.9% 155 150
3.1%
Margin
(1) 14.2% 13.5% 14.2% 13.7%
Flat Glass
Volumes
(Thousand
Tons)
Const + Auto 641 667 -3.9%
Fiberglass
(Thousand
Tons)
37.1 35.1 5.5%
GLASS CONTAINERS
Net
Sales 10,033 10,608 -5.4%
901 983 -8.4%
Interd.
Sales 105 73
44.3% 9 7
39.0%
Con. N.
Sales 9,928 10,536 -5.8%
891 977 -8.7%
Expts. 2,795 2,707
3.2% 248 236
5.2%
EBIT 783
1,251 -37.5% 70
117 -40.1%
Margin
(1) 7.9% 11.9% 7.9% 12.0%
EBITDA 1,840 2,261
-18.6% 166 214
-22.5%
Margin
(1) 18.5% 21.5% 18.6% 21.9%
Glass
containers volumes
(MM Pieces)
Domestic
3,626 4,115 -11.9%
Exports
1,136 1,145 -0.8%
Total:Dom.+Exp. 4,762 5,260
-9.5%
Soda Ash
(Thousand Tons)
406 404 0.6%
Aluminum Cans
(MM
Pieces)
752 718 4.7%
GLASSWARE
Net
Sales 2,632 2,749
-4.3% 237 259
-8.4%
Interd.
Sales 19 31
-36.5% 2 3
-41.4%
Con. N.
Sales 2,612 2,719
-3.9% 236 256
-8.0%
Expts. 859
845 1.6% 78
78 -1.1%
EBIT 187 275
-32.2% 17 26
-34.3%
Margin
(1) 7.2% 10.1% 7.1% 10.0%
EBITDA 474 564
-16.0% 43 53
-19.8%
Margin
(1) 18.1% 20.7% 18.1% 20.8%
GLASSWARE
(Sales Mix %)
Retail
35.3% 31.4%
Wholesale 25.3% 24.2%
Industrial 34.6% 39.6%
OEM
4.9% 4.8%
CONSOLIDATED (2)
Net
Sales 25,471 25,764 -1.1%
2,282 2,371 -3.8%
Interd. Sales 517
338 52.8% 44
29 51.7%
Con. N.
Sales 24,954 25,426 -1.9%
2,238 2,343 -4.5%
Expts. 6,470 6,379
1.4% 580 586
-1.0%
EBIT 1,847 2,117 -12.8%
165 194 -14.9%
Margin
(1) 7.4% 8.3% 7.4% 8.3%
EBITDA 4,052 4,308
-5.9% 364 403
-9.7%
Margin
(1) 16.2% 16.9% 16.3% 17.2%