Quarterly Earnings Report Octubre 28, 2014
3Q14
Distribution Sales to Institutional Clients Declined while Chile and Mexico Demonstrated Improved Performance
Financial Highlights:
(All figures are expressed in million of Mexican pesos. Comparisons are made with the same period of 2014, unless otherwise stated. Figures may vary slightly due to rounding).
- The Group s net sales for the first quarter reached $176.63 million pesos.
- The Gross income for the period was $638.45 million and the gross margin for the quarter was 361.46%.
- Operating expenses reached $658.27 million pesos, which represents 372.68% of the Company s total sales.
- Fourth quarter EBITDA was $2.36 million, or 1.34%.of total sales.
- As part of the financial recovery pursuing, the Group keeps on with the signing of payment agreements with most laboratories creditors.
Mexico City, April 29, 2015. Grupo Casa Saba (SAB) (Saba, GCS, the Company or the Group), distributor of pharmaceutical products as well as health, beauty aids and consumer goods in Mexico, announces its consolidated financial and operating results for the first quarter of 2015.
QUARTERLY EARNINGS
The Group keeps exploring financial alternatives for its financial recovery, with the signing of payment agreements with most laboratories creditors.
NET SALES
Net sales for the quarter totaled $176.63 million, de pesos showing a decrease of 97.95% compared to $8,614.93 million in 1Q2014. This decrease is mainly due to the sale of the Group s commercial division, as well as the process of divestiture of the distribution division.
SALES BY DIVISION
DISTRIBUTION DIVISION
PHARMA, HEALTH, BEAUTY AND CONSUMER GOODS
Sales for the first quarter from our Pharma, Health, Beauty and Consumer Goods division totaled $129.26 million, showing a decrease of 95.83% in comparison with the same quarter form the prior year, as a consequence of the distribution division disincorporation as well as the division cash flow problems.
With the sale of the Pharma division in the previous year, the division s percentage in terms of sales went from 35.97% in 1Q2014 to 73.18% in 1Q2015.
GOVERNMENTPHARMA
Our Government Pharma division totaled $47.37 million. The division showed a sales decrease of 47.29%, compared to the first quarter of 2014, due to our distribution division cash flow problems. In terms of total sales, this division s percentage went from 1.40% in 1Q2014 to 26.82% in 1Q2015.
RETAIL PHARMACY
In 2014, the Pharmacy division was sold; in consequence, there were no sales to report during the first quarter of 2014.
Sales for the first quarter of 2014 from our Pharmacy division, totalized $5,425.95 million. This division s percentage of the Group s overall reached 62.98% in the1Q2014.
As a result, the sales mix for the first quarter of 2015 was as follows:
Division
%
of Sales
Retail Pharmacy 0.00%
Total Distribution 100%
Pharma, Health & Beauty 73.18%
Government Pharma
26.82%
TOTAL 100.0%
GROSS INCOME
During the first quarter of 2015, gross income reached $638.45 million pesos, amount 62.18% lower than the gross income reached in the first quarter of 2014. This was mainly due to the FASA disincorporation and the sales decrease of the distribution division.
OPERATING EXPENSES
Operating expenses in the first quarter of 2015 resulted in $658.27 million pesos. This represents a decrease of $1,049.47 million pesos, or 62.18%, compared to the same period of the previous year. This decrease was mainly due to the FASA disincorporation partially offset by an increase of our reserves on inventory and on uncollectible accounts. As a percentage of total sales, operating expenses accounted 372.68% in the first quarter of 2015, versus a 19.59% for the same period of 2014.
OPERATING INCOME
Quarterly operating loss for the 1Q2015 was $-19.82 million pesos, amount 183.66% higher to the $6.99 million reported during 1Q2014. This was the result of the effects of the factors previously mentioned.
Operating margin income for the 1Q2015 was -11.22%, versus -0.08% in the 1Q2014.
OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION (EBITDA)
EBITDA for the 1Q2015 was $2.36 million, amount lower than the $91.83 million, reported in the first quarter of 2014.
EBITDA margin for the first quarter of 2015 was 1.34%.
COMPREHENSIVE COST OF FINANCING (CCF)
The Group s CCF reached $32.41 million, amount 71.25% lower than CCF reported during 1Q2014.
This decrease was mainly due to the decline and subsequent liquidation of the bank debt that we had minimally offset by a bank loan hiring for the payment of liabilities to laboratories creditors.
NET DEBT
At the end of the first quarter of 2015, we only had one credit agreement totalized $951 million.
OTHER EXPENSES (INCOME)
During the third quarter of the year, other income totaled $-1,807.08 million pesos. This was mainly due to the FASA sale earnings.
During the first quarter of the year, other income totaled $84.67, million pesos. This was mainly due to the sale of fixed assets, wastes, etc. for the payment of liabilities with laboratories.
It is important to mention that the results listed in this line item are derived from activities outside of the company s normal business operations and, as a result, they are not necessarily recurrent.
TAX PROVISIONS
A tax provision was created for an amount of for an amount of $42.69.
NET INCOME (LOSS)
During the first quarter of 2015, GCS recorded a net loss of $-10.25 million, with a variation of $84.72 million, compared to the net loss in the same period last year.
Analysis Coverage: Through the Bolsa Mexicana de Valores program, Independent Analyst, Grupo Casa Saba counts with the coverage of Morningstar.
The 265.4 million shares issued by Grupo Casa Saba are listed on the Mexican Stock Exchange under the symbol “SAB”.
Grupo Casa Saba was founded in 1892 and is one of the leading distributors of pharmaceutical products, beauty, personal care and consumer goods, general merchandise, publications and other goods in Mexico. With more than 115 years of experience, the Company distributes to the majority of pharmacies, chains, self service and convenience stores, as well as other specialized national chains. With the acquisition of FASA in October of 2010 the company now has retail pharmacy outlets located in Mexico, Chile and Brazil.
As a precautionary note to investors, except for the historic information contained herein, certain topics discussed in this document constitute forward looking statements. Such topics imply risks and uncertainties, including the economic conditions in Mexico and those countries in which Grupo Casa Saba operates, directly or indirectly, including the United States of America, Brazil and Chile, as well as variations in the value of the Mexican peso as compared with the currencies of the previously mentioned countries.
Contacts:
GRUPO CASA SABA IR Communications:
Raymundo Barreiro Arpón Jesús Martínez Rojas
GRUPO CASA SABA, S.A.B. DE C.V.
Figures are expressed in thousands Mexican pesos as of March 2015
jan-mar
Jan-mar
Variation
Income Statement
2014
% of sales
2015
% of sales
$
%
NET SALES
8,614,928
100.00%
176,629
100.00%
(8,438,298
(97.95%)
COST OF SALES
6,927,013
80.41%
(461,817)
(261.46%
(7,388,830)
(106.67%)
Gross Profit
1,687,914
19.59%
638,446
361.46%
(1,049,468)
(62.18%)
OPERATING EXPENSES
Sales Expenses
161,464
1.87%
441,313
249.85%
279,849
173.32%
Administrative Expenses
1,533,439
17.80%
216,957
122.83%
(1,316,481)
(85.85%)
Operating Expenses
1,694,903
19.67%
658,270
372.68%
(1,036,633)
(61.16%)
Operating Income
(6,989)
0.08%
(19,824)
11.22%)
(12,836)
(183.66%)
COMPREHENSIVE COST OF FINANCING
Interest Paid
168,833
1.96%
28,981
16.41%
(139,901)
(82.84%)
Interest (Earned)
(33,944)
(0.39%)
(122)
(0.07%)
33,822
(99.64%)
Exchange Loss (Gain)
(22,205)
(0.26%)
(3,548)
2.01%
25,752
(115.98%)
Monetary Position (gain)
-
0.00%
-
(0.00%)
-
0.00%
Comprehensive Cost of Financing
112,733
1.31%
32,407
18.35%
(80,327)
(71.25%)
OTHER EXPENSES (INCOME), net
(66,005)
(0.77%)
(84,674)
(47.94%)
(18,669)
(28.28)%)
NET INCOME BEFORE TAXES
(53,717)
(0.62%)
32,443
18.73%
86,160
(160.40%)
PROVISIONS FOR:
Income Tax
44,979
0.52%
42,689
24.17%
(2,290)
(5.09%)
Asset Tax
-
0.00%
-
0.00%
-
0.00%
Deferred Income Tax
(3,729)
(0.04%)
-
(0.00%)
3,729
(100%)
Profit sharing due
-
0.00%
-
0.00%
-
0.00%
Deferred Profit sharing due
-
0.00%
-
0.00%
-
0.00%
Total taxes
41,250
0.17%
75,855
0.44%
20,000
35.81%
Net Income Before Extraordinary Items
(94,967)
(1.10%)
(10,246)
(5.80%)
84,721
(89.21%)
Extraordinary Items (Income)
-
0.00%
-
0.00%
-
0.00%
Net Income
(94,967)
(1.10%)
(10,246)
(5.80%)
84,721
(89.21%)
Depreciation and Amortization
98,821
1.15%
22,186
12.56%
(76.634)
(77.55%)
Operating Income plus Depreciation and Amortization
91,832
1.07%
(2,362)
1.34%
(89,470)
(97.43%)
Net Income corresponding to Minority Interest
601
-
-
(0.00%)
(601)
(100%)
GRUPO CASA SABA, S.A.B. DE C.V.
BALANCE SHEET
Figures are expressed in thousands of Mexican pesos as of March 2015
QUARTER CURRENT YEAR
CLOSE PRIOR YEAR
AMOUNT
AMOUNT
TOTAL ASSETS
4,443,911
6,199,270
CURRENT ASSETS
2,561,717
3,857,170
CASH AND CASH EQUIVALENTS
94,940
145,955
CLIENTS (NET)
675,319
1,080,975
CLIENTS
2,616,779
2,588,300
ALLOWANCE FOR DOUBTFUL ACCOUNTS
(1941,460)
(1,507,325)
OTHER ACCOUNTS RECEIVABLES (NET)
1,324,285
1,938,800
INVENTORIES
461,319
683,218
OTHER CURRENT ASSETS
5,854
8,222
LONG TERM
INVESTMENTS IN SHARES OF SUBSIDIARIES AND
ASSOCIATED COMPANIES
PROPERTY MACHINARY AND EQUIPMENT NET
1,441,001
1,747,405
PROPERTY
1,219,745
1,535,742
MACHINERY AND EQUIPMENT
477,909
488,292
OTHER EQUIPMENT
466,255
466,171
ACCUMULATED DEPRECIATION
(722,908)
(743,800)
CONSTRUCTION IN PROGRESS
INTANGIBLE ASSETS (NET)
193,558
195,955
GOODWILL
156,263
156,263
BRANDS
RIGHTS AND LICENSING
26,950
29,863
OTHER INTANGIBLE ASSETS
10,345
9,829
OTHER NON CURRENT ASSETS
247,635
398,740
ADVANCE PAYMENTS
23,290
26,238
DEFERRED CHARGES (NET)
OTHERS
224,345
372,502
TOTAL LIABILITIES
3,894,493
5,400,440
CURRENT LIABILITIES
1,410,687
3,754,604
BANK CREDITS
951,000
200,000
SUPPLIERS
379,703
3,414,091
TAXES PAYABLE
79,984
140,513
OTHER CURRENT LIABILITIES
2,483,806
1,645,836
EMPLOYEE BENEFITS
302,749
337,338
OTHER CURRENT LIABILITIES
2,181,057
1,308,498
NON CURRENT LIABILITIES
BANK CREDITS
OTHER LIABILITIES
SHAREHOLDERS' EQUITY
549,418
798,830
CONTRIBUTED CAPITAL
2,593,872
2,593,972
CAPITAL STOCK PAID (NOMINAL)
767,902
767,902
CAPITAL STOCK PAID UPDATE
956,093
956,093
PREMIUM ON STOCK SOLD
869,877
869,877
CAPITAL INCREASE (DECREASE)
(2,044,454)
(1,795,042)
ACCUMULATED PROFIT AND LEGAL RESERVE
(3,096,408)
(3,454,275)
RESERVE FOR STOCK REPURCHASE
1,062,200
1,062,200
PROFIT
(10,246)
597,033