SANLUIS S.A. de C.V. Results for 1999 and the 4th Quarter 1999
18 February 2000
SANLUIS Corporacion S.A. de C.V. Results for 1999 and the 4th Quarter 1999 (Millions of US dollars )
MEXICO CITY, Feb. 17 -- SANLUIS Corporacion, S.A. de C.V.
(BMV: SANLUIS), a Mexican industrial group that manufactures auto parts and
mines silver and gold, today reported results for year ended December 31,
1999.
-- Consolidated sales of US$ 125 million in the fourth quarter were
16 higher than the fourth quarter of 1998. EBITDA in the fourth
quarter was US $25 million.
-- SANLUIS Rassini, the Company's Auto Parts division, increased sales
in the fourth quarter by 19% over the same period in 1998, to US
$109 million.
-- The ratio of net debt to EBITDA dropped from 5.9 to 4.4 over the
last twelve months. The company reduced total debt by US $22 million
and net debt by US $5 million in 1999.
Consolidated Results for 1999
Sales rose 24% to US $471 million, and EBITDA of US $104 million was 32%
higher than 1998. EBITDA margin improved from 21% in 1998 to 22% in 1999.
These key figures rose for the second year in a row.
Net income for the year was US $61 million as compared to a loss of US
$12 million for 1998.
These excellent results were achieved in spite of the strength of the peso
throughout 1999. Although inflation in 1999 was 12%, the peso appreciated
4% against the dollar. EBITDA in 1999 was approximately US $9 million lower
than it would have been had the peso maintained its purchasing power parity.
Sales and EBITDA have grown at compound annual rates of 23% and 31%,
respectively, over the last 5 years, making SANLUIS Corporacion one of the
fastest growing companies in Mexico and the fifth fastest growing company in
Latin America.
95% of sales in 1999 were denominated in dollars, and 89%
(US $419 million) of sales were direct exports to the U.S., Canada, and
Europe, which provides SANLUIS with an important natural hedge against its
dollar obligations.
Consolidated Results for the 4th Quarter
Sales were US $125 million in the 4th quarter, an increase of 16% over the
same period in 1998. EBITDA of US $25 million was nearly unchanged from
fourth quarter 1998, in spite of the stronger peso.
1998
US $ Millions Q1 Q2 Q3 Q4 Total
Sales
Brakes 8.2 9.9 7.9 10.9 36.9
Suspensions 61.2 72.5 64.5 81.1 279.3
Mining 17.1 17.1 15.1 15.4 64.7
Consolidated 86.5 99.5 87.5 107.4 380.9
EBITDA
Auto Parts 11.1 15.0 9.1 20.4 55.6
Mining 7.7 5.6 5.1 4.9 23.3
Consolidated 18.8 20.6 14.2 25.3 78.9
EBITDA Margin 21.8% 20.8% 16.2% 23.5% 20.7%
1999
US$ Millions Q1 Q2 Q3 Q4 Total
Sales
Brakes 11.6 12.5 12.4 14.9 51.4
Suspensions 81.8 96.1 86.9 94.4 359.2
Mining 14.1 15.7 15.4 15.5 60.7
Consolidated 107.5 124.3 114.7 124.8 471.3
EBITDA
Auto Parts 21.2 23.8 18.5 20.4 83.9
Mining 5.2 5.2 5.3 4.2 19.9
Consolidated 26.4 29.0 23.8 24.6 103.8
EBITDA Margin 24.5% 23.3% 20.7% 19.7% 22.0%
SANLUIS Rassini
SANLUIS Rassini produces suspensions and brake components for the global
automotive industry, with a principal focus on original equipment
manufacturers (OEM's).
Suspension products include leaf springs (parabolic and multi-leaf), coil
springs, torsion bars, bushings, and stabilizer bars. The Brake Division
produces disks, drums, rotors, and hubs.
The market for light trucks, pick-ups, and sport utility vehicles in the
NAFTA countries continued to expand in 1999. A record 15.6 million vehicles
were produced in Canada and the U.S. in 1999, an increase of 12% over 1998.
Light trucks, pick-ups and sport utility vehicles, the segment on which the
Auto Parts Division focuses its primary attention, accounted for 8.3 million
vehicles, or 53% of the total market.
SANLUIS Rassini has a 90% share of the Mexican market for light truck
suspensions and a 62% share of the U.S. and Canadian markets, and has
benefited significantly from the continued growth in demand for vehicles in
that segment of the market. The Division's solid and diversified client base
includes Ford, DaimlerChrysler, General Motors, Nissan, Nummi, and Toyota.
SANLUIS Rassini's sales were US $109 million in the 4th quarter, a 19%
increase over the same period in 1998, on continued strength in export orders
from the auto manufacturers.
EBITDA of SANLUIS Rassini in the 4th quarter was US $20 million,
approximately the same as the 4th quarter 1998. The significant improvement
in EBITDA and its margins is due principally to higher utilization rates of
the additional factory capacity added over the last two years, with fixed
costs spread over increasing volume from additional sales of the Ford Series F
and General Motors GMT-800 platforms.
Sales for the full year 1999 rose 30% to US $411 million, while EBITDA
increased 51% to US$ 84 million.
With our current installed manufacturing capacity we will begin supplying
new leaf spring contracts over the next three years for the GMT-355 and
GMT-560 platforms with an annual value of US $18 million.
Auto Parts Sales by Product
1998
US $ Millions Q1 Q2 Q3 Q4 Total
Leaf Springs
export 45.6 57.5 50.4 68.5 220.0
Torsion Bars
export 3.5 3.3 3.5 3.9 14.2
Leaf Springs
Mexico 9.6 9.4 8.6 6.7 34.3
Coil Springs 2.1 2.1 1.7 1.7 7.6
Brakes Export 3.7 5.2 4.7 7.6 21.2
Brakes Mexico 4.5 4.6 3.3 3.3 15.7
Total Auto
Parts 69.4 82.4 72.4 92.0 316.2
1999
US $ Millions Q1 Q2 Q3 Q4 Total
Leaf Springs
export 68.1 78.1 70.3 77.9 294.4
Torsion Bars
export 3.9 4.5 2.7 3.8 14.9
Leaf Springs
Mexico 7.9 11.2 12.1 10.5 41.7
Torsion Bars
Mexico 0.2 0.4 0.4 0.6 1.6
Coil Springs 1.7 1.9 1.4 1.5 6.5
Brakes Export 7.8 8.2 7.8 9.8 33.6
Brakes Mexico 3.8 4.3 4.6 5.2 17.9
Total Auto
parts 93.4 108.6 9.3 109.3 410.6
The Brake Division, including its unconsolidated subsidiary, also
generated greater sales and income as a result of its new focus on the
original equipment market (with continued selective servicing of the market
for replacement parts). The division's market share among OEMs in the U.S.
and Canada increased from 2% at the beginning of 1999 to its current 8%.
Fourth quarter sales in the Brake Division rose 37% over the same period
last year due principally to export orders for the General Motors GMT-800
light truck platform, BMW's (Z3) and domestic sales to Volkswagen, General
Motors, Nissan, and Daimler Chrysler.
Brake Division sales for the full year 1999 rose 39% to US $51 million,
and EBITDA for 1999 increased 926% over 1998, reflecting the Division's
excellent prospects.
Beginning in 2000 the Brake Division will begin shipping under new
contracts with General Motors, Nissan, and Mercedes Benz with annual sales
totaling approximately US $33 million as a result of capital expenditures in
the last two years.
In July 1996, SANLUIS Rassini acquired two Brazilian suspension
manufacturers, Fabrini of Sao Paulo and Cimebra of Rio de Janeiro. 1999 sales
for these two operations were US $33 million.
Both firms have been restructured and merged into a new entity, Rassini
NHK Autopecas. Rassini NHK Autopecas will be consolidated with the Auto Parts
Division as of January 1st, 2000, since SANLUIS Corporacion now holds more
than 50% of its capital. Rassini NHK Autopecas produces multi-leaf springs
(76% of 1999 sales) and coil springs (24% of 1999 sales) and operates at
approximately 70% of installed capacity. The company has approximately 50% of
the Brazilian market for leaf springs and approximately 20% of the market for
coil springs.
Luismin (Mining Division)
Fourth quarter results of the Mining Division were substantially unchanged
from 1998, due principally to the forward sale of 80,000 ounces of gold at
US $400 per ounce and continued low production costs. Luismin also sold
forward 5.5 million ounces of silver for delivery in 1999 at a price of US
$5.45. Together, these hedging operations guaranteed the stable and
predictable results for the Mining Division in 1999.
Luismin produced approximately 23,000 ounces of gold and 1.5 million
ounces of silver in the fourth quarter. Sales of gold and silver were US
$7.8 million and US $7.7 million in the fourth quarter, respectively.
Average production costs of US $177 per gold equivalent ounce in 1999 were
substantially unchanged 1998 in spite of the 4% appreciation of the Mexican
peso and accumulated inflation of 12% for the last twelve months. The Mining
Division continues to be one of the most efficient and profitable operators in
the world.
1998
Production Q1 Q2 Q3 Q4 Total
(in thousands
of ounces)
Gold 18.9 21.0 20.5 20.7 81.1
Silver 1,293 1,406 1,320 1,417 5,436
Average Sales
prices
(US$ per ounces)
Gold 420 410 413 413 413
Silver 6.12 5.48 5.15 4.96 5.41
Cash Costs 176 178 169 179 176
per equivalent
gold ounce
1999
Production Q1 Q2 Q3 Q4 Total
(in thousands
of ounces)
Gold 19.1 21.5 21.9 23.2 85.7
Silver 1,297 1,440 1,387 1,474 5,598
Average Sales
prices
(US$ per ounces)
Gold 408 402 392 355 387
Silver 5.46 5.49 5.53 5.47 5.50
Cash Costs 171 170 172 182 177
per equivalent
gold ounce
Finance
The net debt of SANLUIS Corporacion as of December 31, 1999 was US $459
million, including cash of US $57 million. Total debt was US $22 million lower
than at the end of 1998, and net debt was US$ 5 million lower. We recently
increased our line for Euro Commercial Paper from US$ 100 million to US
$300 million.
The ratio of net debt to EBITDA continues to improve significantly,
falling from 5.9 to 4.4 over the last twelve months. EBITDA covered net
interest expense 2.2 times in 1999.
In the third quarter, SANLUIS debt was rated BB- by Standard & Poor's.
The rating was based primarily on the Company's solid position in the light
truck suspension market in North America, long-term contracts (8-10 years) and
high EBITDA margins in the Auto Parts Division and, as a complement, rich gold
and silver mines with low costs of production.
Capital Expenditures
Capital expenditures in 1999 were principally for maintenance and
replacement and were in line with our budget. These investments, as detailed
in the following table, were significantly lower than 1998, due to the
completion of the Company's plant expansion program.
(Millions of US$) 1998 1999
Auto Parts 99 19
Mining 20 10
Total 119 29
Subsequent Events
As of January 1, 2000 the Company will begin following the new
dispositions of the Mexican Institute of Public Accountants in Bulletin
D-4 regarding the accounting treatment of income taxes and workers' profit
sharing.
The objective of the Bulletin is to adopt an accounting treatment more in
line with international accounting principles in regard to deferred taxes.
This new treatment will decrease the Company's capital by approximately
US $57 million (33%) and increase liability for deferred taxes by the same
amount. This arises from the significant investments made by the Company in
recent years in its plant expansion program, since the Company chose to
immediately deduct such expenditures to reduce its tax liability. This will
reduce allowable depreciation expenses for tax purposes and increase taxes due
in future years, and the new accounting treatment requires that this future
liability be recorded on the balance sheet.
It is important to remember that this adjustment of US $57 million, which
will be implemented in fiscal 2000, does not represent a cash expense and has
no effect on the cash flow of the Company.
SANLUIS Corporacion, S.A. de C.V.
Consolidated Balance Sheets
As of December 31, 1998 and 1999
(In Thousands of Mexican Pesos in Purchasing Power of December 31, 1999)
Assets 1999 1998
Current Assets 538,551 812,791
Cash & Cash Equivalents 498,583 577,561
Client Receivables 278,335 260,855
Other Accounts Receivable
Inventories 362,101 400,114
Other Current Assets 95,330 81,635
Total Current Assets 1,772,900 2,132,956
Investment in Shares of
affiliated companies 182,334 167,957
Property, Plant, &
equipment, net 5,160,755 5,696,121
Other Assets 642,923 653,581
Total Assets 7,758,912 8,650,613
Liabilities
Current Liabilities
Suppliers 614,457 541,824
Note Payable 2,149,790 2,137,686
Other Current Liabilities 538,754 418,234
Total Current Liabilities 3,303,001 3,097,744
Long-Term Liabilities
Long-term Debt 2,734,054 3,783,682
Other Liabilities 75,326 54,802
Total Liabilities 6,112,381 6,936,228
Consolidated Net Worth 1,456,454 1,514,170
Major Interest Equity 190,007 200,215
Minority Interest Equity 1,646,531 1,714,385
Total Liabilities
and Net Worth 7,758,912 8,650,613
SANLUIS Corporacion, S.A. de C.V.
Consolidated Statement of Income
For the years Ended December 31, 1998 and 1999
(In Thousands of Mexican Pesos in Purchasing Power of December 31, 1999)
1999 1998
Net Sales 4,700,912 4,231,618
Cost of Sales 3,353,911 3,128,283
Gross Profit 1,347,001 1,103,335
Operating Expenses 628,699 481,592
Operating Income 718,302 621,743
Net Financial (Expense)Income
Interest Expense 571,239 434,828
Interest Income 96,386 139,642
Exchange Gain (Loss) 173,154 (826,184)
Gain (Loss) on
monetary Position 502,620 613,148
Other income (expense) (105,389) (53,733)
Income from affiliates (105,389) (53,733)
Income before Taxes
and Profit Sharing 822,413 32,968
Taxes & Employee
profit sharing 82,786 9,870
Net Income before
extraordinary items 739,627 23,098
Extraordinary Income
(expense) (99,742) (197,604)
Net Income 639,885 (174,506)
Distribution of Net Income
Majority Interests 610,731 (128,819)
Minority Interests 29,154 (45,687)
Depreciation & Amortization 316,700 255,852
EBITDA 1,035,002 877,585
Financial and Operating Indicators
Gross Margin 28.7% 26.1%
Operating Margin 15.3% 14.7%
EBITDA Margin 22.0% 20.7%
Net Interest Coverage
(EBITDA/Net
Interest Expense) 2.18 2.97
Net Debt/EBITDA
(last twelve months) 4.4 5.9
SOURCE SANLUIS Corporacion, S.A. de C.V.