SANLUIS Corporacion S.A. de C.V. Results for the 1st Quarter 2000
27 April 2000
SANLUIS Corporacion S.A. de C.V. Results for the 1st Quarter 2000 (Millions of US dollars)
MEXICO CITY, April 26 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 the first quarter year ended
March 31, 2000.
Highlights
-- Record sales and EBITDA in the first quarter of US $130 million and US
$29 million, respectively.
-- Consolidated statements include Rassini NHK Autopecas SA, the
Company's Brazilian subsidiary, as of January 1, 2000.
-- The Mining Division sold its interest in the San Nicolas project to
Teck Corporation
-- The Board of Directors decided to reinvest 1999 net income in the
Company to reduce debt and strengthen the Company's balance sheet,
and, therefore, no dividends were declared.
Consolidated Results for the First Quarter 2000
Consolidated sales for the first quarter were US $130 million, an increase
of 20% over the same period last year and a record for SANLUIS Corporacion.
EBITDA of US $29 million was 10% higher than first quarter 1999.
Sales in dollar terms have grown at a compound annual rate of 27% over the
last five years, the fifth fastest rate of growth among Latin American
companies according to Latin Trade magazine.
1999
US$ 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
2000 Q1/Q1
US$ Millions Q1 Variation
SALES
Brakes 15.2 31%
Suspensions 102.0 25%
Mining 12.4 (12%)
Consolidated 129.6 21%
1999
EBITDA Q1 Q2 Q3 Q4 Total
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
2000 Q1/Q1
EBITDA Q1 Variation
Auto Parts 26.0 23%
Mining 3.1 (42%)
Consolidated 29.1 10%
89% of SANLUIS' sales and 60% of costs are denominated in dollars. Because
of the appreciation of the peso in both nominal and real terms (9.42 versus
9.98), therefore, comparisons of first quarter 2000 with first quarter 1999
are less favorable in peso terms than in dollars. 84% of sales in the first
quarter were to North America, 7% to the Mercosur area, and the remaining
9% to Europe.
Q1 1999 Q1 2000 Var %
Millions Pesos Dollars Pesos Dollars Pesos Dollars
Sales 1,195.2 107.6 1,229.0 129.6 3% 20%
Gross Profit 361.5 32.5 333.1 35.1 (8%) 8%
EBITDA 293.6 26.4 275.5 29.1 (6%) 10%
EBIT 204.2 18.4 195.2 20.6 (4%) 12%
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 drums, rotors, and hubs.
SANLUIS Rassini is one of the most important suppliers of original
equipment auto parts in North America according to the March 27, 2000 issue of
Automotive News. In order of sales, the Company ranked 88 out of 150 suppliers
to the North American market in 1999 and 97 in 1998. This confirms the
Division's impressive growth and increasing market share, as projected in its
long-term strategic plan.
Automotive production in the United States and Canada continued to be
strong through March 2000. A record 4.2 million vehicle were produced in the
first quarter, 6% above first quarter 1999. Light trucks, pick-ups and sport
utility vehicles, the segment on which the Auto Parts Division focuses its
primary attention and is the best positioned, accounted for 2.3 million
vehicles, or 55% of the total market.
SANLUIS Rassini has a 90% share of the Mexican market for suspensions and
a 62% share of the U.S. and Canadian market, and continues to benefit from the
growing demand in the light truck segment of the market.
The Division's solid and diversified client base includes General Motors,
Ford, DaimlerChrysler, General Motors, Nissan, Nummi, BMW, Navistar,
Volkswagen, and Toyota.
SANLUIS Rassini's sales were a record US$117 million in the first quarter,
a 25% increase over the first quarter 1999. EBITDA rose 23% to US $26 million.
Auto Parts Sales by Product
US $ MM UnitsMM
1999 2000 1999 2000
US$ Millions Q1 Q1 Q1 Q1
Leaf Springs Export 68.1 77.7 2,178 2,459
Torsion Bars Export 3.9 3.7 359 329
Leaf Springs Mexico 7.9 8.8 220 224
Torsion Bars Mexico 0.2 0.7 43 372
Coil Springs 1.7 1.9 345 128
Leaf Springs Brazil 7.4 362
Coil Springs Brazil 1.8 426
Brakes Export 7.8 13.5 465 599
Brakes Mexico 3.8 1.7 552 717
Total Auto Parts 93.4 117.2 4,162 5,616
Brake Division sales also rose as a result of the focus on original
equipment (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%.
First quarter sales of brake components rose 30% over the same period last
year due principally to export orders for the General Motors GMT-800 light
truck platform. Sales for the BMW, Volkswagen, General Motors, Nissan, and
DaimlerChrysler platforms have also had great success, reflecting the
Division's excellent future prospects.
Brazil
In July 1996, SANLUIS Rassini acquired two Brazilian suspension
manufacturers, Fabrini of Sao Paulo and Cimebra of Rio de Janeiro, which were
subsequently merged into a new entity, Rassini NHK Autopecas, S/A.
As of January 1, 2000, the financial results of Rassini NHK Autopecas were
consolidated into SANLUIS Corporacion. Rassini NHK Autopecas produces multi-
leaf springs, which account for 80% of sales, and coil springs, which account
for 20% of sales, and operates at approximately 66% of installed capacity. The
company has approximately 50% of the Brazilian market for leaf springs and
approximately 20% of the market for coil springs.
Brazilian sales were US $9 million in the first quarter with an EBITDA of
US $1 million. Rassini NHK debt totals US $5.4 million, all of which is
denominated in dollars. Total assets are US $28 million, US $14 million of
which are fixed assets, and net worth is US $8 million. The company has 691
employees.
1999 vehicle production in Brazil was 1.3 million, nearly equal to
Mexico's 1.4 million.
Our investment in Brazil has been strategic from many perspectives. First,
it has given us a strong presence in a market where our major customers have
made significant investments. And as Brazil has become a center of automotive
development, our position there will be key in building a vital critical mass
for the future of our business.
Luismin
In March, Luismin sold its 25% participation in the San Nicolas copper and
zinc project in the state of Zacatecas to the Canadian company, Teck
Corporation (TSE: TEK.B) for 1.8 million Class B Teck Corporation shares.
SANLUIS will receive additional amounts if the shares fail to reach a price of
Canadian $22.5 in three years. The amount of additional payments will depend
on the prices of copper and zinc. At a price of Canadian $22.50 per share, the
value of the transaction is Canadian $40.5 million.
The 1.8 million Teck shares are included as a cash item on the balance
sheet of SANLUIS Corporacion as of March 31, 2000 at a price of US $ 7.36 per
share, for a total of US $13.3 million. Also, the difference between Canadian
$22.50 (the guaranteed price) and Canadian $10.59 (the price of the shares
when the transaction was closed) on a total of 900,000 shares (US $7.4
million) was accounted for as a long-term receivable as of March 31, 2000.
First quarter 2000 results for Luismin were lower than those achieved in
the first quarter of 1999 due principally to a reduction in the average sales
price of gold, from US $400 dollars per ounce to US $292. Silver production
for the year was hedged at between US $5.00 and US $5.60, which locks in
silver revenues for 2000.
Luismin produced approximately 20,000 ounces of gold and 1.3 million
ounces of silver in the first quarter. Sales of gold were US $5.8 million in
the first quarter, while sales of silver totaled US $6.6 million.
Average production costs rose approximately 10% over first quarter 1999,
to US$ 189 per gold equivalent ounce. This was due to the 8% appreciation of
the Mexican peso and accumulated inflation of 12% for the last twelve months.
The Mining Division, however, continues to be one of the most efficient and
profitable operators in the world.
1999 2000
Q1 Q2 Q3 Q4 Total Q1
Production
(in thousands of ounces)
Gold 19.1 21.5 21.9 23.2 85.7 20.3
Silver 1,297 1,440 1,387 1,474 5,598 1,283
Average Sales Price
(US$ per ounce)
Gold 408 402 392 355 387 307
Silver 5.46 5.49 5.53 5.47 5.50 5.41
Cash Costs
per equivalent
gold ounce 171 170 172 182 177 189
Finance
The net debt of SANLUIS Corporacion as of March 31, 2000 was US$ 455
million, including cash and cash equivalents of US$ 72 million (including the
short and long-term portions of the Teck shares). At its March 16, 2000
meeting, the Board of Directors decided to reinvest 1999 net income in the
Company to reduce debt and strengthen the Company's balance sheet, and,
therefore, no dividends were declared.
Gross debt rose US$ 11 million in the first quarter to US$ 527 million.
This was due to increased working capital requirements in the first quarter
resulting from the normal cycle of the business and the consolidation of the
Brazilian business, which has a total debt of US$ 5 million. One of our
principal objectives is to reduce debt levels, and in this regard we are in
line with our budget.
The ratio of net debt to EBITDA of 4.4 was unchanged from the first
quarter 1999. EBITDA covered net interest expense 2.8 times in the first
quarter.
SANLUIS debt was recently rated BB by Duff & Phelps. 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 of approximately US $2 million in the Auto Parts
Division and US $2 million in the Mining Division, principally for plant
maintenance, were in line with budget.
Subsequent Events
As of January 1, 2000 the Company adopted 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 compares asset values on the books of the Company with
asset values for tax purposes and records the difference as a charge to
capital. The result has been a US $62 million (approximately 30%) reduction in
the Company's capital in the first quarter.
It is important to remember that this adjustment 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 March 31, 1999 and 2000
(In thousands of Mexican Pesos in Purchasing Power of March 31, 2000)
Mar 00 Mar 99
Assets
Current Assets
Client & Cash
Equivalents 596,147 514,616
Client Receivables 581,261 667,315
Other Accounts Receivable 324,089 282,898
Inventories 376,138 385,316
Other Current Assets 129,700 99,738
Total Current Assets 2,007,335 1,949,883
Investments In Shares
of Affiliated Companies 230,029 206,978
Property, Plant, &
Equipment, net 5,272,664 5,608,629
Other Assets 572,671 622,221
Total Assets 8,082,699 8,387,711
Liabilities
Current Liabilities
Suppliers 633,747 541,781
Notes Payable 2,232,464 1,967,356
Other Current Liabilities 611,306 383,746
Total Current Liabilities 3,477,517 2,892,883
Long-term liabilities
Long-term Debt 2,634,985 3,568,746
Deferred Taxes 577,526 --
Other Liabilities 20,464 21,721
Total Liabilities 6,710,492 6,483,350
Consolidated Net Worth
Major Interest Equity 1,126,125 1,698,010
Minority Interest Equity 246,083 206,351
Total Consolidated Net Worth 1,372,208 1,904,361
Total Liabilities and Net Worth 8,082,699 8,387,711
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended March 31, 1999 and 2000
(in thousands of Mexican Pesos in Purchasing Power of March 31, 2000)
Mar 00 Mar 99
Net Sales 1,229,067 1,195,226
Cost of Sales 895,937 833,777
Gross Profit 333,130 361,449
Operating Expenses 137,905 157,205
Operating Income 195,225 204,244
Net Financial (Expense) Income
Interest Expense 124,357 150,429
Interest Income 25,153 63,103
Exchange Gain (Loss) 126,950 100,831
Gain (Loss) on Monetary Position 112,794 216,059
140,540 229,564
Other income (expense) 63,727 (21,116)
Income from affiliates 3,792 (3,779)
Income before Taxes and Profit sharing 403,284 408,913
Taxes & Employee Profit Sharing 12,202 18,048
Deferred Taxes 33,183
Net Income before extraordinary items 357,899 390,865
Net income 357,899 390,865
Distribution of Net Income
Majority Interests 346,205 374,753
Minority Interests 11,694 16,112
Depreciation & Amortization 80,312 89,354
EBITDA 275,537 293,598
FINANCIAL AND OPERATING INDICATORS
Gross Margin 27.1% 30.2%
Operating Margin 15.9% 17.1%
EBITDA Margin 22.4% 24.6%
Net Interest Coverage
(EBITDA/Net Interest Expense) 2.78 3.36
Net Debt/EBITDA (last twelve months) 4.4 4.4