Vitro: 3Q 2008 sales up 8.9%

Reporting unaudited results for the 3Q 2008, Vitro S.A.B. de C.V. one of the world“s largest producers and distributors of glass products, said on 28 October 2008 that consolidated net sales rose 8.9…

Reporting unaudited results for the 3Q 2008, Vitro S.A.B. de C.V. one of the world“s largest producers and distributors of glass products, said on 28 October 2008 that consolidated net sales rose 8.9% while EBITDA increased 11.4%. Despite a 68% increase in natural gas prices, the consolidated EBITDA margin increased to 14.5% from 14.1% in the same period 2007. Commenting on the results for the quarter, Enrique Osorio, chief financial officer, said “This was another strong quarter, with the highest EBITDA since 3Q 2006. We see a challenging 2009, but we feel comfortable that we have a strong business with competitive advantages that will play an important role in our performance.” Mr. David Gonzlez, president of the Glass Containers business unit, commented, “This was again another solid quarter for containers, both in the domestic and export markets, reflecting volume and price increases across the board. Domestic sales rose 25% year-over-year, while export sales increased 8%, including those to the US market. In turn, EBITDA rose 21.6% year-over-year despite higher energy prices. This was driven by strong volumes, a favorable product mix, price increases to cover the inflation of inputs and ongoing cost reduction initiatives and the absence of costs related to the production interruptions in 3Q 2007”. “We are taking a conservative approach to planning for next year. We are also developing contingency plans and cost cutting initiatives to be implemented across the board in preparation for what we expect to be a more challenging environment in the year ahead”, said Mr. Gonzlez. Mr. Hugo Lara, president of the Flat Glass business unit, noted, “Despite tough industry conditions in the US and Spanish construction segments and in the North American Automotive business, Flat Glass sales fell only 1.4% this quarter. Sales at Vitro Cristalglass, our Spanish subsidiary, increased 5% which reflects a better price mix from the new value-added production line as well as a strong euro. Auto glass sales to the OEM market fell 5% as a result of weakening demand, but we managed to mitigate some of the negative effects of this downturn and gained market share in the North American market through our increased participation in small car and CUV platforms. Vitro America sales remained flat as we continued to focus on the commercial sector to offset some of the decline experienced in product lines linked to the residential market such as our mirror line. The domestic market for float glass remained strong, however we did see a decline in volume sold to Auto Glass manufacturers.” “EBITDA for the Flat Glass business unit fell 26.7% as we were unable to completely offset substantially higher energy and raw material costs despite our cost reduction initiatives and a better product and price mix as we shift towards higher value added products. Looking forward, we see a challenging industry environment, however we are going to aggressively pursue cost cutting initiatives which we expect will enable us to be better prepared for the possibility of a prolonged slowdown and enable us to become a stronger company.” continued Mr. Lara. Addressing the balance sheet, Mr. Osorio noted, “This was a good quarter and we generated USD 74 million dollars in free cash flow before CapEx and dividends, which reflects the strength of our business and continued efforts to preserve cash. Net debt to EBITDA remained stable quarter-over-quarter at 3.6 times. The average cost of debt, in turn, dropped almost 30 basis points year-over-year to 9.1%. Total financing result, however, increased to USD 267 million from USD 38 million in 3Q 2007, as a result of the change in the mark-to-market of our derivative portfolio. Keep in mind that our current hedging portfolio focuses on future commitments related to our operations, specifically our future natural gas requirements and coupon payments on the USD 1 billion senior Notes due 2012 and 2017. As of today, we have restructured our portfolio to significantly reduce possible negative effects related to current volatility. Our current mark-to-market on open positions is approximately USD 98 million”. “Given the severe and expected volatility in the international financial markets, we are also maintaining close communication with creditors, financial institutions, clients and suppliers, who have reiterated their willingness to find favorable alternatives based to the current financial conditions,” Mr. Osorio closed.