6 May 1999: Mexican glassmaker Vitro reported a weak first quarter with declining revenues as expected, but industry analysts found a silver lining in the firm“s operating margins, which, though lowe…
6 May 1999: Mexican glassmaker Vitro reported a weak first quarter with declining revenues as expected, but industry analysts found a silver lining in the firm“s operating margins, which, though lower, performed better than expected. Vitro, based in the northeastern city of Monterrey, specializes in flat glass and glass containers, but also runs divisions manufacturing glassware, white goods and diverse products including lab equipment and electronic parts. The firm recently released its first-quarter results, which are analysed in inflation-adjusted terms. Overall sales fell 2.78% from the first quarter of 1998 to Pso 5.801 billion, about US$ 624 million, mostly due to a slowdown in the Mexican economy. The result was below a forecast of Pso 5.97 billion. Operating profit of Pso 999.54 million slightly topped expectations of Pso 996 million. The combination of lower sales and higher-than-expected operating income resulted in a consolidated operating margin of 17.2%, down from 17.9% a year ago, but better than the 16.7% seen previously. “The margins were better than expected in all the divisions except glass containers, which was in line,” said one analyst. The pleasant surprise was the diverse industries division, which represents 12% of Vitro sales with its array of products including fibreglass, laboratory equipment, plastic containers and electronic components. It posted an operating margin of 19.6% compared to 18.3% in the first quarter a year ago. “Diverse industries was the best Vitro division because it increased its sales, operating margin and EBITDA margin,” said another analyst, referring in the last reference to earnings before interest, tax, depreciation and amortization (EBITDA). “The rest had lower sales.” Mexican companies are analysed more for their sales and operating and EBITDA results than the bottom line, which is distorted by variations in the exchange rate for the Mexican peso. Sales for the glass containers division, which represents 29% of consolidated revenue, fell 6.6% as expected. But the shock was a decline in glass container exports of 14.1%, worse than specialists had expected.