Vitro SA, of Mexico, has announced that for 1995, sales were 21.9 billion pesos, down 1.2%, on the previous year while operating income rose 56% to 2.7 billion pesos. Net profit for 1995 was 835.6 mil…
Vitro SA, of Mexico, has announced that for 1995, sales were 21.9 billion pesos, down 1.2%, on the previous year while operating income rose 56% to 2.7 billion pesos. Net profit for 1995 was 835.6 million pesos, after a 1994 loss of 1.67 billion pesos. Exports increased 17.5% to US$ 524 million, and 66% of total sales came from outside Mexico. Vitro has operations in six countries, but its biggest foreign subsidiary, US-based Anchor Glass Container, which announced a net loss of US$ 66 million for 1995 on sales of US$ 956,639, has been a drain on resources. However, Vitro has approved a 1995 dividend of 0.60 pesos per share which will be in two parts, Vitro said in a statement. The first was on 8 May and the second will be a date set by the Board of Directors. Vitro has appointed Alfonso Gomez Palacio as the new CEO of Anchor Glass in an attempt to tackle their big debts. Vitro is also committed to investing US$ 126 million so that the firm can update its manufacturing equipment. Palacio will replace James R Malone. Malone will remain in Anchor Glass as chairman, while Palacio will also keep his office as CEO of glass container division Vitro Envases in Mexico. Vitro also announced its intention to integrate two of its Mexican divisions, Vitro Quimica Fibras y Mineria and Vitro Empaques, into a new division called Vitro Quimica y Empaques. Ricardo Gonzalez, current president of the packing division, will become president of Vitro Quimico y Empaques, Vitro“s flat glass division, as of 1 June 1996. Vitro said the integration is its second of the year. The first, announced in January, was the operational integration of Anchor Glass with Vitro Envases in Mexico. The company“s current problems stem from foreign operations, which had been thought to signify the company“s arrival as an international player, and from peso-based financing that has failed to keep in step with dollar-based income. As one of Mexico“s most traditional corporations, predominant in several sectors, it has also been slow to respond to the opening of Mexico“s economy. Its core operations remain reasonably strong, despite the crumbling of the Mexican domestic economy following the 1994 peso devaluation. Executives argue that if the currency had not tumbled once more at the end of the year, operating cash flow for 1995 would stand close to the US$ 600 million generated the previous two years. Vitro will soon face its first significant competition at home, most notably from the French manufacturer Saint-Gobain, which will be starting up a car-glass factory this year with a capacity of 500,000 car sets a year, and a flat glass factory in May 1997. “There“s certainly room for a competitor,” says Mr. Alain De Metz, Saint-Gobain director-general in Mexico City. Manufacturers such as Celanese, Shell and Eastman are also planning to increase their production of PET, a plastic substitute for the glass bottles Vitro sells to soft drink companies. However, Vitro“s market share in flat glass and glass containers in Mexico is so large, a near monopoly, that such developments are unlikely to make much of a dent on profitability in the short term.