Vitro quarterly sales up 14.5% in 2Q 2008

Vitro S.A.B. de C.V. one of the world“s largest producers and distributors of glass products, announced unaudited results for the 2Q 2008 on 24 July 2008. Year-on-year consolidated sales rose 14.5% w…

Vitro S.A.B. de C.V. one of the world“s largest producers and distributors of glass products, announced unaudited results for the 2Q 2008 on 24 July 2008. Year-on-year consolidated sales rose 14.5% while EBITDA declined 15.6%. The consolidated EBITDA margin dropped to 11.7% from 15.8% in the same period of 2007, following a 45% increase in natural gas prices. Commenting on the results for the quarter, Enrique Osorio, chief financial officer, said “Our business fundamentals remain strong. Demand rose in most segments of our business. On a comparable basis, sales for the quarter reached an all-time high of USD 725 million. Higher energy costs, however, impacted EBITDA for the quarter. But, overall we are confident in the health of the business as we look ahead”. David Gonzlez, president of the Glass Containers business unit, said, “This was another excellent quarter for containers. We posted record comparable sales driven by strong volume increases across the board. Domestic sales were up more than 22% year-on-year, and export sales rose almost 12%, including those to the US market, proving again that this is a fairly defensive business to economic downturns. Foreign subsidiaries also were strong with sales growth of almost 22%”. “EBITDA, in turn, decreased 6% year-on-year as higher energy prices, cost of raw materials and the impact of having two cosmetics glass container plants working in parallel as we transition production to our new plant in Toluca continue to impact this business. However, cost reduction programs, increased efficiencies, productivity and capacity utilization offset a large portion of these higher costs,” continued Mr. Gonzlez. Commenting on the Flat Glass business unit, Hugo Lara noted, “Flat Glass sales rose 9% this quarter, also achieving a quarterly record. Sales in our US subsidiary remained flat and have begun to show signs of recovery despite weak market conditions, as we focus on larger value added commercial projects. Vitro Cristalglass, our Spanish subsidiary, continued to grow despite the contraction in residential construction in the country. Our recently acquired French subsidiary is helping to partially offset a challenging 2H for Vitro Cristalglass. Auto glass sales to the OEM market remained strong, as small to mid size cars rose from 24% to 43% of our portfolio over the past year. Sales to the domestic float glass market also performed well as construction activity in Mexico continues to grow with no sign of weakness evident. EBITDA, in turn, fell 25% driven by higher energy and raw material costs and a lower contribution from Vitro America and Vitro Cristalglass”. Regarding the balance sheet, Mr. Osorio noted, “Net debt to EBITDA rose to 3.6 times from 3.3 times in the 1Q of the year, as capital expenditures to strengthen Vitro“s market position and expand our client base increased. The average cost of debt, in turn, dropped 30 basis points year-on-year to 9.2 %”. “This quarter demonstrates once again the resilience of our business. We will continue to build on Vitro“s strong position in the glass industry, while taking the steps to manage to the extent possible the volatility in natural gas prices”, Mr. Osorio concluded. All figures provided in the firm“s announcement are in accordance with Mexican Financial Reporting Standards