Mexican glass giant Vitro said strong Flat Glass domestic performance and solid Glass Containers exports partially offset a decline in Flat Glass exports, lower domestic sales volumes at Glass Containers and the negative effect of 4.8 percent peso depreciation, resulting in Consolidated Net sales of US$408 million, a 1.0 percent year-over-year decrease.
Despite a 47% price increase in natural gas, a 4.8 percent year-over-year peso depreciation (quarterly average) and marginal lower sales, EBITDA decreased just by 2.2 percent year-over-year to US$90 million. Benefits from a leaner management structure, a robust price mix particularly in the domestic Flat Glass segment and lower legal expenses, partially compensated for the impact from higher natural gas and energy prices and the peso depreciation.
Net free cash flow increased 153 percent year-over-year to US$42 million, mainly due to lower Working Capital investment and CapEx, compared to the first quarter of last year. Quarter-end net debt decreased by US$39 million versus year-end 2013, mainly reflecting higher cash and equivalents.
Commenting on Vitro’s outlook and performance, Mr. Adrián Sada Cueva, Chief Executive Officer, said “As expected, results for the quarter reflect the ongoing challenging conditions we face in our cost structure, as well as the anticipated lower beer and automotive volumes. Our continued focus on further enhancing Vitro’s operational and financial performance, has allowed us to partially compensate the 47% year-over-year increase in natural gas prices and the 4.8% peso depreciation. In this context, our Flat Glass business reported a positive performance with increases of 1.9 percent in sales and 47.7 percent in EBITDA, while Glass Containers reported single digit declines in both categories.”
“Looking at our business units, Flat Glass sales were driven by steady domestic construction volumes and a robust price mix, together with a mild recovery in the domestic OEM market. While a pick-up in demand of value added products resulted in higher exports to the US construction market, automotive glass sales to OEMs remained slow. Glass Containers sales, in turn, decreased 2.2 percent mainly reflecting overall weaker market conditions in the Cosmetics and Beer segments and the negative impact due to the peso devaluation, which more than offset a strong performance in the Food, Wine and Liquor segments.”
“We remain focused on driving operational efficiencies and are glad to communicate that even with the challenges we have faced in this first quarter we have been able to increase our net free cash flow by 153% mainly due to a better working capital and CapEx management.” On the balance sheet, Mr. Claudio Del Valle, Chief Administrative and Financial Officer, noted: “We continued to make improvements to our financial condition despite the challenging environment. Net free cash flow expanded to US$42 million from US$17 million in 1Q13, principally reflecting a reduction in working capital investments as well as lower capital expenditure requirements as in 2013 Vitro conducted major furnace repairs at its Queretaro facility. Furthermore, including the US$235 million note that was already recognized as a provision in our 1Q’13 financial statements in the other liabilities line and issued in 2Q’13, our net debt would have decline by US$146 million year-over-year. Sequentially, net debt declined by US$39 million, mainly driven by a cash balance increase of US$35 million and a slight reduction in gross debt.
“Looking forward, we remain focused on leveraging our solid business fundamentals and strengthened balance sheet, as we continue to drive operating performance and maximize the long-term growth opportunities we see in our markets. We are confident we will continue to gain new business by offering our quality products and services to current and potential new customers,” concluded Mr. Sada.