Vitro, the leading glass producer in Mexico, has announced its unaudited results for the first quarter of 2015.
“We reported a solid first quarter, achieving EBITDA growth of 10.6 percent YoY, despite the challenges faced during the period. Several external factors impacted results this quarter, including the sharp foreign exchange rate volatility, which resulted in a 14.0 percent depreciation of the peso against the US dollar. Lower capacity utilization due to the refurbishment of one of our flat glass furnaces also affected results. These factors were more than offset by our strong performance in most of our markets, the ongoing implementation of cost reduction initiatives that drove a 5.2 percent decline in SG&A and lower cost of natural gas,” said Mr. Adrián Sada Cueva, Chief Executive Officer.
“Our Glass Containers business delivered a solid performance across all segments, except the Cosmetics, Fragrances and Toiletries (“CFT”) market, which was affected by challenging market conditions. Sales to the Beer segment continue to show an upward trend driven by incremental sales volumes. Meanwhile, sales of returnable soft drink bottles have reached double-digit growth, with the Food and Wine & Liquor segments reporting ongoing sales volume growth. Performance in the Flat Glass business however, was affected by lower sales in the automotive and export construction markets. A temporary halt in production early in the quarter at one of our Original Equipment Manufacturing (“OEM”) clients, together with capacity constraints while one of our float furnaces was being refurbished, more than offset the progressive improvement in production levels following the completion of the repair of this furnace last February, the mild recovery in domestic construction sales volume and stable price mix,” he said.
Claudio Del Valle, Chief Administrative and Financial Officer commented on the balance sheet. “We maintain a healthy balance sheet, with net debt declining QoQ by USD 20 million to USD 989 million as of March 31, 2015 reflecting a higher Cash and Cash Equivalent balance and ongoing debt amortization. Our debt ratios continue improving, with total net debt to EBITDA further improving to 2.6x from 2.8x in 4Q’14 and 2.9x in 1Q’14. Net Free Cash flow of USD 27 million compared to USD 42 million in the year-ago quarter reflects a USD 29 million increase in Working Capital investments reflecting higher payments to suppliers and accounts receivables as we grow our business. Finally, on January 30, 2015 we received the consent from the majority of holders of our Senior Limited Recourse Notes due in 2018 to waive certain covenants relating to Vitro’s ability to incur or permit liens, debt and capital expenditures and enter into certain hedging agreements, thus aligning the Senior Notes with our growth strategy,” he said.
“Looking ahead, we feel confident that we can continue to deliver quality products while expanding our operations and maintaining a tight focus on costs controls. Market dynamics in the CFT segment appear to have reached an inflection point and we are seeing emerging signs of recovery. Our domestic construction segment is also showing mild signs of recovery and our capacity constraints that affected production in the past quarter have also been resolved and are expected to improve the performance of our Flat Glass business,” said Sada.
“We also remain focused on implementing our three expansion projects which are expected to enhance cash flow generation and further strengthen our balance sheet. We are currently on schedule to finish by the end of the year the construction of a new furnace in our Monterrey facility to fulfil our long-term contract with Constellation Brands. Our capex plans also include the construction of a glass containers plant in Brazil scheduled to begin operations in the second half of next year to serve the CFT segments and we have also started to execute the investment to double our capacity production of Calcium Chloride to increase our sales to the de-icing and oil sectors,” he said.