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Vitro: strong 2Q 2004 in line with expectations

Mexican glass giant Vitro S.A. de C.V., on 26 July 2004 announced 2Q 2004 unaudited results, posting a 0.8% year-on-year decline in consolidated sales. Consolidated EBITDA went up 7% year-on-year, dri…

Mexican glass giant Vitro S.A. de C.V., on 26 July 2004 announced 2Q 2004 unaudited results, posting a 0.8% year-on-year decline in consolidated sales. Consolidated EBITDA went up 7% year-on-year, driven by significantly improved performance at the Glass Containers business unit, which more than offset the decline in Flat Glass and Glassware. Consolidated EBIT for the quarter, however, declined by 2%, with falls at both the Flat Glass and Glassware business units. Consolidated EBITDA margins rose by 120 basis points and EBIT fell slightly by 9 basis points. EBITDA for the latest quarter improved to USD 371 million as of 30 June 2004 from USD 365 million at 31 March 2004. Between 2Q 2003 and 2Q 2004, Vitro divested two companies, Vitro Fibras (VIFISA) and Envases Cuautitln (ECSA). On a pro-forma basis, excluding these two companies, sales would have increased 2.8% year-on-year, EBIT would have increased 7.6% year-on-year, and EBITDA would have posted a 13.5% year-on-year increase. The most important changes in the pro-forma calculations are Flat Glass, with the sale of Vifisa, and Glassware with the sale of ECSA. On a pro-forma basis these business units had an EBITDA growth of 7.7% and a decline of 15.5 %, respectively. Alvaro Rodriguez, Chief Financial Officer, said: “Performance was in line with the expectations and our guidance. We are pleased with the quarter“s two-digit EBITDA growth, on a pro-forma basis. Glass Containers provided the strongest growth both in sales and EBITDA this quarter, and with this we once again recognize the strength of Vitro“s portfolio of businesses to stabilize cash flow generation and provide a solid operational base. Glass Containers EBITDA gained over 20% year-on-year demonstrating its ability to generate cash flow.” “Our 12% export growth this quarter is evidence of our increasing penetration of international markets,” Mr. Rodriguez continued. “Exports for the quarter increased to 30% of sales from 26% in the same quarter last year. These gains are built on several of Vitro“s strengths – high product quality and our value added niche market positioning supported by flexibility to rapidly and efficiently respond to customers“ specific needs.” Mr. Rodriguez commented, “We continued to improve Vitro“s capital structure through various financing activities. On 23 July 2004 we placed USD 170 million senior secured guaranteed notes due July 2011, exceeding original expectations by almost 15%. These notes were issued by Vitro Envases Norteamerica, our Glass Containers divison. This transaction significantly improved life of debt at Glass Containers to six years from two years. Net proceeds were applied to refinance existing debt and reduced the business unit“s short-term debt percentages to 12%, from 56%.” “The transaction at Vitro Glass Containers was ground breaking, since it“s the first capital markets transaction at the level of a Vitro operating unit. This is the first step towards a new financing strategy at Vitro. It was also innovative in the sense that it was the first ever secured transaction issued in the international capital markets by a Mexican corporation.” “In addition”, he continued, “during the quarter, we closed several other financing transactions. We refinanced most of Glassware“s debt through a USD 75 million syndicated loan facility at that business unit, and finalized a three year securitization agreement at Vitro America, our Flat Glass distribution subsidiary in the US, providing an additional USD 10 million in liquidity. As a result of these transactions, on a pro-forma basis including the senior secured guaranteed notes, the average life of debt improved to 4.5 years from 3.9 years in 1Q 2004.” Mr. Rodriguez concluded, “The overall performance of the Company, demonstrates once again our progress on all fronts, as we continue to build on our position as a leading global glass producer.”

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