| 4Q04
Earnings Release February
23, 2005 EBITDA
and Net Income Increased by Financial
Highlights:
QUARTERLY RESULTS TOTAL SALES During the fourth quarter of 2004, Grupo Casa Saba’s total sales decreased 7.68% versus the same period of 2003, reaching $5,347.9 million. This decline is the result of quarterly decreases in our Private Pharma and Publications divisions, which could not be compensated for despite increases in the Health, Beauty, Consumer Goods, General Merchandise and Others, and Government Pharma divisions. SALES BY DIVISION
Sales from the Private Pharma division registered a decline of 9.71% compared to the same period of 2003. The decrease was due, in part to elevated comparison bases given that the month of December 2003 was extraordinary in terms of the units sold both by Grupo Casa Saba as well as in the market in general. It is important to mention that, during the month of December 2004, the decrease in units registered by the private pharmaceutical products market reached double digits. Other factor that
influenced this division’s performance were the fiscal changes that
took place in 2005 that modified some of our clients purchasing strategies.
In addition, there were adjustments in some of our product lines. As a
result, the Group did not distribute products from suppliers who did not
meet the minimum profitability parameters established by management.
The Government Pharma division continued to perform positively as it has throughout the year, registering an increase of 32.00% compared to the fourth quarter of 2003. The positive results posted by this division reflect our increased commercial efforts and the Group’s presence in distinct government institutions including PEMEX. Government Pharma’s share of the Group’s total sales went from 2.30% in 4Q03 to 3.29% in 4Q04. HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHERS As a result of the implementation of new commercial strategies and the repositioning of some of the product lines of this division, sales grew by 0.35% compared to the fourth quarter of 2003. Therefore, during the fourth quarter of 2004, this division’s share of total sales was 10.14% versus 9.32% in 4Q03. PUBLICATIONS
December continued
to be the same as in previous years, a low sales month for this division
given that the consumers prefer to spend their money on products other
than publications. It is important to note that, during the fourth quarter
of 2004, Citem maintained an editor base that was greater than in the
same period of 2003, and therefore registered a better market share. Division
%
of Sales GROSS PROFIT Grupo Casa Saba’s gross profit increased 3.15% compared to the same period of 2003, to reach $634.5 million. Consequently, the Group’s gross margin went from 10.62% in 4Q03 to 11.86% in 4Q04. The gross margin increased as a result of improvements in our purchasing mix due to more favorable conditions in some of our winter season product lines as well as the acquisition of greater volumes of merchandise.
Given that the reduction in expenses was lower than the drop in sales, the expense ratio for the fourth quarter of 2004 increased 32 basis points, to 6.32% versus 6.00% in 4Q03. OPERATING INCOME
The Group’s operating margin went from 4.62% in the fourth quarter of 2003 to 5.55% in the fourth quarter of 2004. OPERATING PROFIT PLUS DEPRECIATION AND AMORTIZATION (EBITDA) EBITDA for the fourth quarter of 2004 was $322.3 million, 10.14% higher than that which was registered in the same quarter of 2003. This increase reflects the previously mentioned improvement in the operative result as well as the 2.61% increase in depreciation and amortization. COST-BEARING LIABILITIES AND CASH
We believe that the net debt levels registered by the Group give it a competitive position in the various markets where it operates. COMPREHENSIVE FINANCING COSTS
TAX PROVISIONS Tax provisions in the fourth quarter of 2004 reached $42.9 million, representing 13.97% of the pre-tax income. Compared to the fourth quarter of 2003, the tax provision for the quarter rose by 145.71%. NET INCOME As a result of the increase in operating income, the lower CFC, the greater other income and the higher tax provision (versus the fourth quarter of 2003), net income for 4Q04 grew 8.15% to reach $264.1 million. The Group’s net margin, therefore, went from 4.22% in 4Q03 to 4.94% in 4Q04. WORKING CAPITAL By the end of 2004, and with respect to December 2003, accounts receivable days were slightly lower, decreasing by 4 basis points to reach 56.0 days. Supplier days and inventory days in the 4Q04 were 58.5 and 70.3 respectively, reflecting increases of 4.9 and 14.6 days, versus the 4Q03, respectively. The increase in inventories was the result of improved conditions and purchasing opportunities during the quarter in some of the product lines, based on the acquisition of larger volumes of merchandise.
The 265.4 million shares issues by Grupo Casa Saba are listed on the Mexican Stock Exchange and in the form of ADRs on the New York Stock Exchange, both under the ticker symbol “SAB.” One ADR is equivalent to 10 common shares.
As a precautionary note to investors, except for the historic information contained herein, certain themes discussed in this document constitute forward-looking statements. Said themes have risks and uncertainties, including the economic conditions in Mexico and other countries in which Casa Saba operates, as well as variations in the value of the Mexican peso as compared with the US dollar. Contacts: |