|
Quarterly Earnings Report October
26, 2007
o Sales in the quarter amounted to $5,821.95 million Mexico City, Mexico, October 26, 2007. Grupo Casa Saba (“Saba”, “GCS”, “the Company” or “the Group”), one of the leading Mexican distributors of pharmaceutical products, beauty aids, personal care and consumer goods, general merchandise, publications and other products announced today its consolidated financial and operating results for the third quarter of 2007.
In the third quarter of 2007, GCS sales totaled $5,821.95 million, an increase of 0.33%. Our divisions of Government Pharma and Health, Beauty, Consumer Goods, General Merchandise and Others grew by 7.15% and 2.98%, respectively, versus the third quarter of 2006. The growth in Health, Beauty, Consumer Goods, General Merchandise and Others division was due to greater volume sales, which offset a lower average unit price. In the case of the Government Pharma division, the increase in sales reflects a higher participation in bidding processes during the quarter. Publications sales declined 1.53% due to lower prices, despite the fact that the number of items sold increased 10.10%. Sales in the Private Pharma division decreased marginally, by 0.13%, as a result of the competitive environment that GCS faced in the market. The sales mix was not altered significantly. Private Pharma sales represented 83.27% of total sales, Government Pharma accounted for 3.46%, Health, Beauty, Consumer Goods, General Merchandise and Others totaled 9.33% and Publications the remaining 3.94%.
PRIVATE PHARMA Sales in the Private Pharma division declined marginally, by 0.13%, as a result of the competitive environment that GCS faced in the marketplace, which had an unfavorable impact on the number of items sold during the quarter. Sales reached $4,847.80 million, representing 83.27% of the Group’s total sales.
Sales of Government Pharma rose 7.15% to reach $201.63 million. This was mainly due to a higher participation in bidding processes during the quarter. As a result, Government
Pharma increased its participation with respect to total sales, from 3.24%
in 3Q06 to 3.46% this quarter. HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHER Sales in this division totaled $543.26 million during the quarter, an increase of 2.98% compared to 3Q06. The growth in this division was due to higher sales volume, which offset the decline in average unit prices during the period.
Citem’s sales decreased 1.53% as a result of a lower average price and despite the fact that the number of items sold during the period increased approximately 10.10%. Publications sales as a percentage of total sales declined from 4.01% in 3Q06 to 3.94% in the third quarter of 2007. Division % of sales
Government Pharma
3.46% 9.33%
During the third quarter
of the year, Grupo Casa Saba’s gross income grew 1.70% to reach
$539.76 million. Despite the highly competitive environment that has been
discussed in previous reports, the Company was able to increase its gross
margin to 9.27% during the third quarter of 2007, which compares favorably
to the margin of 9.15% registered during the same period of 2006. The Company’s operating expenses rose marginally, by 0.93%, due to the 2.47% increase in sales expenses. Operating expenses as a percentage of sales grew from 5.67% in the third quarter of 2006 to 5.71% in 3Q07. However, Grupo Casa Saba continued to implement cost reduction programs and, as a result, was able to lower its administrative expenses. OPERATING INCOME Operating income grew by 2.96% to reach $207.40 million pesos. The operating margin was 3.56%, which is 9 b.p. higher than the margin that was registered during the same quarter of 2006. OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION Operating income plus
depreciation and amortization for 3Q07 was $235.72 million, increasing
4.71% from the same period of the previous year. Depreciation for the
quarter totaled $28.32 million, an increase of 19.60%. Cash and cash equivalents
at the end of the third quarter of 2007 reached $368.34 million. The reduction
in cash was due to higher working capital expenditures. COMPREHENSIVE COST OF FINANCING During the third quarter of 2007, GCS’s comprehensive cost of financing of $13.33 million was higher than the $3.79 million of 3Q06, as a result of lower interest income. OTHER EXPENSES (INCOME) During the third quarter of 2007, the Company registered an income of $72.70 million in other expenses (income). This amount reflects the recovery of taxes from past periods. It is worth noting that expenses (income) from this line item reflect activities that are distinct from the company’s everyday business operations.
During the third quarter of 2007, tax provisions rose to $82.56 million. This increase was primarily the result of a reduction in deferred income taxes, related to the recovery of taxes from past periods. NET INCOME GCS’s net income
during the third quarter of 2007 was $184.21 million, an increase of 13.57%
versus the $162.19 million from 3Q06. The net margin for the period was
3.16%, which compares favorably to the 2.80% posted during the same period
of 2006. During the quarter, the Group’s accounts receivable and inventory days increased by 3.8 and 6.1 days compared to 3Q06, to reach 62.1 and 57.4 days, respectively. Our accounts payable days also increased slightly, by 0.8 days, compared to 3Q06. Accounts payable days for the period were 48 days. The 265.4 million shares issued by Grupo Casa Saba are listed in the Mexican Stock Exchange and its ADRs in the New York Stock Exchange, both under the symbol “SAB”. One ADR equals 10 ordinary shares.
As a precautionary note to investors, except for the historic information contained herein, certain topics discussed in this document constitute forward-looking statements. Such topics imply 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.
Alejandro Sadurni,
CFO |
GRUPO CASA SABA S.A.B. DE C.V. AND SUBSIDIARIES
Figures expressed in thousands of pesos of purchasing power as of September
2007
| Jan-Sept |
Jan-Sept |
Variation |
Jul-Sept |
Jul-Sept |
Variation |
||||||||
| Income Statement NET SALES COST OF SALES Gross Profit Operating Expenses Sell Expenses Administration Expenses OPERATING EXPENSES |
2006 17,384,276 15,756,443 1,627,832 382,779 |
% of sales 100.00% 90.64% 9.36% 2.20% |
2007 17,755,601 16,105,277 1,650,324 403,888 602,391 1,006,279 |
% of sales 100.00% 90.71% 9.29% 2.27% |
$ 371,325 348,833 22,492 21,109 -17,120 3,989 |
% 2.14% 2.21% 1.38% 5.51% |
2006 5,802,610 5,271,875 530,735 126,548 |
% of sales 100.00% 90.85% 9.15% 2.18% |
2007 5,821,954 5,282,197 539,757 129,671 |
% of sales 100.00% 90.73% 9.27% 2.23% |
$ 19,344 10,322 9,021 3,123 -56 3,067 |
% 0.33% 0.20% 1.70% 2.47% |
|
| Operating Income COMPREHENSIVE COST OF FINANCING Interest Paid Interest (Earned) Exchange Loss (Gain) Monetary Position (gain) Comprehensive Cost of Financing |
625,542
7,920 |
3.60%
0.05% |
644,045
8,789 |
3.63%
0.05% |
18,503
869 |
2.96%
10.97% |
201,444
2,514 |
3.47%
0.04% |
207,398
2,457 |
3.56%
0.04% |
5,954
-57 |
2.96%
(2.27%) |
|
| OTHER EXPENSES (INCOME),
net
|
-28,565
661,955 |
(0.16%)
3.81% |
-95,595
728,850 |
(0.54%)
4.10% |
-67,030
66,895 |
234.66%
10.11% |
-1,703
199,356 |
(0.03%)
3.44% |
-72,700
266,763 |
(1.25%)
4.58% |
-70,997
67,407 |
4168.48%
33.81% |
|
| PROVISIONS FOR: Income Tax Asset Tax Deferred Income Tax Profit sharing due Deferred Profit sharing due Total taxes Net Income Before Extraordinary Items Extraordinary Items (Income) |
243,693 0 -97,095 0 0 146,598 515,357 1,142 |
1.40% 0.00% (0.56%) 0.00% 0.00% 0.84% 2.96% 0.01% |
217,905 0 -18,814 0 0 199,091 529,759 0 |
1.23% 0.00% (0.11%) 0.00% 0.00% 1.12% 2.98% 0.00% |
-25,788 0 78,281 0 0 52,493 14,402 -1,142 |
(10.58%) 0.00% (80.62%) 0.00% 0.00% 0.00% 2.79% 0.00% |
100,613 0 -64,591 0 0 36,022 163,335 1,142 |
1.73% 0.00% (1.11%) 0.00% 0.00% 0.62% 2.81% 0.02% |
94,262 0 -11,707 0 0 82,555 184,209 0 |
1.62% 0.00% (0.20%) 0.00% 0.00% 1.42% 3.16% 0.00% |
-6,351 0 52,884 0 0 46,533 20,874 -1,142 |
(6.31%) 0.00% (81.88%) 0.00% 0.00% 129.18% 12.78% (100.00%) |
|
| Depreciation and Amortization Operating income plus Depreciation and Amortization |
76,715 702,257 |
0.44% 4.04% |
79,072 723,117 |
0.45% 4.07% |
2,357 20,860 |
3.07% 2.97% |
23,680 225,123 |
0.41% 3.88% |
28,322 235,720 |
0.49% 4.05% |
4,642 10,596 |
19.60% 4.71% |
|
GRUPO CASA SABA S.A.B. DE C.V. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Figures expressed in thousands of Mexican Pesos as of September 2007
| ITEM |
September
2007 |
September
2006 |
Variation ($) |
| TOTAL ASSETS
CURRENT ASSETS TOTAL LIABILITIES CURRENT LIABILITIES SHAREHOLDER'S EQUITY MINORITY STOCKHOLDER'S EQUITY |
9,520,292
8,019,910 250,413 1,158,526 162,173 3,752,906 3,047,628 5,767,386
|
9,084,525
7,669,237 205,161 1,112,445 161,539 3,887,155 3,080,428 5,197,370
|
435,767
350,673 45,252 46,081 634 -134,249 -32,800 570,016 - |