San Pedro Garza García, Nuevo León, Mexico, February 18, 2019– Vitro, S.A.B. de C.V. (BMV: VITROA), hereinafter “Vitro” or the “Company”, a leading glass producer in North America, announced today its results for the fourth quarter of 2018 (“4Q’18”).
Fourth Quarter 2018 Highlights
- Vitro announced fourth quarter of 2018 results that showed solid salesgrowth and very good cash generation but weaker EBITDA growth. Increased overall competition, softer industry demand and reorganization costs for the automotive business, together with higher energy costs were the key factors impacting EBITDA for the quarter.
- Consolidated Net Sales increased 2.6% year-over-year (“YoY”) during 4Q18 to US$540 million. This was mainly driven by the 2.5% YoY increase in the Flat Glass division which reported revenue of US$484 million benefitting from an increase in the Mexican market. Revenues for the Glass Container unit rose 4.7% to US$56 million, attributable to a better product mix and increased volumes in both businesses, Machinery and Equipment (“FAMA”), and in Cosmetics, Fragrances and Pharmaceutical (“CFT”) business
- EBITDA decreased 21.6% YoY to US$71 million, impacted by the Flat Glass Business which posted a 26.7% decline. An increasingly competitive environment in the flat glass market led to price and product mix actions to recover market share, in the Architectural business, additional costs were related to the transference of parts which were moved among facilities in order to improve capacity utilization in the automotive segment. Additional impacts included, a 27% increase in electricity prices in México affecting Architectural, Automotive, CFT and the chemical businesses as well as temporary operational inefficiencies in the automotive businesses. By contrast, Glass Containers Business EBITDA rose 12% mainly driven by the good performance of the CFT Business.
Commenting on Vitro’s performance and outlook, Mr. Adrián Sada Cueva, Chief Executive Officer, said “Our results during the quarter continue to reflect some of the same challenges we faced in the prior quarter. Nevertheless, we were able to deliver solid top line growth and a big increase in our cash generation and net debt reduction, this being achieved while going through a difficult quarter for our margins, which we are working hard to improve. In November we were able to close the sale of our minority equity position in our central American food and Beverage glass container JV at very favorable financial terms. Not only was this an important financial achievement but also an action aligned with the strategy that we embarked on since the end of 2015 when we decided to exit the Food and Beverage container business.
Regarding the performance of our business units Automotive posted weaker performance due to operational inefficiencies related to a strategy to realign our plants in order to be more efficient in the medium term, in addition we have faced slower demand in the United States which we believe will continue and even soften more during 2019. At our Architectural Business, we faced temporary operational inefficiencies this quarter in one of our Mexicali facilities, while in the U.S., we continued to experience lower margins from increased competition as we reestablished our full capacity at the Carlisle plant after the fire. We remain fully focused on regaining and maintaining our market share and are proud to have been recently awarded the business to supply glass for the Amazon spheres in Seattle as well as the Singapore airport. Although our operative second half results are not where we would like them to be due to a number of factors, we are taking the necessary steps to further enhance our strong franchise and taking decisions with a long-term perspective.”
“We remain focused on further increasing the competitiveness of our operations as well as investing in capacity and new product development for higher-value added products. By doing so, we will be better positioned to withstand slower industry demand as well as increased competition. We are making good progress with these initiatives and I am pleased to report that in December we concluded the installation of our new state-of-the-art windshield line in Mexico and are starting to ramp up operations in line with plan, offering innovative value-added products to the OEM industry. Similarly, in Architectural Glass, our state-of-the art MSVD jumbo coating line at our plant in Wichita Falls, Texas dedicated to production of high-performing large expansive low-e glass is already operating over 50% capacity after just a few months in operation.
“Looking ahead, and benefitting from our strengthened balance sheet, we will continue to execute on our strategic growth plan as we seek to make investments that improve our competitiveness and grow our capacity to offer the most innovative, distinctive and value-added products to our customers”
Commenting on the financial results, Mr. Claudio Del Valle, Chief Administrative and Financial Officer, “We have improved our financial position trough the sale of our minority participation in Empresas Comegua for an amount of US$119 million. Vitro generated net free cash flow of US$47 million in the quarter, which along with the sale of Comegua allowed us to close the year with a cash balance of US$291 million and a net debt to LTM EBITDA ratio of 1.16x. With the goal of further reducing interest expense and improving our maturity profile, during the quarter we pre-paid two loans for a total of approximately US$689 million that were refinanced through a new US$700 million 5-year syndicated loan.”