Casa Saba Earnings Report 4Q05
February 21 2006 - 9:11PM
PR Newswire (US)
Sales and Operating Profit rose 14.0% and 23.5%, respectively
MEXICO CITY, Feb. 21 /PRNewswire-FirstCall/ -- 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 announces its consolidated financial and
operating results for the fourth quarter of 2005. QUARTERLY RESULTS
TOTAL SALES During the fourth quarter of 2005, Grupo Casa Saba
registered a 13.96% increase in sales, resulting from growth in
three of the four business divisions of the Group. Sales were
generally driven by favorable seasonal commercial negotiations
which improved our market offer. Likewise, product lines that had
been removed during past quarters due to low levels of
profitability were re-incorporated in our product catalogs.
Government Pharma was the division that registered the highest
sales increase, 62.61%, demonstrating the efforts made to increase
our operations with government institutions, including PEMEX. We
have sustained and will keep on maintaining our strategy of
profitable growth, so we will continue focusing on improving our
presence and market share levels in all of the Group's divisions.
SALES BY DIVISION: PRIVATE PHARMA During the fourth quarter of
2005, Private Pharma registered a 13.80% increase in sales,
resulting from favorable year-end commercial negotiations as well
as from a solid and sustained growth in the private pharma market.
Likewise, we re-incorporated some product lines that were absent
during the 4Q04. Private Pharma accounted for 83.61% of GCS's total
sales during the fourth quarter of 2005, a 12 bp decrease with
respect to the fourth quarter of 2004. This reduction in its share
to total sales is due to the strong growth registered by the
Government Pharma and Publications divisions. GOVERNMENT PHARMA Our
strategy and commitment to sustain a more significant presence in
government institutions, including PEMEX and state health
institutions, set up some quarters ago, allowed 4Q05 government
pharma sales to rise by 62.61%. It is worth noting that a
significant portion of this division's sales are subject to public
bidding processes, in which we will focus our efforts to maintain
and/or increase our participation. However, there are risks
associated to these processes. As a result of this growth, the
share of Government Pharma to total sales went from 3.27% in the
fourth quarter of 2004, to 4.66% in 4Q05. HEALTH, BEAUTY, CONSUMER
GOODS, GENERAL MERCHANDISE AND OTHER As a result of lower sales of
products oriented to health and beauty, this division registered a
3.38% sales decrease versus 4Q04 sales. This decline results from
some clients' decisions to stop buying this kind of product through
GCS. It is worth mentioning, however, that in our general
merchandise line, food products registered a 14.16% sales growth
compared to the 4Q04. This growth results from solid commercial
efforts in both the new and the previous products that we manage.
As a result, this division decreased its contribution to the
Group's total sales, from 10.02% in 4Q04 to 8.50% in 4Q05.
PUBLICATIONS In Citem, our publications division, its solid
editorial base, as well as the inclusion of new titles, resulted in
a quarterly sales increase of 23.37%. This growth also reflects
Citem's penetration in new markets, such as Blockbuster and
Farmacias del Ahorro. The publications division increased its
contribution to the Group's total sales, from 2.98% in 4Q04 to
3.23% in 4Q05. GROSS PROFIT The Group's 4Q05 gross profit amounted
$760.07 million, 9.22% higher than in the fourth quarter of 2004.
With respect to the 4Q04, gross margin decreased 52 bp to 11.98%.
This reduction was mainly due to a high 4Q04 gross margin which
resulted from favorable commercial negotiations. OPERATING EXPENSES
Operating expenses decreased by 1.68% with respect to the fourth
quarter of 2004. This decrease allowed the expense to sales ratio
for an important reduction of 98 bp with respect to 4Q04. The
expenses to sales ratio in 4Q05 reached 6.12%. The decrease in
operating expenses reflects the positive performance of our diverse
efficiency and cost-savings programs, such as routes reengineering,
vehicle controls, optimization of distribution centers, etc.
OPERATING INCOME As a result of the increase in sales and the lower
operating expenses, which offset the reduction in gross margin,
GCS's 4Q05 operating income reached $371.54 million, increasing
23.54% as compared to the 4Q04. Operating Profit plus Depreciation
and Amortization 4Q05 Depreciation and Amortization diminished by
9.48% when compared to the 4Q04. This decrease resulted from a
reduction in the Group's transportation vehicles, including those
which were close to 4 years old. As a result of the above
mentioned, 4Q05 operating profit plus depreciation and amortization
increased by 20.39% with respect to the 4Q04. COST-BEARING
LIABILITIES AND CASH During the 4Q05, GCS's balance sheet was free
of cost-bearing liabilities. With respect to cash and temporary
investments, the cash flow generated from operations allowed this
item to reach $714.53 million in the 4Q05. This number represents a
43.75% increase from the 4Q04 number. COMPREHENSIVE COST OF
FINANCING GCS's Comprehensive Cost of Financing adjusted from a
$5.05 million gain in the 4Q04 to a $4.16 million loss in the 4Q05.
This was mainly motivated by an $8.79 million loss in monetary
position in the 4Q05 versus a $4.45 million gain in the 4Q04.
Interest expense, which mainly includes banking fees, registered a
15.32% increase compared to 4Q04, contributing also to this result.
Interest income partially offset the negative effects previously
mentioned, increasing by 95.19% compared to 4Q04. OTHER
EXPENSES/INCOME The other expenses/income item, which includes
expenses and income from operations different from our business
lines, registered an income of $18.17 million, which represents a
4.72% decrease compared to the 4Q04. TAX PROVISIONS Tax provisions
for the quarter increased by 50.76% compared to the 4Q04. This
increase is mainly explained by a larger provision for deferred
income taxes. 4Q05 tax provisions reached $75.93 million. NET
INCOME Net income for the 4Q05 increased by 12.79% versus the 4Q04,
as a result of a higher operating income, a higher integral cost of
financing, and the increase in tax provisions. GCS's 4Q05 net
income reached $309.62 million. WORKING CAPITAL Accounts receivable
days for 4Q05 decreased slightly compared to the 4Q04, by 1.0 day.
Following our strategy of operating efficiently and profitably,
4Q05 inventory days decreased by 11.9 days with respect to the
4Q04. Accounts payable reflected a 5.8 days reduction in the
quarter versus the 4Q04. This reduction resulted from commercial
negotiations which were aimed at improving conditions other than
payment terms. 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. Grupo Casa Saba is one
of the leading distributors of pharmaceutical products, beauty,
personal care and consumer goods, general merchandise, publications
and other goods in Mexico. With more than 110 years of experience,
the Company distributes to the majority of pharmacies, chains,
self-service and convenience stores, as well as other specialized
national chains. 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. DATASOURCE: Grupo Casa Saba CONTACT: Jorge Sanchez, IRO,
+52-55-5284-6672, , or Alejandro Sadurni, CFO, , both of Grupo Casa
Saba; or Luisa Salgado of IR Communications, +52-55-5644-1247, ,
for Grupo Casa Saba Web site: http://www.casasaba.com/
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