SAN PEDRO GARZA GARCIA, Mexico, Oct. 28 /PRNewswire-FirstCall/ --
Vitro S.A.B. de C.V. (BMV: VITROA; NYSE: VTO) one of the world's
largest producers and distributors of glass products, today
announced 3Q'08 unaudited results. Year over year consolidated net
sales rose 8.9 percent while EBITDA increased 11.4 percent. The
consolidated EBITDA margin increased to 14.5 percent from 14.1
percent in the same period last year despite a 68 percent increase
in natural gas prices. FINANCIAL HIGHLIGHTS* 3Q'08 3Q'07 % Change
Consolidated Net Sales 724 665 8.9% Glass Containers 404 339 19.0%
Flat Glass 314 318 -1.4% Cost of Sales 523 483 8.3% Gross Income
201 182 10.5% Gross Margins 27.8% 27.4% 0.4 pp SG&A 141 129
8.6% SG&A % of sales 19.4% 19.5% -0.1 pp EBIT 61 53 15.0% EBIT
Margins 8.4% 7.9% 0.5 pp EBITDA 105 94 11.4% Glass Containers 80 66
21.6% Flat Glass 22 31 -26.7% EBITDA Margins 14.5% 14.1% 0.4 pp Net
Income (153) (3) - Net Income Margins -21.2% -0.5% -21 pp Total
Debt 1,456 1,382 5.4% Short Term Debt 158 80 96.6% Long Term Debt
1,299 1,302 -0.2% Average life of debt 5.9 7.1 Cash & Cash
Equivalents(1) 128 173 -25.9% Total Net Debt 1,329 1,209 9.9% *
Million US$ Nominal (1) Cash & Cash Equivalents include
restricted cash which corresponded to cash collateralizing debt and
derivatives instruments accounted for in other current assets.
Commenting on the results for the quarter, Enrique Osorio, Chief
Financial Officer, said, "This was another strong quarter, with the
highest EBITDA since 3Q'06. We see a challenging 2009, but we feel
comfortable that we have a strong business with competitive
advantages that will play an important role in our performance."
Mr. David Gonzalez, President of Glass Containers business unit,
commented, "This was again another solid quarter for containers,
both in the domestic and export markets, reflecting volume and
price increases across the board. Domestic sales rose 25 percent
year-over-year, while export sales increased 8 percent, including
those to the US market. In turn, EBITDA rose 21.6 percent
year-over-year despite higher energy prices. This was driven by
strong volumes, a favorable product mix, price increases to cover
the inflation of inputs and ongoing cost reduction initiatives and
the absence of costs related to the production interruptions in
3Q'07." "We are taking a conservative approach to planning for next
year. We are also developing contingency plans and cost cutting
initiatives to be implemented across the board in preparation for
what we expect to be a more challenging environment in the year
ahead," continued Mr. Gonzalez. Mr. Hugo Lara, President of Flat
Glass business unit, noted, "Despite tough industry conditions in
the US and Spanish construction segments and in the North American
Automotive business, Flat Glass sales fell only 1.4 percent this
quarter. Sales at Vitro Cristalglass, our Spanish subsidiary,
increased five percent which reflects a better price mix from the
new value-added production line as well as a strong Euro. Auto
glass sales to the OEM market fell five percent as a result of
weakening demand, but we managed to mitigate some of the negative
effects of this downturn and gained market share in the North
American market through our increased participation in small car
and CUV platforms. Vitro America sales remained flat as we
continued to focus on the commercial sector to offset some of the
decline experienced in product lines linked to the residential
market such as our mirror line. The domestic market for float glass
remained strong, however we did see a decline in volume sold to
Auto Glass manufacturers." "EBITDA for the Flat Glass business unit
fell 26.7 percent as we were unable to completely offset
substantially higher energy and raw material costs despite our cost
reduction initiatives and a better product and price mix as we
shift towards higher value added products. Looking forward, we see
a challenging industry environment, however we are going to
aggressively pursue cost cutting initiatives which we expect will
enable us to be better prepared for the possibility of a prolonged
slowdown and enable us to become a stronger Company," continued Mr.
Lara Addressing the balance sheet, Mr. Osorio noted, "This was a
good quarter and we generated US$74 million dollars in free cash
flow before CapEx and dividends, which reflects the strength of our
business and continued efforts to preserve cash. Net debt to EBITDA
remained stable quarter-over-quarter at 3.6 times. The average cost
of debt, in turn, dropped almost 30 basis points year-over-year to
9.1 percent. Total financing result, however, increased to US$267
million from US$38 million in 3Q'07, as a result of the change in
the mark-to-market of our derivative portfolio. Keep in mind that
our current hedging portfolio focuses on future commitments related
to our operations specifically our future natural gas requirements
and coupon payments on the US$1 billion senior Notes due 2012 and
2017. As of today, we have restructured our portfolio to
significantly reduce possible negative effects related to current
volatility. Our current mark-to-market on open positions is
approximately US$98 million." "Given the severe and expected
volatility in the international financial markets, we are also
maintaining close communication with creditors, financial
institutions, clients and suppliers, who have reiterated their
willingness to find favorable alternatives based to the current
financial conditions," Mr. Osorio closed. Sep-08 Sep-07 Inflation
in Mexico Quarter 1.8% 1.6% LTM 5.5% 3.8% Inflation in USA Quarter
1.8% 0.3% LTM 6.1% 2.7% Exchange Rate Closing 10.7919 10.9243
Devaluation Quarter 4.9% 1.2% LTM -1.2% -0.6% All figures provided
in this announcement are in accordance with Mexican Financial
Reporting Standards (Mexican FRS or NIFs) issued by the Mexican
Board for Research and Development of Financial Reporting Standards
(CINIF), except otherwise indicated. Dollar figures are in nominal
US dollars and are obtained by dividing nominal pesos for each
month by the end of month fix exchange rate published by Banco de
Mexico. In the case of the Balance Sheet, US dollar translations
are made at the fix exchange rate as of the end of the period.
Certain amounts may not sum due to rounding. All figures and
comparisons are in US dollar terms, unless otherwise stated, and
may differ from the peso amounts due to the difference between
inflation and exchange rates. This announcement contains historical
information, certain management's expectations, estimates and other
forward-looking information regarding Vitro, S.A.B. de C.V. and its
Subsidiaries (collectively the "Company"). While the Company
believes that these management's expectations and forward looking
statements are based on reasonable assumptions, all such statements
reflect the current views of the Company with respect to future
events and are subject to certain risks and uncertainties that
could cause actual results to differ materially from those
contemplated in this report. Many factors could cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements that may be expressed or implied by such
forward-looking statements, including, among others, changes in
general economic, political, governmental and business conditions
worldwide and in such markets in which the Company does business,
changes in interest rates, changes in inflation rates, changes in
exchange rates, the growth or reduction of the markets and segments
where the Company sells its products, changes in raw material
prices, changes in energy prices, particularly gas, changes in the
business strategy, and other factors. Should one or more of these
risks or uncertainties materialize, or should the underlying
assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated or
expected. The Company does not assume any obligation, to and will
not update these forward-looking statements. The assumptions, risks
and uncertainties relating to the forward-looking statements in
this report include those described in the Company's annual report
in form 20-F file with the U.S. Securities and Exchange Commission,
and in the Company's other filings with the Mexican Comision
Nacional Bancaria y de Valores. This report on Form 6-K is
incorporated by reference into the Registration Statement on Form
F-4 of Vitro, S.A.B. de C.V. (Registration Number 333-144726). NEW
ACCOUNTING PRINCIPLES In 2007 and January 2008, the CINIF issued
the following NIFs and Interpretations of Financial Reporting
Standards (INIFs), which became effective for fiscal years
beginning on January 1, 2008: -- NIF B-2, Statement of Cash Flows.
-- NIF B-10, Effects of Inflation. -- NIF B-15, Translation of
Foreign Currencies. -- NIF D-3, Employee Benefits. -- NIF D-4,
Taxes on Income. -- INIF 5, Recognition of the Additional
Consideration Agreed to at the Inception of a Derivative Financial
Instrument to Adjust It to Fair Value. -- INIF 6, Timing of Formal
Hedge Designation. -- INIF 7, Application of Comprehensive Income
or Loss Resulting From a Cash Flow Hedge on a Forecasted Purchase
of a Non-Financial Asset. -- INIF 8, Effects of the Business Flat
Tax (IETU) -- INIF 9, Presentation of Comparative Financial
Statements Prepared under NIF B-10 Some of the significant changes
established by these standards are as follows: -- NIF B-2,
Statement of Cash Flows.- This NIF establishes general rules for
the presentation, structure and preparation of a cash flow
statement, as well as the disclosures supplementing such statement,
which replaces the statement of changes in financial position. NIF
B-2 requires that the statement show a company's cash inflows and
outflows during the period. Line items should be preferably
presented gross. Cash flows from financing activities are now
presented below those from investing activities (a departure from
the statement of changes in financial position). In addition, NIF
B-2 allows entities to determine and present their cash flows from
operating activities using either the direct or the indirect
method. -- NIF B-10, Effects of Inflation.- CINIF defines two
economic environments: a) inflationary environment, when cumulative
inflation of the three preceding years is 26 percent or more, in
which case, the effects of inflation should be recognized using the
comprehensive method; and b) non-inflationary environment, when
cumulative inflation of the three preceding years is less than 26
percent, in which case, no inflationary effects should be
recognized in the financial statements. Additionally, NIF B-10
eliminates the replacement cost and specific indexation methods for
inventories and fixed assets, respectively, and requires that the
cumulative gain or loss from holding non-monetary assets be
reclassified to retained earnings, if such gain or loss is
realized; the gain or loss that is not realized will be maintained
in stockholders' equity and charged to current earnings of the
period in which the originating item is realized. -- NIF B-15,
Translation of Foreign Currencies.- NIF B-15 eliminates
classification of integrated foreign operations and foreign
entities and incorporates the concepts of accounting currency,
functional currency and reporting currency. NIF B-15 establishes
the procedures to translate the financial information of a foreign
subsidiary: i) from the accounting to the functional currency; and
ii) from the functional to the reporting currency, and allows
entities to present their financial statements in a reporting
currency other than their functional currency. -- NIF D-3, Employee
Benefits.- This NIF includes current and deferred PSW (Profit
Sharing to Workers). Deferred PSW should be calculated using the
same methodology established in NIF D-4. It also includes the
career salary concept and the amortization period of most items is
reduced to five years. The beginning balance of gains and losses
from severance benefits should be amortized against the results of
2008. -- NIF D-4, Income Taxes .- This NIF relocates accounting for
current and deferred PSW to NIF D-3, eliminates the permanent
difference concept, redefines and incorporates various definitions
and requires that the cumulative income tax ("ISR") effect be
reclassified to retained earnings, unless it is identified with
some of the other comprehensive income items that have not been
applied against current earnings. -- INIF 5, Recognition of the
Additional Consideration Agreed To at the Inception of a Derivative
Financial Instrument to Adjust It to Fair Value.- INIF 5 states
that any additional consideration agreed to at the inception of a
derivative financial instrument to adjust it to its fair value at
that time should be part of the instrument's initial fair value and
not subject to amortization as established by paragraph 90 of
Bulletin C-10. INIF 5 also establishes that the effect of the
change should be prospectively recognized, affecting results of the
period in which this INIF becomes effective. If the effect of the
change is material, it should be disclosed. -- INIF 6, Timing of
Formal Hedge Designation.- INIF 6 states that hedge designations
may be made as of the date a derivative financial instrument is
contracted, or at a later date, provided its effects are
prospectively recognized as of the date when formal conditions are
met and the instrument qualifies as a hedging relationship.
Paragraph 51 a) of Bulletin C-10 only considered the hedge
designation at the inception of the transaction. -- INIF 7,
Application of Comprehensive Income or Loss Resulting From a Cash
Flow Hedge on a Forecasted Purchase of a Non-Financial Asset.- INIF
7 states that the effect of a hedge reflected in other
comprehensive income or loss resulting from a forecasted purchase
of a non-financial asset should be capitalized within the cost of
such asset, whose price is set through a hedge, rather than
reclassifying the effect to the results of the period affected by
the asset, as required by Paragraph 105 of Bulletin C-10. The
effect of this change should be recognized by applying any amounts
recorded in other comprehensive income or loss to the cost of the
acquired asset, as of the effective date of this INIF. -- INIF 8,
Effects of the Business Flat Tax (IETU).- Due to the new tax law,
the INIF 8 provides the guidance for the deferred tax recording
methodology given the two income tax regimes (ISR and IETU),
depending on the tax regime the company will substantially operate
according to its financial projections. -- INIF 9, Presentation of
Comparative Financial Statements Prepared under NIF B-10.- INIF 9
states that financial data for year 2008 is presented in nominal
pesos while for previous periods it is expressed in constant pesos
as of December 31, 2007. Due to the above mentioned situation,
financial data for last twelve months 2008 is a combination of
nominal pesos (for those months of year 2008) and constant pesos as
of December 31, 2007 (for those months of year 2007). SPECIAL NOTE
REGARDING NON-GAAP FINANCIAL MEASURES A body of generally accepted
accounting principles is commonly referred to as "GAAP". A non-GAAP
financial measure is generally defined by the SEC as one that
purports to measure historical or future financial performance,
financial position or cash flows but excludes or includes amounts
that would not be so adjusted in the most comparable U.S. GAAP
measure. We disclose in this report certain non-GAAP financial
measures, including EBITDA. EBITDA for any period is defined as
consolidated net income (loss) excluding (i) depreciation and
amortization, (ii) non-cash items related to pension liabilities,
(iii) total net comprehensive financing cost (which is comprised of
net interest expense, exchange gain or loss, monetary position gain
or loss and other financing costs and derivative transactions),
(iv) other expenses, net, (v) income tax, (vi) provision for
employee retirement obligations, (vii) cumulative effect of change
in accounting principle, net of tax and (viii) (income) loss from
discontinued operations. In managing our business we rely on EBITDA
as a means of assessing our operating performance and a portion of
our management's compensation and employee profit sharing plan is
linked to EBITDA performance. We believe that EBITDA can be useful
to facilitate comparisons of operating performance between periods
and with other companies because it excludes the effect of (i)
depreciation and amortization, which represents a non-cash charge
to earnings, (ii) certain financing costs, which are significantly
affected by external factors, including interest rates, foreign
currency exchange rates and inflation rates, which have little or
no bearing on our operating performance, (iii) income tax and tax
on assets and statutory employee profit sharing, which is similar
to a tax on income and (iv) other expenses or income not related to
the operation of the business. EBITDA is also a useful basis of
comparing our results with those of other companies because it
presents operating results on a basis unaffected by capital
structure and taxes. We also calculate EBITDA in connection with
covenants related to some of our financings. We believe that EBITDA
enhances the understanding of our financial performance and our
ability to satisfy principal and interest obligations with respect
to our indebtedness as well as to fund capital expenditures and
working capital requirements. EBITDA is not a measure of financial
performance under U.S. GAAP or Mexican FRS. EBITDA should not be
considered as an alternate measure of net income or operating
income, as determined on a consolidated basis using amounts derived
from statements of operations prepared in accordance with Mexican
FRS, as an indicator of operating performance or as cash flows from
operating activity or as a measure of liquidity. EBITDA has
material limitations that impair its value as a measure of a
company's overall profitability since it does not address certain
ongoing costs of our business that could significantly affect
profitability such as financial expenses and income taxes,
depreciation, pension plan reserves or capital expenditures and
associated charges. The EBITDA presented herein relates to Mexican
FRS, which we use to prepare our consolidated financial statements.
Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), is one of the
largest glass manufacturers in the world. Through our subsidiary
companies we offer products with the highest quality standards and
reliable services to satisfy the needs of two distinct business
sectors: glass containers and flat glass. Our manufacturing
facilities produce, process, distribute and sell a wide range of
glass products that offer excellent solutions to multiple
industries that include: wine, beer, cosmetic, pharmaceutical, food
and beverage, as well as the automotive and construction industry.
Also, we supply raw materials, machinery and industrial equipment
to different industries. We constantly strive to improve the
quality of life for our employees as well as the communities in
which we do business by generating employment and economic
prosperity thanks to our permanent focus on quality and continuous
improvement as well as consistent efforts to promote sustainable
development. Our World Headquarters are located in Monterrey,
Mexico where Vitro was founded in 1909 and now embarks major
facilities and a broad distribution network in ten countries in the
Americas and Europe. Additionally, it exports its products to over
50 countries around the World. For more information, you can access
Vitro's Website at: http://www.vitro.com/ Third Quarter 2008
results Conference Call and Web cast Wednesday, October 29, 2008
11:00 AM U.S. EST - 9:00 A.M. Monterrey time A live web cast of the
conference call will be available to investors and the media at
http://www.vitro.com/. A replay of the web cast will be available
through the end of the day on November 12, 2008. For inquiries
regarding the conference call, please contact Barbara Cano or Susan
Borinelli of Breakstone Group via telephone at (646) 452-2334, or
via email at Consolidated Results Sales Consolidated net sales for
3Q'08 increased 8.9 percent YoY to US$724 million from US$665
million last year. For LTM 2008, consolidated net sales rose 9.5
percent to US$2,748 million from US$2,510 in LTM 2007. Glass
Containers sales for the quarter rose YoY by 19.0 percent while
Flat Glass sales declined 1.4 percent over the same time period.
During the quarter domestic, export and foreign subsidiaries' sales
increased 13.3 percent, 6.7 percent and 4.8 percent YoY
respectively. Table 1: Total Sales Table 1 Sales (Million) YoY%
YoY% 3Q'08 3Q'07 Change 9M'08 9M'07 Change Pesos(1) Total
Consolidated Sales 7,482 7,436 0.6 21,866 21,402 2.2 Glass
Containers 4,167 3,776 10.4 11,838 10,966 8.0 Flat Glass 3,245
3,573 (9.2) 9,792 10,173 (3.7) Domestic Sales 3,221 3,174 1.5 9,387
8,988 4.4 Export Sales 1,779 1,737 2.4 5,211 5,053 3.1 Foreign
Subsidiaries 2,482 2,524 (1.7) 7,268 7,361 (1.3) Nominal Dollars
Total Consolidated Sales 724 665 8.9 2,089 1,901 9.9 Glass
Containers 404 339 19.0 1,132 980 15.5 Flat Glass 314 318 (1.4) 935
898 4.1 -- Domestic Sales 320 283 13.3 916 800 14.5 Export Sales
167 157 6.7 487 453 7.7 Foreign Subsidiaries 237 226 4.8 685 649
5.7 % Foreign Currency Sales* / Total Sales 56% 57% -1.7 pp 56% 58%
-1.9 pp % Export Sales / Total Sales 23% 24% -0.4 pp 23% 24% -0.5
pp LTM YoY% 2008 2007 Change Pesos(1) Total Consolidated Sales
29,055 28,354 2.5 Glass Containers 15,511 14,542 6.7 Flat Glass
13,210 13,418 (1.6) Domestic Sales 12,405 11,955 3.8 Export Sales
6,833 6,517 4.9 Foreign Subsidiaries 9,818 9,882 (0.7) Nominal
Dollars Total Consolidated Sales 2,748 2,510 9.5 Glass Containers
1,469 1,296 13.4 Flat Glass 1,247 1,179 5.8 Domestic Sales 1,194
1,062 12.4 Export Sales 636 582 9.3 Foreign Subsidiaries 917 865
6.0 % Foreign Currency Sales* / Total Sales 57% 58% -1.2 pp %
Export Sales / Total Sales 23% 23% 0 pp (1) Financial data for year
2008 is presented in nominal pesos while for previous periods it is
expressed in constant pesos as of December 31, 2007. For more
details please refer to the note regarding new Mexican Financial
Reporting Standards. * Exports + Foreign Subsidiaries EBIT and
EBITDA Consolidated EBIT for the quarter increased 15.0 percent YoY
to US$61 million from US$53 million last year. EBIT margin
increased 50 basis points to 8.4 percent from 7.9 percent. On a LTM
basis, consolidated EBIT increased 8.3 percent to US$225 million
from US$208 million in LTM 2007. During this same period of time,
EBIT margin decreased 10 basis points to 8.2 percent from 8.3
percent. EBIT for the quarter at Glass Containers increased by 32.1
percent YoY, while at Flat Glass EBIT decreased by 56.6 percent
YoY. Consolidated EBITDA for the quarter rose 11.4 percent to
US$105 million from US$94 million in 3Q'07. The EBITDA margin grew
40 basis points YoY to 14.5 percent from 14.1 percent despite
higher energy and raw materials costs and transition of production
of our new cosmetics glass container plant. This comparison
includes the negative effect of a series of temporary production
interruptions at certain glass containers facilities in Mexico
during the months of July and September last year. On a LTM basis,
consolidated EBITDA declined 3.5 percent to US$371 million from
US$384 million in LTM 2007. During the quarter, EBITDA at Glass
Containers increased 21.6 percent YoY to US$80 million from US$66
million while EBITDA at Flat Glass decreased 26.7 percent YoY to
US$22 million from US$31 million. Table 2: EBIT and EBITDA Table 2
EBIT and EBITDA (Million) YoY% YoY% 3Q'08 3Q'07 Change 9M'08 9M'07
Change Pesos(1) Consolidated EBIT 631 597 5.8 1,523 1,837 (17.1)
Margin 8.4% 8.0% 0.4 pp 7.0% 8.6% -1.6 pp Glass Containers 550 451
21.9 1,331 1,379 (3.5) Flat Glass 85 217 (60.9) 275 564 (51.3)
Consolidated EBITDA 1,087 1,060 2.5 2,833 3,279 (13.6) Margin 14.5%
14.3% 0.2 pp 13.0% 15.3% -2.3 pp Glass Containers 828 737 12.4
2,116 2,272 (6.9) Flat Glass 232 348 (33.4) 698 989 (29.4) Nominal
Dollars Consolidated EBIT 61 53 15.0 145 162 (10.3) Margin 8.4%
7.9% 0.5 pp 7.0% 8.5% -1.5 pp Glass Containers 53 40 32.1 127 123
3.6 Flat Glass 8 19 (56.6) 26 49 (46.0) Consolidated EBITDA 105 94
11.4 270 290 (6.8) Margin 14.5% 14.1% 0.4 pp 12.9% 15.3% -2.4 pp
Glass Containers 80 66 21.6 202 202 (0.1) Flat Glass 22 31 (26.7)
67 86 (22.7) LTM YoY% 2008 2007 Change Pesos(1) Consolidated EBIT
2,390 2,360 1.3 Margin 8.2% 8.3% -0.1 pp Glass Containers 2,036
1,876 8.6 Flat Glass 493 689 (28.4) Consolidated EBITDA 3,932 4,355
(9.7) Margin 13.5% 15.4% -1.9 pp Glass Containers 2,944 3,090 (4.7)
Flat Glass 1,029 1,300 (20.8) Nominal Dollars Consolidated EBIT 225
208 8.3 Margin 8.2% 8.3% -0.1 pp Glass Containers 192 167 15.1 Flat
Glass 46 59 (21.7) Consolidated EBITDA 371 384 (3.5) Margin 13.5%
15.3% -1.8 pp Glass Containers 278 275 1.3 Flat Glass 97 113 (14.1)
(1) Financial data for year 2008 is presented in nominal pesos
while for previous periods it is expressed in constant pesos as of
December 31, 2007. For more details please refer to the note
regarding new Mexican Financial Reporting Standards. Consolidated
Financing Result Consolidated financing result for the quarter
increased 609.3 percent YoY to US$267 million compared with US$38
million during 3Q'07. This situation was driven by three factors:
higher other financing expenses due to the change in the
mark-to-market of the Company's derivative portfolio, which does
not represent a cash expense; a non-cash foreign exchange loss of
US$59 million compared with a non-cash foreign exchange loss of
US$12 million during 3Q'07 due to a 4.9 percent devaluation of the
Mexican peso during 3Q'08 compared with a 1.2 percent devaluation
in the same period last year; the decrease in monetary position as
a result of the elimination of this effect at the beginning of year
2008 due to the new Mexican Financial Reporting Standards. On a LTM
basis, total consolidated financing result increased 101.2 percent
YoY to US$329 million from US$164 million driven by higher other
financial expenses and lower monetary position due to the reasons
mentioned in the previous paragraph. Lower interest expense of
US$145 million compared with US$192 million due to a decrease in
the interest rate partially offset the increase in the total
financing result. Table 3: Total Financing Result Table 3 Total
Financing Result (Million) YoY% YoY% 3Q'08 3Q'07 Change 9M'08 9M'07
Change Pesos(1) Interest Expense (433) (421) 2.9 (1,147) (1,313)
(12.7) Interest Income 17 41 (57.6) 41 165 (74.9) Other Financial
Expenses(2) (1,743) (67) -- (2,265) (464) 388.3 Foreign Exchange
(Loss) (650) (137) 374.4 146 (91) -- Monetary Position (Loss)(3) -
154 -- (0) 296 -- Total Financing Result (2,808) (430) 553.4
(3,225) (1,407) 129.1 Nominal Dollars Interest Expense (42) (37)
12.2 (110) (116) (5.7) Interest Income 2 4 (53.0) 4 15 (72.9) Other
Financial Expenses(2) (167) (6) -- (217) (41) 425.0 Foreign
Exchange (Loss) (59) (12) 401.7 17 (7) -- Monetary Position
(Loss)(3) - 14 -- (0) 26 -- Total Financing Result (267) (38) 609.3
(306) (124) 147.1 LTM YoY% 2008 2007 Change Pesos(1) Interest
Expense (1,537) (2,188) (29.7) Interest Income 52 244 (78.8) Other
Financial Expenses(2) (2,310) (769) 200.3 Foreign Exchange (Loss)
144 234 (38.6) Monetary Position (Loss)(3) 175 612 (71.4) Total
Financing Result (3,477) (1,868) 86.2 Nominal Dollars Interest
Expense (145) (192) (24.3) Interest Income 5 22 (77.1) Other
Financial Expenses(2) (222) (68) 226.0 Foreign Exchange (Loss) 17
21 (20.0) Monetary Position (Loss)(3) 16 54 (70.2) Total Financing
Result (329) (164) 101.2 (1) Financial data for year 2008 is
presented in nominal pesos while for previous periods it is
expressed in constant pesos as of December 31, 2007. For more
details please refer to the note regarding new Mexican Financial
Reporting Standards. (2) Includes derivative transactions and
interest related to factoring transactions (3) According with the
new Mexican Financial Reporting Standards, the monetary position
effect was eliminated at the beginning of year 2008. For further
details please refer to the note regarding new Mexican Financial
Reporting Standards. Taxes Total income tax decreased from an
expense of US$8 million in 3Q'07 to an income of US$60 million
during this quarter due to lower taxable profits in our Mexican
operations derived mainly from the non-cash change in the
mark-to-market of the Company's derivative portfolio previously
mentioned and the devaluation of the Mexican peso against the U.S.
dollar which does not represent a cash outflow. Table 4: Taxes
Table 4 Taxes (Million) YoY% YoY% 3Q'08 3Q'07 Change 9M'08 9M'07
Change Pesos(1) Accrued Income Tax (70) 52 -- 111 142 (21.4)
Deferred Income Tax (gain) (566) 38 -- (668) 71 -- Total Income Tax
(635) 90 -- (557) 213 -- Nominal Dollars Accrued Income Tax (6) 5
-- 11 12 (13.2) Deferred Income Tax (gain) (53) 4 -- (63) 7 --
Total Income Tax (60) 8 -- (52) 19 -- LTM YoY% 2008 2007 Change
Pesos(1) Accrued Income Tax 365 181 101.1 Deferred Income Tax
(gain) (1,090) 550 -- Total Income Tax (726) 731 -- Nominal Dollars
Accrued Income Tax 34 16 117.0 Deferred Income Tax (gain) (101) 49
-- Total Income Tax (68) 64 -- (1) Financial data for year 2008 is
presented in nominal pesos while for previous periods it is
expressed in constant pesos as of December 31, 2007. For more
details please refer to the note regarding new Mexican Financial
Reporting Standards. Consolidated Net Loss During 3Q'08 the Company
recorded a consolidated net loss of US$153 million compared to a
net loss of US$3 million during the same period last year. This
variation is mainly the result of a US$229 million increase in
total financing result derived from a non-cash change in the
mark-to-market of the Company's derivative portfolio. This factor
was partially offset by an income tax gain of US$60 million during
this quarter compared with an expense of US$8 million during the
same period last year, higher EBIT of US$61 million compared with
US$53 million in the third quarter 2007, and a US$3 million
decrease in other expenses. Capital Expenditures (CapEx) Capital
expenditures for the quarter totaled US$39 million, compared with
US$53 million in 3Q'07. Glass Containers represented 82 percent of
total CapEx and was mainly invested in the final stage of two major
furnace repairs, the transfer of Vidriera Mexico's ("Vimex")
facilities to Toluca and maintenance. Flat Glass accounted for 18
percent and was mainly invested in maintenance and, to a lesser
extent, in equipment upgrade at the Automotive and Float Glass
business. Consolidated Financial Position Net debt, which is
calculated by deducting cash and cash equivalents as well as
restricted cash accounted for in current and other long term
assets, decreased QoQ by US$20 million to US$1,329 million. On a
YoY comparison, net debt increased US$119 million. As of 3Q'08, the
Company had a cash balance of US$128 million, of which US$72
million was recorded as cash and cash equivalents and US$56 million
was classified as other current assets. The US$56 million is
restricted cash, which is composed of cash collateralizing debt and
derivative instruments. Cash collateralizing debt corresponds to
US$1 million recorded at Flat Glass while the cash collateralizing
derivative instruments corresponds to US$55 million. Consolidated
gross debt as of September 30, 2008 totaled US$1,456 million, a QoQ
increase of US$30 million and a YoY increase of US$74 million.
Table 5 Debt Indicators (Million dollars; except as indicated)
3Q'08 2Q'08 1Q'08 4Q'07 3Q'07 Interest Coverage(1) (EBITDA/ Total
Net Financial Exp.) (Times) LTM 1.0 1.9 2.1 2.2 1.6 Leverage(1)
(Total Debt / EBITDA) (Times) LTM 4.0 3.8 3.6 3.4 3.5 (Total Net
Debt / EBITDA) (Times) LTM 3.6 3.6 3.3 2.9 3.1 Total Debt 1,456
1,426 1,402 1,373 1,382 Short-Term Debt 158 143 132 87 80 Long-Term
Debt 1,299 1,283 1,270 1,286 1,302 Cash and Equivalents(2) 128 77
138 186 173 Total Net Debt 1,329 1,349 1,264 1,186 1,209 Currency
Mix (%) dlls&Euros/Pesos 95/5 97/3 98/2 98/2 98/2 (1) Financial
ratios are calculated using figures in pesos (2) Cash & Cash
Equivalents include restricted cash which corresponded to cash
collateralizing debt and derivative instruments accounted for in
current and other long term assets. -- The Company's average life
of debt as of 3Q'08 was 5.9 years compared with 7.1 years for
3Q'07. -- Short-term debt as of September 30, 2008, increased by
US$77 million to 11 percent as a percentage of total debt, compared
with 6 percent in 3Q'07. -- Revolving debt, including trade-related
debt, accounted for 77 percent of total short-term debt. This type
of debt is usually renewed within 28 to 270 days. -- Current
maturities of long-term debt, including current maturities of
market debt, remained stable in a YoY comparison at US$37 million.
As of 3Q'08 current maturities of long-term debt represented 23
percent of short-term debt. -- As of September 30, 2008 Vitro had
an aggregate of US$139 million in off-balance sheet financing
related to sales of receivables and receivable securitization
programs. Flat Glass recorded US$73 million and Glass Containers
recorded US$66 million. -- Maturities for 2008 include long-term
"Certificados Bursatiles" and Credit Facilities at the Holding
Company and subsidiary level. -- Maturities from 2009 and
thereafter include, among others, long-term "Certificados
Bursatiles", the Senior Notes due in 2012, Senior Notes due in 2013
and Senior Notes due in 2017 at the Holding Company level. Cash
Flow Cash flow before CapEx and dividends increased to US$74
million from US$47 million in 3Q'07. This was the result of cash
taxes recovered and higher EBITDA which offset higher working
capital needs and a slight increase in net interest expense.
Available cash was partially used to fund dividends paid in our
Foreign Subsidiaries mostly related to the Put option exercised by
our partners in Spain as well as US$39 million in CapEx investments
compared with US$53 million in 3Q'07. On a LTM basis, the Company
recorded cash flow before CapEx and dividends of US$152 million
compared with US$166 million in LTM 2007. The above mentioned
decrease, partially offset by a US$45 million reduction in net
interest expense, was mainly due to higher cash taxes paid,
increased working capital needs and lower EBITDA. This cash flow
coupled with available cash and increased debt was used to fund the
US$230 million CapEx investments, which in part was used to
increase capacity at Glass Containers to satisfy higher demand from
our customers. Table 6: Cash Flow Analysis Table 6 Cash Flow from
Operations Analysis(1) (Million) YoY% YoY% 3Q'08 3Q'07 Change 9M'08
9M'07 Change Pesos(2) EBITDA 1,087 1,060 2.5 2,833 3,279 (13.6) Net
Interest Expense(3),(4) (392) (399) (1.5) (1,350) (1,226) 10.1
Working Capital(5) (106) (2) -- (853) (278) 206.9 Cash Taxes (paid)
recovered(6) 178 (132) -- (197) (341) (42.2) Cash Flow before Capex
and Dividends 766 528 45.1 432 1,434 (69.9) Capex (407) (594)
(31.5) (1,681) (1,928) (12.8) Dividends (103) (37) 183.2 (274)
(205) 33.3 Net Free Cash Flow 255 (103) -- (1,522) (699) 117.8
Nominal Dollars EBITDA 105 94 11.4 270 290 (6.8) Net Interest
Expense(3),(4) (39) (36) 8.8 (130) (109) 18.9 Working Capital(5)
(10) (0) -- (79) (23) 245.7 Cash Taxes (paid) recovered(6) 18 (12)
-- (18) (30) (39.7) Cash Flow before Capex and Dividends 74 47 58.0
43 128 (66.2) Capex (39) (53) (25.8) (160) (171) (6.8) Dividends
(10) (3) 195.2 (26) (19) 40.5 Net Free Cash Flow 25 (9) -- (143)
(62) 129.3 LTM YoY% 2008 2007 Change Pesos(2) EBITDA 3,932 4,355
(9.7) Net Interest Expense(3),(4) (1,337) (1,995) (33.0) Working
Capital(5) (544) (181) 200.2 Cash Taxes (paid) recovered(6) (404)
(293) 37.8 Cash Flow before Capex and Dividends 1,647 1,886 (12.6)
Capex (2,448) (2,367) 3.4 Dividends (276) (205) 34.4 Net Free Cash
Flow (1,077) (686) 56.9 Nominal Dollars EBITDA 371 384 (3.5) Net
Interest Expense(3),(4) (129) (173) (25.7) Working Capital(5) (53)
(19) 182.5 Cash Taxes (paid) recovered(6) (37) (26) 44.3 Cash Flow
before Capex and Dividends 152 166 (8.8) Capex (230) (210) 9.5
Dividends (27) (19) 41.7 Net Free Cash Flow (105) (62) 67.8 (1)
This statement is a Cash Flow statement and it does not represent a
Statement of Cash Flow according with Mexican FRS (2) Financial
data for year 2008 is presented in nominal pesos while for previous
periods it is expressed in constant pesos as of December 31, 2007.
For more details please refer to the note regarding new Mexican
Financial Reporting Standards. (3) Includes derivative
transactions, and other financial expenses and products. Includes
interest rate swap transaction in which Vitro pays variable and
fixed peso rates on a monthly basis and receives semi-annual
payments of fixed dollar rate. (4) 1Q'07 does not include
additional interests and transaction fees associated with the debt
refinancing completed at the beginning of year 2007. (5) Includes:
Clients, inventories, suppliers, other current assets and
liabilities, IVA (Value Added Tax) and ISCAS taxes (Salary Special
Tax) (6) Includes PSW (Profit Sharing to Workers) Key Developments
FINANCIAL POSITION Vitro takes the required measures to face the
current financial situation On October 22, 2008, the Company
announced to its different audiences that it maintained its normal
operations and that it estimated to have the required resources to
meet its obligations and continue fulfilling the requirements and
expectations of its clients. The Company reiterated that to ensure
continued compliance derived from the severe and unexpected
volatility in the international financial markets, it maintained
close communication with its creditors, financial institutions,
clients and suppliers who have reiterated their willingness to find
favorable alternatives according to the current financial
conditions. In accordance with the aforementioned, the Company was
not contemplating any other different alternative. Vitro's
financial position under current volatile market conditions On
October 10, 2008, the Company informed the investor community of
the effect that volatility in the financial markets has had in its
current hedging instruments. The fair market value (mark to market)
of its position of financial derivative exposure as of October 9,
2008 was approximately negative US$227 million. Of that position,
US$33 million were related to hedging instruments in US dollars and
interest rates. The remainder was mostly related to natural gas and
to a lesser extent Euros. However, stemming from the severe and
unexpected volatility of the financial markets, the Company has
maintained close communication with the counterparties, in order to
ensure continued compliance. Vitro reiterated that it maintained
its normal operations and will continue to monitor the markets
taking the necessary actions to mitigate the effects of the current
financial conditions. AWARDS Vitro is certified as to comply with
European standards On August 6, 2008, the Company announced that
representatives from the Spanish government undertook an audit on
its automotive glass facilities to validate compliance with the
ECE-R43 standards (Economic Commission of Europe - Regulation 43).
The visit took place on July and the group consisted of
representatives from the Ministry of Industry Commerce of Spain as
well as representatives from the ECE-43, which are the standards
from the European Community that dictate the specific safety
characteristics to be followed by manufacturers of automobile
products. RATINGS Vitro's rating placed on watch negative by Fitch
On October 24, 2008, the Company's B Issuer Default Rating ("IDRs")
and outstanding debt ratings were placed on Rating Watch Negative
by Fitch Ratings ("Fitch"). The rating actions reflect increased
pressure on Vitro's liquidity and financial flexibility following
the Company's recent announcement of a US$227 million
mark-to-market loss on its derivative instruments. A large portion
of this non-cash loss is associated with the Company's natural gas
hedge positions. Vitro has also had to post additional collateral
to cover expected losses related to these contracts, which in turn
limits its liquidity and financial flexibility. Vitro's leverage
will likely increase as it unwinds its derivative contracts, with
losses likely to be funded by its counterparties. Additionally,
Vitro is working in several transactions that should replenish near
term liquidity and allow the company to operate. Vitro's inability
to satisfactorily negotiate and fund derivative losses and increase
its liquidity would seriously affect the Company's ability to
service near term obligations, despite having only minimal
maturities. According to Fitch, the Rating Watch Negative also
reflects the current volatility in the financial and credit
markets, as well as a more challenging operating environment due to
lower economic growth prospects in Mexico and other regions where
Vitro has a presence. Operating weakness should be partially offset
by the devaluation of the Mexican peso and derivative contract
losses are expected to be partially offset by lower actual energy
costs over the next year. In recent months, Vitro announced
reductions in its discretional capital expenditures during 2008 in
an effort to maintain liquidity. Vitro's management continues
working on several initiatives in order to enhance the company's
liquidity position. Vitro's rating placed on review for downgrade
by Moody's On October 24, 2008, the Company's B2 senior unsecured
debt and corporate family ratings were placed on review for
downgrade by Moody's. The review reflects Moody's belief that
Vitro's liquidity has tightened further over the past two weeks
because of a drop in the mark-to-market value of its derivatives
portfolio, particularly as it relates to natural gas hedges, caused
by ongoing volatility in the financial markets and falling natural
gas prices. Moody's review will focus on the extent to which margin
calls may have affected Vitro's liquidity and the feasibility and
effectiveness of the measures the Company is undertaking to meet
near term cash requirements and to restore financial flexibility to
levels appropriate for the rating category. The rating agency
expects to conclude the review within the coming weeks. Vitro's
rating placed on negative watch by Standard & Poor's On October
14, 2008, the Company's B foreign currency long-term corporate
credit rating was placed on CreditWatch with negative implications
by Standard & Poor's ("S&P"). The 'mxBBB-' national scale
long-term corporate credit rating was also placed on CreditWatch
with negative implications, meaning that S&P could either lower
or affirm the ratings following completion of its review. The
rating action reflects S&P's concerns about how the more
challenging economy and market volatility will affect Vitro's key
financial indicators and cash flow generation. S&P expects the
economies of Mexico and the U.S. to weaken during the rest of 2008
and into 2009 and affect the construction, automotive, and consumer
products (glass containers) industries. According to S&P,
Vitro's high financial leverage, important debt maturities, limited
cash position, and exposure to commodity price volatility
(particularly for natural gas) further constrain its financial
flexibility. Liquidity has also been affected by margin calls that
have resulted from the negative mark to market on its derivatives
position, mostly related to natural gas price fixes. The Company is
taking a number of actions to strengthen its liquidity position to
weather the current market volatility. S&P mentioned that it
could resolve the CreditWatch placement once these actions are put
in place. According to S&P, the ratings on Vitro are
constrained by the company's highly leveraged financial risk
profile, its exposure to commodity price volatility (particularly
for natural gas), and the challenging operating environment its
flat-glass business faces. The ratings also reflect the seasonality
of the food and beverage industry and cyclicality of the
construction and automotive industries. However, Vitro's leading
position in glass containers and significant share of the Mexican
flat-glass market support the ratings. The ratings also reflect
Vitro's export activities and international operations, which
contribute about 58 percent of total revenues. OTHER Inauguration
of Telefonica's new City of Communications, the largest corporate
project in Europe On October 8, 2008, the new corporate home of
Telefonica, District C, was officially inaugurated. Telefonica's
new City of Communications, with its 140,000 square meters of
glazed surfaces in the facades, is now the largest urban
development in terms of glass ever carried out in Spain and in
Europe. For this project, Vitro Cristalglass specifically designed
SUPERDUAL-T(R), a product that enables substantial energy savings
due to its optimal solar factor. In addition, Vitro Cristalglass
supplied MULTIPACT(R) over extra-clear glass and SOLARLUX(R)
Supernatural 70/40. Vitro opens an Architectural Development Center
On September 2, 2008, the Company announced the opening of the
Architectural Design Center (CDA), located in Mexico City, with the
purpose of providing comprehensive technical support and state of
the art solutions to clients, engineers, designers and all
designing professionals. One of the most notable aspects of the CDA
is that it specializes in projects that require a high degree of
design, feasibility skills and know-how. This characteristic places
the CDA among the world's most advanced architectural design
centers. Glass Containers (54 percent of LTM 2008 Consolidated
Sales) Sales Sales for the quarter increased 19.0 percent YoY to
US$404 million from US$339 million. The main drivers behind the
24.9 percent YoY increase in domestic sales were higher volumes in
the beer segment coupled with an overall improved price mix, along
with price increases to cover energy and raw material inflation.
Export sales increased 8.4 percent due to higher volumes in the CFT
(Cosmetics, Fragrances & Toiletries), food and wine &
liquor segments coupled with an improved price mix in the soft
drinks, food and wine & liquor markets. Sales from Glass
Containers' foreign subsidiaries rose 16.6 percent YoY as a result
of the increased demand in Central and South America. EBIT and
EBITDA EBIT for the quarter increased 32.1 percent YoY to US$53
million from US$40 million in 3Q'07. EBITDA for the same period
increased 21.6 percent to US$80 million from US$66 million. During
this quarter, EBIT and EBITDA were benefited from higher volumes,
better production efficiencies (optimized fixed costs absorption)
and the continued cost reduction initiatives. These factors offset
higher energy and raw materials costs as well as the costs
associated with the transfer of Vimex's facilities to Vitro Cosmos
("Cosmos") in Toluca. The YoY comparison includes the negative
effect of a series of temporary production interruptions at certain
glass containers facilities in Mexico during the months of July and
September last year. EBITDA from Mexican glass containers
operations, which is Glass Container's core business and represents
approximately 78 percent of total EBITDA, increased 18 percent YoY
due to the above mentioned factors. Table 7: Glass Containers Table
7 Glass Containers (Million) YoY% YoY% 3Q'08 3Q'07 Change 9M'08
9M'07 Change Pesos(1) Consolidated Net sales 4,167 3,776 10.4
11,838 10,966 8.0 Net Sales Domestic Sales 2,402 2,167 10.8 6,704
6,312 6.2 Exports 1,122 1,053 6.5 3,309 3,048 8.6 Foreign
Subsidiaries 644 556 15.9 1,838 1,606 14.4 EBIT 550 451 21.9 1,331
1,379 (3.5) EBITDA 828 737 12.4 2,116 2,272 (6.9) EBIT Margin 13.2%
11.9% 1.3 pp 11.2% 12.6% -1.4 pp EBITDA Margin 19.9% 19.5% 0.4 pp
17.9% 20.7% -2.8 pp Nominal Dollars Consolidated Net sales 404 339
19.0 1,132 980 15.5 Domestic Sales 240 193 24.9 656 560 17.2 Export
Sales 104 96 8.4 306 275 11.4 Foreign Subsidiaries 59 51 16.6 169
145 16.5 EBIT 53 40 32.1 127 123 3.6 EBITDA 80 66 21.6 202 202
(0.1) EBIT Margin 13.2% 11.9% 1.3 pp 11.2% 12.5% -1.3 pp EBITDA
Margin 19.8% 19.4% 0.4 pp 17.9% 20.6% -2.7 pp Glass Containers
Domestic (Millions of Units) 1,278 1,214 5.2 3,746 3,635 3.0
Exports (Millions of Units) 358 338 5.9 1,056 990 6.6 Total 1,635
1,552 5.4 4,801 4,625 3.8 Capacity utilization (furnaces)* 96% 90%
6 pp Alcali (Thousands Tons sold)** 162 163 (0.4 ) 495 473 4.8 LTM
YoY% 2008 2007 Change Pesos(1) Consolidated Net sales 15,511 14,542
6.7 Net Sales Domestic Sales 8,763 8,326 5.2 Exports 4,288 4,007
7.0 Foreign Subsidiaries 2,472 2,208 12.0 EBIT 2,036 1,876 8.6
EBITDA 2,944 3,090 (4.7) EBIT Margin 13.1% 12.9% 0.2 pp EBITDA
Margin 19.0% 21.3% -2.3 pp Nominal Dollars Consolidated Net sales
1,469 1,296 13.4 Domestic Sales 845 738 14.6 Export Sales 396 359
10.2 Foreign Subsidiaries 227 198 14.7 EBIT 192 167 15.1 EBITDA 278
275 1.3 EBIT Margin 13.1% 12.9% 0.2 pp EBITDA Margin 18.9% 21.2%
-2.3 pp Glass Containers Domestic (Millions of Units) 4,951 4,868
1.7 Exports (Millions of Units) 1,412 1,328 6.3 Total 6,363 6,196
2.7 Capacity utilization (furnaces)* Alcali (Thousands Tons sold)**
659 634 3.8 (1) Financial data for year 2008 is presented in
nominal pesos while for previous periods it is expressed in
constant pesos as of December 31, 2007. For more details please
refer to the note regarding new Mexican Financial Reporting
Standards. * Includes furnaces under repair ** Includes sodium
carbonate, sodium bicarbonate, sodium chlorine, calcium chlorine
Flat Glass (46 percent of LTM 2008 Consolidated Sales) Sales Flat
Glass sales for the quarter decreased 1.4 percent YoY to US$314
million from US$318 million. Domestic sales decreased 11.3 percent
YoY mainly as result of lower volumes in the automotive business
line. This situation was partially offset by higher float glass
volumes oriented to the construction market. Export sales increased
4.1 percent YoY due to higher float glass volumes sold to South and
Central American markets. Automotive sales declined 4.4 percent YoY
driven by lower sales in the OEM business line and due to lower
export sales of Automotive Glass Replacement ("AGR") as we continue
to focus on the more profitable domestic AGR market in which we
grew 9 percent YoY. Sales from foreign subsidiaries increased 1.4
percent YoY to US$177 million from US$175 million. Sales at Vitro
Cristalglass, the Spanish subsidiary, increased 5 percent YoY due
to a better price mix, the new production line for value-added
laminated glass in "La Rozada" facility and a stronger Euro. Sales
at Vitro Colombia decreased 10 percent compared with the same
quarter last year mainly due to a weaker Colombian peso. Sales at
Vitro America, the U.S. subsidiary, decreased by 2 percent due to
the anticipated slowdown in the demand from the residential
construction and were partially offset by increased sales to larger
commercial projects (improved product mix). EBIT & EBITDA EBIT
decreased 56.6 percent YoY to US$8 million from US$19 million while
EBITDA decreased 26.7 percent YoY to US$22 million from US$31
million. During the same period, EBIT and EBITDA margins decreased
3.3 and 2.5 percentage points respectively. On a YoY comparison,
higher energy and raw materials costs coupled with sluggish
construction and automotive markets had a negative impact on the
EBIT and EBITDA generation. Table 8: Flat Glass Table 8 Flat Glass
(Million) YoY% YoY% 3Q'08 3Q'07 Change 9M'08 9M'07 Change Pesos(1)
Consolidated Net sales 3,245 3,573 (9.2) 9,792 10,173 (3.7) Net
Sales Domestic Sales 749 921 (18.7) 2,460 2,413 1.9 Exports 657 684
(3.9) 1,902 2,004 (5.1) Foreign Subsidiaries 1,838 1,969 (6.6)
5,430 5,755 (5.6) EBIT 85 217 (60.9) 275 564 (51.3) EBITDA 232 348
(33.4) 698 989 (29.4) EBIT Margin 2.6% 6.1% -3.5 pp 2.8% 5.5% -2.7
pp EBITDA Margin 7.2% 9.8% -2.6 pp 7.1% 9.7% -2.6 pp Nominal
Dollars Consolidated Net sales 314 318 (1.4) 935 898 4.1 Domestic
Sales 73 83 (11.3) 237 216 9.6 Export Sales 63 61 4.1 181 178 1.8
Foreign Subsidiaries 177 175 1.4 516 504 2.5 EBIT 8 19 (56.6) 26 49
(46.0) EBITDA 22 31 (26.7) 67 86 (22.7) EBIT Margin 2.6% 5.9% -3.3
pp 2.8% 5.4% -2.6 pp EBITDA Margin 7.1% 9.6% -2.5 pp 7.1% 9.6% -2.5
pp Volumes Flat Glass (Thousands of m2R)(2),(3) 33,769 34,624 (2.5)
101,273 98,918 2.4 Capacity utilization Flat Glass furnaces(4) 110%
107% 3.1 pp Flat Glass auto(5) 85% 81% 4.6 pp LTM YoY% 2008 2007
Change Pesos(1) Consolidated Net sales 13,210 13,418 (1.6) Net
Sales Domestic Sales 3,319 3,234 2.6 Exports 2,545 2,509 1.4
Foreign Subsidiaries 7,346 7,675 (4.3) EBIT 493 689 (28.4) EBITDA
1,029 1,300 (20.8) EBIT Margin 3.7% 5.1% -1.4 pp EBITDA Margin 7.8%
9.7% -1.9 pp Nominal Dollars Consolidated Net sales 1,247 1,179 5.8
Domestic Sales 317 289 9.5 Export Sales 240 222 8.0 Foreign
Subsidiaries 690 667 3.4 EBIT 46 59 (21.7) EBITDA 97 113 (14.1)
EBIT Margin 3.7% 5.1% -1.4 pp EBITDA Margin 7.8% 9.7% -1.9 pp
Volumes Flat Glass (Thousands of m2R)(2),(3) 135,144 128,599 5.1
Capacity utilization Flat Glass furnaces(4) Flat Glass auto(5) (1)
Financial data for year 2008 is presented in nominal pesos while
for previous periods it is expressed in constant pesos as of
December 31, 2007. For more details please refer to the note
regarding new Mexican Financial Reporting Standards. (2) Flat Glass
volumes only include float and automotive glass manufactured at our
Mexican subsidiaries (3) m2R = Reduced Squared Meters (4) Capacity
utilization may sometimes be greater than 100 percent because
pulling capacity is calculated based on a certain number of changes
in glass color & thickness, determined by historical averages.
(5) Capacity measured in units CONSOLIDATED VITRO, S.A.B. DE C.V.
AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS,
(MILLION) Third Quarter INCOME STATEMENT Pesos(1) Nominal Dollars
Item 2008 2007 % Var. 2008 2007 % Var. 1 Consolidated Net Sales
7,482 7,436 0.6 724 665 8.9 2 Cost of Sales 5,401 5,396 0.1 523 483
8.3 3 Gross Income 2,081 2,039 2.1 201 182 10.5 4 SG&A Expenses
1,450 1,442 0.5 141 129 8.6 5 Operating Income 631 597 5.8 61 53
15.0 6 Other Expenses (Income), net 77 119 (35.5) 7 11 (31.2) 7
Interest Expense (433) (421) 2.9 (42) (37) 12.2 8 Interest Income
17 41 (57.6) 2 4 (53.0) 9 Other Financial Expenses (net) (1,743)
(67) -- (167) (6) -- 10 Exchange Loss (650) (137) 374.4 (59) (12)
401.7 11 Gain from Monet. Position - 154 -- - 14 -- 12 Total
Financing Result (2,808) (430) 553.4 (267) (38) 609.3 13 Inc.
(loss) bef. Tax (2,254) 48 -- (213) 5 -- 14 Income Tax (635) 90 --
(60) 8 -- 15 Net Inc. (loss) Cont. Opns. (1,619) (42) -- (153) (3)
-- 16 Income (loss)of Discont. Oper. - - -- - - -- 17 Income on
disposal of discontinued operations - - -- - - -- 18 Extraordinary
Items, Net - - -- - - -- 19 Net Income (Loss) (1,619) (42) -- (153)
(3) -- 20 Net Income (loss) of Maj. Int. (1,578) (81) -- (150) (7)
-- 21 Net Income (loss) of Min. Int. (40) 39 -- (4) 3 --
CONSOLIDATED VITRO, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS FOR THE PERIODS, (MILLION) January - September
INCOME STATEMENT Constant Pesos Nominal Dollars Item 2008 2007 %
Var. 2008 2007 % Var. 1 Consolidated Net Sales 21,866 21,402 2.2
2,089 1,901 9.9 2 Cost of Sales 16,067 15,425 4.2 1,535 1,371 12.0
3 Gross Income 5,799 5,977 (3.0) 554 531 4.4 4 SG&A Expenses
4,276 4,140 3.3 409 368 10.9 5 Operating Income 1,523 1,837 (17.1)
145 162 (10.3) 6 Other Expenses (Income), net 98 601 (83.8) 9 53
(82.3) 7 Interest Expense (1,147) (1,313) (110) (116) (5.7) 8
Interest Income 41 165 (74.9) 4 15 (72.9) 9 Other Financial
Expenses (net) (2,265) (464) 388.3 (217) (41) 425.0 10 Exchange
Loss 146 (91) -- 17 (7) -- 11 Gain from Monet. Position (0) 296 --
(0) 26 -- 12 Total Financing Result (3,225) (1,407) 129.1 (306)
(124) 147.1 13 Inc. (loss) bef. Tax (1,799) (172) (946.8) (170)
(14) -- 14 Income Tax (557) 213 -- (52) 19 -- 15 Net Inc. (loss)
Cont. Opns. (1,242) (384) (223.1) (118) (33) (254.2) 16 Income
(loss)of Discont. Oper. - - -- - - -- 17 Income on disposal of
discontinued operations - - -- - - -- 18 Extraordinary Items, Net -
- -- - - -- 19 Net Income (Loss) (1,242) (384) (223.1) (118) (33)
(254.2) 20 Net Income (loss) of Maj. Int. (1,240) (489) (153.8)
(118) (42) (179.7) 21 Net Income (loss) of Min. Int. (2) 104 -- (0)
9 -- Last Twelve Months INCOME STATEMENT Pesos(1) Nominal Dollars
Item 2008 2007 % Var. 2008 2007 % Var. 1 Consolidated Net Sales
29,055 28,354 2.5 2,748 2,510 9.5 2 Cost of Sales 20,829 20,391 2.1
1,971 1,805 9.2 3 Gross Income 8,226 7,963 3.3 777 704 10.3 4
SG&A Expenses 5,836 5,603 4.2 552 497 11.1 5 Operating Income
2,390 2,360 1.3 225 208 8.3 6 Other Expenses (Income), net 366 250
46.2 34 21 58.7 7 Interest Expense (1,537) (1,711) (10.2) (145)
(151) (3.8) 8 Interest Income 52 204 (74.6) 5 18 (72.7) 9 Other
Financial Expenses (net) (2,310) (537) 330.0 (222) (48) 361.5 10
Exchange Loss 144 35 307.2 17 4 292.2 11 Gain from Monet. Position
175 434 (59.7) 16 38 (58.2) 12 Total Financing Result (3,477)
(1,575) 120.8 (329) (138) 137.9 13 Inc. (loss) bef. Tax (1,453) 535
-- (138) 48 -- 14 Income Tax (726) 536 -- (68) 48 -- 15 Net Inc.
(loss) Cont. Opns. (727) (2) 45,731.8 (71) 0 -- 16 Income (loss)of
Discont. Oper. - - -- - - -- 17 Income on disposal of discontinued
operations - (2) -- - (0) -- 18 Extraordinary Items, Net - - -- - -
-- 19 Net Income (Loss) (727) (4) 18,721.1 (71) 0 -- 20 Net Income
(loss) of Maj. Int. (764) (93) 720.4 (74) (7)(925.8) 21 Net Income
(loss) of Min. Int. 37 89 (58.7) 3 7 (52.9) VITRO, S.A.B. DE C.V.
AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS As of September
30, (Million) Pesos(1) Nominal Dollars Item BALANCE SHEET 2008 2007
% Var. 2008 2007 % Var. 22 Cash & Cash Equivalents 777 1,501
(48.2) 72 135 (46.7) 23 Trade Receivables 1,871 1,856 0.8 173 164
5.5 24 Inventories 4,128 3,817 8.2 382 344 11.3 25 Other Current
Assets 3,977 3,273 21.5 369 295 24.8 26 Total Current Assets 10,753
10,446 2.9 996 938 6.2 27 Prop., Plant & Equipment 18,485
17,206 7.4 1,713 1,551 10.5 28 Deferred Assets 3,282 2,883 13.8 304
256 18.8 29 Other Long-Term Assets 108 327 (66.9) 10 29 (65.8) 30
Total Assets 32,628 30,862 5.7 3,023 2,775 9.0 31 Short-Term &
Curr. Debt 1,702 913 86.3 158 80 96.6 32 Trade Payables 2,276 2,042
11.4 211 183 15.4 33 Other Current Liabilities 5,955 2,694 121.0
552 242 127.8 34 Total Curr. Liab. 9,933 5,650 75.8 920 505 82.2 35
Long-Term Debt 14,016 14,433 (2.9) 1,299 1,302 (0.2) 36 Other LT
Liabilities 898 2,063 (56.5) 83 185 (55.1) 37 Total Liabilities
24,847 22,146 12.2 2,302 1,992 15.6 38 Majority interest 6,319
6,797 (7.0) 585 613 (4.5) 39 Minority Interest 1,462 1,919 (23.8)
136 169 (19.8) 40 Total Shar. Equity 7,781 8,716 (10.7) 721 782
(7.8) FINANCIAL INDICATORS(2) 3Q'08 3Q'07 Debt/EBITDA (LTM, times)
4.0 3.5 EBITDA/ Total Net Fin. Exp. (LTM, times) 1.0 1.6 Debt /
(Debt + Equity)(times) 0.7 0.6 Debt/Equity (times) 2.0 1.8 Total
Liab./Stockh. Equity (times) 3.2 2.5 Curr. Assets/Curr. Liab.
(times) 1.1 1.8 Sales/Assets (times) 0.9 1.2 EPS (Ps$) * (4.40)
(0.23) EPADR (US$) * (1.25) (0.06) * Based on the weighted average
shares outstanding. OTHER DATA # Shares Issued (thousands) 386,857
386,857 # Average Shares Outstanding (thousands) 358,505 358,538 #
Employees 23,414 24,400 (1) Financial data for year 2008 is
presented in nominal pesos while for previous periods it is
expressed in constant pesos as of December 31, 2007. For more
details please refer to the note regarding new Mexican Financial
Reporting Standards. (2) Financial ratios are calculated using
figures in pesos VITRO, S.A.B. DE C.V. AND SUBSIDIARIES SEGMENTED
INFORMATION FOR THE PERIODS, (MILLION) Third Quarter Pesos(1)
Nominal Dollars 2008 2007 % 2008 2007 % GLASS CONTAINERS Net Sales
4,180 3,783 10.5% 405 340 19.1% Interd. Sales 13 8 66.3% 1 1 76.6%
Con. Net Sales 4,167 3,776 10.4% 404 339 19.0% Expts. 1,122 1,053
6.5% 104 96 8.4% EBIT 550 451 21.9% 53 40 32.1% Margin (2) 13.2%
11.9% 13.2% 11.9% EBITDA 828 737 12.4% 80 66 21.6% Margin (2) 19.9%
19.5% 19.8% 19.4% Glass containers volumes (MM Pieces) Domestic
1,278 1,214 5.2% Exports 358 338 5.9% Total:Dom.+Exp. 1,635 1,552
5.4% Soda Ash (Thousand Tons) 162 163 -0.4% FLAT GLASS Net Sales
3,256 3,575 -8.9% 315 318 -1.1% Interd. Sales 11 2 520.5% 1 0
566.5% Con. Net Sales 3,245 3,573 -9.2% 314 318 -1.4% Expts. 657
684 -3.9% 63 61 4.1% EBIT 85 217 -60.9% 8 19 -56.6% Margin (2) 2.6%
6.1% 2.6% 5.9% EBITDA 232 348 -33.4% 22 31 -26.7% Margin (2) 7.2%
9.8% 7.1% 9.6% Flat Glass Volumes (Thousand m2R)(3) Const + Auto
33,769 34,624 -2.5% CONSOLIDATED (4) Net Sales 7,506 7,445 0.8% 726
666 9.1% Interd. Sales 24 10 154.2% 2 1 170.0% Con. Net Sales 7,482
7,436 0.6% 724 665 8.9% Expts. 1,779 1,737 2.4% 167 157 6.7% EBIT
631 597 5.8% 61 53 15.0% Margin (2) 8.4% 8.0% 8.4% 7.9% EBITDA
1,087 1,060 2.5% 105 94 11.4% Margin (2) 14.5% 14.3% 14.5% 14.1%
January - September Constant Pesos Nominal Dollars 2008 2007 % 2008
2007 % GLASS CONTAINERS Net Sales 11,865 10,997 7.9% 1,134 983
15.4% Interd. Sales 27 30 -11.1% 3 3 -2.5% Con. Net Sales 11,838
10,966 8.0% 1,132 980 15.5% Expts. 3,309 3,048 8.6% 306 275 11.4%
EBIT 1,331 1,379 -3.5% 127 123 3.6% Margin (2) 11.2% 12.6% 11.2%
12.5% EBITDA 2,116 2,272 -6.9% 202 202 -0.1% Margin (2) 17.9% 20.7%
17.9% 20.6% Glass containers volumes (MM Pieces) Domestic 3,746
3,635 3.0% Exports 1,056 990 6.6% Total:Dom.+Exp. 4,801 4,625 3.8%
Soda Ash (Thousand Tons) 495 473 4.8% FLAT GLASS Net Sales 9,829
10,182 -3.5% 938 899 4.4% Interd. Sales 37 9 312.9% 4 1 343.3% Con.
Net Sales 9,792 10,173 -3.7% 935 898 4.1% Expts. 1,902 2,004 -5.1%
181 178 1.8% EBIT 275 564 -51.3% 26 49 -46.0% Margin (2) 2.8% 5.5%
2.8% 5.4% EBITDA 698 989 -29.4% 67 86 -22.7% Margin (2) 7.1% 9.7%
7.1% 9.6% Flat Glass Volumes (Thousand m2R)(3) Const + Auto 101,273
98,918 2.4% CONSOLIDATED (4) Net Sales 21,930 21,441 2.3% 2,095
1,905 10.0% Interd. Sales 64 39 62.6% 6 4 75.8% Con. Net Sales
21,866 21,402 2.2% 2,089 1,901 9.9% Expts. 5,211 5,053 3.1% 487 453
7.7% EBIT 1,523 1,837 -17.1% 145 162 -10.3% Margin (2) 7.0% 8.6%
7.0% 8.5% EBITDA 2,833 3,279 -13.6% 270 290 -6.8% Margin (2) 13.0%
15.3% 12.9% 15.3% Last Twelve Months Pesos(1) Nominal Dollars 2008
2007 % 2008 2007 % GLASS CONTAINERS Net Sales 15,544 14,593 6.5%
1,472 1,300 13.2% Interd. Sales 34 51 -33.9% 3 5 -28.1% Con. Net
Sales 15,511 14,542 6.7% 1,469 1,296 13.4% Expts. 4,288 4,007 7.0%
396 359 10.2% EBIT 2,036 1,876 8.6% 192 167 15.1% Margin (2) 13.1%
12.9% 13.1% 12.9% EBITDA 2,944 3,090 -4.7% 278 275 1.3% Margin (2)
19.0% 21.3% 18.9% 21.2% Glass containers volumes (MM Pieces)
Domestic 4,951 4,868 1.7% Exports 1,412 1,328 6.3% Total:Dom.+Exp.
6,363 6,196 2.7% Soda Ash (Thousand Tons) 659 634 3.8% FLAT GLASS
Net Sales 13,252 13,428 -1.3% 1,251 1,180 6.0% Interd. Sales 42 10
326.6% 4 1 355.5% Con. Net Sales 13,210 13,418 -1.6% 1,247 1,179
5.8% Expts. 2,545 2,509 1.4% 240 222 8.0% EBIT 493 689 -28.4% 46 59
-21.7% Margin (2) 3.7% 5.1% 3.7% 5.0% EBITDA 1,029 1,300 -20.8% 97
113 -14.1% Margin (2) 7.8% 9.7% 7.8% 9.6% Flat Glass Volumes
(Thousand m2R)(3) Const + Auto 135,144 128,599 5.1% CONSOLIDATED
(4) Net Sales 29,131 28,415 2.5% 2,755 2,515 9.5% Interd. Sales 76
61 24.6% 7 5 34.3% Con. Net Sales 29,055 28,354 2.5% 2,748 2,510
9.5% Expts. 6,833 6,517 4.9% 636 582 9.3% EBIT 2,390 2,360 1.3% 225
208 8.3% Margin (2) 8.2% 8.3% 8.2% 8.3% EBITDA 3,932 4,355 -9.7%
371 384 -3.5% Margin (2) 13.5% 15.4% 13.5% 15.3% (1) Financial data
for year 2008 is presented in nominal pesos while for previous
periods it is expressed in constant pesos as of December 31, 2007.
For more details please refer to the note regarding new Mexican
Financial Reporting Standards. (2) EBIT and EBITDA Margins consider
Consolidated Net Sales. (3) m2R = Reduced Squared Meters (4)
Includes corporate companies and other's sales and EBIT.
DATASOURCE: Vitro S.A.B. de C.V. CONTACT: Investor Relations,
Adrian Meouchi, + (52) 81-8863-1765, , Angel Estrada, + (52)
81-8863-1730, , both of Vitro S.A.B. de C.V., or U.S. agency, Susan
Borinelli, or Barbara Cano, , both of Breakstone Group,
+1-646-452-2334, Media Relations, Albert Chico of Vitro, S.A.B. de
C.V., + (52) 81-8863-1661, Web Site: http://www.vitro.com/
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