|
Quarterly
Earnings Release
February 27, 2007
Financial
Highlights:
QUARTERLY RESULTS
During the fourth quarter of 2006, Grupo Casa Saba sales decreased 0.83% when compared to the same 2005 quarter. The decline mainly reflects a high comparison base for Private Pharma sales and lower sales to the government, as well as health and beauty products. It’s worth mentioning that during 2005’s fourth quarter, and particularly during month of December that year, special season sales took place and triggered a double-digit growth in the period. In December 2006, the Private Pharma market did not offer the same conditions to reach the sales volumes registered in 2005, affecting the growth rate of our main division, Private Pharma. Sales of Publications and Food Products rose 12.48% and 8.33%, respectively. The increases reflect a good acceptance of our catalogs of products in the different markets where we operate. SALES BY DIVISION
During 2006’s fourth quarter sales in our Private Pharma divisions rose 0.90%. This modest growth reflects a high comparison base, particularly in December. Special end of season sales in the last month of 2006 could not match those of 2005, as the market for private pharmaceuticals did not offer the conditions to reach December 2005 sales. Even when December was a difficult month in terms of comparison for this division, the positive performance of the national private pharmaceuticals market in terms of values, allowed quarter sales to reach $5,616.53 million, while its percentage to total sales increased to 85.19% in 4Q06 from 83.73% in 4Q05. GOVERNMENT PHARMA Sales of our Government Pharma division, which include sales to government institutions, whether federal or state, decreased 26.59%, as sales to Petróleos Mexicanos (PEMEX) declined. Lower sales to PEMEX stem from an internal modification applied by the institution to their subrogation scheme of pharmaceutical products. With sales decreasing, the percentage to total sales of this division also declined from 4.63% in 4Q05 to 3.43% in 4Q06. Mainly as a result of lower sales of health and beauty products, sales from this division, which include products other than pharmaceuticals and publications, declined 7.79% during 2006’s fourth quarter. The reduction in health and beauty products sales stems mainly from the decision made by some of our clients not to buy these type of products from GCS. Conversely, food products sales had a good performance, increasing 8.33% with respect to 4Q05. As a percentage to total sales, the sales reduction in this division affected its contribution to total sales, declining from 8.92% in 4Q05 to 8.28% in 4Q06.
Citem’s which
is GCS’ subsidiary that distributes publications nation wide (mainly
magazines), increased sales by 12.48% from 4Q05. The increase stems from
a better distribution of products by type of client in the different niches
where it operates, along with a greater acceptance and demand for year-end
editions.
Division %
of Sales
Grupo Casa Saba’s gross income during the fourth quarter of 2006 decreased 3.97% from the same 2005 period. Lower sales and greater discounts offered contributed to this decrease. The increase in discounts stems from the strong competition that prevails in all channels of the private pharmaceutical market.
The operating expenses of the Group as a percentage to total sales decreased by 87 b.p. to 5.43%. Operating expenses performance during the fourth quarter of 2006 was influenced by storage and route efficiency programs, as well as by corporate and administrative expense savings schemes. Total operating expenses for the Group declined 14.46% from 4Q05, or $60.59 million.
Given that the reduction in expenses was proportionately above the lower gross income, GCS’s operating income increased 8.18% from 4Q05. As a percentage of total sales, operating income of the Group represented 5.45% in 4Q05 and closed at 5.94% in 4Q06.
Depreciation and amortization
in 4Q06 decreased 56.79% from 4Q05, as the Group’s computer equipment
stopped depreciating a few months ago and a goodwill registered in the
fourth quarter of 2005 was not registered in 4Q06. CASH AND CASH EQUIVALENTS Cash and cash equivalents in 4Q06 totaled $616.38 million pesos, representing a 17.09% decreased from 4Q05. The decline in the cash position owes to higher investment in working capital of the Group.
The comprehensive cost of financing (CCF) in the fourth quarter generated an income of $6.45 million, 109.18% above the income in 4Q05. This growth mainly stems from a gain during the fourth quarter in our monetary and exchange rate positions, compared to a losses registered in 4Q05.
Other expenses/income in 4Q06 totaled $125.54 million, as a result of transportation equipment sales, third-party services and others.
Tax provisions for 4Q06 increased 85.60% from 4Q05. The relationship between tax provisions and income before taxes represented 18.39% in 4Q05 and closed at 24.40% in 4Q06.
GCS’ net income in 4Q06 increased 29.45%, or $89.93 million, to $395.34 million. Net income as a percentage of total sales increased from 4.59% in 4Q05 to 6.00% 4Q06.
During the fourth quarter of 2006, account receivables measured in terms of days increased from 2005 by 0.3 days to 55.3 days. Inventory days also grew by 3.50 days to 60.8 days. Account payables, conversely, decreased by 0.90 days to 52.2 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. 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 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. De C.V. and Subsidiaries
CONSOLIDATED BALANCE
SHEET
(In thousands
of pesos of purchasing power as of December 2006)
Total Assets Current Assets Total Liabilities Current Liabilities Shareholder's Equity Majority Stockholder's
Equity |
Dec-06 10,331,793 8,941,879 5,033,696 4,207,317 5,298,097 5,298,097 |
Dec-05 10,231,538 8,820,631 5,430,226 4,521,214 4,801,312 4,801,312 |
%Chg
Dec 06 / Dec 05 100,255 121,248 -396,530 -313,897 496,785 496,785 |
GRUPO CASA SABA
S.A DE C.V.
Figures expressed in thousands of pesos of purchasing power
as of December 2006
Jan-Dec |
Jan-Dec |
Variation
|
Oct-Dec |
Oct-Dec |
Variation |
|||||||
| Income Statement NET SALES COST OF SALES GROSS PROFIT OPERATING EXPENSES |
2005 22,760,359 20,411,708 2,348,651 1,417,125 |
%
of sales 100.00% 89.68% 10.32% 6.23% |
2006 23,601,651 21,259,043 2,342,608 1,338,887 |
%
of sales 100.00% 90.07% 9.93% 5.67% |
$ 841,292 847,335 -6,043 -78,238 |
% 3.70% 4.15% -0.26% -5.52% |
2005 6,648,380 5,867,433 780,947 418,851 |
%
of sales 100.00% 88.25% 11.75% 6.30% |
2006 6,593,201 5,843,233 749,968 358,265 |
%
of sales 100.00% 88.63% 11.37% 5.43% |
$ -55,179 -24,200 -30,979 -60,586 |
% -0.83% -0.41% -3.97% -14.46% |
| OPERATING INCOME COMPREHENSIVE COST OF FINANCING Interest Paid Interest (Earned) Exchange Loss (Gain) Monetary Position (gain) Comprehensive Cost of Financing |
931,526
13,557 |
4.09%
0.06% |
1,003,721
10,185 |
4.25%
0.04% |
72,196
-3,372 |
7.75%
-24.87% |
362,096
4,215 |
5.45%
0.06% |
391,703
2,436 |
5.94%
0.04% |
29,607
-1,779 |
8.18%
-42.21% |
| OTHER EXPENSES (INCOME),
net |
-39,970 |
-0.18% |
-157,890 |
-0.67% |
-117,920 |
295.02% |
-9,072 |
-0.14% |
-125,539 |
-1.90% |
-116,467 |
1283.81% |
| NET INCOME BEFORE TAXES | 973,127 |
4.28% |
1,175,741 |
4.98% |
202,614 |
20.82% |
374,252 |
5.63% |
523,693 |
7.94% |
149,441 |
39.93% |
| PROVISIONS FOR: Income Tax Asset Tax Deferred Income Tax Profit sharing due Profit sharing due (deferred) |
124,164 0 92,022 4,432 -5,232 |
0.55% 0.00% 0.40% 0.02% -0.02% |
336,636 0 -62,035 994 9 |
1.43% 0.00% -0.26% 0.00% 0.00% |
212,472 0 -154,057 -3,438 5,241 |
171.12% n.c. n.c. -77.57% n.c. |
-103,939 -3 176,792 1,224 -5,232 |
-1.56% 0.00% 2.66% 0.02% -0.08% |
98,209 0 32,961 -3,410 9 |
1.49% 0.00% 0.50% -0.05% 0.00% |
202,148 3 -143,831 -4,634 5,241 |
n.c. n.c. -81.36% -378.59% n.c. |
| Total taxes | 215,386 |
0.95% |
275,604 |
1.17% |
60,218 |
27.96% |
68,842 |
1.04% |
127,769 |
1.94% |
58,927 |
85.60% |
| Net Income Before Extraordinary Items | 757,741 |
3.33% |
900,137 |
3.81% |
142,396 |
18.79% |
305,410 |
4.59% |
395,924 |
6.01% |
90,514 |
29.64% |
| Extraordinary
Items (Income) |
0 |
0.00% |
1,702 |
0.01% |
1,702 |
n.c. |
0 |
0.00% |
585 |
0.01% |
585 |
N.A. |
| NET INCOME Depreciation and Amortization Operating income plus Depreciation and Amortization |
757,741
135,282 |
3.33%
0.59% |
898,435
96,473 |
3.81%
0.41% |
140,694
-38,809 |
18.57%
-28.69% |
305,410
49,562 |
4.59%
0.75% |
395,339
21,416 |
6.00%
0.32% |
89,929
-28,146 |
29.45%
-56.79% |