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Quarterly Earnings Release July
27, 2007
Mexico City, July 27, 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 announces its consolidated financial and operating results for the second quarter of 2007.
During the second quarter, Grupo Casa Saba’s sales totaled $5,915.32 million pesos, an increase of 3.35%. The Private Pharma division had the best performance when compared to the second quarter of 2006, growing 4.63%. The increase was the result of the positive performance that the private pharmaceutical market has demonstrated for the past several quarters, along with the strategy and commercial practices that GCS has implemented, which are focused on actively serving our traditional clients as well as drugstore chains and supermarkets. Sales of health, beauty, consumer goods, general merchandise and other products increased 2.39% during the quarter, while our publications sales, which include books and magazines, declined 0.24%. Government Pharma’s share of total sales decreased to reach 2.82%, as a result of lower sales to Petróleos Mexicanos (PEMEX), which were due to modifications in this company’s acquisition and subrogation schemes for pharmaceutical products. On June 8th, 2007, GCS complied with its commitment to distribute a portion of its profits to its shareholders by paying out a cash dividend of $170.0 million. This amount is 13.33% higher than the dividend that was paid out in 2006.
PRIVATE PHARMA The Private Pharma division continued to grow at a strong pace, increasing 4.63% to reach $4,970.10 million pesos. The solid performance reflects the positive evolution of the Private Pharma market in general as well as the market strategies implemented by GCS. Sales of Private Pharma as a percentage of total sales increased from 82.99% in 2Q06 to 84.02% this quarter.
Government Pharma sales declined 19.76%, primarily as a result of lower sales to PEMEX. The acquisition and subrogation schemes for pharmaceutical products implemented by PEMEX have lead to a reduction in GCS’s medicine sales to this particular company. As a result, Government Pharma sales, as a percentage of the Group’s total sales, declined from 3.63% in 2Q06 to 2.82% this quarter.
Sales for this division totaled $562.16 million pesos at the end of the quarter, increasing 2.39% from the second quarter of 2006. Sales of health, beauty, consumer goods, general merchandise and other, as a percentage of total sales, decreased from 9.59% in 2Q06 to 9.50% in 2Q07.
During the second quarter of the year, Citem’s sales decreased slightly, by 0.24%, as a result of stable prices and volumes. As a percentage of sales, this division’s contribution to total sales went from 3.79% in 2Q06 to 3.66% in 2Q07. Division
%
of Sales GROSS INCOME Grupo Casa Saba’s gross income during the second quarter totaled $534.01 million, an increase of 0.99%. This relatively small increase is due to a high degree of competition within the market, which resulted in greater discounts to our customers. As a result, the gross margin reached 9.03%, a decline of 21 basis points versus the 9.24% registered in 2Q06.
As a result of tight spending policies and the implementation of programs aimed at improving operational efficiency, expenses only increased by 0.05% during the quarter, and compare favorably with the growth in sales of 3.35%. Operating expenses as a percentage of sales went from 5.74% in 2Q06 to 5.55% at the end of the quarter, an improvement of 19b.p..
Operating income for
the second quarter of 2007 rose 2.53%, while the operating margin was
3.47%, 3 b.p. below the margin registered in 2Q06. This increase was primarily
the result of a higher growth rate in sales than in operating expenses. Depreciation and amortization
in 2Q07 was $229.13 million pesos, an increase of 1.40% compared to the
second quarter of 2006. This increase was the result of lower asset depreciation. COMPREHENSIVE COST OF FINANCING During the second
quarter, GCS’s comprehensive cost of financing (CCF) resulted in
an income of $6.00 million pesos, slightly less than the income of $6.23
million pesos that was registered in 2Q06. During the second
quarter of 2007, other income was $12.81 million pesos, 0.93% higher than
in 2Q06. This was the result of the sale of transportation equipment,
third-party services and other activities. TAX PROVISIONS Tax provisions for 2Q07 were $48.61 million pesos, 10.30% below the 2Q06 figure. The decrease is largely due to the income tax line item.
GCS’s net income for the second quarter of 2007 totaled $175.70 million pesos, a 6.37% increase compared to the $165.17 million pesos registered in 2Q06. The net margin for the period was 2.97%, higher than the 2.89% achieved during the same period of 2006.
During the second quarter of the year, and compared to the same quarter of 2006, accounts receivable and inventory days increased by 3.30 and 4.40 days to 60.20 and 52.40 days, respectively. On the other hand, accounts payable days were 46.70 days, a slight decrease of 0.50 days versus 2Q06. 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. Contacts: Alejandro Sadurni,
CFO |
GRUPO CASA SABA S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Figures expressed in thousands of Mexican Pesos as of June 2007
| ITEM
CURRENT ASSETS OTHER ACCOUNTS RECEIVABLE (NET) |
Jun-07
7,683,481 252,807 |
Jun-06
7,286,711 127,049 |
Var. %
5.45% 98.98% |
| LONG TERM ACCOUNTS RECEIVABLE INVESTMENTS IN EQUITY SHARES AND UNCONSOLIDATED SUBSIDIARIES OTHER INVESTMENTS |
|||
| NET PROPERY, PLANT
AND EQUIPMENT PROPERTY MACHINERY AND EQUIPMENT OTHER EQUIPMENT ACCUMULATED DEPRECIATION BUILDINGS IN PROCESS DEFERRED ASSETS OTHER ASSETS |
1,148,355 1,267,045 398,797 505,229 1,022,717 - 166,118 178,893 |
1,104,819 1,216,897 397,041 476,817 985,936 165,708 |
3.94% 4.12% 0.44% 5.96% 3.73% 0.25% |
| TOTAL LIABILITIES
CURRENT LIABILITIES |
3,618,513
2,901,528 - |
3,658,640
2,778,269
|
-1.10%
4.44%
|
| LONG TERM LIABILITIES BANK DEBT DEBT SECURITIES OTHER DEBT DEFERRED LIABILITIES |
|||
| OTHER LIABILITIES
SHAREHOLDER'S EQUITY MINORITY STOCKHOLDER'S EQUITY |
716,984
5,558,335 - |
880,371
5,032,128
|
-18.56%
10.46%
|
| CAPITAL STOCK RESTATEMENT IN CAPITAL STOCK PREMIUM ON STOCK SOLD RESERVE FOR RESTATEMENT ON SHAREHOLDER'S EQUITY CAPITAL INCREASE (DECREASE) CUMMULATIVE RESULTS AND EQUITY RESERVE RESERVE FOR SHARES REPURCHASE OVERAGE (DEFICIT) ON RESTATEMENT ON STOCKHOLDER'S EQUITY NET INCOME |
167,903 921,468 841,978 - 3,626,986 4,617,569 1,030,967 (2,361,603) 340,052 |
167,903 921,468 841,978 3,100,779 |
0.00% 0.00% 0.00% 16.97% |
GRUPO CASA SABA, S.A. DE C.V.
Figures expressed in thousands of Mexican Pesos as of June 2007
Jan
- Jun 2006 |
%
of sales |
Jan
- Jun 2007 |
%
of sales |
Variation $ |
% |
Apr
- Jun 2006 |
%
of sales |
Apr
- Jun 2007 |
%
of sales |
Variation
$ |
% |
||
| Income Statement NET SALES COST OF SALES GROSS PROFIT |
11,397,390 10,317,749 1,079,641 |
100.00% 90.53% 9.47% |
11,743,771 10,650,874 1,092,896 |
100.00% 90.69% 9.31% |
346,381 333,125 13,256 |
3.04% 3.23% 1.23% |
5,723,643 5,194,848 528,796 |
100.00% 90.76% 9.24% |
5,915,317 5,381,304 534,013 |
100.00% 90.97% 9.03% |
191,674 186,457 5,217 |
3.35% 3.59% 0.99% |
|
| Operating Expenses Sell Expenses Administration Expenses OPERATING EXPENSES |
252,154 410,136 662,290 |
2.21% 3.60% 5.81% |
269,854 393,343 663,197 |
2.30% 3.35% 5.65% |
17,700 -16,794 907 |
7.02% -4.09% 0.14% |
124,177 204,187 328,364 |
2.17% 3.57% 5.74% |
132,878 195,640 328,518 |
2.25% 3.31% 5.55% |
8,701 -8,547 154 |
7.01% -4.19% 0.05% |
|
| OPERATING INCOME COMPREHENSIVE COST OF FINANCING Interest Paid Interest (Earned) Exchange Loss (Gain) Monetary Position (gain) Comprehensive Cost of Financing |
417,351
5,320 |
3.66%
0.05% |
429,700
-1,613 |
3.66%
-0.01% |
12,349
-6,933 |
2.96%
-130.32% |
200,432
2,434 |
3.50%
0.04% |
205,495
668 |
3.47%
-0.07% |
5,063
-6,766 |
2.53%
-277.98% |
|
| OTHER EXPENSES (INCOME),
net |
-26,434 |
-0.23% |
-22,530 |
-0.19% |
3,904 |
-14.77% |
-12,696 |
-0.22% |
-12,814 |
-0.22% |
-117 |
0.92% | |
NET INCOME BEFORE TAXES PROVISIONS FOR: |
455,239
|
3.99%
|
454,734
|
3.87%
|
-505
|
-0.11%
|
219,361
|
3.83%
|
224,305
|
3.79%
|
4,943
|
2.25%
|
|
| Net Income Before Extraordinary
Items
Extraordinary Items (Income) |
346,422
0 |
3.04%
0.00% |
340,052
0 |
2.90%
0.00% |
-6,370
0 |
-1.84%
0.00% |
165,174
0 |
2.89%
0.00% |
175,697
0 |
2.97%
0.00% |
10,524
0 |
6.37%
0.00% |
|
| Depreciation and Amortization Operating income plus Depreciation and Amortization |
54,270 471,620 |
0.48% 4.14% |
49,942 479,642 |
0.43% 4.08% |
(4,327) 8,022 |
-7.97% 1.70% |
25,534 225,966 |
0.45% 3.95% |
23,638 229,133 |
0.40% 3.87% |
(1,896) 3,167 |
-7.42% 1.40% |