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Quarterly Earnings Report
Octubre 27, 2012
3Q12
Financial Highlights:
(All figures are expressed in millions of Mexican pesos. Comparisons are made with the same period of 2011, unless otherwise stated. Figures may vary slightly due to rounding).
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The Group’s net sales for the quarter reached $11,023.9 million pesos
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Gross income for the period was $1,988.0 million; the gross margin for the quarter was 18.03%.
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Operating expenses reached $1,695.0 million pesos and represented 15.38% of the Company’s total sales.
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Quarterly operating income was $292.9 million, resulting in an operating margin of 2.66% for the period.
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Third quarter EBITDA was $394.8 million, or 3.58% of total sales.
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As of September 30, 2012, GCS’s net debt totaled $9,042.4 million.
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GCS closed the quarter with 24 Distribution Centers and over 1,360 pharmacies in operation across Latin Americ
Mexico City, Mexico, October 27, 2012.
Grupo Casa Saba (SAB) (“Saba”, “GCS”, “the Company” or “the Group”)
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one of the leading Mexican distributors of pharmaceutical products as well as health, beauty aids and consumer goods and publications and one of the most important pharmacy chains in Latin America, announced its consolidated financial and operating results for the second quarter of 2012.
QUARTERLY EARNINGS
In the third quarter of 2012, Saba facedlose competition in the distribution and marketing of pharmaceutical products, health and beauty aids, and consumer goods in Mexico as well as in the other Latin America countries in which we operate. Our operating strategy has been to maintain emphasis on improving efficiency levels and controlling logistic costs and expenses, as well as offering competitive prices, generating positive results in practically all our divisions. At the sales level, we are continue to focusing on improving the availability of the most in-demand products for our clients in wholesale and in our pharma network, as well as improving the care and service of our stock sales. In regards to growth, opening new pharmacies in Latin America and in Mexico allowed us to strengthen our presence in the markets in which we already operate, as well as to improve the knowledge of the brands with which we operate.
NET
SALES
Net sales for the quarter totaled $11,023.9 million, a decrease of 11.4% compared to $12,446.2 million in 3Q2011. This decrement resulted mainly due to the disincorporation of Peru’s operations from Casa Saba.
SALES BY DIVISON
DISTRIBUTION DIVISION
PHARMA, HEALTH,
BEAUTY AND CONSUMER GOODS
Sales from our Pharma, Health, Beauty and Consumer Goods division increased 0.4% versus the 3Q2011, totaling $5,163.0 million. In terms of total sales, this division’s percentage went from 41.3% in 3Q2011 to 46.8% in the 3Q2012.
GOVERNMENT
PHARMA
Quarterly sales in our Government Pharma division grew 10.5% compared to the third quarter of 2011. This growth was due to our increased participation in the bidding processes of various State and Federal health institutions. In terms of total sales, this division represented 2.5% in 3Q2011 and 3.1% in the 3Q2012.
PUBLICATIONS
Sales from our Publications Distribution division declined 32.5% compared to the third quarter of 2011, as a result of the business disincorporation in August of the current year. In terms of total sales, this division’s percentage represented 1.5% in 3Q2011.
RETAIL PHARMACY
During the third quarter of the year, sales from our Retail Pharmacy division decreased by $1,415.0 million pesos, or 20.8%, due the disincorporation of Peru, the Brazilian restructuring and lower institutional sales in our Farmacias ABC chain. A portion of this effect was offset by the positive performance of Farmacias Ahumada.
This division’s percentage of the Group’s overall sales rose to 48.9% vs. 48.8% % in the 3Q2011.
As a result, the sales mix for the second quarter of 2012 was as follows:
Division
%
of Sales
Retail Pharmacy 48.9%
Total Distribution 51.1%
Pharma, Health & Beauty 46.8%
Government Pharma
3.1%
Publications 1.2%
TOTAL 100.0%
GROSS INCOME
During the third quarter of 2012, gross income reached $1,988.0 million pesos, amount 15% lower than the gross income reached in the third quarter of 2011. This resulted mainly from the disincorporation of Peru’s operations from Casa Saba.
OPERATING EXPENSES
Operating expenses in the third quarter of 2012 declined by $373.3 million pesos, or 18.5%, compared to the same period of the previous year. This decrease was the result of the disincorporation of Peru’s operations, reducing management and sales expenses.
As a percentage of total sales, operating expenses represented 15.38% during the third quarter of 2012 compared to 16.62% during the same period of 2011.
OPERATING INCOME
Quarterly operating income for 3Q2012 was $292.9 million, a higher amount than the $270.5 million reported in 3Q2011. This increase in operating income was the result of an operating expenses reduction.
Operating income margin for the 3Q2012 was 2.66%, versus 2.17% in 3Q2011.
OPERATING INCOME PLUS DEPRECIATION AND
AMORTIZATION (EBITDA)
EBITDA for 3Q2012 was $394.8 million, an amount slightly inferior compared to the $395.6 million reported in the third quarter of 2011.
EBITDA margin for the third quarter of 2012 was 3.58%.
COMPREHENSIVE COST OF FINANCING
(CCF)
The Group’s CCF reached $274.4 million in 3Q2012, 7.97% lower than the CCF reported during 3Q2011.
This decrease was primarily due to minor interest payments.
NET DEBT
The Company’s net debt at the end of 3Q2012 was $9,042.4 million pesos.
OTHER EXPENSES (INCOME)
During the third quarter of the year, other expenses totaled $1.5 million.
It is important to mention that the results listed in this line item are derived from activities outside of the company’s normal business operations and, as a result, they are not necessarily recurrent.
TAX PROVISIONS
Tax provisions for the third quarter of 2012 were $124.8 million, an amount higher than the $3.27 million reported in 3Q2011.
NET INCOME (LOSS)
In the third quarter 2012 GCS recorded a net loss of $107.8 million, while in the same period last year a net income of $15.53 million was registered.
Analysis Coverage: We do not currently have analyst coverage from a brokerage firm or from a credit institution.
The 265.4 million shares issued by Grupo Casa Saba are listed on the Mexican Stock Exchange, and its ADRs are listed on the New York Stock Exchange, both under the symbol “SAB”. One ADR equals 10 ordinary shares.
Grupo Casa Saba was founded in 1892 and 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 115 years of experience, the Company distributes to the majority of pharmacies, chains, self-service and convenience stores, as well as other specialized national chains. With the acquisition of FASA in October of 2010 the company now has retail pharmacy outlets located in Mexico, Chile and Brazil.
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 those countries in which Grupo Casa Saba operates, directly or indirectly, including the United States of America, Brazil and Chile, as well as variations in the value of the Mexican peso as compared with the currencies of the previously-mentioned countries.
Contacts:
GRUPO CASA SABA IR Communications:
Carlos Mora Jesús Martínez Rojas
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