Note: This report does not include complete information due to the
fact that the Company is negotiating certain legal aspects with its
derivative counterparties that could significantly affect the
financial information as of December 31, 2008. SAN PEDRO GARZA
GARCIA, NUEVO LEON, Mexico, Feb. 27 /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 4Q'08
unaudited results. Year over year consolidated net sales declined
17.7 percent mostly affected by a 28.2 percent peso depreciation
during the quarter while EBITDA decreased 41.6 percent. The
consolidated EBITDA margin decreased to 10.9 percent from 15.3
percent in the same period last year. FINANCIAL HIGHLIGHTS* 4Q'08
4Q'07 % Change ----- ----- -------- Consolidated Net Sales 542 659
-17.7% Glass Containers 275 337 -18.5% Flat Glass 259 312 -17.0%
---------- --- --- ----- Cost of Sales 395 436 -9.3% -------------
--- --- ---- Gross Income 146 223 -34.3% ------------ --- --- -----
Gross Margins 27.0% 33.8% -6.8 pp ------------- ---- ---- -------
SG&A 131 143 -8.8% ---- --- --- ---- SG&A % of sales 24.1%
21.8% 2.3 pp --------------- ---- ---- ------ EBIT 16 79 -80.2%
---- -- -- ----- EBIT Margins 2.9% 12.1% -9.2 pp ------------ ---
---- ------- EBITDA 59 101 -41.6% Glass Containers 50 76 -34.1%
Flat Glass 7 30 -75.9% ---------- - -- ----- EBITDA Margins 10.9%
15.3% -4.4 pp -------------- ---- ---- ------- * Million US$
Nominal --------------------- Commenting on the results for the
quarter, Mr. Hugo Lara, Chief Executive Officer, said, "This was a
difficult quarter for Vitro as the worldwide recession and tight
credit markets clearly impacted results. It is also clear that
Vitro's strong market position and franchise, a long standing
diversified blue chip client base and the investments in our
manufacturing facilities over the past ten years constitute an
important foundation in these challenging times. But most
importantly, we are confident we are taking all the necessary steps
to continue business as usual although at a lower capacity while
maintaining ongoing relationships with customers and suppliers. In
fact, we are focused on actively controlling costs, managing our
liquidity, and generating cash flow, while we restructure our
financial obligations." Mr. Claudio del Valle, Chief Administrative
and Financial Officer, commented, "In the face of global declining
demand, Glass Container sales volumes were down in all segments
reflecting overall weak conditions. As a result, domestic and
export sales declined year-over-year by 16.9 percent and 14.1
percent, respectively. While EBITDA benefited somewhat by cost
reduction initiatives we reported a 34.1 percent year-over-year
drop for glass containers. On a comparable basis, excluding Comegua
which was deconsolidated since December 2008, EBITDA would have
decreased 30.6 percent YoY. Looking forward, our goal is to
optimize production lines to assure continuity and have launched
several programs to increase volumes." "Flat Glass sales fell 17
percent this quarter mainly driven by continued tough industry
conditions in the North American Automotive business, as well as
the US and Spanish construction segments. In the Mexican
construction market, we maintained our market share despite an
industry wide volume decrease. Auto glass volumes to the OEM market
fell 10 percent in the face of a 26 percent industry drop as a
result of weakening demand, which translated into a market share
gain from 14 percent to 17 percent in the NAFTA region. Float glass
exports remained strong with volume up 22 percent year-over-year.
EBITDA, in turn, declined during the period, mainly as a result of
lower fixed-cost absorption. Looking ahead, our goal is to build
sales through marketing programs for the domestic automotive glass
replacement aftermarket, expansion of Vitro Cristalglass product
offerings, increasing float glass exports to new markets. For Vitro
America, the focus is on value added products and areas where we
can differentiate our products. In all Flat Glass, we are analyzing
demand and expect to rationalize capacity where required."
Addressing the restructuring process, Mr. Lara commented, "Today we
are in the process of negotiations with counterparties to determine
alternatives for restructuring derivative obligations. An
additional element of the restructuring involves our bondholders
and other financial counterparties. A committee has been formed and
we have been negotiating with bondholders. At this point, we are in
the process of developing a business plan that outlines our
strategy and expected performance which will be presented to
creditors in the next few weeks." "We have also taken steps to
revitalize the Company, including cost reduction initiatives
throughout every aspect of our company, while optimizing production
capacity to maximize utilization and efficiencies consistent with
the current level of operations. Together, these initiatives will
represent annualized savings of between US$80 and US$120 million
once fully implemented. During 2008, US$40 million were implemented
and will have their full benefit in 2009. To further maximize our
cash position we have also reduced capital expenditures to US$74
million for 2009 and sold several minor non-productive assets." "In
summary, we are taking decisive steps to better position Vitro for
the future and will continue to maintain constant communication
with creditors, financial institutions, clients and suppliers as we
advance our plans in 2009," Mr. Lara closed. To obtain the full
text of this earnings release, please visit our Investor Relations
website at http://www.vitro.com/ under the Download Center section,
or click on the following link
http://phx.corporate-ir.net/phoenix.zhtml?c=108614&p=irol-reportsother
Dec-08 Dec-07 Inflation in Mexico Quarter 2.5% 1.5% Accumulated
6.5% 3.8% Inflation in USA Quarter -4.8% 0.7% Accumulated 0.3% 4.1%
Exchange Rate Closing 13.8325 10.8662 Devaluation Quarter 28.2%
-0.5% Accumulated 27.3% 0.5% 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).
EFFECTS OF INFLATION -- 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. -- 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. 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. 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/ Fourth Quarter
2008 results Conference Call and Web cast Wednesday, March 4, 2009
11:00 AM U.S. EST - 10:00 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 March 11, 2009. For inquiries
regarding the conference call, please contact Danielle Birrer or
Susan Borinelli of Breakstone Group via telephone at (646)
452-2336, or via email at DATASOURCE: Vitro S.A.B. de C.V. CONTACT:
Investor Relations, Adrian Meouchi, +(52)81-8863-1765, , or Angel
Estrada, +(52)81-8863-1730, , both of Vitro, S.A.B. de C.V.; or
U.S. agency, Susan Borinelli, , or Danielle Birrer, , both of
Breakstone Group, +1-646-452-2336; or Media Relations, Albert
Chico, +(52)81-8863-1661, , or Roberto Riva, +(52)81-8863-1689, ,
both of Vitro, S.A.B. de C.V. Web Site: http://www.vitro.com/
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