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Grupo Casa Saba 1T04 Earnings Release
Sales and Net Income Increased 2.3% and 4.5%, Respectively
MEXICO CITY, April 29 /PRNewswire-FirstCall/ -- Grupo Casa Saba ("Saba," GCS,
the company or the Group), Grupo Casa Saba, one of the leading Mexican
distributors of pharmaceutical products, beauty, personal care and consumer
goods, general merchandise and publications, announces its consolidated
financial and operating results for 1Q04.
For Grupo Casa Saba, the first quarter of the year was a period in which we
began to implement a series of innovative programs, procedures and controls in
order to improve the logistics operations in our warehouses as well as in our
delivery routes and ordering processes. Our intention is not only to improve
the efficiency of our operations and the service that we provide to our clients
in the short-term, but also to prepare and ensure Grupo Casa Saba's position at
the forefront so that we can participate, in a leading way, in the growing and
highly demanding private pharma, health, beauty, consumer and general
merchandise distribution markets.
Given that the quality of the service that we offer our clients is directly
related to the Group's operative efficiency, as of the first quarter of this
year, we started a series of investments in logistics which we expect will
generate improvements in the receiving operations the assortment and storage of
products, as well as the operating efficiency of our distribution routes
throughout the Mexican Republic.
In order to achieve this, some of the measures that were implemented included
equipping some of our transport units with a satellite tracking system so that
we can have better control over the times and the movements of each of the
units and routes as well as validate the effectiveness of our logistical
procedures. Additionally, in order to increase the Group's productivity, we
began to implement new systems and procedures for our more highly trained and
upper level personnel.
Even though in Grupo Casa Saba we maintain our commitment to growth with
profitability and continually find ourselves focused on reducing the Group's
expenses, the implementation of the previously-mentioned strategies generated
an increase in our operating expenses. However, we expect our expenses to
decrease as a percentage of sales while we improve our position and performance
in the distinct markets where we operate.
In terms of our debt, and given that the Group continues to generate positive
cash levels, during the first quarter of 2004, we reduced our cost-bearing
liabilities to $137.75 million, a decrease of 14.64%.
Given that our current debt levels demonstrate a sound financial structure that
enables us to continue investing and growing, during the last Annual
Shareholders' Meeting held April 27th, GCS's Board of Directors agreed on a
dividend payment in the amount of $110.00 million pesos which, in nominal
terms, represents a 10% increase over the 2003 dividend payment.
PRIVATE PHARMA
Sales from our main division, Private Pharma, registered a 3.47% increase
during the quarter due to, among other things, a private pharmaceutical
market that, in the quarter, demonstrated a weak behavior in terms of
units sold. As a result, our Private Pharma division generated 83.72% of
our total sales.
GOVERNMENT PHARMA
Sales from our Government Pharma division decreased 20.18% mainly as a
result of the lower degree of participation that we registered in
contracts with PEMEX. It is worth mentioning that this lower
participation is due to the changes that PEMEX has made in its contracts
in terms of the characteristics and prices of their products. During the
quarter, Government Pharma represented 2.89% of our total sales.
HEALTH, BEAUTY, CONSUMER GOODS AND GENERAL MERCHANDISE
Health, Beauty, Consumer Goods and General Merchandise reflected a
decrease in sales of 3.67% with respect to the first quarter of last
year. This negative comparison is mainly due to an economic environment
that generated a weak demand over the products sold by this division.
The contribution of the Health, Beauty, Consumer Goods and General
Merchandise division represented 9.89% of total sales.
PUBLICATIONS
Citem, the division of our company that is dedicated to the distribution
of publications, registered an increase of 17.66% during the quarter.
This positive behavior is due to the inclusion of new titles in its
products catalogue as well as the operative restructuring that took place
during the previous quarters.
Division % of Sales
-- Private Pharma 83.72%
-- Government Pharma 2.89%
-- Health, Beauty Consumer Goods and General Merchandise 9.89%
-- Publications 3.50%
TOTAL 100.00%
QUARTERLY RESULTS
GROSS PROFIT
Gross profit for the first quarter of 2004 grew 1.10%. As a result, its
relation to total sales (gross margin) went from 9.86% in 1Q03 to 9.75% in
1Q04. The gross margin's quarterly decline of 11 basis points is due to Grupo
Casa Saba's current client mix as well as the level of competition within the
various markets in which we operate.
OPERATING EXPENSES
Operating expenses for the first quarter were 5.96% higher than in 1Q03. As a
result, the expense ratio of the group increased 20 basis points during the
quarter from 5.77% to 5.97%.
OPERATING INCOME
Given that the increase in operating expenses could not be compensated for by
our sales and gross profit results, operating profit for the first quarter of
2004 contracted by 5.74%. Consequently, the Group's operating margin decreased
by 32 basis points to 3.77%.
OPERATING PROFIT PLUS DEPRECIATION AND AMORTIZATION
Operating profit plus depreciation and amortization for the period registered a
negative comparison with respect to the first quarter of 2003 of 4.95%.
Depreciation and amortization for the quarter rose 2.17% due to an increase in
the number of our transportation units.
COST-BEARING LIABILITIES
As a result of the cash generated by the Group and given that we maintain our
commitment of operating with low debt levels, our cost-bearing liabilities
reduced 21.37% during the quarter. In net cash terms and given that our cash
decreased by 25.03% during the quarter, cost-bearing liabilities less cash fell
by 14.64% compared to 1Q03.
COMPREHENSIVE FINANCING COST
The CFC for the quarter was $0.47 million, basically the result of the $11.12
million in income earned from the monetary position, which was essentially
compensated by $10.97 million in interest paid. It is important to note that
the quarterly interest paid decreased 53.49%.
OTHER EXPENSES/ INCOME
The line item of other expenses/(income) increased 5.87% during the quarter to
reach $12.42 million. This is due, in large part, to the sales of fixed assets
and services rendered to third parties.
TAX PROVISIONS
Tax provisions and profit sharing for the quarter fell by 17.24% mainly due to
a lower current ISR tax.
NET INCOME
As a result of a lower comprehensive cost of financing and a lower tax
provision, net income for the first quarter of 2004 increased 4.52% to reach
$161.07 million.
WORKING CAPTIAL
The Group's accounts receivable days were 57.1 days, an increase of 2.8 days
for the quarter. This was mainly the result of the commercial strategies that
were implemented as well as the levels of competition within the various
markets in which we operate. Nevertheless, inventory days fell by 0.7 days (to
41.6 days), reflecting an increase in the efficiency levels of our warehouses.
Supplier days increased by 0.7 days during the quarter to 58.9 days.
The 265.4 million shares issues by Grupo Casa Saba are listed on the Mexican
Stock Exchange and in the form of ADRs on the New York Stock Exchange, both
under the ticker symbol "SAB." One ADR is equivalent to 10 common shares.
Grupo Casa Saba is one of the leading distributors in Mexico of pharmaceutical
products, beauty, personal care and consumer goods, general merchandise and
publications. 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 themes discussed in this document constitute
forward-looking statements. Said themes have 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.
DATASOURCE: Grupo Casa Saba, S.A. de C.V.
CONTACT: Jorge Sanchez, IRO, +52-55-5284-6672, , or
Alejandro Sadurni, CFO, , both of Grupo Casa Saba; or
Ernestina Nevarez of IR Communications, +52-55-5644-1247,
, for Grupo Casa Saba
Web site: http://www.casasaba.com/