Grupo Casa Saba 2Q05 Earnings Release

Grupo Casa Saba 2Q05 Earnings Release
Operating Profit Rose 12% and Net Income Increased 39% 


MEXICO CITY, July 28  /PRNewswire-FirstCall/ -- 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, announced yesterday, July 27,
2005, its consolidated financial and operating results for the second quarter
of 2005.

Financial Highlights:

(Figures in pesos as of June 30, 2005; variations are with respect to the same
period of 2004 except where noted. Figures may vary due to rounding.)

  -- Sales rose 1.2% during the quarter to reach $5,038.0 million
  -- Gross profit increased 3.9% versus 2Q04
  -- The gross margin increased by 25 basis points during the quarter to
     reach 9.6%
  -- Quarterly operating expenses rose 0.1%
  -- Operating income grew 12.1% compared to 2Q04
  -- The operating margin for the quarter rose 32 basis points versus 2Q04
     to reach 3.3%.
  -- Net income increased 38.6% during the quarter to $146.5 million
  -- Cash at the end of 2Q05 was $443.1 million
  -- A cash dividend in the amount of $120.0 million was paid out in
     June 2005
  -- GCS did not incur any cost-bearing liabilities during the quarter


  Total Sales


During the second quarter of 2005, Grupo Casa Saba continued to follow its
strategy of growing profitably, maintaining operations with clients and
suppliers who meet the minimum profitability measures established by
management. It is worth mentioning that, during the second quarter, product
lines that had been eliminated for failing to comply with our profitability
objectives were reincorporated into our product catalog after new negotiations
enabled them to fall within the Group's parameters.

The growth registered by the Private Pharmaceutical Products market during
2Q05, combined with the re-incorporation of product lines in our catalogs, as
well as the solid performance posted by our Government Pharma, Health, Beauty,
Consumer Goods, General Merchandise and Other and the Publications divisions,
enabled us to increase total sales 1.2%. This reversed the net sales decline
registered in the first quarter of 2005.

  Sales by Division:
  Private Pharma


In our main division, Private Pharma, which generated 83.0% of the Group's
total sales during the second quarter of 2005, sales increased 0.3%. This
increase in sales was due to the re-incorporation of a significant number of
the product lines that we had not been distributing into our product catalogs,
as well as the solid performance of the national private pharmaceutical market.

Due to the fact that the Group's other divisions experienced higher levels of
growth than that of Private Pharma, this division's contribution to total sales
decreased by 68 basis points compared to 2Q04.

Government Pharma

In our Government Pharma division, we continued to incorporate new clients or
state health institutions while, at the same time, we maintained our presence
in the government institutions that we traditionally work with, including
Petroleos Mexicanos. This enabled us to offset the lower sales that were posted
by some government institutions and to generate a significant sales increase, of
15.6%, for this division, compared to the second quarter of 2004.

Government Pharma's contribution to total sales went from 2.7% in 2Q04 to 3.1%
in 2Q05 due to the previously mentioned growth.

Health, Beauty, Consumer Goods, General Merchandise and Other

Sales in the Health, Beauty, Consumer Goods, General Merchandise and Other
division increased 0.6% during the quarter, primarily as a result of the 11.7%
increase in sales of General Merchandise versus 2Q04. This increase in General
Merchandise sales was due, in large part, to the inclusion of new highly
demanded products in its catalogs, such as The Sensual Tea and Pringles. As a
result, this division accounted for 10.0% of the Group's total sales.

Publications

In 2Q05, sales for Citem, the Group's division that focuses on the distribution
of publications, grew 10.9% compared to the same period of 2004. This division's
positive performace led to an increase in its contribution to the Group's total
sales, from 3.6% in 2Q04 to 3.9% in 2Q05. This increase is also the result of
incorporating new publications into our catalogs for stores, as well as
newspaper and magazine stands throughout the country and in Mexico City. This
reflects Citem's strategy, implemented several quarters ago, of offering
quality services to its clients, as well as working with profitable editorial
houses whose publications are in high demand.

  Division                      % of Sales
  Private Pharma                   83.0%
  Government Pharma                 3.1%
  Health, Beauty,
   Consumer Goods,
   General Merchandise
   and Other                       10.0%
  Publications                      3.9%
  TOTAL                          100.00%


  Gross Profit


As a result of our purchasing and sales strategies that focus on establishing
minimal profitability levels, the Group's gross profit during 2Q05 increased
3.9% compared to 2Q04. The gross margin improved 25 basis points versus 2Q04,
which is relevant, given the high level of competition that existed within the
various distribution sectors where we operate.

Operating Expenses

During the second quarter of 2005, the Group's consolidated operating expenses
rose 0.1% compared to the same period of 2004. This slight increase reflects
the savings obtained due to our productivity programs for our warehouses and
personnel, as well as the reengineering of routes.

As a result, the Group's expense margin declined 7 basis points compared to the
second quarter of 2004, to 6.3%.

Operating Income

Based on the improvement in gross profit, as well as the slight increase in
operating expenses, which decreased as a percentage of sales, operating income
rose 12.1%, a substantial increase. The significant improvement reflects the
positive results of our growth strategy and of operating under minimum
profitability parameters.

The operating margin improved 32 basis points compared to the second quarter of
2004 to reach 3.3%.

Cost-Bearing Liabilities and Cash

During 2Q05, Grupo Casa Saba maintained a balance sheet free of cost- bearing
liabilities, despite the $145.3 million increase in inventories versus 2Q04 and
the quarterly decline of $79.3 million in accounts payable.

Although our working capital requirements increased in 2Q05 compared to 2Q04,
the higher level of cash flow generated by our operations enabled us not only
to maintain a cost-bearing liability free balance sheet, but also to increase
our cash by 28.4%. Cash and cash equivalents for the quarter were $443.1
million.

It is worth noting that on June 3, 2005, the management complied with its
commitment to our shareholders to distribute a portion of the generated
resources by paying out a dividend in the amount of $120.0 million, or $0.45
per share.

Comprehensive Cost of Financing

As a result of the Group's financial structure, which does not include any
cost-bearing liabilities and is cash positive, the Comprehensive Cost of
Financing (CCF) for the period registered interest income of $9.5 million,
which offset $2.9 million in interest expenses, as well as the foreign exchange
loss of $1.9 million registered during the period. Therefore, in 2Q05, the CCF
generated an income of $5.3 million.

Other Expenses/Income

Other expenses/income includes income from line items that are different from
our operations, as well as services rendered to third parties and the sale of
fixed assets. In 2Q05, this line item registered an income of $10.3 million,
19.2% higher than that recorded during the same period of 2004.

Tax Provisions

Tax provisions as a percentage of pre-tax income was 18.8% for the quarter and
reached $33.9 million.

Net Income

As a result of the 21.1% increase in pre-tax income, as well as the reduction
in tax provisions, the Group's net income for the quarter reached $146.5
million, an increase of 38.6% versus 2Q04.

Working Capital

Accounts receivable for 2Q05 decreased $68.2 million and accounts payable fell
by $79.3 million during the quarter. Inventories resulting from our commercial
strategies during the quarter increased $145.3 million compared to 2Q04. As a
result, accounts receivable days reached 55.3, declining 1.9 days versus 2Q04
while supplier days declined by 1.7 days compared to 2Q04, to reach 44.4.
Inventory days rose 2.5 days compared to 2Q04 to reach 48.3 days. 

DATASOURCE: Grupo Casa Saba, S.A. de C.V.



CONTACT:  Investors, Sandra Yatsko, IR Communications,

+011-52-55-5644-1247, or , for Grupo Casa Saba; or Jorge

Sanchez, IRO, , or Alejandro Sadurni, CFO,

, both of Grupo Casa Saba, +011-52-55-5284-6672



Web site:  http://www.casasaba.com/ 

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