Grupo Casa Saba Sales and Operating Income up 2.73% and 3.36%, Respectively

MEXICO CITY, May 3  /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, announces its consolidated financial and operating results for the first quarter of 2007.

Financial Highlights:

(All figures expressed in millions of Mexican pesos as of March 31, 2007. Variations refer to the same period of 2006, unless otherwise stated. Figures may vary due to rounding off. Basis points is abbreviated "bps".)

  - First quarter sales totaled $5,853.50 million
  - Gross profit increased 1.46%
  - Gross margin for the quarter was 9.59%
  - First-quarter operating expenses increased 0.23%
  - Operating expenses as a percentage of sales declined 15 bps
  - First-quarter operating income increased 3.36%
  - Operating margin in the quarter rose 3 bps to 3.85%
  - Quarterly tax provisions increased 20.70%
  - Net income in the first quarter totaled $165.10 million, a decline of
    9.32%
  - Cash and cash equivalents amounted to $495.72 million at the close of
    the quarter

  QUARTERLY RESULTS
  NET SALES


In first quarter 2007, GCS sales increased 2.73% to a total $5,853.5 million.

Sales of pharmaceutical products to the private sector ("Private Pharma") registered the greatest comparative increase of all our divisions over 1Q06, ratcheting up 4.04%. As in previous quarters, this increase was due to the strong performance of the private pharmaceuticals market in Mexico, combined with GCS's business strategy, which focuses on actively targeting not only our traditional clients but also supermarkets and drugstore chains.

With respect to sales of products other than pharmaceuticals to the private sector, sales of health care and beauty products, consumer goods and other merchandise increased 1.95%, while sales of publications (includes books and magazines) declined 0.71%. The share of sales to government institutions ("Government Pharma") in total sales decreased to 2.66%, mainly due to lower sales to Petroleos Mexicanos (PEMEX), as the state-run oil company carried out changes in its purchasing and subrogation policies.

  SALES BY DIVISION
  PRIVATE PHARMA


Our main division, Private Pharma, continued as in previous quarters to increase its share of total sales. The positive performance posted by the private pharmaceutical market in Mexico allowed this division to grow 4.04% compared to first quarter 2006.

Since Private Pharma registered the strongest growth of any of the Group's divisions, its share of total sales rose from 82.92% in 1Q06 to 83.99% in 1Q07.

GOVERNMENT PHARMA

Sales in our Government Pharma division declined 22.35%, mainly due to lower sales to PEMEX. The decline in sales to PEMEX was the result of GCS's reduced participation in the current purchasing and subrogation policies implemented by PEMEX.

As a result, the share of Government Pharma in the Group's total sales went from 3.52% in 1Q06 to 2.66% in 1Q07.

HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE, AND OTHER

Sales of health care and beauty products, consumer goods, general merchandise, and others registered growth of 1.95% compared to first quarter 2006. This increase was due mainly to stronger sales of Health, Beauty, and Consumer products, which rose 2.59% in the quarter.

This division's share of total sales was 9.53%, down slightly from the 9.61% registered in 1Q06.

PUBLICATIONS

The sales of Citem diminished 0.71% over the same quarter of the previous year. This reduction reflects the fact that the prices of the magazines distributed by Citem have not been increased (making for a comparative decrease in real terms) and that sales volume was not able to offset the aforementioned price effect.

As a result, the share of Citem in the Group's total sales decreased from 3.95% in 1Q06 to 3.82% in the first quarter of 2007.

GROSS INCOME

Gross income of Grupo Casa Saba in first quarter 2007 increased 1.46% to $561.29 million. This growth was slower than that of sales owing to the discounts offered to our customers in the competitive environments of our markets. As a result, gross margin was 9.59% in 1Q07, down 12 bps from the 9.71% registered in 1Q06.

OPERATING EXPENSES

Operating expenses of GCS in first quarter 2007 amounted to $336.12 million, up 0.23% over 1Q06. Since this increase was less than that of sales, operating expenses as a percentage of sales decreased 15 bps to 5.74%.

At GCS we have continued to operate under strict expense reduction and operating efficiency controls which have allowed us to constantly lower expenses in ratio to sales generated.

OPERATING INCOME

Operating income in first quarter 2007 increased 3.36%. Consequently, GCS's operating margin ratcheted up 3 bps from its 1Q06 level to 3.85%. The slower growth in operating expenses largely explains the increase in operating income and operating margin.

OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION

Depreciation and amortization in 1Q07 was down 8.46% compared to first quarter 2006 as a result of a lesser amount of depreciable assets. First-quarter operating income plus depreciation and amortization increased 1.98% over the same quarter the previous year, to $251.59 million.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents at the close of 1Q07 amounted to $495.72 million, down 10.44% from the same period of 2006, as a result of greater investment in working capital.

COMPREHENSIVE COST OF FINANCING (CCF)

CCF in first quarter 2007 amounted to $3.51 million, negative in comparison to the $5.24 million income registered in 1Q06. Lower interest gains, lower exchange income, and a loss in net monetary position explain this result.

OTHER EXPENSES/INCOME

In first quarter 2007, GCS registered income of $11.01 million in this item as the result of sales of transport equipment, third-party services, and others. This figure was down 26.36% in comparison with 1Q06. It should be noted that the income or expenses registered in this item are related to activities distinct from the company's normal business operations.

TAX PROVISIONS

Tax provisions for 1Q07 amounted $67.61 million, up 20.70% over 1Q06. As a result, the ratio of tax provisions to income before taxes went from 23.53% in 1Q06 to 29.06% in 1Q07.

NET INCOME

Since the increase in operating income was insufficient to offset the fact that CCF generated an expense rather than income (in 1Q06), and owing to the comparative quarterly increase in tax provisions, GCS's net income declined 9.32% to $165.10 million in first quarter 2007.

WORKING CAPITAL

In first quarter 2007, accounts receivables measured in terms of days increased 3.35 to 60.67 days, while inventory days increased 0.67 to 54.94 days, compared to 1Q06. Accounts payable measured in terms of days showed a slight decrease of 0.38 from the 1Q06 level to 51.02 days. 

DATASOURCE: Grupo Casa Saba



CONTACT:  Jorge Sanchez, Investor Relations, +011-52-55-5284-6672, or

, or Alejandro Sadurni, CFO, , both

of Grupo Casa Saba; or Jesus Martinez Rojas, IR Communications,

+011-52-55-5644-1247,  



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

Copyright