Quarterly
Earnings Report 1Q10 April 28, 2010
Net Income Rose 37.52%
Financial Highlights:
(All figures are expressed in millions of Mexican pesos of purchasing power as of March 2010. Comparisons are made with the same period of 2009, unless otherwise stated. Figures may vary due to rounding practices).
Mexico City, Mexico, April 28, 2010. Grupo Casa Saba (“Saba”, “GCS”, “the Company” or “the Group”), one of the leading Mexican distributors of pharmaceutical products, health and 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 2010.
QUARTERLY EARNINGS
During the first quarter of 2010, GCS’s sales reached $7,724.08 million, an increase of 4.01%.
SALES
BY DIVISION
PRIVATE PHARMA
Quarterly sales in our Private Pharma division rose 4.63% versus the first quarter of 2009, primarily as a result of an increase in the sales of our Mexican distribution operations.
During the period, sales for this division reached $6,759.43 million, which compared favorably to the $6,460.45 million registered during the same period of the previous year. As a result, Private Pharma represented 87.51% of the Group’s total sales, 52 basis points higher than the participation that it had in 1Q09.
GOVERNMENT PHARMA
During the period, sales in our Government Pharma division declined 21.39% versus the first quarter of 2009. This was mainly due to the fact that our sales to institutions such as PEMEX and ISSEMYM, among others, decreased.
As a percentage of total sales, this division went from representing 2.26% in 1Q09 to 1.71% during the first quarter of 2010.
HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHER
Sales in our Health, Beauty, Consumer Goods, General Merchandise and Other division reached $642.80 million, an increase of 3.97% compared to the first quarter of 2009. This was due not only to the incorporation of new brands but also to an increase in offers and promotions that stimulated the demand for these products in the marketplace.
This division represented 8.32% of GCS’s total sales in both 1Q09 and 1Q10.
PUBLICATIONS
Publication distribution sales increased 5.62% during the quarter. This growth was largely due to the addition of several significant new magazine titles to the product catalog. In addition, we purged low demand publications from the catalog in order to improve Citem’s overall profitability.
Consequently, this division’s participation as a percentage of total sales went from 2.42% in 1Q09 to 2.46% in the first quarter of 2010.
As a result, the sales mix for the quarter was:
Division
%
of Sales
Private
Pharma 87.51%
Government Pharma
1.71%
Health,
Beauty, Consumer Goods,
General Merchandise and Other 8.32%
Publications
2.46%
TOTAL 100.00%
GROSS INCOME
During the first quarter of the year, Grupo Casa Saba’s gross income grew 6.49% versus the same period of the previous year to reach $883.46 million. This increase was primarily due to a reduction in the cost of sales of the merchandise sold as a percentage of net sales. As such, the company’s gross margin was 11.44%, 27 basis points higher than the 11.17% margin reported in 1Q09.
OPERATING EXPENSES
GCS’s operating expenses reached $563.71 million in 1Q10, an increase of 0.92% compared to the first quarter of 2009.
Operating expenses represented 7.30% of our total sales in 1Q10 compared to 7.52% during the same period of the previous year, resulting in a decline of 22 basis points.
OPERATING INCOME
Quarterly operating income was $319.74 million, 17.96% higher than the $271.05 million reported in 1Q09. The growth was due to the fact that the increase in sales, combined with an improvement in our commercial negotiations with providers was sufficient to offset the increase in operating expenses.
As a result, the operating margin was 4.14%, 49 basis points higher than the 3.65% margin registered during the first quarter of 2009.
OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION
Operating income plus depreciation and amortization for 1Q10 was $339.12 million, an increase of 16.80% compared to the first quarter of 2009. Depreciation and amortization for the period was $19.37 million, 0.46% higher than in the first quarter of 2009.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the end of the first quarter of 2010 was $501.51 million, an increase of 315.27% compared to the same period of 2009.
COMPREHENSIVE COST OF FINANCING
During the period, GCS’s comprehensive cost of financing (CCF) reached $54.92 million, 12.26% lower than the CCF reported during 1Q09. This was primarily due to a reduction in interest payments and an increase in interest earned.
OTHER EXPENSES (INCOME)
During the first quarter of 2010, the Company reported an income of $6.96 million in other expenses (income), a decline of 72.23% versus the same period of 2009. It is worth mentioning that the expenses (income) from this line item were derived from activities that are distinct from the company’s everyday business operations.
TAX PROVISIONS
During the first quarter, tax provisions were $24.33 million, 54.62% less than the $53.61 million reported during 1Q09. All of the provisions this quarter were related entirely to income tax payments.
NET INCOME
As a result, GCS’s net income for the first quarter was $247.46 million, an increase of 37.52% compared to the first quarter of 2009. This was primarily due to the improvements in our operating efficiency as well as a reduction in the CCF and lower overall tax provisions.
Consequently, the net margin for the period was 3.20%, 78 basis points higher than the 2.42% net margin registered during the first quarter of 2009.
.
WORKING CAPITAL
During the first quarter of 2010, our accounts receivable days increased by 2.8 days from 1Q09 to reach 73.0 days. In addition, our accounts payable days rose by 8.7 days versus 1Q09, to reach 74.9 days. Finally, our inventory days were 54.2 days, 1.7 fewer days than we had during the same period of the previous year.
The 265.4 million shares issued by Grupo Casa Saba are listed on the Mexican Stock Exchange and its ADRs on the New York Stock Exchange, both under the symbol “SAB”. One ADR equals 10 ordinary shares.
Grupo Casa Saba 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.
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 other countries in which
Grupo Casa Saba operates, as well as variations in the value of the Mexican
peso as compared with the US dollar.
Contacts:
GRUPO CASA SABA IR
Communications:
Sandra Yatsko Jesús
Martínez Rojas
+52 (55) 5284-6623 +52
(55) 5644-1247
syatsko@casasaba.com jesus@irandpr.com