Quarterly
Earnings Report 3Q10 October 28, 2010
Operating Income and Net Income Increased by 22.15% and 88.35%, Respectivelyy
Financial Highlights:
(All figures are expressed in millions of Mexican pesos of purchasing power as of September 2010. Comparisons are made with the same period of 2009, unless otherwise stated. Figures may vary due to rounding practices).
Mexico City, Mexico, October 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 third quarter of 2010.
QUARTERLY EARNINGS
During the third quarter of 2010, GCS’s sales rose 6.43% compared to the same period of the previous year to reach $7,460.02 million.
SALES
BY DIVISION
PRIVATE PHARMA
Sales in our main division, Private Pharma, increased 4.89% compared to the third quarter 2009. This increase was primarily the result of the growth in the sales of our Mexican distribution business.
This division represented 83.69% of the Group’s total sales, 122 basis points lower than the participation that it had in 3Q09.
GOVERNMENT PHARMA
During the period, sales in our Government Pharma division grew 26.23% compared to the third quarter of 2009, primarily as a result of higher sales related to the Metro system, among others.
Consequently, this division went from representing 3.84% of the Group’s total sales in 3Q09 to 4.56% during the same period of 2010.
HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHER
Sales in our Health, Beauty, Consumer Goods, General Merchandise and Other division rose 12.60% compared to the third quarter of 2009. This growth was the result of an increase in offers and promotions that stimulated the demand for these products in the marketplace as well as the organization of events for special clients.
In 3Q10, this division represented 8.98% of GCS’s total sales, 49 b.p. higher than in the same period of 2009, when it accounted for 8.49%.
PUBLICATIONS
During the quarter sales from Citem, our Publication distribution division, increased 7.00% compared to 3Q09. This growth was due to the recuperation of various publishers and the incorporation of important new publishers such as Impresiones Aéreas.
As a result, its participation as a percentage of the Group’s total sales went from 2.76% in 3Q09 to 2.77% in the third quarter of 2010.
Division
%
of Sales
Private
Pharma 83.69%
Government Pharma
4.56%
Health,
Beauty, Consumer Goods,
General Merchandise and Other 8.98%
Publications
2.77%
TOTAL 100.00%
GROSS INCOME
Grupo Casa Saba’s quarterly gross income reached $859.58 million, an increase of 12.80% compared to the $762.04 million registered during the same period of 2009. This was primarily due to the Group’s commercial strategies which were geared towards increasing the Company’s profitability levels.
As a result, the company’s gross margin for the period was 11.52%, 65 basis points higher than the 10.87% margin achieved during 3Q09.
OPERATING EXPENSES
During the third quarter, operating expenses were $602.55 million, 9.23% higher than the $551.63 million reported in the third quarter of 2009. This increase was primarily due to an increase in the work force in order to promote sales in the government sector, among others.
Operating expenses as a percentage of total sales went from 7.87% in 3Q09 to 8.08% during the third quarter of 2010.
OPERATING INCOME
Operating income for the period was $257.02 million, 22.15% higher than the $210.41 million obtained in 3Q09.
Consequently, the operating margin for the period was 3.45%, 45 basis points higher than the 3.00% margin reported during the third quarter of 2009.
OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION
Operating income plus depreciation and amortization for 3Q10 was $274.14 million pesos, an increase of 16.45% compared to 3Q09. Depreciation and amortization for the period was $17.11 million, 31.54% lower than the $25.00 million registered during the third quarter of 2009.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the end of the third quarter of 2010 was $6,961.62 million, which corresponds to a loan related to the acquisition of Farmacias Ahumada, S.A. (FASA) located in Santiago, Chile.
COMPREHENSIVE COST OF FINANCING
During the quarter, GCS’s comprehensive cost of financing (CCF) reached -$47.79 million. This was primarily due to an exchange gain related to the hedge used for the Chilean transaction.
OTHER EXPENSES (INCOME)
During the third quarter of 2010, the Company reported an income of $22.57 million in other expenses (income), 29.47% higher than the income reported during 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
Tax provisions were $34.73 million during the third quarter of 2010, 40.35% higher than the $24.74 million reported in 3Q09. Of these, $36.54 million were related to Income Tax and -$1.81 million to Deferred Income Tax.
NET INCOME
GCS’s net income for the third quarter reached $292.66 million pesos, an increase of 88.35% compared to the same period of 2009. This growth was primarily due to the decrease in the CCF.
As a result, the net margin for the period was 3.92%, 170 basis points higher than the 2.22% net margin obtained during the third quarter of the previous year.
WORKING CAPITAL
During the third quarter of 2010, our accounts receivable days increased by 10.3 days from 3Q09 to reach 79.6 days. In addition, our accounts payable days rose 16.2 days versus 3Q09, to reach 72.5 days. Finally, our inventory days were 60.0 days, 0.4 fewer days than we had during the same period of 2009.
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) 5284-6672 +52
(55) 5644-1247
syatsko@casasaba.com jesus@irandpr.com
Alejandro Sadurni Gómez, CFO
asadurni@casasaba.com
OTHER CURRENT LIABILITIES