Vitro Reports 3Q’14 Sales up 1.3% YoY and 5.1% Decline in EBITDA
San Pedro Garza García, Nuevo León, Mexico, October 28, 2014 – Vitro, S.A.B. de C.V. (BMV: VITROA),
hereinafter “Vitro” or the “Company”, the leading glass producer in Mexico, today announced its unaudited results for
the third quarter 2014.
Third Quarter 2014 Highlights
 Consolidated sales were up 1.3 percent year-on-year (YoY) to US$433 million driven by positive results in the Glass
Containers business unit across all segments, except CFT (Cosmetics, Fragrance and Toiletries). In the Flat Glass
business unit, a solid performance in sales to automotive market partially compensated for the impact of lower domestic
and export sales to the construction segment.
 A strong performance in Glass Containers, driven by increasing sales volume and a strong price-mix, along with
positive automotive market sales in Flat Glass, partially offset the decline in EBITDA. During 3Q’14, EBITDA was
US$100 million, reflecting lower sales volumes to the construction segment, both domestic and exports, lower capacity
utilization in one of our float glass furnaces, a 15.3 percent increase in average natural gas prices and a 0.9 percent
year-over-year peso depreciation (quarterly average).
 Aided by higher a cash balance and current debt amortization, Net debt decreased by US$34 million to US$990 million,
from US$ 1,024 recorded in the previous quarter and by US$81 million from US$1,071 in December 2013.
Commenting on Vitro’s outlook and performance, Mr. Adrián Sada
Cueva, Chief Executive Officer, said “This past quarter we achieved
important milestones in our strategy and laid the foundations for the
future profitable growth of our company. After many months of hard
work, our team was able to earn a very important long term contract to
supply beer bottles to Constellation Brands with an estimated sales
value of approximately US$950 million during the next 7 years. Our
board also authorized an investment for a furnace in Brazil to supply the
CFT market, for which we entered into an agreement with the state of
Bahia to install our new plant in that state. We expect to see the
benefits of the Constellation contract starting November of this year and
expect to be sourcing the full run rate of the contract on January, 2016
after starting up a furnace exclusively dedicated to this project.
Regarding our plant in Brazil we expect to see the positive effect during
the second half of 2016, when we have the Brazilian plant installed and
operational.”
“Regarding the financial results of this quarter, our Glass Containers
business delivered a very strong performance with sales up 6.8 percent
and EBITDA growth of 14.7 percent, despite continued soft macro
conditions in some of our markets. Sales to the Beer segment remained
very strong, while the Soft Drinks, Food and Wine and Liquor segments
all reported a good performance resulting in a solid price mix. These
developments more than offset continued weak industry conditions for
CFT. Our flat glass automotive business also continued to report
sustained positive results driven by the continued recovery of the OEM
market.”
FINANCIAL HIGHLIGHTS*
3Q'14
Consolidated Net Sales
Gross Income
427
289
137
293
135
Gross Margins
28.7%
31.5%
-2.8 pp
57
64
-11.1%
13.1%
15.0%
-1.9 pp
67
71
-4.8%
15.5%
16.5%
-1 pp
100
94
8
106
82
22
-5.1%
-65.2%
23.2%
24.8%
-1.6 pp
3
29
-91.0%
Glass Containers
Flat Glass
Cost of Sales
SG&A
SG&A % of sales
EBIT (3)
EBIT Margins
EBITDA (3)
Glass Containers
Flat Glass
EBITDA Margins
Net income from continuing operations
Net income (loss) from discontinued
operations
Net Income attributable to controlling
interest
Total Debt(1)
Short Term Debt
Long Term Debt
Cash & Cash Equivalents(2)
Total Net Debt
(1)
-
-
1.3%
6.8%
-10.9%
5.5%
-7.8%
14.7%
#DIV/0!
0
31
-99.6%
1,241
299
942
1,252
191
1,061
56.3%
-11.3%
251
990
213
17.6%
1,039
-4.8%
-0.9%
* M illio n US$ No minal
(1) To tal debt includes acco unt receivables debt pro grams acco rding to IFRS.
(2) Cash & Cash Equivalents include restricted cash o n o ur acco unts receivables debt pro grams
and lease co ntracts.
(3) EB IT and EB ITDA are presented befo re o ther expenses (inco me).
Vitro 3Q’14 | Page 1
3Q'13 % Change
433
308
122
309
124
“During this quarter, one of our float glass furnaces, which represents around a third of our capacity, had an unexpected
technical issue, which ended affecting dramatically the capacity utilization of the furnace. As a consequence, overall Flat
Glass results were impacted by lower sales volumes to the construction market, reflecting our capacity constrains during
this quarter. We did, however, benefit from a more favorable price mix, which did help to partially offset the impact of
lower sales volumes and higher cost absorption. Nevertheless, Flat Glass EBITDA was down significantly this quarter,
when compared to the same period of the prior year mainly due to this incident. Corrective measures have been
implemented and we have significantly improved our flat glass output to be able to adequately supply the market going
forward.”
Strengthening the balance sheet has been a key priority for the Company. Mr. Claudio Del Valle, Chief Administrative and
Financial Officer, noted: “We achieved a significant increase in our cash balance reaching US$251 million from US$213
million YoY. Net debt, in turn, declined by US$34 million to US$990 million, from US$1,024 million in the previous quarter,
while compared with the closing of 2013, net debt has been reduced by US$81 million, from US$1,071 in December 2013,
reflecting a higher cash balance and a reduction in gross debt. All in all, we remain focused on further strengthening our
balance sheet, with plans to refinance our US$235 million note due April 2015.”
“Despite the productivity incident in the Flat Glass business unit and the soft industry conditions in some of the markets
Vitro serves, we continue to make headway in further building our business and consolidating Vitro as a stronger, more
productive and innovative Company, expecting to close this year with overall improved results.”
“Our outlook for the end of the year is positive. We are expecting a solid last quarter, with strong demand expected in the
container segments supported by the start of supply to Constellation as well as better availability of flat glass to serve our
market.” concluded Mr. Sada.
____________
Financial statements were prepared according to International Financial Reporting Standards (IFRS). The Peso figures included in the document are presented in nominal
Pesos which could affect its comparability. Dollar figures are in nominal US dollars and are obtained by dividing nominal pesos for each month by the end of month fixed
exchange rate published by Banco de México. In the case of the Balance Sheet, US dollar translations are made at the fixed exchange rate as of the end of the period.
Certain amounts may not sum due to rounding. All figures and comparisons are in US dollar terms, unless otherwise stated, and may differ from the peso amounts due to the
difference in exchange rates.
Vitro 3Q’14 | Page 2
REVIEW OF CONSOLIDATED RESULTS
Sep'14 Sep'13
Inflation in Mexico
Quarter
Accumulated
LTM
Inflation in USA
Quarter
Accumulated
LTM
Exchange Rate
Closing
Average (Acumulated)
Average (LTM)
Average (Quarter)
Devaluation (Apreciation)
Accumulated
LTM (closing)
Quarter (average) YoY
Accumulated (Average)
1.0%
2.1%
4.2%
0.6%
1.9%
3.4%
-0.2%
2.1%
1.6%
0.3%
2.0%
1.2%
13.4330
13.1476
13.1274
13.2454
13.1747
12.7989
12.8478
13.1209
2.7%
2.0%
0.9%
2.7%
1.6%
2.4%
-0.1%
-2.9%
CONSOLIDATED SALES
Consolidated Net Sales for 3Q’14 increased 1.3 percent to US$433 million,
from US$427 million during 3Q’13, reflecting a solid performance across
all segments in the Glass Containers business unit, except CFT, and
positive results in the Automotive segment in Flat Glass. These increases
more than offset the impact from the 0.9 percent year-over-year peso
depreciation (quarterly average), lower construction sales volumes in Flat
Glass, both to the domestic and export markets, and continued weak sales
volumes in the Cosmetics segment in Glass Containers.
Table 1 - SALES
Million of Mexican Pesos
YoY%
Total Consolidated Sales
Domestic Sales
Export Sales
Foreign Subsidiaries
Glass Containers
Domestic Sales
Export Sales
Foreign Subsidiaries
Flat Glass
Domestic Sales
Export Sales
Foreign Subsidiaries
3Q'14
3Q'13
Change
5,731
3,769
1,780
182
5,603
3,531
1,895
178
2.3
4,080
2,591
1,435
54
3,785
2,295
1,443
47
1,616
1,144
345
128
1,797
1,216
451
131
6.8
(6.1)
2.5
7.8
12.9
(0.6)
15.6
(10.1)
(5.9)
(23.6)
(2.2)
Million of US Dollars
YoY%
9M'14
9M'13
17,021
11,004
5,514
502
16,429
10,367
5,563
500
11,885
7,376
4,374
135
11,281
6,923
4,205
153
5,072
3,564
1,141
367
5,120
3,415
1,358
347
Change
3.6
6.1
(0.9)
0.5
5.4
6.5
4.0
(11.5)
(0.9)
4.4
(16.0)
5.8
YoY%
3Q'14 3Q'13 Change
433
285
134
14
427
269
144
14
308
196
108
4
289
175
110
4
122
86
26
10
137
93
34
10
1.3
5.8
(6.9)
1.6
6.8
11.8
(1.5)
14.6
(10.9)
(6.7)
(24.4)
(3.1)
YoY%
9M'14
9M'13
Change
1,295
838
420
38
1,284
810
435
39
0.9
905
562
333
10
882
541
328
12
386
271
87
28
400
267
106
27
3.4
(3.4)
(2.1)
2.6
3.7
1.3
(13.9)
(3.5)
1.7
(18.2)
3.2
Glass Containers sales increased 6.8 percent in 3Q’14 to US$308 million, from US$289 million in 3Q’13, as a result of a
solid performance across all segments, except CFT (Cosmetics, Fragrance and Toiletries). Strong sales in the Beer
segment were a major contributor to this positive performance, as well as solid sales figures in the Soft Drinks, Food and
Wine and Liquor segments. These factors offset the impact of continued lower sales volumes in the CFT segment, due to
ongoing weak industry conditions. Export sales declined 1.5 percent to US$108 million in 3Q’14, from US$110 million in
3Q’13, also affected by a soft consumer environment in the CFT segment.
Flat Glass sales declined to US$122 million in 3Q’14, from US$137 million in 3Q’13. Despite positive results in the
Automotive segment resulting from higher sales volumes to OEMs (Original Equipment Manufacturers) and the AGR
market (Automotive Glass Replacement), as well as a healthy price mix in the Construction segment, Flat Glass sales
were affected by lower sales volumes to both, domestic and export construction markets. The decline in sales volumes to
the construction market was mainly due to capacity constraints. Foreign subsidiaries’ sales remained at US$10 million for
both periods, with a slight decrease in sales volumes of the Colombian subsidiary in 3T’14.
Vitro 3Q’14 | Page 3
EBIT AND EBITDA
Despite the outstanding performance in Glass Containers and positive results in the Automotive segment in Flat Glass,
EBIT and EBITDA were affected by a 0.9 percent year-over-year peso depreciation (quarterly average), a 15.3 percent
increase in average natural gas prices (quarterly average) and lower capacity utilization in one of the float glass furnaces,
which affected fixed cost absorption and margins in the Flat Glass business unit.
Consolidated EBIT decreased 4.8 percent to US$67 million in 3Q’14, from US$71 million in 3Q’13. EBIT margin declined
100 basis points to 15.5 percent, from 16.5 percent in the same period last year. Consolidated EBITDA decreased 5.1
percent to US$100 million in 3Q’14, from US$106 million in 3Q’13, while EBITDA margin declined 160 basis points to
23.2 percent from 24.8 percent in the same period last year.
Table 2 - EBIT & EBITDA (1) (2)
Million of Mexican Pesos
YoY%
Consolidated EBIT
Margin
Glass Containers
Margin
Flat Glass
Margin
Million of US Dollars
YoY%
YoY%
3Q'14
3Q'13
Change
9M'14
3Q'14
3Q'13
Change
9M'14
894
929
(3.8)
2,449
2,425
1.0
67
71
(4.8)
186
190
15.6%
16.6%
14.4%
14.8%
-0.4 pp
15.5%
16.5%
14.4%
14.8%
-1 pp
9M'13 Change
YoY%
-1 pp
9M'13 Change
915
727
26
2,260
2,112
7
69
55
24
172
166
4
22.4%
19.2%
3.2 pp
19.0%
18.7%
0.3 pp
22.4%
19.2%
3.2 pp
19.0%
18.8%
0.2 pp
241
199
21
(0)
18
15
20
-9.7 pp
4.8%
3.9%
0.9 pp
-0.2%
-9.8 pp
4.8%
3.8%
1 pp
(2)
-0.1%
173 -9.6%
Consolidated EBITDA
1,334
1,392
Margin
23.3%
24.8%
(4.1)
-1.5 pp
3,770
3,826
22.2%
23.3%
(1.4)
-1.1 pp
13 -9.6%
100
106
23.2%
24.8%
(5.1)
-1.6 pp
287
300
22.1%
23.3%
Glass Containers
1,241
1,071
16
3,230
3,154
2
94
82
15
246
247
Margin
30.4%
28.3%
2.1 pp
27.2%
28.0%
-0.8 pp
30.4%
28.3%
2.1 pp
27.1%
28.0%
Flat Glass
Margin
(2.0)
-0.4 pp
100
284
6.2%
15.8%
(65)
-9.6 pp
(1)
EBIT and EBITDA are presented before other expenses (income)
(2)
Consolidated EBIT and EBITDA includes Corporate subsidiaries.
556
530
5
8
22
11.0%
10.3%
0.7 pp
6.1%
15.7%
(65)
-9.6 pp
(4.3)
-1.2 pp
(1)
-0.9 pp
42
41
3
11.0%
10.3%
0.7 pp
Glass Containers EBIT increased to US$69 million in 3Q’14, from US$55 million in 3Q’13 while EBITDA increased to
US$94 million, from US$82 million in the same period. EBIT and EBITDA margins rose 320 basis points and 210 basis
points to 22.4 percent and 30.4 percent, from 19.2 percent and 28.3 percent, respectively.
EBIT and EBITDA growth was primarily boosted by an outstanding performance across all Glass Containers segments,
except CFT. Strong sales volumes and price mix in the Beer and Soft Drinks segments, coupled with healthy sales
volumes in the Food segment, offset the effect of a continued weak performance in CFT, as well as the impact of a 0.9
percent year-over-year peso depreciation (quarterly average) and a 15.3 percent increase in average natural gas prices
(quarterly average).
Flat Glass EBIT resulted in a breakeven figure in 3Q’14, while EBITDA decreased to US$8 million, from US$22 million in
the same period last year. Results in Flat Glass business unit were mainly affected by lower sales in some of the markets
the Company participates in due to capacity constraints, a 0.9 percent year-over-year peso depreciation (quarterly
average) and a 15.3 percent increase in average natural gas prices. These events were partially offset by a healthy
growth in the Automotive segment and a solid price mix in Construction, despite the lower sales volumes.
Vitro 3Q’14 | Page 4
NET FINANCIAL COST
Table 3: Net Financial Cost
Million of Mexican Pesos
Million of US Dollars
YoY%
3Q'14
Net Interest Expense
Other Financial (Expenses) Income
(1)
Foreign Exchange Gain (Loss)
Total Financing Result
3Q'13
YoY%
Change
(318)
(76)
(492)
(179)
(68)
(144)
(886)
(390)
9M'14
9M'13
Change
241.3
(860)
(241)
(479)
(855)
(252)
(161)
127.0
(1,580)
(1,268)
78.2
12.0
YoY%
3Q'14
3Q'13
196.7
(24)
(6)
(37)
(13)
(5)
(10)
24.5
(66)
(29)
0.7
4.7
YoY%
Change
9M'14
9M'13
Change
268
(65)
(18)
(35)
(67)
(20)
(8)
327
132
(118)
(95)
25
78
11
2
7
(1) Includes natural gas hedgings and expenses related to debt restructuring.
During 3Q’14 the Company’s Net Financial Cost was US$66 million, compared to a Net Financial Cost of US$29 million in
3Q’13. The significant increase in Net Financial Cost was mainly driven by a higher Foreign Exchange (“FX”) Loss and an
increase in net interest expenses. FX Loss of US$37 million in the quarter reflects a 3.6 percent peso depreciation (at the
close of the quarter), compared to a lower FX Loss of US$10 million in 3Q’13, when the peso depreciated only 1.1
percent. Lower interest income during 3Q’14 also contributed to a rise in Net Interest expenses to US$24 million, from
US$13 million in 3Q’13.
TAXES
Table 4: Taxes
Million of Mexican Pesos
Million of US Dollars
YoY%
3Q'14
Accrued Income Tax
Deferred Income Tax (gain)
Total Income Tax
53
(104)
(51)
3Q'13
Change
225
(56)
169 --
76
87
YoY%
9M'14
9M'13
135
132
718
(305)
268
413
Change
81
-35
YoY%
3Q'14
3Q'13 Change
4
(8)
17
(4)
(4)
13 --
77
81
YoY%
9M'14
9M'13
10
11
57
(23)
21
33
Change
82
-38
During 3Q’14 the Company posted a lower Accrued Income Tax of US$4 million, compared to US$17 million in the same
period last year. This factor, coupled with a higher Deferred Income Tax gain of US$8 million, compared to US$4 million in
3Q’13, contributed to a Total Income Tax benefit of US$4 million during 3Q’14, compared to an expense of US$13 million
recorded in 3Q’13.
Vitro 3Q’14 | Page 5
CONSOLIDATED NET INCOME
Consolidated Net Income
(million dollars)
*
67
During 3Q’14 the Company posted a Consolidated Net
Income of US$3 million. Consisting of a US$67 million
EBIT and a US$4 million gain in taxes, Consolidated Net
Income was primarily affected by US$66 million Net
Financial Cost mainly due to a higher Foreign Exchange
Loss in 3Q’14.
2
(4)
3
Other (Income)
Expenses
Taxes
Consolidated Net
Income
66
*EBIT
Net Financial
Cost
* EBIT is presented before other expenses (income)
CONSOLIDATED FINANCIAL POSITION
Table 5: Debt Indicators
Million of US Dollars, except where indicated
3Q'14
2Q'14
1Q'14
4Q'13
3Q'13
2Q'13
1Q'13
Leverage (1)
(Total Debt / EBITDA) (Times) LTM
(Total Net Debt / EBITDA) (Times) LTM
Total Debt(3)(4)
3.7
3.0
3.6
2.9
3.6
2.9
3.6
3.1
3.6
3.0
4.0
3.2
3.3
2.6
1,241
1,257
1,258
1,262
1,252
1,405
1,173
Short-Term Debt
Long-Term Debt
299
304
109
114
191
195
187
942
953
1,149
1,149
1,061
1,209
986
Cash and Equivalents(2)
251
234
226
191
213
283
230
Total Net Debt
990
1,024
1,032
1,071
1,039
1,122
943
90 / 9
93 / 7
91 / 9
91 / 9
93 / 7
93 / 7
91 / 9
Currency Mix (%) Dlls / Pesos
(1) Financial ratio s are calculated using figures in peso s.
(2) Cash & Cash Equivalents include restricted cash co llateralizing lease co ntracts and cash o n o ur acco unts receivables financing pro grams.
(3) A cco rding to IFRS, o ur acco unts receivable securitizatio n trusts are included in the Co nso lidated Financial Statements o f Vitro and Subsidiaries.
(4) A s part o f the agreements to finalize the Co mpany’ s debt restructuring pro cess, a no te o f US$ 235 was issued o n A pril 8, 2013 by a Vitro subsidiary, increasing Net
and To tal Debt by such amo unt.
As of September 30, 2014, the Company had a cash balance of US$251 million, of which US$15 million was restricted
cash including collateralized lease contracts and cash related to Vitro’s accounts receivable financing program, compared
to a cash balance of US$234 million in the previous quarter. Unrestricted cash as of September 30, 2014 increased 7.8
percent to US$236 million, from US$219 million in the previous quarter.
Total Net Debt, which is calculated by deducting cash and cash equivalents classified in short and long term assets,
decreased by US$34 million to US$990 million at the end of 3Q’14, compared to US$1,024 million in the previous quarter,
reflecting a higher cash balance and current debt amortization during the quarter.
Vitro 3Q’14 | Page 6
Fixed Rate
Rate
Exposure
Sep.13
Floating Rate + Fixed Spead
90%
Sep.14
10%
87%
13%
Dollars
Currency
Exposure
Pesos
Sep.13
93%
7%
Sep.14
90%
9%
Banks
Sep.13
Market
32%
68%
Source
Sep.14
27%
73%
CASH FLOW
Table 6: Cash Flow from Operations Analysis (1)
Million of Mexican Pesos
Million of US Dollars
YoY%
3Q'14
EBITDA
Net Interest Paid (3)
Working Capital (2)
Cash Taxes (paid) recovered(4)
Cash Flow before Capex & Dividends
Capex (5)
1,334
(24)
(285)
(38)
987
(217)
-
Dividends
Net Free Cash Flow
771
3Q'13
Change
1,392
(4.1)
15 -(73)
(291.2)
(22)
(73.3)
1,312
(24.8)
(281)
-1,032
YoY%
9M'14
9M'13
Change
3,770
(843)
(221)
(388)
2,318
3,826
(554)
32 -(194)
3,110
(22.8)
(774)
-
(1,017)
--
(25.3)
1,544
2,093
YoY%
3Q'14
3Q'13
Change
YoY%
9M'14
9M'13
Change
100
(2)
(21)
(3)
75
106
(5.1)
1 -(6) (281.6)
(2)
(72.1)
100
(25.1)
287
(65)
(16)
(30)
176
300
(4.3)
(43)
(51.4)
3 -(16)
(89.2)
244
(27.8)
(23.9)
(16)
-
(21)
(23.7)
--
(59)
-
(80)
(26.7)
--
(26.2)
58
118
164
(1.4)
(52.3)
(99.8)
(25.5)
78
(25.5)
(28.3)
(1) This statement is a cash flow analysis and it does not represent a Cash Flow Statement according with IFRS
(2) Includes: Clients, inventories, suppliers, other current assets and liabilities including IVA (Value Added Tax)
(3) Includes interest income, natural gas hedgings and expenses related to debt restructuring
(4) Includes PSW (Profit Sharing to Workers)
(5) Includes advanced payments which under IFRS is cosidered as other long term assets.
During 3Q’14 Vitro reported a Net Free Cash Flow of US$58 million, compared to Net Free Cash Flow of US$78 million in
3Q’13. Along with an EBITDA of US$100, compared to US$106 million in 3Q’13, the decline in Net Free Cash Flow was
primarily driven by a Working Capital investment of US$21 million in 3Q’14, compared to US$6 million in 3Q’13, mainly
resulting from a decrease in accounts payable and higher other current assets, offset by a recovery in accounts
receivable.
Capital Expenditures: During 3Q’14 CapEx totaled US$16 million, compared to US$21 million in 3Q’13. Glass
Containers represented 82 percent of total CapEx, which was mainly utilized for furnace repairs, maintenance across
facilities and manufacturing of molds used in production of glass containers. Flat Glass accounted for the remaining 18
percent, utilized for furnace repairs and maintenance in Flat Glass facilities.
Vitro 3Q’14 | Page 7
KEY DEVELOPMENTS
FINANCIAL POSITION AND RESTRUCTURING PROCESS
Vitro is exploring a potential transaction involving its Food and Beverage Container business
On August 14, 2014, the Company reported its intention to explore a potential offer to sell its Food and Beverage
Container business. The Sales and EBITDA of this portion of the business represented 48 per cent and 49 per cent,
respectively, of Vitro’s consolidated results for 2013.
The potential transaction would include the operations in México, Bolivia (Vilux) and product distribution of the Business in
the United States. On the other hand, the transaction would exclude the CFT business (Vitro Cosmos), the Machinery and
Equipment business (Fabricación de Máquinas), the Chemical business (Industria del Álcali), and Vitro´s participation in
its Central American Joint Venture (Comegua) (jointly, the “excluded assets”).
The transaction would be subject to comprehensive due diligence by the purchaser, now underway, and to the negotiation
of all relevant terms and conditions, including the price. Furthermore, the transaction would need to be approved by Vitro’s
Board of Directors, as well as by an Extraordinary General Shareholders Meeting and would be subject to obtaining
antitrust and other regulatory authorizations. If the potential transaction is completed, Vitro would maintain the Excluded
Assets, as well as the businesses serving the Automotive industry and Float Glass for construction.
Vitro signs new contract with Constellation Brands
On August 14, 2014, the Company announced that it had signed a new contract with existing client Constellation Brands
to produce 7,300 million beer bottles for export, with an estimated sales value of $950 million dollars during the life of the
contract.
The contract will be in place over the next seven years and will triple Vitro’s current volume of production for the beer
market. As a result, the Company will invest approximately $100 million dollars for the construction of a new furnace at its
Monterrey plant, which will be using Vitro’s own technology, developed by its subsidiary Fabricación de Maquinas.
Operations are expected to commence within 18 months.
While the new furnace is under construction, the Company will manufacture its bottle requirements in its Toluca and
Querétaro facilities. Both sites will continue producing for Constellation Brands once the new Monterrey furnace is
installed and operational. With this new project, Vitro reaffirms its leadership in the market and strengthens the strategic
position it has built with one of the best and most extensive glass packaging production systems on the continent.
Vitro will build new glass containers facility in Brazil
On August 14, 2014, Vitro announced it will invest nearly $90 million dollars for the construction of a new plant to
manufacture glass containers in Brazil to serve the cosmetics, fragrances and specialty segments.
With this investment, the Company will strengthen its presence in the South American country with the highest per capita
consumption of cosmetics in 2013, which is also one of the two largest CFT markets in the world. An important aspect of
locating a manufacturing facility in Brazil is that Vitro will now be operating closer to an important portion of its customers
that already have significant operations in the region. To date, Vitro has been serving for many years these customers
from its facilities in Mexico.
The Company expects that the new plant, which will be built using its own technology, commences operations in the
second quarter of 2016. Meanwhile, Vitro will continue exporting to South America from its plant in Toluca. Vitro’s
manufacturing presence in Brazil will help to consolidate its position as one of the leading players in the global market for
cosmetics and fragrances. With a multi-regional presence, Vitro will be better able to serve its customers, as well as meet
market needs and requirements on a more timely basis which is an important consideration of this industry.
Vitro 3Q’14 | Page 8
OTHER KEY DEVELOPMENTS
Vitro recognized as one of the top places to work in Latin America
On July 28, 2014, the Company reported it had been recognized by the Great Place to Work Institute (GPTWI) as one of
the great places to work in Latin America and in Mexico. Also, it ranked once again in the 2014 edition of the Super
Companies list presented by Top Companies and Expansion business magazine.
Evaluations carried out by the GPTWI determined that the subsidiary Vidrio Plano de México LAN, with facilities in
Monterrey and Mexico City, and Vitro’s containers subsidiary located in Guadalajara, are now listed among the Great
Places to Work® in Mexico.
Vidrio Plano de México LAN was also recognized as one of the 30 great places to work among the largest companies in
Latin America by the same Institute. This distinction is awarded to Latin American companies which, besides ranking in
the national lists, have increased the trust of their employees in the previous five years.
The quality of the labor conditions at Vitro has been further acknowledged by the international firm Top Companies, which
also issues a Mexican ranking on Super Companies in the Expansion magazine. The Company has been part of this
exclusive group during the last 4 consecutive years.
Vitro 3Q’14 | Page 9
Investor Relations and Media Contacts:
INVESTORS
Jesus N. Medina
Vitro S.A.B. de C.V.
+ (52) 81-8863-1730
[email protected]
U.S. AGENCY
Susan Borinelli
MBS Breakstone Group
(646) 330-5907 / 452-2334
[email protected]
MEDIA
Ricardo Flores
Vitro, S.A.B. de C.V.
+ (52) 81-8863-1739
[email protected]
About Vitro
Vitro, S.A.B. de C.V. (BMV: VITROA) is the leading glass manufacturer in Mexico and one of the world’s major companies in its
industry, backed by more than 100 years of experience. Founded in 1909 in Monterrey, Mexico, the Company has subsidiaries in the
Americas, offering quality products and reliable services to meet the needs of two businesses: glass containers and flat glass.
Companies of Vitro produce, process, distribute, and market a wide range of glass articles, which are part of the daily life of thousands
of people. Vitro offers solutions for multiple markets, including food, beverage, wine, liquor, beer, cosmetic, and pharmaceutical, as well
as architectural and automotive. The Company is also a supplier of raw material, machinery, and equipment for industrial use. As a
socially responsible organization, Vitro works on several initiatives aligned to its Sustainability Model, aiming to create a positive
influence in the economic, social, and environmental aspects relevant to its stakeholders, in a responsible corporate management
framework. For more information, visit: http://www.vitro.com
Disclaimer
This announcement contains historical information, certain management’s expectations, estimates and other forward-looking information regarding Vitro,
S.A.B. de C.V. and its Subsidiaries (collectively the “Company”). While the Company believes that these management’s expectations and forward
looking statements are based on reasonable assumptions, all such statements reflect the current views of the Company with respect to future events
and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated in this report. Many factors
could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political,
governmental and business conditions worldwide and in such markets in which the Company does business, changes in interest rates, changes in
inflation rates, changes in exchange rates, the growth or reduction of the markets and segments where the Company sells its products, changes in raw
material prices, changes in energy prices, particularly gas, changes in the business strategy, and other factors. Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated or expected. The Company does not assume any obligation, to and will not update these forward-looking statements.
Use of Non-GAAP Financial Measures
A body of generally accepted accounting principles is commonly referred to as “GAAP”. A non-GAAP financial measure is generally defined as one that
purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so
adjusted in the most comparable GAAP measure. We disclose in this report certain non-GAAP financial measures, including EBITDA. EBITDA: earnings
before other income and expenses, interest, taxes plus depreciation and amortization, and provision for employee retirement obligations with impact in
the operating profit.
In managing our business we rely on EBITDA as a means of assessing our operating performance and a portion of our management’s compensation
and employee profit sharing plan is linked to EBITDA performance. We believe that EBITDA can be useful to facilitate comparisons of operating
performance between periods and with other companies because it excludes the effect of (i) depreciation and amortization, which represents a non-cash
charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange
rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax and statutory employee profit sharing, which is
similar to a tax on income and (iv) other expenses or income not related to the operation of the business. EBITDA is also a useful basis of comparing our
results with those of other companies because it presents operating results on a basis unaffected by capital structure and taxes.
We also calculate EBITDA in connection with covenants related to some of our financings. We believe that EBITDA enhances the understanding of our
financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness as well as to fund capital expenditures
and working capital requirements. EBITDA is not a measure of financial performance under IFRS. EBITDA should not be considered as an alternate
measure of net income or operating income, as determined on a consolidated basis using amounts derived from statements of operations prepared in
accordance with IFRS, as an indicator of operating performance or as cash flows from operating activity or as a measure of liquidity. EBITDA has
material limitations that impair its value as a measure of a company’s overall profitability since it does not address certain ongoing costs of our business
that could significantly affect profitability such as financial expenses and income taxes, depreciation, pension plan reserves or capital expenditures and
associated charges.
**To fully comply with the Mexican Stock Exchange Regulation, art. 4.033.01 Section VIII, the Company informs that currently the following Brokerage or
Credit Institutions provide analysis coverage to our securities: GBM Grupo Bursátil Mexicano, S.A. de C.V., Casa de Bolsa.
Vitro 3Q’14 | Page 10
CONSOLIDATED
VITRO, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS, (MILLION)
Third Quarter
INCOME STATEMENT
9M
Nom inal Pesos
2014
2013
Nom inal Dollars
% Var.
2014
2013
2.3
433
427
Consolidated Net Sales
5,731
5,603
Cost of Sales
4,085
3,836
6.5
309
Gross Incom e
1,646
1,767
(6.9)
124
SG&A Expenses
752
838
(10.3)
Operating Incom e
894
929
(3.8)
28
4
866
925
0
2
Other Expenses (Income), net
Operating incom e after other
expenses (incom e), net
Share in earnings (loss) of unconsolidated
associated companies
Nom inal Pesos
% Var.
2014
2013
Nom inal Dollars
% Var.
2014
2013
% Var.
1.3
17,021
16,429
293
5.5
12,245
135
(7.8)
4,776
57
64
(11.1)
67
71
(4.8)
2
0
(6.4)
65
70
(7.4)
2,416
2,446
(1.2)
184
192
(4.3)
(84.0)
0
0
(83.4)
16
4
355.7
1
0
304.9
1,014
1,040
579.8
575.6
3.6
1,295
1,284
11,301
8.4
932
883
5.6
5,129
(6.9)
363
401
(9.5)
2,327
2,703
(13.9)
177
211
(16.2)
2,449
2,425
1.0
186
190
(2.0)
33
(21)
--
3
(2)
0.9
--
Interest Expense
349
334
4.6
26
25
3.7
(2.5)
77
81
(5.1)
Interest (Income)
(31)
(155)
(79.9)
(2)
(12)
(80.3)
(153)
(186)
(17.4)
(12)
(14)
(17.8)
76
68
12.0
6
5
10.6
241
252
(4.7)
18
20
(6.9)
Foreign Exchange Loss (Income)
492
144
241.3
37
10
267.5
479
161
196.7
35
8
327.2
Net financial cost
886
390
127.0
66
29
132.0
1,580
1,268
24.5
118
95
25.0
Incom e (loss) before Tax
(19)
537
--
(1)
42
--
853
1,181
(27.7)
67
98
(31.7)
Income Tax
(51)
169
--
(4)
13
--
268
413
(35.3)
21
33
(37.5)
32
368
3
29
(91.0)
586
767
(23.7)
46
64
(28.6)
(1)
396
--
0
31
(99.6)
546
769
(29.0)
43
64
(33.4)
33
(27)
--
2
(2)
3
0
Other Financial Expenses, net
Net incom e (loss)
Net Income (loss) attributable to controlling
interest
Net Income (loss) attributable to
noncontrolling interest
Vitro 3Q’14 | Page 11
(91.3)
--
40
(2)
--
6,252.1
CONSOLIDATED
VITRO, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL POSITION
As of September
N o m ina l P e s o s
FINANCIAL POSITION
3Q'14
3Q'13
Cash & Cash Equivalents
3,169
2,429
Trade Receivables
3,225
Inventories
Other Current Assets
Assets held for sale
Total Current Assets
Property, Plant & Equipment
N o m ina l D o lla rs
% Var.
3Q'14
3Q'13
30.5
236
184
28.0
3,158
2.1
240
240
0.2
3,333
3,511
(5.1)
248
266
(6.9)
1,156
1,082
6.8
86
82
4.8
35
220
(84.2)
3
17
(84.5)
10,919
10,401
813
789
3.0
5.0
FINANCIAL INDICATORS(1)
% Var.
3Q'14
3Q'13
Debt/EBITDA (LTM, times)
3.7
3.6
EBITDA/ Interest. Exp. (LTM, times)
3.8
3.9
Debt / (Debt + Equity) (times)
0.7
0.7
Debt/Equity (times)
1.9
2.5
Total Liab./Stockh. Equity (times)
3.0
4.3
Curr. Assets/Curr. Liab. (times)
1.3
1.2
14,123
14,333
(1.5)
1,054
1,090
(3.3)
Sales (LTM)/Assets (times)
0.6
0.6
7,749
8,057
(3.8)
577
612
(5.7)
EPS (Ps$) (YTD)*
1.2
2.1
Other Long-Term Assets
679
992
(31.6)
51
75
(32.9)
Investment in Affiliates (2)
70
77
Deferred Assets
939
1,016
Total Non Current Assets
23,490
24,398
(3.7)
1,752
1,854
(5.5)
Total Assets
34,409
34,799
(1.1)
2,564
2,644
(3.0)
Short-Term & Current Debt
4,015
2,520
59.3
299
191
56.3
Trade Payables
1,361
1,265
7.6
101
96
5.6
Other Current Liabilities
2,990
4,883
(38.8)
223
371
(40.0)
Total Current Liabilities
8,366
8,668
(3.5)
623
658
(5.3)
12,649
13,981
(9.5)
942
1,061
(11.3)
780
1,354
(42.4)
58
103
(43.5)
Long-Term Debt
Employee benefits
(7.6)
(9.4)
Other LT Liabilities
Total Non Current
Liabilities
3,944
4,225
(6.6)
294
321
(8.4)
17,374
19,559
(11.2)
1,293
1,485
(12.9)
Total Liabilities
25,740
28,228
(8.8)
1,916
2,143
(10.6)
Controlling interest
7,416
5,280
40.5
555
403
Noncontroliing interest
1,253
1,292
(3.0)
93
98
(4.9)
Total Shareholders Equity
8,669
6,572
31.9
648
501
29.4
(1) Financial ratio s are calculated using figures in peso s.
(2) Investment in A ffiliates includes 49.7% participatio n in Co megua under the equity metho d.
Vitro 3Q’14 | Page 12
37.7
* Based on w eighted average outstanding shares year to date
OTHER INFORMATION
3Q'14
3Q'13
# Shares Issued (thousands)
483,571
483,571
# Weighted Average Shares Outstanding (thousands)
458,749
367,132
16,278
15,730
# Employees
VITRO, S.A.B. DE C.V. AND SUBSIDIARIES
SEGMENTED INFORMATION
FOR THE FOLLOWING PERIODS, (MILLION)
Third Quarter
GLASS CONTAINERS
Net Sales
Intercompany Sales
Net Sales to third parties
EBIT (4)
Margin (1)
EBITDA (4)
Margin (1)
9M
Nom inal Pesos
2014
2013
%
Nom inal Dollars
2014
2013
%
4,080
5
4,075
915
22.4%
1,241
30.4%
308
0
308
69
22.4%
94
30.4%
3,785
7.8%
5 -8.1%
3,780
7.8%
727 25.9%
19.2%
1,071 15.9%
28.3%
289
6.8%
0 -9.1%
288
6.8%
55 24.4%
19.2%
82 14.7%
28.3%
Nom inal Pesos
2014
2013
%
11,885
17
11,868
2,260
19.0%
3,230
27.2%
11,281
5.4%
81 -79.1%
11,200
6.0%
2,112
7.0%
18.7%
3,154
2.4%
28.0%
Glass containers volum es (MM Pieces)
Domestic
1,054
959
Exports
380
391
Total:Dom.+Exp.
1,434
1,349
10.0%
-2.8%
6.3%
3,046
1,138
4,184
2,956
1,145
4,102
3.0%
-0.6%
2.0%
Soda Ash (Thousand Tons)
461
483
-4.5%
FLAT GLASS
Net Sales
Intercompany Sales
Net Sales to third parties
EBIT (4)
Margin (1)
EBITDA (4)
Margin (1)
147
158
-6.9%
1,616
4
1,612
(2)
-0.1%
100
6.2%
1,797
0
1,797
173
9.6%
284
15.8%
-10.1%
######
-10.3%
--
Flat Glass Volum es (Thousand m 2R) (2)
Const + Auto
26,843 35,601
CONSOLIDATED (3)
Net Sales
Intercompany Sales
Net Sales to third parties
EBIT (4)
Margin (1)
EBITDA (4)
Margin (1)
-64.6%
122
0
122
(0)
-0.2%
8
6.1%
-24.6%
5,731
5,603
2.3%
433
-5,731
5,603
2.3%
433
894
929 -3.8%
67
15.6% 16.6%
15.5%
1,334
1,392 -4.1%
100
23.3% 24.8%
23.2%
(1)
EBIT and EBITDA Margins consider Consolidated Net Sales.
(2)
m2R = Reduced Squared Meters
(3)
Includes corporate companies and other's sales and EBIT.
(4)
EBIT and EBITDA are presented before other expenses (income) effect
Vitro 3Q’14 | Page 13
137 -10.9%
(0)
-137 -11.1%
13
-9.6%
22 -65.2%
15.7%
5,072
7
5,065
241
4.8%
556
11.0%
88,032
427
427
71
16.5%
106
24.8%
1.3%
-1.3%
-4.8%
-5.1%
17,021
17,021
2,449
14.4%
3,770
22.2%
5,120 -0.9%
0 ######
5,120 -1.1%
199 21.4%
3.9%
530
4.9%
10.3%
101,687
16,429
16,429
2,425
14.8%
3,826
23.3%
Nom inal Dollars
2014
2013
%
905
1
903
172
19.0%
246
27.1%
882
2.6%
6 -80.2%
876
3.2%
166
3.7%
18.8%
247 -0.6%
28.0%
386
1
385
18
4.8%
42
11.0%
400 -3.5%
(0)
-400 -3.6%
15 20.1%
3.8%
41
2.6%
10.3%
1,295
1,295
186
14.4%
287
22.1%
1,284
1,284
190
14.8%
300
23.3%
-13.4%
3.6%
3.6%
1.0%
-1.4%
0.9%
0.9%
-2.0%
-4.3%