6-K 1 gcs_2q09.htm 2Q09 EARNINGS RESULTS

Quarterly Earnings Report                                                                                   July 27, 2009
2Q09

Sales and Operating Income Increased 8.90% and 2.75%, Respectively


Financial Highlights:
(All figures are expressed in millions of Mexican pesos of purchasing power as of June 2009. Comparisons are made with the same period of 2008, unless otherwise stated. Figures may vary due to rounding practices).

    • Sales for the quarter totaled $7,579.09 million, an increase of 8.90%
    • Gross income rose 12.42% to reach $832.64 million
    • The gross margin for the quarter grew to 10.99% compared to 10.64% in 2Q08
    • Quarterly operating expenses as a percentage of sales were 7.73%
    • Operating income increased 2.75% versus 2Q08
    • The operating margin for the quarter was 3.26%
    • Operating income plus depreciation and amortization for the period was $269.88 million, an increase of 4.17% versus 2Q08
    • Net profit for the quarter was $147.03 million
    • Cash and cash equivalents at the end of the quarter was $199.15 million

    Mexico City, Mexico, July 27, 2009. 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 second quarter of 2009.


    QUARTERLY EARNINGS

    NET SALES

    During the second quarter of 2009, GCS’s sales were $7,579.09 million, an increase of 8.90%.


    SALES BY DIVISION


    PRIVATE PHARMA

    Sales in our Private Pharma division rose 10.85% during the second quarter of 2009, as a result of the consolidation of investments that were made within the sector. This includes the acquisition of Drogasmil Medicamento e Perfumeria, S.A., in Brazil in May 2008 as well as the growth in our retail sales division in Mexico.  In addition our commercial strategies also had a positive effect on our sales.
     
    Sales for this division reached $6,457.01 million versus $5,825.07 million in 2Q08 and represented 85.20% of the Group’s total sales    .

     

    GOVERNMENT PHARMA

    Sales in our Government Pharma division increased 5.63% to $288.41 million compared to $273.04 million in the second quarter of 2008.  This was mainly due to an increase in our participation in the bidding processes of the Instituto Mexicano del Seguro Social (IMSS), the Instituto de Seguridad Social del Estado de México y Municipios (ISSEMYM) and the National Center for the Prevention and Control of HIV/AIDS (CENSIDA by its Spanish acronym).

    As a percentage of total sales, this division went from representing 3.92% in 2Q08 to 3.81% during the second quarter of 2009.

     

    HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHER

    Sales in our Health, Beauty, Consumer Goods, General Merchandise and Other division reached $653.26 million, an increase of 1.93% versus the $640.89 million registered during the second quarter of 2008. This was due to commercial agreements that enabled us to increase promotions and discounts which, in turn, increased our sales.

    This division represented 8.61% of GCS’s total sales in 2Q09, a decrease compared to the same period of the previous year when it accounted for 9.21%.  This decline was due to the significant increase in the participation of the Private Pharma division as a percentage of total sales.

     

    PUBLICATIONS

    Publication sales decreased 18.15% during the quarter, primarily as a result of lower unit sales.  This decrease in units was mainly due to the fact that Citem stopped distributing some publications that no longer met our minimal profitability requirements.

    This division’s participation as a percentage of total sales went from 3.17% in 2Q08 to 2.38% in the second quarter of 2009.

     

    There were marginal changes in the sales mix during the quarter. Private Pharma sales represented 85.20% of total sales (compared to 83.70% during the second quarter of 2008), while Government Pharma accounted for 3.81% (versus 3.92% during the second quarter of 2008). Health, Beauty, Consumer Goods, General Merchandise and Other represented 8.61% (compared to 9.21% in the second quarter of 2008) and Publications made up the remaining 2.38% (versus 3.17% during the second quarter of 2008).


                                                                      Division                               % of sales
                                                  Private Pharma                             85.20%
                                              Government Pharma                          3.81%
                                    Health, Beauty, Consumer Goods,
                                      General Merchandise and Other                  8.61%
                                                    Publications                                2.38%

                                                       TOTAL                                   100.00%


    GROSS INCOME

    During the second quarter of the year, Grupo Casa Saba’s gross income increased 12.42% versus the same period of the previous year to reach $832.64 million. The company’s gross margin improved 0.35%, from 10.64% in 2Q08 to 10.99% during the current period.  This was the result of the higher sales derived from recent investments in our Private Pharma division.


    OPERATING EXPENSES

    Operating expenses reached $585.52 million, an increase of 17.07% compared to the second quarter of 2008.  This was due to the investments that were made in the Private Pharma division.  Operating expenses represented 7.73% of our total sales in 2Q09 compared to 7.19% during the same period of the previous year. 


    OPERATING INCOME

    Operating income increased 2.75%, as a result of the growth in sales which offset the increase in operating expenses.  The operating margin was 3.26%, 0.20% lower than the 3.46% margin registered in the second quarter of 2008. 

     

    OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION

    Operating income plus depreciation and amortization for 2Q09 was $269.88 million, an increase of 4.17% compared to the second quarter of 2008.  Depreciation and amortization for the period was $22.76 million, 22.51% higher than in the second quarter of 2008.

     

    CASH AND CASH EQUIVALENTS

    Cash and cash equivalents at the end of the second quarter of 2009 was $199.15 million.


    COMPREHENSIVE COST OF FINANCING

    During the period, GCS’s comprehensive cost of financing (CCF) rose to $58.63 million. This was primarily due to an increase in the amount of interest income paid.

    These interest payments are related to the long-term credit that was obtained as a result of the acquisition in Brazil as well as the interest that was generated from the utilization of short-term credits for our operations in both Mexico and Brazil.

    .

    OTHER EXPENSES (INCOME)

    During the second quarter of 2009, the Company registered an income of $2.26 million in other expenses (income). 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 second quarter, tax provisions rose to $43.72 million, $55.04 million of which were related to income tax payments and ($11.32) million were attributed to deferred income tax. 


    NET INCOME

    GCS’s net income for the second quarter was $147.03 million, a decrease of 30.02% compared to the second quarter of 2008.

    The net margin for the period was 1.94%, a decline from the 3.02% net margin registered during the second quarter of 2008.

     

    WORKING CAPITAL

    During the second quarter of 2009, our accounts receivable days increased by 7.2 days from 2Q08 to reach 67.8 days.  In addition, our accounts payable days rose by 4.0 days versus 2Q08, to reach 52.0 days.  Finally, our inventory days were 55.0 days, an increase of 1.1 days compared to 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 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 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:
    Patrik Zielinski                                               Jesús Martínez Rojas
    +52 (55) 5284-6623                                       +52 (55) 5644-1247
    pzielinski@casasaba.com                              jesus@irandpr.com

    Sandra Yatsko                                              
    +52 (55) 5284-6698                                       
    syatsko@casasaba.com
             
 
GRUPO CASA SABA S.A.B. DE C.V. AND SUBSIDIARIES  
  CONSOLIDATED BALANCE SHEET  
     
  In thousands of Mexican Pesos as of June 2009  
             
             
  I T E M June 09 June 08 Variation  
             
             
  TOTAL ASSETS
13,772,511
11,843,043
1,929,468
 
     
 
 
 
  
  CURRENT ASSETS
10,793,644
9,352,930
1,440,714
 
  CASH AND CASH EQUIVALENTS
199,154
315,426
(116,271)
  
  ACCOUNTS RECEIVABLE (NET)
5,710,606
4,686,617
1,023,989
 
  INTERCOMPANY
-
  
  OTHER ACCOUNTS RECEIVABLE (NET)
636,270
484,135
152,135
 
  INVENTORIES
4,121,181
3,726,718
394,463
 
  OTHER CURRENT ASSETS
126,432
140,035
(13,602)
  
  LONG TERM
 
 
-
  
  ACCOUNTS RECEIVABLE
-
  
  INVESTMENTS IN EQUITY SHARES AND
-
  
  UNCONSOLIDATED SUBSIDIARIES
-
-
-
  
  OTHER INVESTMENTS
-
  
  NET PROPERY, PLANT AND EQUIPMENT
1,357,001
1,283,670
73,330
 
  PROPERTY
1,355,491
1,318,796
36,695
 
  MACHINERY AND EQUIPMENT
494,165
471,993
22,172
 
  OTHER EQUIPMENT
662,793
612,843
49,950
 
  ACCUMULATED DEPRECIATION
1,155,448
1,119,962
35,486
 
  BUILDINGS IN PROCESS
-
-
-
  
  DEFERRED ASSETS (NET)
1,321,157
770,949
550,207
 
  OTHER ASSETS
300,709
435,494
(134,784)
  
     
 
 
 
  
  TOTAL LIABILITIES
6,708,576
5,463,788
1,244,787
 
     
 
  CURRENT LIABILITIES
5,129,581
4,270,540
859,041
 
  ACCOUNTS PAYABLE
3,911,710
3,348,109
563,601
 
  BANK DEBT
1,047,614
573,174
474,440
 
  DEBT SECURITIES
-
-
-
  
  ACCRUED TAXES
10,149
(10,149)
  
  OTHER CURRENT LIABILITIES
170,257
339,108
(168,851)
  
  LONG TERM LIABILITIES
1,102,472
670,000
432,472
 
  BANK DEBT
1,102,472
670,000
432,472
 
  DEBT SECURITIES
-
  
  OTHER DEBT
-
  
  DEFERRED LIABILITIES
-
  
  OTHER LIABILITIES
476,522
523,248
(46,726)
  
     
 
 
 
  
  SHAREHOLDER'S EQUITY
7,063,935
6,379,254
684,681
 
     
 
 
 
  
  MINORITY STOCKHOLDER'S EQUITY
-
-
-
  
  MAJORITY STOCKHOLDER'S EQUITY
7,063,935
6,379,254
684,681
 
  PAID-IN CAPITAL
1,993,875
1,993,875
-
  
  CAPITAL STOCK
167,903
167,903
-
  
  RESTATEMENT IN CAPITAL STOCK
956,094
956,094
-
  
  PREMIUM ON STOCK SOLD
869,878
869,878
-
  
  RESERVE FOR RESTATEMENT ON SHAREHOLDER'S EQUITY
-
-
-
  
  CAPITAL INCREASE (DECREASE)
5,070,060
4,385,379
684,681
 
  CUMMULATIVE RESULTS AND EQUITY RESERVE
6,318,361
5,582,095
736,266
 
  RESERVE FOR SHARES REPURCHASE
1,062,200
1,062,200
-
  
  OVERAGE (DEFICIT) ON RESTATEMENT ON STOCKHOLDER'S EQUITY
(2,639,077)
(2,660,625)
21,547
 
  NET INCOME
328,577
401,709
(73,132)
  
             
             

 

 

GRUPO CASA SABA, S.A.B. DE C.V.
Figures are expressed in thousands of Mexican pesos as of June 2009
 
 
 
Jan-June
Jan-June
Variation
Apr - June
Apr - June
Variation
Income Statement
2008
% of sales
2009
% of sales
$
%
2008
% of sales
2009
% of sales
$
%
NET SALES
13,893,449
100.00%
15,005,389
100.00%
1,111,940
8.00%
6,959,418
100.00%
7,579,089
100.00%
619,671
8.90%
COST OF SALES
12,498,720
89.96%
13,343,111
88.92%
844,390
6.76%
6,218,780
89.36%
6,746,455
89.01%
527,674
8.49%
Gross Profit
1,394,729
10.04%
1,662,279
11.08%
267,550
19.18%
740,638
10.64%
832,635
10.99%
91,997
12.42%
Operating Expenses
Sales Expenses
338,816
2.44%
453,422
3.02%
114,606
33.83%
185,510
2.67%
234,861
3.10%
49,351
26.60%
Administrative Expenses
555,458
4.00%
689,076
4.59%
133,618
24.06%
314,627
4.52%
350,654
4.63%
36,026
11.45%
OPERATING EXPENSES
894,274
6.44%
1,142,499
7.61%
248,224
27.76%
500,137
7.19%
585,515
7.73%
85,377
17.07%
 
Operating Income
500,454
3.60%
519,780
3.46%
19,326
3.86%
240,500
3.46%
247,120
3.26%
6,619
2.75%
COMPREHENSIVE COST OF FINANCING
Interest Paid
53,621
0.39%
121,685
0.81%
68,064
126.93%
47,114
0.68%
60,064
0.79%
12,949
27.49%
Interest (Earned)
-1,443
(0.01%)
-2,572
(0.02%)
-1,129
78.22%
-908
(0.01%)
-1,339
(0.02%)
-430
47.38%
Exchange Loss (Gain)
1,279
0.01%
2,110
0.01%
831
65.02%
1,457
0.02%
-95
(0.00%)
-1,551
n.c
Monetary Position (gain)
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Comprehensive Cost of Financing
53,457
0.38%
121,223
0.81%
67,767
126.77%
47,663
0.68%
58,630
0.77%
10,968
23.01%
 
OTHER EXPENSES (INCOME), net
-23,660
(0.17%)
-27,355
(0.18%)
-3,695
15.62%
-21,166
(0.30%)
-2,262
(0.03%)
18,904
(89.31%)
 
 
 
NET INCOME BEFORE TAXES
470,658
3.39%
425,912
2.84%
-44,746
(9.51%)
214,004
3.08%
190,752
2.52%
-23,253
(10.87%)
 
PROVISIONS FOR:
Income Tax
140,276
1.01%
108,655
0.72%
-31,621
(22.54%)
39,576
0.57%
55,041
0.73%
15,465
39.08%
Asset Tax
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Deferred Income Tax
-71,327
(0.51%)
-11,320
(0.08%)
60,007
(84.13%)
-35,664
(0.51%)
-11,320
(0.15%)
24,344
(68.26%)
Profit sharing due
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Deferred Profit sharing due
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Total taxes
68,950
0.50%
97,335
0.65%
28,386
41.17%
3,913
0.06%
43,721
0.58%
39,809
1017.47%
 
Net Income Before Extraordinary Items
401,709
2.89%
328,577
2.19%
-73,132
(18.21%)
210,092
3.02%
147,030
1.94%
-63,061
(30.02%)
 
Extraordinary Items (Income)
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
0
0.00%
Net Income
401,709
2.89%
328,577
2.19%
-73,132
-18.21%
210,092
3.02%
147,030
1.94%
-63,061
-30.02%
 
 
Depreciation and Amortization
35,498
0.26%
42,046
0.28%
6,548
18.45%
18,579
0.27%
22,761
0.30%
4,183
22.51%
Operating income plus Depreciation and Amortization
535,952
3.86%
561,826
3.74%
25,874
4.83%
259,079
3.72%
269,881
3.56%
10,802
4.17%
 
Minority Interest
 
 
3,771
0.03%
3,771
0.00%
 
 
2,332
0.03%
2,332
0.00%