6-K 1 gcs_1q10.htm GCS 1Q10 EARNINGS RELEASE

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).

    • Net sales for the quarter rose 4.01% to reach $7,724.08 million
    • Gross income increased 6.49% compared to the same period of 2009
    • The gross margin for the quarter was 11.44%
    • Quarterly operating expenses as a percentage of sales were 7.30%, 22 b.p. lower than reported during the first quarter of 2009
    • Operating income increased 17.96% versus 1Q09
    • The operating margin for the quarter was 4.14%
    • The CCF for the quarter decreased 12.26% compared to the first quarter of the previous year
    • Tax provisions were 54.62% lower than in 1Q09
    • Net profit for the quarter was $247.46 million, an increase of 37.52%
    • Cash and cash equivalents at the end of the quarter was $501.51 million

    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

    NET SALES

    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

     
             
 
GRUPO CASA SABA S.A.B. DE C.V. AND SUBSIDIARIES  
  CONSOLIDATED BALANCE SHEET  
     
  In thousands of Mexican pesos as of March 2010  
             
             
  I T E M March 10 March 09 Change  
             
             
  TOTAL ASSETS
15,516,695
13,622,869
1,893,827
 
     
 
 
 
  
  CURRENT ASSETS
12,372,790
10,660,172
1,712,618
 
  CASH AND CASH EQUIVALENTS
501,513
120,767
380,746
  
  ACCOUNTS RECEIVABLE (NET)
6,266,099
5,793,961
472,138
 
  OTHER ACCOUNTS RECEIVABLE (NET)
1,387,871
525,339
862,532
 
  INVENTORIES
4,117,365
4,094,946
22,418
 
  OTHER CURRENT ASSETS
99,943
125,158
(25,215)
  
   
 
  NET PROPERY, PLANT AND EQUIPMENT
1,314,405
1,367,311
(52,906)
 
  PROPERTY
1,359,450
1,354,415
5,036
 
  MACHINERY AND EQUIPMENT
460,364
505,990
(45,626)
 
  OTHER EQUIPMENT
671,969
650,409
21,560
 
  ACCUMULATED DEPRECIATION
1,177,378
1,143,502
33,876
 
   
 
  DEFERRED ASSETS (NET)
1,619,842
1,305,125
314,717
 
  OTHER ASSETS
209,658
290,261
(80,602)
  
     
 
 
 
  
  TOTAL LIABILITIES
7,931,755
7,068,168
863,587
 
     
 
  CURRENT LIABILITIES
6,668,553
5,462,326
1,206,227
 
  ACCOUNTS PAYABLE
4,574,562
4,090,648
483,914
 
  BANK DEBT
1,638,413
845,451
792,962
 
  OTHER CURRENT LIABILITIES
455,578
526,227
(70,649)
  
  LONG TERM LIABILITIES
841,177
1,118,000
(276,823)
 
  BANK DEBT
841,177
1,118,000
(276,823)
 
   
 
  OTHER LIABILITIES
422,025
487,842
(65,817)
  
     
 
 
 
  
  SHAREHOLDER'S EQUITY
7,584,940
6,554,701
1,030,239
 
     
 
 
 
  
  PAID-IN CAPITAL
1,992,326
1,992,326
-
  
  CAPITAL STOCK
167,903
167,903
-
  
  RESTATEMENT IN CAPITAL STOCK
955,862
955,862
-
  
  PREMIUM ON STOCK SOLD
868,561
868,561
-
  
  CAPITAL INCREASE (DECREASE)
5,592,615
4,562,375
1,030,239
 
  CUMMULATIVE RESULTS AND EQUITY RESERVE
6,234,346
6,057,256
177,090
 
  RESERVE FOR SHARES REPURCHASE
1,063,517
1,063,517
-
  
  OVERAGE (DEFICIT) ON RESTATEMENT ON STOCKHOLDER'S EQUITY
(1,952,711)
(2,738,339)
785,629
  
  NET INCOME  
247,463
179,941
67,521
  
             
GRUPO CASA SABA, S.A.B. DE C.V.
             
Figures are expressed in thousands of Mexican pesos as of March 2010
  Jan-Mar   Jan-Mar   Variation 
Income Statement 2009 % of sales 2010 % of sales $ %
NET SALES
7,426,300
100.00%
7,724,080
100.00%
297,780
4.01%
COST OF SALES
6,596,656
88.83%
6,840,615
88.56%
243,959
3.70%
Gross Profit
829,644
11.17%
883,464
11.44%
53,820
6.49%
Operating Expenses
Sales Expenses
220,166
2.96%
218,995
2.84%
-1,172
(0.53%)
Administrative Expenses
338,423
4.56%
344,723
4.46%
6,301
1.86%
OPERATING EXPENSES
558,589
7.52%
563,718
7.30%
5,129
0.92%
 
Operating Income
271,055
3.65%
319,746
4.14%
48,691
17.96%
COMPREHENSIVE COST OF FINANCING
Interest Paid
61,622
0.83%
57,286
0.74%
-4,335
(7.04%)
Interest (Earned)
-1,234
(0.02%)
-1,873
(0.02%)
-640
51.88%
Exchange Loss (Gain)
2,205
0.03%
-492
(0.01%)
-2,697
(122.33%)
Monetary Position (gain)
0
0.00%
0
0.00%
0
0.00%
Comprehensive Cost of Financing
62,593
0.84%
54,920
0.71%
-7,672
(12.26%)
 
OTHER EXPENSES (INCOME), net
-25,093
(0.34%)
-6,967
(0.09%)
18,126
(72.23%)
 
 
 
NET INCOME BEFORE TAXES
233,556
3.14%
271,793
3.52%
38,283
16.37%
 
PROVISIONS FOR:
Income Tax
53,614
0.72%
24,331
0.31%
-29,283
(54.62%)
Asset Tax
0
0.00%
0
0.00%
0
0.00%
Deferred Income Tax
0
0.00%
0
0.00%
0
0.00%
Profit sharing due
0
0.00%
0
0.00%
0
0.00%
Deferred Profit sharing due
0
0.00%
0
0.00%
0
0.00%
Total taxes
53,614
0.72%
24,331
0.31%
-29,283
(54.62%)
 
Net Income Before Extraordinary Items
179,941
2.42%
247,463
3.20%
67,521
37.52%
 
Extraordinary Items (Income)
0
0.00%
0
0.00%
0
0.00%
Net Income
179,941
2.42%
247,463
3.20%
67,521
37.52%
 
 
Depreciation and Amortization
19,284
0.26%
19,374
0.25%
89
0.46%
Operating income plus Depreciation and Amortization
290,340
3.91%
339,120
4.39%
48,780
16.80%