-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SXUW2Gc4+/vkC9+Pq8tq2981IKnm4pHkBoVgsmcgD+kSx5B9w/+12UDH6Pd+Xvj8 n3lmSmjaKobZCIxTCOu98w== 0000925262-03-000010.txt : 20030729 0000925262-03-000010.hdr.sgml : 20030729 20030728195202 ACCESSION NUMBER: 0000925262-03-000010 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORPORACION DURANGO SA DE CV/ CENTRAL INDEX KEY: 0000925262 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD MILLS [2631] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13148 FILM NUMBER: 03807003 BUSINESS ADDRESS: STREET 1: POTASIO 150 CIUDAD INDUSTRIAL CITY: DURANGO DURANGO MEXI STATE: O5 MAIL ADDRESS: STREET 1: POTASIO 150 CIUDAD INDUSTRIAL DURANGO CITY: DURANGO MEXICO STATE: O5 ZIP: 00000 6-K 1 cd2q2003.txt CORPORACION DURANGO 2ND QUARTER 2003 RESULTS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of July 28, 2003 Durango Corporation (f/k/a Grupo Industrial Durango, S.A. de C.V.) - ------------------------------------------------------------------- (Translation of registrant's name into English) Torre Corporativa Durango, Potasio 150, Cuidad Industrial, Durango, Durango, Mexico - ------------------------------------------------------------------- (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F [x] Form 40-F Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No [x] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____________. SECOND QUARTER 2003 RESULTS Durango, Mexico, July 28, 2003 - Corporacion Durango, S.A. de C.V., (NYSE: CDG, BMV: CODUSA) ("Durango" or the "Company"), the largest integrated paper producer in Mexico, today announced its unaudited consolidated results for the second quarter ended June 30, 2003. All figures were prepared in accordance with Mexican generally accepted accounting principles and are stated in constant Mexican pesos as of June 30, 2003 and converted into U.S. dollars using the exchange rate at the end of the period. All comparative figures for the second quarter of 2002 were prepared on a pro-forma basis after excluding the results of the Georgia mill operations. BUSINESS ENVIRONMENT A weak economy undermined the performance of the world pulp and paper industry. US paper companies struggled through a difficult second quarter, burdened with still high energy and fiber costs, prices declines, and lower volumes. With three years of contracting demand, surging imports, closures, cost-cutting, de-leveraging and remarkable supply management behind them, most industry analysts wonder themselves,what more can industry managements and their capital partners do to improve industry returns. In Mexico, circumstances were even worse for paper producers like Durango due to a sharp decline in manufacturing activity and a corresponding decrease of advertising lineage in daily newspapers, as well as the fact that energy costs increased 40% higher than in the US as a result of an inefficient and costly Government operated energy monopoly. Durango was also greatly affected by higher recycled fiber costs -both imported and domestic, the very negative impact of a strong Mexican peso, a continuing flood of foreign paper imports, a restrictive banking system aggravating liquidity problems among its customers and the Mexican economy continuing to lag a very sluggish US economic recovery. Finally, Mexico's current political stalemate and the failure to adopt needed structural reforms seem to have hampered the government's capacity to maneuver, forcing it to rely almost exclusively on the volatility of oil pricing and on the potential recovery of the US economy. COMPANY'S PERFORMANCE "While we continue to be very disappointed by external business conditions,we are pleased with what we have accomplished under the circumstances. Notwithstanding a lackluster economy, our earnings improved from the first quarter of 2003. This has been accomplished with our strong manufacturing operations, better product mix and administrative costs controls", said Miguel Rincon, Chairman and CEO. "During this period, the Company was able to increase shipments while maintaining pricing levels in a very difficult economic and business environment, thus, increasing our EBITDA by 12%", added Rincon. Although they have improved from the first quarter, the Company's results for the 2Q continued to reflect challenging business conditions in Mexico, which have been even more critical than those of the U.S. The Company's EBITDA in the 2Q'03 was $18.0 million, well below the $ 41.7 million achieved in the 2Q'02. The decline of $23.7 million in earnings was primarily attributable to $8.5 million from 5% lower pricing, $14.2 million from higher unit production costs (energy, fibers and chemicals), and $ 1.1 million in SG&A expenses (reorganization costs). 3Q03 OUTLOOK Commenting on the third-quarter outlook, Rincon said, "We anticipate a very tough external environment and a strongly competitive environment in Mexico based on a stronger peso. We expect flat demand, pricing and energy cost, with a moderated improvement in costs of raw materials. Some pickup in volume and easing of unit costs should lead to modestly stronger results in the 3Q'03. Looking ahead, we expect to see continuing improvement in several of our businesses. Obviously, much depends on the US economy and the resulting impact on Mexico. Dynamics for a broader economic recovery seem to be emerging, but the timing still remains unclear. Durango is focused on managing operations with our run-to-demand strategy and wringing out additional cost savings to maximize our results", Rincon concluded. FINANCIAL RESTRUCTURING "The Company continues negotiations with its creditors with a view towards achieve an effective and sustainable restructuring that will recognize the new economic, industry and complex business environment in Mexico. The restructuring of Durango enable it to surge ahead as a world class company not only on the operating side, which it currently is, but also on the financial side, for the benefit of all its stakeholders. It has become obvious for the Company and its creditors that the difficult economic times we are living in the paper industry confirm that the Company decision to execute a financial restructuring soon rather than later," said Mayela R. Velasco, Durango Chief Financial Officer. HIGHLIGHTS SECOND QUARTER 2003/2002 Item 2Q03 1Q03 2Q02 Total Shipments (000 Short Tons) 347.7 334.4 347.3 Pricing (US$/Short Tons) 495 489 520 Net Sales (US$Million) 172.0 163.7 180.5 Unit Cost (US$/Short Tons) 433 428 392 EBITDA (US$Million) 18.0 16.1 41.7 EBITDA Margin 10% 10% 23% Shipments (000 Short tons) 2Q03 1Q03 2Q02 Paper 164.3 151.1 149.7 Packaging 160.7 160.1 173.6 Other 22.7 23.2 24.0 Total 347.7 334.4 347.3 Prices (US$/Short ton) 2Q03 1Q03 2Q02 Paper 454 440 472 Packaging 568 565 595 Other 269 285 278 Total 495 489 520 Net Sales (US$ million) 2Q03 1Q03 2Q02 Paper 74.6 66.5 70.6 Packaging 91.2 90.5 103.2 Other 6.1 6.6 6.7 Total 172.0 163.7 180.5 Unit Cost (US$/ short ton) 2Q03 1Q03 2Q02 Total 433 428 392 EBITDA (US$ million) 2Q03 Margin 1Q03 2Q02 Margin Paper 5.5 7% 3.4 14.8 21% Packaging 12.9 14% 13.0 23.8 23% Other -0.4 -7% -0.3 3.1 46% Total 18.0 10% 16.1 41.7 23%
HIGHLIGHTS FIRST HALF 2003/2002 Item 1H03 1H02 Total Shipments (000 Short Tons) 682.2 639.8 Pricing (US$/Short Tons) 492 527 Net Sales (US$Million) 335.6 337.2 Unit Cost (US$/Short Tons) 431 399 EBITDA (US$Million) 34.1 76.2 EBITDA Margin 10% 23% CONTACTS Corporacion Durango, S.A. de C.V. The Global Consulting Group Mayela R. Velasco Mariana Crespo +52 (618) 829 1008 (646) 284 9407 mrinconv@corpdgo.com.mx mcrespo@hfgcg.com Miguel Antonio R. Richard Huber +52 (618) 829 1070 (646) 284 9413 rinconma@corpdgo.com.mx rhuber@hfgcg.com
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES 10.4370 CONSOLIDATED CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2002 AND JUNE 30, 2003 (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF JUNE 30, 2003 (Stated in thousands of Pesos and Dollars) US$ DLLS. December 31, June 30, June 30, 2002 2003 2003 (Audited) (Unaudited) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents ........................$ 259,032$ 541,283 51,862 Accounts receivable, net ......................... 1,961,325 1,924,287 184,372 Taxes recoverable and other assets ............... 39,278 40,910 3,920 Inventories, net ................................. 1,293,468 1,158,338 110,984 Prepaids ......................................... 28,933 39,675 3,801 Total current assets ................... 3,582,036 3,704,493 354,938 PROPERTY, PLANT AND EQUIPMENT, net ................. 13,227,185 13,039,656 1,249,368 OTHER ASSETS, net .................................. 720,285 733,774 70,305 Total assets ..........................$ 17,529,506$ 17,477,923 1,674,612 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Bank loans and current portion of long-term debt . 7,670,678 7,453,251 714,118 Interest payable ................................. 458,711 931,673 89,266 Trade accounts payable ........................... 910,939 833,272 79,838 Notes payable .................................... 50,258 44,078 4,223 Accrued liabilities .............................. 495,797 411,079 39,387 Employee profit-sharing .......................... 2,369 702 67 Total current liabilities ............. 9,588,752 9,674,055 926,900 LONG-TERM DEBT ..................................... 1,096,806 1,140,712 109,295 NOTES PAYABLE ...................................... 138,733 121,115 11,604 DEFERRED TAXES...................................... 2,034,336 1,983,455 190,041 LIABILITY FOR EMPLOYEE BENEFITS..................... 184,675 183,199 17,553 Total long term liabilities ............ 3,454,550 3,428,481 328,493 Total liabilities ..................... 13,043,302 13,102,536 1,255,393 STOCKHOLDERS' EQUITY: Majority interest ................................ 4,416,939 4,303,812 412,361 Minority interest ................................ 69,265 71,575 6,858 Total stockholders' equity ............. 4,486,204 4,375,387 419,219 Total liabilities and stockholders' equi$ 17,529,506$ 17,477,923 1,674,61 Exchange rate: $ 10.4370 per Dollar
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF JUNE 30, 2003 (Stated in thousands of Pesos and Dollars) * Full Year Acum.Jun Acum.Jun 2002 2003 US$ 2003 (Audited) (Unaudited) OPERATING ACTIVITIES: Net income (loss) ..............................................$ -3,588,364$ -279,601 -26,789 Add (deduct)- Charges (credits) to income which do not require (provide) cash- Depreciation and amortization ........................... 481,528 204,170 19,562 Provision for employee benefits ......................... 12,787 791 76 Special items ........................................... 1,469,429 27,577 2,642 Amortization of Financial Comissions .................... 122,802 53,892 5,164 Provision for deferred taxes ............................ -675,860 -131,141 -12,565 Impairment .............................................. 1,577,289 0 0 Other.................................................... 4,001 0 0 Total items which do not require cash.................... 2,991,976 155,289 14,879 Net resources generated from income .......................... -596,388 -124,312 -11,911 Changes in operating assets and liabilities: Decrease (Increase) in inventories ......................... -377,513 135,130 12,947 Decrease (Increase) in current assets ...................... -40,719 -12,374 -1,186 Decrease (increase) in account receivables, net ............ -5,963 37,038 3,549 (Decrease) increase in accounts payable and accrued liabilities ...................................... 881,024 302,730 29,005 Resources generated by operating activities .................. -139,559 338,212 32,405 FINANCING ACTIVITIES: Increase (Decrease) in bank loans and others ............ 744,861 -253,301 -24,270 Increase (Decrease) in capital .......................... 0 -33,691 -3,228 Loss on shares acquisition .............................. 0 95,752 9,174 Net resources generated from financing activities ............ 744,861 -191,240 -18,323 INVESTMENT ACTIVITIES: Additions to property, plant and equipment............... -456,646 -31,671 -3,034 Divestiture to property, plant and equipment............. 147,477 249,302 23,886 Disposition of subsidiaries ............................. -207,309 0 0 Increase in deferred assets ............................. -369,232 -82,352 -7,890 Minority interest ....................................... 23,720 0 0 Net resources applied to investing activities ................ -861,990 135,279 12,961 INCREASE IN CASH AND CASH EQUIVALENTS .......................... -256,688 282,251 27,043 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 515,720 259,032 24,819 CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 259,032$ 541,283US 51,862 * The exchange rate of 10.4370 was used for translation purposes.
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF JUNE 30, 2003 Thousands of Pesos Thousands of Dollars 2Q 2Q 2Q 2Q 2002 2003 Var 2002 2003 Var (Audited) (Unaudited) (Audited) (Unaudited) NET SALES ...............................$ 2,424,746$ 1,794,856 -26% 231,569 171,971 -26% COST OF SALES ........................... 1,985,234 1,569,733 -21% 189,202 150,400 -21% Gross profit........................ 439,512 225,123 -49% 42,367 21,571 -49% Selling and Administrative expenses 160,231 144,058 -10% 15,343 13,803 -10% Operating income ................... 279,281 81,065 -71% 27,024 7,768 -71% FINANCIAL EXPENSE: Interest expense ........................ 298,793 499,128 67% 28,656 47,823 67% Interest income ......................... -7,141 -9,968 40% -683 -956 40% Exchange (gain) loss, net ............... 753,949 -285,864 N/A 72,621 -27,389 N/A Gain on monetary position ............... -94,949 7,222 N/A -9,111 692 N/A Total financial expense ............... 950,652 210,518 -78% 91,483 20,170 -78% OTHER INCOME (EXPENSES): Other income (expense), net ............. -39,832 5,042 N/A -3,840 483 N/A Total other income (expense) .......... -39,832 5,042 N/A -3,840 483 N/A Income (loss) before income and asset t -711,203 -124,411 -83% -68,299 -11,919 -83% Provisions for income and asset taxes ... 23,137 7,288 -69% 2,227 698 -69% Provision for deferred income taxes ..... -3,245 -71,853 2114% -344 -6,884 1901% Net income after taxes ................ -731,095 -59,846 -92% -70,182 -5,733 -92% Extraordinary items ..................... 0 33,220 N/A 0 3,183 N/A Net income before minority interest......$ -731,095$ -93,066 -87% -70,182 -8,916 -87% Minority interest...................... -1,220 94 N/A -120 8 N/A Majority net income....................$ -729,875$ -93,160 -87% -70,062 -8,924 -87% Depreciation & amortization 131,983 107,064 -19% 12,617 10,258 -19% EBITDA 411,264 188,129 -54% 39,641 18,026 -55%
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS AS OF JUNE 30, 2003 Thousands of Pesos Thousands of Dollars Ac Ac Ac Ac 2002 2003 Var 2002 2003 Var (Audited) (Unaudited) (Audited) (Unaudited) NET SALES ...............................$ 4,580,487$ 3,550,060 -22% 437,320 335,641 -23% COST OF SALES ........................... 3,783,605 3,105,912 -18% 360,485 293,677 -19% Gross profit........................ 796,882 444,148 -44% 76,835 41,964 -45% Selling and Administrative expenses 323,731 287,737 -11% 31,003 27,167 -12% Operating income ................... 473,151 156,411 -67% 45,832 14,797 -68% FINANCIAL EXPENSE: Interest expense ........................ 538,194 817,872 52% 51,617 77,401 50% Interest income ......................... -16,345 -18,518 13% -1,563 -1,760 13% Exchange (gain) loss, net ............... 631,794 57,222 -91% 60,855 4,436 -93% Gain on monetary position ............... -192,643 -104,474 -46% -18,503 -9,658 -48% Total financial expense ............... 961,000 752,102 -22% 92,406 70,419 -24% OTHER INCOME (EXPENSES): Other income (expense), net ............. -61,562 -52,373 -15% -5,927 -4,843 -18% Total other income (expense) .......... -61,562 -52,373 -15% -5,927 -4,843 -18% Income (loss) before income and asset t -549,411 -648,064 18% -52,501 -60,465 15% Provisions for income and asset taxes ... 94,388 45,262 -52% 9,081 4,237 -53% Provision for deferred income taxes ..... -46,410 -131,141 183% -4,591 -12,387 170% Net income after taxes ................ -597,389 -562,185 -6% -56,991 -52,315 -8% Extraordinary items ..................... 0 -282,584 N/A 0 -26,112 N/A Net income before minority interest......$ -597,389$ -279,601 -53% -56,991 -26,203 -54% Minority interest...................... 2,153 385 -82% 207 36 -83% Majority net income....................$ -599,542$ -279,986 -53% -57,198 -26,239 -54% Depreciation & amortization 255,671 204,170 -20% 24,448 19,302 -21% EBITDA 728,822 360,581 -51% 70,280 34,099 -51%
This release contains forward-looking statements that involve risks and uncertainties. The actual results achieved by the Company may differ significantly from the results discussed in the forward looking statements. Factors that may cause such differences include general economic, market, or business conditions, the opportunities (or lack thereof) that may be presented to and pursued by the Company and its subsidiaries, the availability of raw materials used by the Company and its subsidiaries, competitive actions by other companies, changes in laws or regulations, and other factors, many of which are beyond the control of the Company and its subsidiaries. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CORPORACION DURANGO, S.A. DE C.V. Date: July 28, 2003 By /s/ Mayela Rincon de Velasco Durango, Mexico -------------------------------- Name: Mayela Rincon de Velasco Title: Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----