Fitch has also downgraded Vitro's national scale rating to 'A+'(mex) from 'AA-'(mex).
The rating actions reflect the challenges that Vitro continues to face on its glass businesses, due to extended weak economic activity, pricing pressures from automobile manufacturers, import competition and lower cost absorption. These challenges have pressured cash flows and profitability, hampering Vitro's progress on debt reduction and the improvement of credit protection measures.
Vitro's debt remains high, at US$1,576 million at March 31, 2003. Recent transactions in the local medium-term note and syndicated loan markets have extended the maturity profile and a portion of the proceeds have been used to increase Vitro's liquidity position. At March 31, 2003 Vitro had US$262 million in cash and marketable securities, the ratio of Net Debt to Last 12 Months EBITDA was 3.3x and the ratio of Last 12 Months EBITDA to Interest Expense was 3.0x.
Prolonged economic weakness in Mexico and the U.S., and continued pressures on cash flows and credit protection measures may result in further rating actions. Over the near term, Fitch Ratings will continue to review and evaluate its credit ratings on Vitro.
Vitro is the leading producer of flat glass, glass containers and glassware in Mexico. The company exports glass products to more than 70 countries. In 2002, Vitro has sales of US$2.3 billion, EBITDA of US$403 million, exports of US$586 million and sales by foreign subsidiaries of US$628 million.