Mexico's Vitro plans to reduce debt by $100 mln

Mexico's top glass maker Vitro (nyse: VTO - news - people) plans to reduce debt by $100 million this year by using cash flows and the proceeds of the upcoming sale of a fiberglass subsidiary, executives said on Thursday.

Vitro, maker of flat glass for the auto and construction industry and bottles for the food and beverage sector, could lower net debt by another $40 million if buyers are found for two other small aluminum and plastic units it wants to shed.

In April, Vitro hopes to close a previously announced deal to sell its 60 percent stake in Vitro Fibras to its U.S. partner Owens Corning for $71.5 million, proceeds which will also go to lowering debt.

"This year we will reduce debt with cash flows of around $30 million, and with the sale that should close in April another $70 million, with which we will arrive at a reduction of $100 million," Alvaro Rodriguez, Vitro's chief financial officer, told a news conference.

"If the other sell-offs that have been mentioned -- Bosco and Vancan -- go through then there will be an additional debt reduction," he said. "The approximate amounts are $40 million and with it we would complete 100 percent of the sale of our non-core assets." he said.

Vitro's plans will take its net debt to around $1.3 billion by the end of the year. Debt at the end of 2003 stood at $1.409 billion.

After several years of struggling in a sluggish economy and with declining sales, Vitro embarked on a strategy of selling off non-strategic assets and returning to its core business of making glass.

It's a plan that seems to be working.

Federico Sada, Vitro's chief executive, reiterated previously announced forecasts for sales growing 5 percent in 2004 and a 7 percent increase in earnings before interest, taxes, depreciation and amortization (EBITDA).

Sada also said the Monterrey-based company plans to invest $124 million this year in maintenance and plant modernizations.

Chief operations director Jose Domene said Vitro gained market share in three major markets last year -- flat glass for the construction industry, glass for the auto industry and in glassware products.

In flat glass for the construction industry in Mexico, Vitro gained six percentage points to reach 54 percent market share, Domene said.

Glassware sales moved up 7 percentage points to 71 percent of the market and glass for the auto industry in Mexico jumped 12 percentage points to 47 percent of the industry, he added.

600450 Mexico's Vitro plans to reduce debt by $100 mln
Date: 30 March 2004
Source: Reuters

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