Vitro Maintains Growth Trend

Vitro S.A.B. de C.V. one of the world's largest producers and distributors of glass products, announced 2Q'07 unaudited results.

Year-over-year consolidated sales increased 5.0 percent and EBITDA rose 1.9 percent. The consolidated EBITDA margin declined 40 basis points to 15.9 percent for the quarter. Excluding the acquisition of Vidrios Panameños (VIPASA) in April 2006, consolidated sales rose 4.9 percent and consolidated EBITDA increased 2.1 percent year-over-year.

Federico Sada, Chief Executive Officer, commented "Results continue to reflect solid performance. On a comparable basis, we recorded the highest consolidated EBITDA for a second quarter since 2Q’01. And this was achieved despite a 12 percent year-over-year increase in natural gas prices.” Enrique Osorio, Chief Financial Officer, said “This quarter we refurbished two furnaces at Glass Containers, which reduced fixed cost absorption as the business did not operate at nearly 100 percent capacity as was the case in 2Q’06. This resulted in a 10.8 percent decline in EBITDA at Glass Containers. At the same time, taking advantage of those repairs we increased capacity by 6 percent at Glass Containers as planned.”

“At Flat Glass, EBITDA this quarter was up 41.8 percent year-over-year, the second consecutive quarter of EBITDA growth and on a comparable basis, the highest EBITDA since 4Q’04. As anticipated, we more than compensated for slower sales at the OEM auto markets with increased sales to the construction and automotive replacement markets.” Commenting on Vitro’s balance sheet, Mr. Osorio said, “Net debt for the quarter rose 1 percent year-over-year, or US$12 million, to US$1,161 million. Keep in mind that this includes approximately US$55 million in refinancing fees and tender offer costs related to the debt refinancing completed in 1Q’07, as well as the impact of higher year-over-year capital expenditures as announced last quarter. As a result, net debt to EBITDA was 2.9x this quarter, compared with 2.7x in 1Q’07. The average cost of debt, however, declined 140 basis points to 9.5 percent, from 10.9 percent in 2Q’06.” “Looking ahead into 3Q’07, we limited to US$3.7 million the negative impact on EBITDA from the temporary interruption in operations at two of our Glass Containers facilities due to an interruption of natural gas supply. The lower than expected impact reflects the quick response of our team and of PEMEX staff, Tractebel and LNG suppliers. We are now focused on generating increased efficiencies and capacity utilization to offset this negative impact before the end of the quarter,” noted Mr. Osorio.

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