Consolidated EBITDA rose YoY by 7.0 percent, driven by significantly improved performance at the Glass Containers business unit, which more than compensated for the decline in Flat Glass and Glassware. Consolidated EBIT for the quarter, however, declined by 2.0 percent, with decreases at both the Flat Glass and Glassware business units. Consolidated EBITDA margins rose by 120 basis points and EBIT fell slightly by 9 basis points. EBITDA for the LTM improved to US$371 million as of June 30, 2004 from US$365 million as of March 31, 2004.
Between 2Q'03 and 2Q'04, Vitro divested two companies, Vitro Fibras (VIFISA) and Envases Cuautitlan (ECSA). On a pro-forma basis, excluding these two companies, sales would have increased 2.8 percent YoY, EBIT would have increased 7.6 percent YoY, and EBITDA would have posted a 13.5 percent YoY increase. The most important changes in the pro-forma calculations are Flat Glass, with the sale of Vifisa, and Glassware with the sale of ECSA. On a pro-forma basis these business units had an EBITDA growth of 7.7 percent and a decline of 15.5 percent, respectively.
Alvaro Rodriguez, Chief Financial Officer, commented: "Performance was in line with the expectations and our guidance. We are pleased with the quarter's two-digit EBITDA growth, on a pro-forma basis. Glass Containers provided the strongest growth both in sales and EBITDA this quarter, and with this we once gain recognize the strength of Vitro's portfolio of businesses to stabilize ash flow generation and provide a solid operational base. Glass Containers EBITDA gained over 20% YoY demonstrating its ability to generate cash flow."
"Our 12% export growth this quarter is evidence of our increasing penetration of international markets," Mr. Rodriguez continued. "Exports for the quarter increased to 30% of sales from 26% in the same quarter last year. These gains are built on several of Vitro's strengths -- high product quality and our value added niche market positioning supported by flexibility to rapidly and efficiently respond to customers' specific needs."
Mr. Rodriguez commented, "We continued to improve Vitro's capital structure through various financing activities. On July 23, 2004 we placed $170 million senior secured guaranteed notes due July 2011, exceeding original expectations by almost 15%. These notes were issued by Vitro Envases Norteamerica our Glass Containers divison. This transaction significantly improved life of debt at Glass Containers to six years from two years. Net proceeds were applied to refinance existing debt and reduced the business unit's short-term debt percentages to 12%, from 56%."
"The transaction at Vitro Glass Containers was groundbreaking since it's the first capital markets transaction at the the level of a Vitro operating unit. This is the first step towards a new financing strategy at Vitro. It was also innovative in the sense that it was the first ever secured transaction issued in the international capital markets by a Mexican corporation.
"In addition," he continued, "during the quarter, we closed several other financing transactions. We refinanced most of Glassware's debt through a US$75 million syndicated loan facility at that business unit, and finalized a three- year securitization agreement at Vitro America, our Flat Glass distribution subsidiary in the US, providing an additional $10 million in liquidity. As a result of these transactions, on a pro forma basis including the senior secured guaranteed notes, the average life of debt improved to 4.5 years from 3.9 years in 1Q'04."
Mr. Rodriguez concluded, "The overall performance of the Company, demonstrates once again our progress on all fronts, as we continue to build on our position as a leading global glass producer."
All figures provided in this announcement are in accordance with Generally Accepted Accounting Principles in Mexico, except otherwise indicated. Dollar figures are in nominal US dollars and are obtained by dividing nominal pesos for month by the end of month fix exchange rate published by Banxico. In the case of the Balance Sheet, US dollar translations are made at the fix exchange rate as of the end of the period. The exchange rate as of April 30, 2004 was 11.4093, as of May 31, 2004 was 11.4147 and as of June 30, 2004 was 11.5258 pesos per US dollar. Certain amounts may not sum due to rounding. All figures and comparisons are in USD terms, unless otherwise stated.