Comparisons reflect a decrease in glass container shipments as a result of bad weather, ongoing weak flat glass demand in the U.S. non-residential construction and OEM automotive markets, and slow consumer spending in glassware products. At the same time, sales were supported by strong domestic construction and auto replacement markets, as well as by VitrosSpanish operations.
Consolidated EBITDA declined 5.0 percent YoY to US$100 million. Glass Containers was the main driver of thedecline, resulting in a 20.4 percent drop in EBITDA from poor weather conditions that led to lower sales and fixed cost absorption. Flat Glass EBITDA increased 2.2 percent YoY, driven by increased efficiencies at Vitros float plants. Glassware EBITDA increased 5.5 percent mainly due to a better product mix, particularly in exports.
Consolidated EBITDA margins for the quarter declined to 17.2 percent from 17.5 percent a year ago.
Alvaro Rodriguez, Chief Financial Officer, commented: We continue to make progress in streamlining and focusing operations and strengthening our balance sheet.
For example, QoQ EBITDA increased 14.8 percent, with an improvement of 200 basis points in EBITDA margins for the period. We are starting to see a positive change in trends, partially improving due to the initiatives taken to lower our cost structure. During the quarter we also completed the divestiture of one of our plastic operations for US$18 million.
Mr. Rodriguez added: Consolidated debt was reduced byUS$75 million to US$1,411 million quarter-over-quarter. On October 22, we expect to complete the issuance and sale of US$225 million Senior Notes due November 1, 2013, which will be applied primarily to retire substantially all of the short-term and current portion of long-term debt of our holding company, Vitro, S.A. de C.V. This transaction will improve the average life of total consolidated debt to about 4 years on an adjusted basis, from approximately 3 years.
Reflecting its position in specialized niche markets, Vitro recently developed new products for leading players such as Estee Lauder, Coca Cola and Modelo, examples partially responsible for an 8.9 percent QoQ increase in EBITDA at Glass Containers.
Exemplifying the trend towards value added products, Flat Glass recently signed a contract for 20,000 square meters of double-glazed ISOLAR SOLARLUX glass in Spain for the Bilbao Exhibition Center. In addition, during the quarter Flat Glass has secured new long- term contracts with some of the major brands at GM, Ford and Chrysler.
New products represented 13.5 percent of total Glassware sales YTD, up from 8.4 percent at year-end 2002. This has been one of the drivers of the 5.6 percent YoY increase in EBITDA at this business unit. In November 2003, Vitro expects to open its new flat glass facility developed jointly with AFG, the US subsidiary of Asahi Glass, which is expected to increase Vitros float glass capacity by 18%. This facility will start production ahead of schedule and within budget.
The consolidated financial results, income statement, and cash flows for the nine-month period ended September 30, 2002, and last twelve months as of September 30, 2002, account for Vitromatic, S.A. de C. V. as a discontinued operation. 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 July 31, 2003 was 10. 4878, as of August 31, 2003 was 11.0475 and as of September 30 2003 was 11.0133 pesos per US dollar. Certain amounts may not sum due to rounding.