Grupo Simec Announces Results of Operations for the First Six Months of 2021

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Jul 13, 2021, 17:47 ET

GUADALAJARA, Mexico, July 13, 2021 /PRNewswire/ -- Grupo Simec, S.A.B. de C.V. (NYSE: SIM) ("Simec") announced today its results of operations for the sixth-month period ended June 30th, 2021.

Comparative first six months of 2021 vs. first six months of 2020

Net Sales

Net sales of the Company increased from Ps. 16,096 million in the first half of 2020 to Ps. 28,613 million in the first half of 2021. Shipments increased 18% from 1,162 thousand tons in the first half of 2020 to 1,369 thousand tons in the first half of 2021. Total sales outside of Mexico in the first half of 2021 increased 77% to Ps. 14,458 million compared to Ps. 8,168 million in the first half of 2020. Mexican sales increased 79% from Ps. 7,928 million in the first half of 2020 to Ps. 14,155 million in the first half of 2021. Sales increased for the first half of 2021 compared to the first half of 2020, is due to the combined of increase in the average sales price of 51% and increase in the volume of shipments approximately of 207 thousand tons that represent an 18%.

Cost of Sales

Cost of sales increased 59% from Ps. 13,173 million in the first half of 2020, to Ps. 20,909 million in the first half of 2021. Cost of sales as a percentage of net sales represented 73% in the first half of 2021 while in the first half of 2020 represented 82%. Cost of sales increased due to mix products and a higher volume of products shipped.

Gross Profit

Gross profit of the Company for the first half of 2021 increased 164% from Ps. 2,923 million in the first half of 2020, to Ps. 7,704 million in the first half of 2021. Gross profit as percentage of net sales in the first half of 2021 was of 27%, while in the first half of 2020 was of 18%. The gross profit between both periods is given by better mix products shipped and higher average price.

Selling, General and Administrative Expense

Selling, general and administrative expense increased 13%, from Ps. 867 million in the first half of 2020 to Ps. 984 million in the same period 2021, selling, general and administrative expense represented 5% of the net sales in the second quarter of 2020 and 3% in the second quarter of 2021.

Other Income (Expenses,) net

The Company recorded other expense net for Ps. 30 million in the first half of 2021 million compared to other income Ps. 160 million in the same period of 2020.

Operating Income

Operating income increased 202% from Ps. 2,216 million for the first half of 2020 compared to Ps. 6,690 million in the first half of 2021. Operating income as percentage of net sales was 23% in the first half of 2021 compared to 14% in the same period of 2020. The increase in operating profit is mainly due to the mix of products shipped and higher sales prices.

Ebitda

The Ebitda amounted to Ps. 2,851 million in the first semester of 2020 as a result of a net income of Ps. 2,460 million, less minority stake of Ps. 3 million, plus income taxes of Ps. 951 million, less comprehensive financial cost of Ps. 1,193 million, plus depreciation of Ps. 636 million to Ps 7,283 million in the first semester of 2021 as a result a net income of Ps. 4,977 million, plus minority stake of Ps. 1 million, plus income taxes of Ps. 1,631 million, plus comprehensive financial cost of Ps. 81 million, plus depreciation of Ps. 593 million.

Consolidated
Million	Comparative first six months of 2021 vs first six months of 2020,
	2021		2020
Net income (loss) attributable to Vale's stockholders		4,977		2,460
Loss attributable to noncontrolling interests		1		(3)
Net income (loss)		4,978		2,457
Depreciation, depletion and amortization		593		636
Income taxes		1,631		951
Financial results income (loss)		81		(1,193)
EBITDA		7,283		2,851

Items to reconciled adjusted EBITDA
Equity results and other results in associates and joint ventures		0		0
Dividends received and interest from associates and joint ventures (i)		0		0
Impairment and disposal of non-current assets		0		0
Adjusted EBITDA		7,283		2,851

Comprehensive Financial Cost

Comprehensive financial cost for the first half of 2021 represented an expense of Ps. 81 million compared with an income of Ps. 1,193 million for the first half of 2020. The comprehensive financial cost is comprised by the exchange loss of Ps. 55 million in the first half of 2021 compared with an exchange income of Ps. 1,148 million in the first half of 2020. Likewise, the Company recorded a net expense interest of Ps. 26 million for the first half of 2021 compared with a net income interest of Ps. 45 million in 2020.

Income Taxes

The Company recorded an expense of Ps. 1,631 million for the net income tax during the first half of 2021, (comprised for a current expense tax of Ps. 1,610 million and expense for deferred tax of Ps. 21 million) compared with an expense of Ps. 951 million to the first half of 2020 (comprised for a current expense tax of Ps. 954 million and income for deferred tax of Ps. 3 million).

Net Income

As a result of the foregoing, the Company recorded an increase in net income of 102% to pass of Ps. 2,460 million in the first half of 2020 to Ps. 4,977 million in the same period of 2021.

Comparative second quarter of 2021 vs. first quarter of 2021

Net Sales

Net sales of the Company increased 14% in the second quarter of 2021 compared to the first quarter of the same period, to pass of Ps. 13,355 million during the first quarter of 2021 to Ps. 15,258 million in the second quarter of 2021. Shipments of finished steel products increased from 682 thousand tons in the first quarter of 2021 to 687 thousand tons in the second quarter of the same year. Total sales outside of Mexico in the second quarter of 2021 increased 16% to get to Ps. 7,767 million compared to Ps. 6,691 million of the first quarter of the same year. Domestic sales increased from Ps. 6,664 million in the first quarter of 2021 to Ps. 7,491 million in the second quarter of the same year. The sales increased mainly higher shipped by 5 thousand tons compared with the first quarter that represent a 1% and an income sales price in 13%.

Cost of Sales

Cost of sales increased 8% from Ps. 10,055 million in the first quarter of 2021 to Ps. 10,854 million in the second quarter of 2021. Cost of sales as a percentage of net sales represented 75% for the first quarter of 2021 compared to 71% in the second quarter of the same year, the average cost of sales by ton record an increase between both quarters of 7%.

Gross Profit

Gross profit of the Company for the second quarter of 2021 increased 33% to pass of Ps. 3,300 million in the first quarter of 2021 to Ps. 4,404 million in the second quarter of same year. Gross profit as a percentage of net sales represented 25% for the first quarter of 2021 compared to 29% in the second quarter of the same year. The gross profit in the second quarter of 2021 it originates from a higher average sale.

Selling, General and Administrative Expense

Selling, general and administrative expense increased 7%, from Ps. 475 million in the first quarter of 2021 to Ps. 509 million in the second quarter of the same year, and as percentage of net sales represented 4% in the first quarter of 2021 compared to 3% in the second quarter of the same year.

Other (Expenses) Income, net

The Company recorded other expenses net for Ps. 17 million during the second quarter of 2021 compared to other expenses net for Ps. 13 million in the first quarter of 2021.

Operating Income

Operating income increased 38%, of Ps. 2,812 million in the first quarter of 2021 compared to Ps. 3,878 million of the second quarter of the same year. Operating income as percentage of net sales was 21% for the first quarter of 2021 compared to 25% for the second quarter of the same year. The operating income is due mainly to a better average sale price.

Ebitda

The Ebitda amounted to Ps. 3,113 million in the first quarter of 2021 as a result of a net income of Ps. 2,644 million, less minority stake of Ps. 0 million, plus income taxes of Ps. 391 million, less comprehensive financial cost of Ps. 223 million, plus depreciation of Ps. 301 million to Ps 4,170 million in the second quarter of 2021 as a result of a net income of Ps. 2,333 million, plus minority stake of Ps. 1 million, plus income taxes of Ps. 1,240 million, plus comprehensive financial cost of Ps. 304 million, plus depreciation of Ps. 292 million.

Consolidated
Million	Comparative second quarter of 2021 vs first quarter of 2021,
	2021		2020
Net income (loss) attributable to Vale's stockholders		2,333		2,644
Loss attributable to noncontrolling interests		1
Net income (loss)		2,334		2,644
Depreciation, depletion and amortization		292		301
Income taxes		1,240		391
Financial results income (loss)		304		(223)
EBITDA		4,170		3,113

Items to reconciled adjusted EBITDA
Equity results and other results in associates and joint ventures		0		0
Dividends received and interest from associates and joint ventures (i)		0		0
Impairment and disposal of non-current assets		0		0
Adjusted EBITDA		4,170		3,113

Comprehensive Financial Cost

Comprehensive financial cost of the Company in the second quarter of 2021 represented an expense of Ps. 304 million compared with of Ps. 223 million an income for the first quarter of 2021. The comprehensive financial cost is comprised for the net interest expense of Ps. 9 million in the second quarter of 2021, while in the first quarter was a net expense of Ps. 17 million. Likewise, we recorded a net exchange loss of Ps. 295 million in the second quarter of 2021 compared a net exchange income Ps. 240 million in the first quarter of the same year.

Income Taxes

The Company have been recorded an expense of Ps. 1,240 million of income tax during the second quarter of 2021, (comprised for an expense by current tax of Ps. 1,210 million and an expense for deferred tax of Ps. 30 million) compared with the Ps. 391 million of expense for the first quarter of the same year, (comprised for an expense by current tax of Ps. 399 million and income for deferred tax of Ps. 8 million).

Net Income

As a result of the foregoing, the Company recorded a decrease of 12% from a net income of Ps. 2,644 million in the first quarter of 2021 compared to a net income of Ps. 2,333 million for the second quarter of 2021.

Liquidity and Capital Resources

As of June 30th, 2021, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 6.0 million (accrued interest on June 30th, 2021 was U.S. $654,000, or Ps. 13.0 million). As of December 31, 2020, Simec's total consolidated debt consisted of U.S. $302,000 of 8 7/8% medium-term notes ("MTN's") due 1998, or Ps. 6.02 million (accrued interest on December 31, 2020 was U.S. $640,000, or Ps. 12.8 million).

Comparative second quarter of 2021 vs. second quarter of 2020

Net Sales

Net sales of the Company increased 101% from Ps. 7,596 million during the second quarter of 2020 to Ps. 15,258 million in the second quarter of 2021. Sales in tons of finished steel increased 27% from 540 thousand tons in the second quarter of 2020 compared with 687 thousand tons in the second quarter of 2021. Sales outside of Mexico in the second quarter of 2021 increased 91% from Ps. 4,072 million in the second quarter of 2020 to Ps. 7,767 million in the second quarter of 2021. Domestic sales increased 113% from Ps. 3,524 million in the second quarter of 2020 to Ps. 7,491 million in the second quarter of 2021. The increase in sales in the second quarter of 2021 compared to the second quarter of 2020 is due to an increase in the average sales price of 58% and a increase in the volume of shipments approximately of 147 thousand of tons that represents 27%.

Cost of Sales

Cost of sales increased 75% in the second quarter of 2021 compared to the second quarter of 2020 from Ps. 6,213 million in the second quarter of 2020 to Ps. 10,854 million in the second quarter of 2021. With respect to sales, the cost of sales of the second quarter of 2021 represented 71% compared to 82% for the second quarter of 2020. The average cost of sales by ton of steel products increased 37% in the second quarter of 2021 versus the second quarter of 2020, due to the cost of certain raw materials mainly scrap and electrodes and the volume shipped.

Gross (Loss) Profit

Gross profit of the Company for the second quarter of 2021 amount to Ps. 4,404 million compared to Ps. 1,383 million in the second quarter of 2020, this represented an increase of 218% between both periods. Gross profit as a percentage of net sales for the second quarter of 2021 was 29% compared to 18% of the second quarter of 2020. The increase in gross profit is mainly due to a higher average sales price and a higher volume shipped, in the second quarter of 2021 compared to the second quarter of 2020.

Selling, General and Administrative Expense

The selling, general and administrative expenses increased 17% in the second quarter of 2021 from Ps. 436 million in the second quarter of 2020 to Ps. 509 million in the second quarter of 2021. Selling, general and administrative expense as a percentage of net sales represented 3% in the second quarter of 2021 compared to 6% of the second quarter of 2020.

Other Income (Expenses), net

The company recorded other expenses net of Ps. 17 million in the second quarter of 2021 compared with other income net of Ps. 58 million for the second quarter of 2020.

Operating (Loss) Income

Operating income amounted to Ps. 3.878 million in the second quarter 2021 compared to Ps. 1.005 million in the second quarter of 2020, this represented 389% of increase between both quarters. The operating income as a percentage of net sales was 25% for the second quarter of 2021, compared to 13% of the second quarter of 2020. The increase in operating profit is due to a higher average sale price.

Ebitda

The Ebitda amounted to Ps. 1,325 million in the second quarter of 2020 as a result of a net income of Ps. 546 million, less minority stake of Ps. 16 million, plus income taxes of Ps. 373 million, plus comprehensive financial cost of Ps. 69 million, plus depreciation of Ps. 321 million to Ps 4,170 million in the second quarter of 2021 as a result of a net income of Ps. 2,333 million, plus minority stake of Ps. 1 million, plus income taxes of Ps. 1,240 million, plus comprehensive financial cost of Ps. 304 million, plus depreciation of Ps. 292 million.

Consolidated
Million	Comparative second quarter of 2021 vs second quarter of 2020,
	2021		2020
Net income (loss) attributable to Vale's stockholders		2,333		546
Loss attributable to noncontrolling interests		1		16
Net income (loss)		2,334		562
Depreciation, depletion and amortization		292		321
Income taxes		1,240		373
Financial results income (loss)		304		69
EBITDA		4,170		1,325

Items to reconciled adjusted EBITDA
Equity results and other results in associates and joint ventures		0		0
Dividends received and interest from associates and joint ventures (i)		0		0
Impairment and disposal of non-current assets		0		0
Adjusted EBITDA		4,170		1,325

Comprehensive Financial Cost

Comprehensive financial cost of the Company for the second quarter of 2021 represented a net expense of Ps. 304 million compared with a net expense of Ps. 69 million for the second quarter of 2020. The comprehensive financial cost is comprised for the net interest expense of Ps. 9 million in the second quarter of 2021, compared to a net interest income of Ps. 1 million for the same period of 2020. Also record an exchange loss of Ps. 295 million in the second quarter of 2021 and an exchange loss of Ps. 70 million in the second quarter of 2020.

Income Taxes

The company recorded an expense of Ps. 1,240 million of expense tax in the second quarter of 2021, (comprised by current expense tax of Ps. 1,210 million and an expense for deferred tax of Ps. 30 million) compared to an expense accrual of Ps. 373 million for income tax for the second quarter of 2020, (comprised by current expense tax of Ps. 364 million and an income for deferred tax of Ps. 9 million).

Net Income (Loss)

As a result of the foregoing, the Company recorded a net income of Ps. 2,333 million in the second quarter of 2021 compared to Ps. 546 million for the second quarter of 2020, an increase of 327% between both quarters.

(millions of pesos)	1H '21	1H '20	Year 21 VS '20
Sales	28,613	16,096	78%
Cost of Sales	20,909	13,173	59%
Gross Profit	7,704	2,923	164%
Selling, General and Administrative Expense	984	867	13%
Other Income (Expenses), net	(30)	160	(119%)
Operating Profit	6,690	2,216	202%
EBITDA	7,283	2,851	155%
Net income	4,977	2,460	102%
Sales Outside Mexico	14,458	8,168	77%
Sales in Mexico	14,155	7,928	79%
Total Sales (Tons)	1,369	1,162	18%

Quarter
(millions of pesos)	2Q'21	1Q '21	2Q '20	2Q´21vs 1Q´21	2Q´21 vs 2Q '20
Sales	15,258	13,355	7,596	14%	101%
Cost of Sales	10,854	10,055	6,213	8%	75%
Gross Profit	4,404	3,300	1,383	33%	218%
Selling, General and Adm. Expenses	509	475	436	7%	17%
Other Income (Expenses), net	(17)	(13)	58	31%	(129%)
Operating Profit	3,878	2,812	1,005	38%	286%
EBITDA	4,170	3,113	1,325	34%	215%
Net Income	2,333	2,644	546	(12%)	327%
Sales Outside Mexico	7,767	6,691	4,072	16%	91%
Sales in Mexico	7,491	6,664	3,524	12%	113%
Total Sales (Tons)	687	682	540	1%	27%

Product	Thousands of Tons Jan-Jun 2021	Millions of Pesos Jan-Jun 2021	Average Price per Ton Jan-Jun 2021	Thousands of Tons Jan – Jun 2020	Millions of Pesos Jan- Jun 2020	Average Price per Ton Jan-Jun 2020
Commercial Profiles	880	17,473	19,856	806	9,952	12,347
Special Profiles	489	11,140	22,781	356	6,144	17,258

Total	1,369	28,613	20,901	1,162	16,096	13,852

Product	Thousands of Tons Apr-Jun 2021	Millions of Pesos Apr-Jun 2021	Average Price per Ton Apr-Jun 2021	Thousands of Tons Jan – Mar 2021	Millions of Pesos Jan- Mar 2021	Average Price per Ton Jan-Mar 2021	Thousands of Tons Apr-Jun 2020	Millions of Pesos Apr-Jun 2020	Average Price per Ton Apr-Jun 2020
Commercial Profiles	445	9,358	21,029	435	8,114	18,653	408	5,172	12,676
Special Profiles	242	5,900	24,380	247	5,241	21,219	132	2,424	18,363

Total	687	15,258	22,210	682	13,355	19,582	540	7,596	14,066

Any forward-looking information contained herein is inherently subject to various risks, uncertainties and assumptions which, if incorrect, may cause actual results to vary materially from those anticipated, expected or estimated. The company assumes no obligation to update any forward-looking information contained herein.

Contact:
José Luis Tinajero
Mario Moreno Cortez
Grupo Simec, S.A.B. de C.V.
Calzada Lázaro Cárdenas 601
44440 Guadalajara, Jalisco, México
52 55 1165 1025
52 33 3770 6734

SOURCE Grupo Simec, S.A.B. de C.V.