SOURCE: Grupo Casa Saba, S.A.B de C.V.

Grupo Casa Saba, S.A.B de C.V.

March 01, 2010 18:08 ET

Grupo Casa Saba Operating Income Increased 19.27%

MEXICO CITY--(Marketwire - March 1, 2010) -  Grupo Casa Saba (NYSE: SAB)

Financial Highlights:
(All figures are expressed in millions of Mexican pesos of purchasing power as of December 2009. Comparisons are made with the same period of 2008, unless otherwise stated. Figures may vary due to rounding practices).

  • Net sales for the quarter declined slightly, by 0.27% to reach $7,803.13 million
  • Gross income decreased 7.61% during the period
  • The gross margin for the quarter was 10.97%
  • Quarterly operating expenses as a percentage of sales were 8.62%, lower than the margin of 9.88% registered during the fourth quarter of 2008
  • Operating income increased 19.27% versus 4Q08
  • The operating margin for the quarter was 2.35%
  • The CCF for the quarter increased 46.21%
  • Tax provisions were 69.83% lower than in 4Q08
  • Net profit for the quarter was $79.29 million, a decrease of 2.87%
  • Cash and cash equivalents at the end of the quarter was $609.83 million

Grupo Casa Saba ("Saba," "GCS," "the Company" or "the Group"), one of the leading Mexican distributors of pharmaceutical products, health and beauty aids, personal care and consumer goods, general merchandise, publications and other products, announces its consolidated financial and operating results for the fourth quarter of 2009.

QUARTERLY EARNINGS

NET SALES

During the fourth quarter of 2009, GCS's sales were $7,803.13 million, a slight decrease of 0.27%.

SALES BY DIVISION

PRIVATE PHARMA

Sales in our Private Pharma division rose 0.71% during the fourth quarter of 2009. This growth was primarily driven by an increase in the sales of our Brazilian retail operation. 

Sales for this division reached $6,758.92 million versus $6,711.41 million in 4Q08 and represented 86.62% of the Group's total sales.

GOVERNMENT PHARMA

Sales in our Government Pharma division this quarter declined 43.25% to $180.57 million compared to $318.16 million in the fourth quarter of 2008. This was mainly due to the fact that PEMEX did not conduct its year-end extraordinary purchases in order to avoid supply shortages during the first half of 2010.

As a percentage of total sales, this division went from representing 4.07% in 4Q08 to 2.31% during the fourth quarter of 2009.

HEALTH, BEAUTY, CONSUMER GOODS, GENERAL MERCHANDISE AND OTHER

Sales in our Health, Beauty, Consumer Goods, General Merchandise and Other division reached $663.92 million, an increase of 0.36% compared to the fourth quarter of 2008.

This division represented 8.51% of GCS's total sales in 4Q09, 6 basis points more than in the same period of the previous year. 

PUBLICATIONS

Publication sales increased significantly during the quarter, by 49.63%. This growth was due to the fact that Citem reincorporated various publications back into its catalog as well as an increase in sales of specialty titles related to the Christmas season and collectibles.

Consequently, this division's participation as a percentage of total sales went from 1.71% in 4Q08 to 2.56% in the fourth quarter of 2009.

GROSS INCOME

During the fourth quarter of the year, Grupo Casa Saba's gross income decreased 7.61% versus the same period of the previous year to reach $856.36 million. This decline was primarily due to an increase in the cost of sales of the merchandise sold as a percentage of net sales. As such, the company's gross margin was 10.97%, 88 basis points lower than the 11.85% margin posted during 4Q08.

OPERATING EXPENSES

GCS's operating expenses reached $672.75 million in 4Q09, a decrease of 12.96% compared to the fourth quarter of 2008. This decline was the result of improvements in our cost control measures in our most important business unit, Private Pharma.

Operating expenses represented 8.62% of our total sales in 4Q09 compared to 9.88% during the same period of the previous year.

OPERATING INCOME

Quarterly operating income was $183.61 million, 19.27% higher than the $153.94 million reported in 4Q08. The improvement can be attributed to the significant reduction in our operating expenses.

The operating margin was 2.35%, 38 basis points higher than the 1.97% margin registered in the fourth quarter of 2008. 

OPERATING INCOME PLUS DEPRECIATION AND AMORTIZATION

Operating income plus depreciation and amortization for 4Q09 was $215.67 million, an increase of 16.68% compared to the fourth quarter of 2008. Depreciation and amortization for the period was $32.06 million, 3.78% higher than in the fourth quarter of 2008.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents at the end of the fourth quarter of 2009 was $609.83 million, an increase of 0.54% compared to the same period of 2008.

COMPREHENSIVE COST OF FINANCING

During the period, GCS's comprehensive cost of financing (CCF) reached $83.25 million, 46.21% higher than the CCF reported during 4Q08. This was primarily due to an increase in interest payments for the long-term credit for the acquisition in Brazil as well as the interest generated from the use of short-term credits for our operations in both Mexico and Brazil. 

OTHER EXPENSES (INCOME) 

During the fourth quarter of 2009, the Company registered an income of $30.59 million in other expenses (income), a decline of 80.37% versus the same period of 2008. The expenses (income) from this line item were derived from activities that are distinct from the company's everyday business operations.

TAX PROVISIONS

During the fourth quarter, tax provisions were $51.65 million, 69.83% less than the $171.21 million registered during 4Q08. Of these, $105.07 million were related to income tax payments and ($53.42) million were attributed to deferred income tax.

NET INCOME

As a result, GCS's net income for the fourth quarter was $79.29 million, a decrease of 2.87% compared to the fourth quarter of 2008. This was primarily due to the increase in the CCF and the decrease in other expenses (income).

Consequently, the net margin for the period was 1.02%, 2 basis points lower than the 1.04% net margin registered during the fourth quarter of 2008.

WORKING CAPITAL

During the fourth quarter of 2009, our accounts receivable days increased by 3.9 days from 4Q08 to reach 64.0 days. In addition, our accounts payable days fell by 4.8 days versus 4Q08, to reach 62.0 days. Finally, our inventory days were 70.8 days, 3.5 more days compared to the same period of the previous year.

The 265.4 million shares issued by Grupo Casa Saba are listed on the Mexican Stock Exchange and its ADRs on the New York Stock Exchange, both under the symbol "SAB." One ADR equals 10 ordinary shares.

Grupo Casa Saba is one of the leading distributors of pharmaceutical products, beauty, personal care and consumer goods, general merchandise, publications and other goods in Mexico. With more than 115 years of experience, the Company distributes to the majority of pharmacies, chains, self-service and convenience stores, as well as other specialized national chains.

As a precautionary note to investors, except for the historic information contained herein, certain topics discussed in this document constitute forward-looking statements. Such topics imply risks and uncertainties, including the economic conditions in Mexico and other countries in which Grupo Casa Saba operates, as well as variations in the value of the Mexican peso as compared with the US dollar.

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