SOURCE: Grupo TMM

February 27, 2007 18:00 ET

Grupo TMM Reports Fourth-Quarter and Full-Year 2006 Financial Results

MEXICO CITY -- (MARKET WIRE) -- February 27, 2007 -- Grupo TMM, S.A.B. (NYSE: TMM) (BMV: TMM A) ("TMM" or the "Company") a Mexican multi-modal transportation and logistics company, reported today its financial results for the fourth-quarter and full-year periods of 2006.

Management Overview

Javier Segovia, president of Grupo TMM, said, "The year 2006 was one of transition, evolution and ultimately progress for Grupo TMM. Last year we focused our efforts to make TMM stronger and better positioned for the future. Constrained by high debt at the beginning of 2006, we paid our Bondholders in full in the third quarter of last year and adopted a new financial structure which gives us greater flexibility in managing our debt levels. This stronger balance sheet freed up capital to provide vital resources for growth and expansion for each of our business units, positioning Grupo TMM to increase market share organically, service our customers more efficiently, and improve profitability in 2007.

"At Maritime, we invested over $241.4 million in 2005 and 2006 to acquire new vessels and the minority interests held by our former partners in our offshore and tugboat operations, securing the financing for these investments through the contracted revenues generated by these assets. During the fourth quarter of 2006 and at the beginning of 2007, our product tanker group was awarded three time charter contracts, which will increase our annual revenues by approximately $13 million. In our parcel tanker segment we negotiated rate increases associated with current contracts, which will add approximately $5 million of incremental revenue for this year. These additions bring the Maritime division's EBITDA to $55 million for 2007. Maritime is positioned for growth as Mexico's new administration continues to make decisions concerning oil exploration, including further outsourcing of the government-owned fleet.

Segovia continued, "At Logistics, we begin 2007 with a clean slate and a renewed focus. This division lost $29 million in revenue in 2006 due to the cancellation of contracts by Kansas City Southern de Mexico. Fourth quarter results also reflect significant losses due to other terminated operations. However, in 2006, we began to invest in this division by ordering 80 new tractors and 82 new trailers, and securing leasing for an additional 271 new tractors and 390 trailers in September, which began to arrive in December. As of the end of February we have received 130 tractors and 200 trailers and believe we will have modernized much of our fleet by May or June of this year, taking the average age of our trucking fleet from 11 years in 2006 to four years in 2007. The modernization of our fleet will provide fuel efficiencies and lower our maintenance costs. The replacement and addition of assets to our trucking fleet will allow us to increase our operable tractors from 452 to 595 units by mid-Summer and our trailer fleet from 1,000 to 1,300 units. Additionally, in December 2006 we purchased ADEMSA, the fourth largest bonded warehouse system in Mexico, improved yards and terminal capabilities, and added software to link our supply chain process. The ADEMSA warehouse system provides an important part of the integrated supply chain, so that this division can quickly become a significant player in bonded and non-bonded warehousing facilities within Mexico. We believe that with the investments we are now making, Logistics will become a profitable and growth-oriented part of the company and project an annual EBITDA run rate of $17 million by mid-year.

"Finally, our Ports division remains stable, and we project 2007 EBITDA of $3 million for this division."

Segovia concluded, "While Grupo TMM's revenues in 2006 were lower than in 2005 due to cancelled contracts and terminated operations, we have reversed this downward trend. We are beginning 2007 with $30 million of additional revenue, providing a base of $278 million of revenue compared to $248 million at the end of 2006, which will afford us greater financial flexibility and a stronger foundation. We expect that 2007 will benefit from last year's transition as our efforts in 2006 continue to gain traction. Overall, we expect improvements in financial results and believe that our performance in 2007 will lead to enhanced shareholder value."

Financial Results

Comparing the fourth quarter of 2006 with the fourth quarter of 2005, TMM reported the following results:

--  Revenue of $65.4 million, down 25.9 percent from $88.3 million
--  Operating income of $2.8 million, remained stable
--  Operating margin of 4.3 percent, up 1.2 percentage points
--  Net income of $7.5 million compared to net income of $23.1 million
    
Comparing the 2006 full year with the 2005 full year, TMM reported the following results:
--  Revenue of $248.2 million, down 19.1 percent from $306.6 million
--  Operating income of $11.3 million, up $6.2 million from $5.1 million
--  Operating margin of 4.5 percent, up 2.9 percentage points
--  Net income of $71.0 million compared to net income of $171.3 million
    
Revenues in the fourth quarter and full year of 2006 compared to the same periods of 2005 were impacted by the sale of TMM's port assets in Colombia in 2005, reducing fourth quarter 2006 revenues by $3.3 million and twelve months 2006 revenues by $19.5 million. Revenues in the 2006 periods were also impacted by the cancellation of service agreements by Kansas City Southern de Mexico, reducing revenues by $9.0 million in the fourth quarter and $29.0 million in the full year.

Consolidated operating profit in fourth quarter 2006 was $2.8 million and included $1.5 million of one-time costs and expenses. Had these one-time charges not occurred, the consolidated operating profit run rate for the quarter would have been $4.3 million, as shown in the Divisional Results chart included below.

SG&A of $6.9 million in fourth quarter 2006 decreased 19.3 percent, or $1.6 million, over the same period of 2005, and SG&A of $31.8 million for full-year 2006 remained stable compared to the same period of 2005.

Net interest expense in fourth quarter 2006 was $9.8 million compared to $15.4 million in the same quarter last year. Net interest expense in the 2006 twelve-month period was $30.6 million compared to $68.2 million in the 2005 twelve-month period.

As of December 31, 2006, TMM's total debt was $362.3 million, of which $195.2 million is related to the Company's securitization facility, $1.0 million is related to debt in an acquired subsidiary, and $166.1 million is project finance debt and is related to the acquisition of maritime assets and supported by approximately $116.7 million of long-term contracted revenues, by the Mexican Navigation Law and by the total market value of these assets, which is estimated to exceed their book value by $42 million.

            Total Debt Composition as of December 31, 2006
                          (Millions of dollars)

                  Securitization Facility         $195.2
                  Debt in acquired subsidiary       $1.0
                  *Two Product Tankers             $56.0
                  *Offshore Vessels               $110.1
                                                  ------
                  Total Debt (1):                 $362.3

*Project finance assets

(1) The Company's total debt as presented in its balance sheet as of
    December 31, 2006, includes $3.6 million of accrued unpaid interest
    and is reduced by $7.6 million of related expenses to be amortized
    over time.



DIVISIONAL RESULTS (All numbers in thousands)

Fourth Quarter 2006
                                                        Corporate
                                                           and
                       Maritime   Logistics    Ports     Others     Total
                       ---------  ---------  ---------  ---------  -------
Revenues                  40,133     22,103      3,271        (65)  65,442
Costs                     30,117     22,993      1,566        (81)  54,595
Gross Result              10,016       (890)     1,705         16   10,847
Gross Margin                25.0%      (4.0%)     52.1%       n/a     16.6%
SG & A                     1,212      1,369        393      3,514    6,488
Operating Results          8,804     (2,259)     1,312     (3,498)   4,359
Operating Margin            21.9%     (10.2%)     40.1%       n/a      6.7%




*Fourth Quarter 2005
                                                      Corporate
                                                         and
                     Maritime   Logistics    Ports     Others      Total
                     ---------  ---------  ---------  ---------  ---------
Revenues                43,543     31,300     13,498        (32)    88,309
Costs                   34,549     30,328     12,157        (52)    76,982
Gross Result             8,994        972      1,341         20     11,327
Gross Margin              20.7%       3.1%       9.9%       n/a       12.8%
SG & A                   1,225      1,907        907      4,493      8,532
Operating Results        7,769       (935)       434     (4,473)     2,795
Operating Margin          17.8%      (3.0%)      3.2%       n/a        3.2%




Full-Year 2006
                                                      Corporate
                                                         and
                     Maritime   Logistics    Ports     Others      Total
                     ---------  ---------  ---------  ---------  ---------
Revenues               146,425     93,895      8,121       (288)   248,153
Costs                  109,977     89,266      5,104       (401)   203,946
Gross Result            36,448      4,629      3,017        113     44,207
Gross Margin              24.9%       4.9%      37.2%       n/a       17.8%
SG & A                   5,099      5,424      1,630     19,278     31,431
Operating Results       31,349       (795)     1,387    (19,165)    12,776
Operating Margin          21.4%      (0.8%)     17.1%       n/a        5.1%




*Full-Year 2005
                                                      Corporate
                                                         and
                     Maritime   Logistics    Ports      Others     Total
                     ---------  ---------  ---------  ---------  ---------
Revenues               159,575    108,402     38,853       (231)   306,599
Costs                  133,028    103,479     33,574       (258)   269,823
Gross Result            26,547      4,923      5,279         27     36,776
Gross Margin              16.6%       4.5%      13.6%       n/a       12.0%
SG & A                   4,382      5,867      4,027     17,385     31,661
Operating Results       22,165       (944)     1,252    (17,358)     5,115
Operating Margin          13.9%      (0.9%)      3.2%       n/a        1.7%

*2005 results presented under continuing operations
SEGMENT RESULTS

Maritime

Comparing the fourth quarter and twelve months of 2006 with the same periods of last year:

--  Revenues decreased 7.8 percent in the 2006 fourth-quarter and 8.2
    percent in the 2006 twelve-month periods due mainly to fewer offshore and
    tanker vessels in operation
--  Revenues were also impacted by $0.9 million from atypical dry-docking
    activity in the 2006 fourth quarter and by $4.0 million in the 2006 twelve-
    month period
--  Improved operating profit and margins at all business segments in the
    2006 twelve-month period due mainly to cost reductions of 17.3 percent in
    the 2006 twelve-month period as a result of increased owned offshore and
    tanker vessels
    
Logistics

Comparing the fourth quarter and twelve months of 2006 with the same periods of last year:

--  Overall revenues and operating results were impacted in both periods
    due to Kansas City Southern de Mexico contract losses and to the
    termination of unprofitable operations
--  In the 2006 fourth quarter, trucking revenues increased 22.7 percent
    to $9.7 million and 32.1 percent to $35.6 million in the 2006 twelve-month
    period due to new tractors and trailers acquired throughout the year
--  In the 2006 twelve-month period, inbound logistics revenues increased
    21.8 percent to $21.0 million due mainly to increased volumes at Volkswagen
    
Ports and Terminals

Comparing the fourth quarter and twelve months of 2006 with the same periods of last year:

--  Revenues were impacted by the sale of port assets in Colombia and by a
    reclassification of net revenue at the shipping agencies business segment
--  Revenues at Acapulco increased 8.9 percent to $5.7 million in the 2006
    twelve-month period due to a 16.2 percent revenue increase in the cruise
    ship business segment
--  Auto handling revenues at Acapulco improved 27.5 percent to $1.7
    million in the 2006 twelve-month period as export volumes to the Middle
    East and South America increased from 25,963 automobiles in 2005 to 37,452
    in 2006
    
Headquartered in Mexico City, TMM is a Latin American multimodal transportation company. Through its branch offices and network of subsidiary companies, TMM provides a dynamic combination of ocean and land transportation services. Visit TMM's web site at www.grupotmm.com. The site offers Spanish/English language options.

CONFERENCE CALL

TMM's management will host a conference call and Webcast to review financial and operational highlights on Wednesday, February 28 at 11:00 a.m. Eastern Time.

To participate in the conference call, please dial 888-802-8577 (domestic) or 973-935-8754 (international) and provide conference ID 8363833 at least five minutes prior to the start of the event. Accompanying visuals and a simultaneous Webcast of the meeting will be available at http://www.visualwebcaster.com/event.asp?id=37587.

A replay of the conference call will be available through March 7, at 11:59 p.m. Eastern Time, by dialing 877-519-4471or 973-341-3080, and entering conference ID 8363833. On the Internet, a replay will be available for 30 days at http://www.visualwebcaster.com/event.asp?id=37587.

Included in this press release are certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements speak only as of the date they are made and are based on the beliefs of the Company's management as well as on assumptions made. Actual results could differ materially from those included in such forward-looking statements. Readers are cautioned that all forward-looking statements involve risks and uncertainty. The following factors could cause actual results to differ materially from such forward-looking statements: global, US and Mexican economic and social conditions; the effect of the North American Free Trade Agreement on the level of US-Mexico trade; the condition of the world shipping market; the success of the Company's investment in new businesses; risks associated with the Company's reorganization and restructuring; the ability of the Company to reduce corporate overhead costs; the ability of management to manage growth and successfully compete in new businesses; and the ability of the Company to restructure or refinance its indebtedness. These risk factors and additional information are included in the Company's reports on Form 6-K and 20-F on file with the United States Securities and Exchange Commission.


                     Grupo TMM, S.A. and subsidiaries
             * Balance Sheet (under discontinuing operations)
                          - millions of dollars -



                                                December 31,  December 31,
                                                    2006          2005
                                                ============  ============

Current assets:
Cash and cash equivalents                             38.685       400.809
                                                ------------  ------------
Accounts receivable
  Accounts receivable - Net                           40.946        43.267
                                                ------------  ------------
  Other accounts receivable                           78.667        19.615
                                                ------------  ------------
  Prepaid expenses and others current assets           9.882         7.295
Total current assets                                 168.180       470.986
                                                ============  ============

Long-term account receivable                          40.000        48.763
                                                ============  ============
Property, machinery and equipment - Net              279.335       166.661
                                                ============  ============
Other assets                                          35.517        23.160
                                                ============  ============
Deferred taxes                                       112.833        83.556
                                                ============  ============
Total assets                                         635.865       793.126
                                                ============  ============

Current liabilities:
Bank loans and current maturities of long term
 liabilities                                          27.555        35.546
                                                ------------  ------------
Sale of accounts receivable                           16.727
                                                ------------  ------------
Suppliers                                             20.486        22.755
                                                ------------  ------------
Other accounts payable and accrued expenses           37.213        47.686
    Total current liabilities                        101.981       105.987
                                                ============  ============
Long-term liabilities:
  Bank loans and other obligations                   141.401       524.763
                                                ------------  ------------
  Sale of accounts receivable                        172.617
                                                ------------  ------------
  Other long-term liabilities                         23.917        25.630
                                                ------------  ------------
Total long-term liabilities                          337.935       550.393
                                                ============  ============

                                                ============  ============
Total liabilities                                    439.916       656.380
                                                ============  ============

Stockholders´ equity
  Common stock                                       121.158       121.158
                                                ------------  ------------
  Retained earnings                                   85.190        14.454
                                                ------------  ------------
  Initial accumulated translation loss               (17.757)      (17.757)
                                                ------------  ------------
  Cumulative translation adjusted                     (1.170)        1.422
                                                ============  ============
                                                     187.421       119.277
  Minority interest                                    8.528        17.469
                                                ------------  ------------
Total stockholders’ equity                           195.949       136.746
                                                ============  ============

                                                ============  ============
Total liabilities and stockholders´ equity           635.865       793.126
                                                ============  ============


* Prepared in accordance with International Financial Reporting Standards.




                     Grupo TMM, S.A. and subsidiaries
          * Statement of Income (under discontinuing operations)
                          - millions of dollars -



                                    Three months ended      Year ended
                                       December 31,        December 31,
                                      2006      2005      2006      2005
                                    ========  ========  ========  ========

Revenue from freight and services     65.442    88.309   248.153   306.599
                                    --------  --------  --------  --------

                                    --------  --------  --------  --------
Cost of freight and services         (52.196)  (74.959) (191.632) (262.569)
                                    --------  --------  --------  --------
Depreciation of vessels and
 operating equipment                  (3.521)   (2.023)  (13.436)   (7.254)
                                    --------  --------  --------  --------

                                       9.725    11.327    43.085    36.776
                                    --------  --------  --------  --------

                                    --------  --------  --------  --------
Administrative expenses               (6.886)   (8.532)  (31.829)  (31.661)
                                    --------  --------  --------  --------

Operating Income                       2.839     2.795    11.256     5.115
                                    ========  ========  ========  ========

                                    --------  --------  --------  --------
Other expenses - Net                  (1.354)   (9.567)   (1.724)   (1.023)
                                    --------  --------  --------  --------

                                    --------  --------  --------  --------
Financial (expenses) income - Net     (9.787)  (15.358)  (30.587)  (68.177)
                                    --------  --------  --------  --------
Amortization of expenses related to
 debt                                 (0.800)   (3.851)  (24.845)  (22.701)
                                    --------  --------  --------  --------
Exchange gain (loss) - Net             0.448     1.152    (0.395)    1.290
                                    --------  --------  --------  --------

Net financial cost                   (10.139)  (18.057)  (55.827)  (89.588)
                                    --------  --------  --------  --------

Loss before taxes                     (8.654)  (24.829)  (46.295)  (85.496)
                                    ========  ========  ========  ========

Benefit for taxes                     23.934    55.053    27.580    61.624
                                    --------  --------  --------  --------

Net Income (loss) before
 discontinuing operations             15.280    30.224   (18.715)  (23.872)
                                    ========  ========  ========  ========

Income from discontinuing
 operations                                                          1.364
                                    --------  --------  --------  --------
(Loss) income from disposal
 discontinuing business               (8.510)   (5.623)   90.100   197.999
                                    --------  --------  --------  --------

Net income for the period              6.770    24.601    71.385   175.491
                                    ========  ========  ========  ========

Attributable to:
                                    --------  --------  --------  --------
  Minority interest                   (0.708)    1.487     0.360     4.188
                                    --------  --------  --------  --------
Equity holders of GTMM, S.A.           7.478    23.114    71.025   171.303
                                    ========  ========  ========  ========

Weighted average outstanding shares
 (millions)                           56.963    56.963    56.963    56.963
Income earnings per share
 (dollars / share)                      0.13      0.41      1.25      3.01

Outstanding shares at end of period
 (millions)                           56.963    56.963    56.963    56.963
Income earnings per share
 (dollars / share)                      0.13      0.41      1.25      3.01
                                    ========  ========  ========  ========

* Prepared in accordance with International Financial Reporting Standards.




                     Grupo TMM, S.A. and subsidiaries
        * Statement of Cash Flow (under discontinuing operations)
                          - millions of dollars -



                                    Three months ended      Year ended
                                       December 31,        December 31,
                                      2006      2005      2006      2005
                                    ========  ========  ========  ========

Cash flow from operation
 activities:
Net  Income (loss) before
 discontinuing operations             15.280    30.224   (18.715)  (23.872)
                                    --------  --------  --------  --------

Charges (credits) to income not
 affecting resources:
    Depreciation & amortization        4.161     7.674    20.435    28.789
                                    --------  --------  --------  --------
    Deferred income taxes            (24.117)  (53.501)  (29.288)  (63.186)
                                    --------  --------  --------  --------
    Other non-cash items              (1.162)   12.278    15.279    (1.364)
                                    --------  --------  --------  --------
  Total non-cash items               (21.118)  (33.549)    6.426   (35.761)
                                    --------  --------  --------  --------
    Changes in assets & liabilities   (4.198)   17.515   (22.211)   46.266
                                    --------  --------  --------  --------
  Total adjustments                  (25.316)  (16.034)  (15.785)   10.505
                                    --------  --------  --------  --------

  Net cash (used in ) provided by
   operating activities              (10.036)   14.190   (34.500)  (13.367)
                                    ========  ========  ========  ========

Cash flow from investing
 activities:
  Proceeds from sales of assets
   (net)                               3.204    (0.067)   12.293     1.693
                                    --------  --------  --------  --------
  Payments for purchases of assets   (15.346)  (14.053) (150.644) (105.058)
                                    --------  --------  --------  --------
  Acquisition of shares of
   subsidiaries                       (8.827)   (4.013)  (28.289)  (38.072)
                                    --------  --------  --------  --------
  Dividends paid to minority
   partners                                               (1.680)
                                    --------  --------  --------  --------

  Net cash used in investment
   activities                        (20.969)  (18.133) (168.320) (141.437)
                                    ========  ========  ========  ========

  Proceeds from discontinued
   business and Sale of share of
   subsidiaries (net)                 (3.100)  370.374    68.754   581.054
                                    --------  --------  --------  --------

Cash flow provided by financing
 activities:
  Short-term borrowings (net)                   (0.150)   (0.150)   (0.600)
                                    --------  --------  --------  --------
  Principal payments under capital
   lease obligations                                                (0.151)
                                    --------  --------  --------  --------
  Sale (repurchase) of accounts
   receivable (net)                   (3.435)            188.535   (75.607)
                                    --------  --------  --------  --------
  Repayment of long-term debt        (11.128)    8.143  (538.246)  (75.201)
                                    --------  --------  --------  --------
  Proceeds from issuance of
   long-term debt                                        121.803    72.970
                                    --------  --------  --------  --------

  Net cash (used in) provided by
   financing activities              (14.563)    7.993  (228.058)  (78.589)
                                    ========  ========  ========  ========

  Net (decrease) increase in cash    (48.668)  374.424  (362.124)  347.661
                                    --------  --------  --------  --------
  Cash at beginning of period         87.353    26.385   400.809    53.148
                                    --------  --------  --------  --------
  Cash at end of period               38.685   400.809    38.685   400.809
                                    ========  ========  ========  ========

* Prepared in accordance with International Financial Reporting Standards.

Contact Information

  • TMM COMPANY CONTACT:
    Juan Fernandez
    Chief Financial Officer
    011-52-55-5629-8778
    (Email Contact)

    Brad Skinner
    Investor Relations
    Director TMM Logistics
    011-52-55-5629-8725
    203-247-2420
    (Email Contact)

    Monica Azar
    Manager, Investor Relations
    212-659-4975
    (Email Contact)

    AT DRESNER CORPORATE SERVICES:
    Kristine Walczak (investors, analysts, media)
    312-726-3600
    (Email Contact)