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Mirgor Earnings Release 2003
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Download source fileCONTACT IN BUENOS AIRES
Fabio Rozenblum
Mirgor S.A.C.I.F.I.A. Tel: (011-5411) 4454-2800 x229
MIRGOR REPORTS RESULTS FOR THE THIRD QUARTER
OF 2003
Buenos Aires, November 10th, 2003 - MIRGOR S.A.C.I.F.I.A., (“Mirgor or “the Company”), Argentina´s largest autoparts manufacturer listed on the Buenos Aires Stock Exchange, announced today its results for the 3rd quarter of 2003, ended on September 30th 2003. All figures were prepared according to generally accepted accounting principles in Argentina.
For the quarter ended on September 30th, 2003, the Company reported a net loss of P$ 0.35 million, compared to a net loss of P$ 2.06 million calculated for the same period of the previous year. The Company´s gross margin for the quarter ended on September 30th, 2003 was P$ 2.80 million compared to P$4.49 informed for the same period of the previous year, representing a reduction of 37.6%.
Margins were affected by the negotiations with General Motors that led to the start of production of the new Corsa. Mirgor had to buy out the customer´s inventories. This negative factor will be compensated in the coming months with a higher sales level.
Also, the salary negotiations with the Steel Workers Union for Tierra del Fuego (U.O.M) ended up in an increase (due to the Presidential Decrees) which impacted the mentioned margins.
Sales decreased 15.0% on the quarter ended on September 30th, 2003, to P$30.1 million, from P$ 35.3 million on the same quarter of last year.
Air conditioning sales on the quarter were 10,518 units, a 3.5% decrease compared to 10,518 units sold on the same period of the previous year.
Non airconditioning systems sales were 6,678, representing a 2.4% increase compared to 6,524 units sold during the same period of the precedent year.
Instrument panel sales increased 36.4% during the quarter compared to the same period of last year.
The fall of sales figures has two main causes. The most important is related to the revaluation of the peso compared to the dollar, which automatically reduces the Company´s sales prices in local currency.
It has to be remarked that after the devaluations of last year, Mirgor agreed with its customers a price adjustment clause based on the cost structures presented to each of them. The rate of exchange at the end of the 3rd quarter of last year was 3.64 P$ per dollar, while at the end of the same period of this year it was 2.81 P$ per dollar.
The second reason that explains the reduction, although with a lower impact, was the growth in sales of products with lower sales value (1).
The Company´s administrative expenses increased to P$2.21 million, from P$ 2.15 million spent on the same period of 2002, 2.8% more. The Company continues with its policy of adjustments to the new environement, taking care of not reducing the quality of service required by its customers. This small variation will not change the previous downward trend.
Selling expenses decreased 24,5% during the quarter ended on September 30th, 2003 to P$0.57 million from P$0.76 million reported for the same period of the previous year, which are also part of the adjustments explained on the previous paragraph.
Other income/other losses, reversed to a loss from P$0.03 on the third quarter of this year compared to a profit of P$0.32 on the same period of last year. This is an acceptable result, considering it includes interest payments and other small expenses.
Financial expenses for the quarter ended on September 30th, 2003 were P$ (0.05) million, compared with P$(3.95), announced for the same period of the previous year. The large reduction corresponds to the price stabilization of the economy, what resulted in the government decision to eliminate the inflation adjustment requirement from company´s statements.
CEO´s statements
Mr. Roberto Vazquez, Chief Executive Officer of Mirgor, stated, “The news about the growth trend of the industrial production of the country has not had the same effect on the auto industry. So far this year, car manufacturers have increased their production 3.7% as a result of the expansion of exports outside of Mercosur.
It becomes mandatory that the government and the private sector set up an agenda to work on a strategy to allow the upgrade of the product lines of the industry.
This is the only way in which we will be able to mantain our export markets which permit us to offset the big fall of the local market.
The relaunching of the Boden plan (2), used only on locally made cars has given a small impulse to local demand. This has led to a slight increase on the short term production plans of our customers.
Our unit sales should grow, from now on, at a faster rate than the market growth, thanks to the new purchase orders obtained.
The most relevant news of the quarter was the confirmation of the contract with General Motors for the climate control systems of the “New Corsa”. It took us a lot of months and a great effort of our people and now we are very stimulated as we start 2004 with a very good market penetration of our products.
Even if production next year remains at the same levels, our sales volumes will increase significantly.
While we wait for the automotive industry to receive the effects of the recovery of the rest of the economy, we will not remain steady and we will be very attentive to new opportunities for growth.
- The products sold by Mirgor are very different between each other, based on the customer´s specifications. This means that a change in customer sales mix and of product mix will alter the Company´s average sales prices.
This is more easily noticed on the sales of systems for cars without air conditioning.
- Boden is a government bond sold under par, which allows the buyer to obtain a discount on the purchase of a new car.