Mirgor — Earnings Release 2003

Mar 12, 2004

CONTACT IN BUENOS AIRES

Fabio Rozenblum

Mirgor S.A.C.I.F.I.A. Tel: (011-5411) 4454-2800 x229

corozenblum@mirgor.com.ar

MIRGOR REPORTS RESULTS FOR THE FOURTH QUARTER AND YEAR END FOR THE PERIOD ENDED DECEMBER 31st, 2003

Buenos Aires, March 10th, 2004 - MIRGOR S.A.C.I.F.I.A., (“Mirgor or “the Company­”), Argentina's largest autoparts company listed on the Buenos Aires stock exchange, announced today its results for the 4th quarter of fiscal year 2003, ended on December31st, 2003. All figures were prepared according to generally accepted accounting principles in Argentina in Pesos as of December ­31, 2003. The closing rate of exchange was ­ P$2.935=US$ 1.0.

For the quarter ended December 31, 2003, the Company reported a net profit of P$ 0.80 million, compared to a net loss of P$ 2.97 million calculated for the same period of the previous year (1).The Company’s gross margin for the quarter ended on December 31, 2003 was P$ 5.07 million compared to P$3.06 reported for the same period of last year, a 65.7 % increase.

For the quarter ended December 31, 2003 sales increased 17.6% to P$38.1 million, from P$ 32.4 million for the same quarter of the previous year. The main reason for this change was the recovery of domestic car sales in Argentina and the addition of a full quarter of deliveries of systems to General Motors Argentina for the New Corsa.

Also, sales of Interclima products profited from the recovery of the brazilian car production and for the introduction of a new product (charged air coolers) to a local customer. This high demand required that the plant worked on extra hours, including some Saturdays.

Air-conditioning unit sales for the quarter were 16,274, a 31.8% increase compared to 12,346 units sold in the same period of last year. Non-air-conditioning units sales were 6,487 an increase of 33.6%, compared to 4,857 units sold during the same period of the previous year.

During the period, Mirgor also delivered 4,821 instrument panels to Volkswagen Argentina, a 54% increase compared to the 3,130 units delivered on the fourth quarter of 2002.

The Company’s administrative expenses increased to P$2.0 million from P$ 1.9 million, a 5.3% increase over the same period of last year. The small change is related to the higher levels of activity of the Company. In the case of General Motors, due to the new contract an outsourced operation was set up, to take care of material handling in their plant. This is part of the service levels offered to this customer.

Selling expenses increased during the quarter ended December 31,2003 to P$1.84 million from P$0.89 million reported during the same period of last year as a result of the higher volumes that have to be transported by the Company. Also, Mirgor had an exceptional tax payment in Córdoba because the tax rate had to be recalculated.

Other expenses/(income) had been negative, P$ (0.54)million on the last quarter of last year as a consequence of the deduction of implicit interest on the sale of the property. On the fourth quarter of 2003 this result has been reversed to an income of P$ 0.07 due to the sale of minor assets.

Financial results for the fourth quarter ended December 31, 2003 were P$ 0.15 million, compared to P$(2.78), reported during the same period of the previous year. The main reason was the sharp reduction of interest due to the agreements reached with the banks and asset holding gains resulting from the euro revaluation.

Annual results

For the year ended on December 31, 2003, the Company reported a net loss of P$ 2.9 million, compared to a net loss of P$ 15.2 in fiscal year 2002, a 80.9% decrease. Last´s years results had been strongly influenced by the effect of inflation and the end of the “Convertibilidad” adjustments.

Sales decreased 5.8% to P$ 114.7 million from P$ 122.0 reported on the year ended on December 31, 2002.

Car production during the year increased 6.4% influenced mainly by a recovery of local demand. However, the effect of this revived interest from local consumers could not be fully profited by autoparts manufacturers and local OEM´s. Domestic sales increased 88% during 2003 but most of this demand was focused on imported cars, mainly small ones coming from Brazil.

According to reports made by analysts, consumer confidence increased during the last part of the year (it must be borne in mind that sales levels of 2002 had been extremely low) and they are estimating that this enthusiasm will carry on during 2004.

Air conditioning unit sales for 2003 increased to 41,451 units, a 15.7% increase compared to 35,839 units sold in the same period of the previous year. Non air conditioning sales were 25,065, an increase of 31.5% compared to 19,056 units sold during the same period of the previous year.

Instrument panel sales were 17,739 units compared to 12,695, a 39.7% increase compared to last year, explained by the supply of more versions and a full year of deliveries to VW.

Also, the Company increased its sales of condensers to third customers. Interclima, the company controlled by Mirgor also manufactures condensers that are used in the systems sold by Mirgor. Outside sales were 102,388 in 2003, a 46.5% increase compared to the 69,888 units sold in the same period of last year.

The increase in quantities sold paired to a reduction in sales amount are broken down into detail in the explanation presented below.

• The products sold by the Company have a high content of imported components. The revaluation of the argentine currency was reflected in a reduction of prices and costs, as it had been agreed with all the customers during the inflationary period of 2002. We have estimated that this variation impacted around 16% in our turnover for 2003.
• Another factor that impacted our sales figures was the change in product mix. One example was the replacement of condensers exports, from the Celta to the New Fiesta. The former is has a receiver-drier attached to it, therefore it is a more expensive product. The estimated impact of these type of changes was a fall of 8% in turnover.
• Mirgor was very active in proposing product changes to its customers. The high cost of euro based components presented an opportunity to introduce local replacement at lower costs. This resulted in a consequent lower price offered to the customers, without a margin penalty to the Company. In some cases the improvement is shared with the customers. This issue explains approximately 3% of our sales amount reduction.
• On the other hand, the higher quantities delivered to the customers compensated part of the above results. The estimation is that the higher volumes are responsible for an increase of 22% in turnover.

The Company´s administrative expenses decreased 7.0% during the year ended in December 31st, 2003, to P$ 8.0 million, from P$ 8.6 million reported on the year before.

Despite the new activity required by the introduction of new products and higher sales, Mirgor has been able to sustain a very conservative policy related to fix costs.

Selling expenses were 24.4% higher than last year, from P$2.6 million in 2002 to P$ 3.3 million in 2003. The Company has worked very actively in optimizing transported volumes, in preparation for higher sales in 2004. The cost increase is fully explained by the exceptional payment explained on the 4th quarter paragraph.

Other expenses increased from P$ (0.35) million in 2002 to P$ (1.5) million in 2003.

The amount corresponds to the extraordinary adjustments made during the second and third quarter of the year.

Financial results for the year ended on December 31, 2003 were P$ (1.0) million, compared to P$ (16.1) million reported for the same period of 2003.

The main reason that explains the sharp decrease of financial losses was the stabilization of the economy that helped to stop inflation, to reduce interest rates and to revalute the argentine currency.

CEO´s Statement

Mr. Roberto Vazquez, Chief Executive Officer of Mirgor, stated, “Although we have to comment on the results of the Company for the full year, I would like to start by expressing my satisfaction by the results obtained on the last quarter of the year. I am convinced the the work done during the last two years in the persual of new contracts for the Company will start to have the impact we had expected.

The last two contracts for Renault Clio and General Motors New Corsa make me very proud of the team I am conducting which was able to carry out the objectives we had set up as a challenge to turn around the losses of the last years.

We are quite confident that the big increase in market share and an increase in car production will be the necessary elements to allow us to return to a profitable business.

The attached table details the breakdown of our sales, which allows to foresee a continued growth trend for the year 2004.

	BREAKDOWN OF MIRGOR SALES TO OEM´S (in quantities)*
	2003		2002		DIF
Totals	66,298		54,811		11,487	21.0%
OLD MODELS
SPRINTER	7,349	11.1%	5,357	9.8%	1,992	37.2%
CORSA I	6,873	10.4%	12,853	23.4%	-5,980	-46.5%
PARTNER	6,494	9.8%	5,243	9.6%	1,251	23.9%
KANGOO	4,247	6.4%	4,271	7.8%	-24	-0.6%
MEGANE	4,252	6.4%	3,040	5.5%	1,212	39.9%
GOL	545	0.8%	2,733	5.0%	-2,188	-80.1%
POLO	18,851	28.4%	13,814	25.2%	5,037	36.5%
CORDOBA	0	0.0%	763	1.4%	-763
CADDY	1,819	2.7%	1,670	3.0%	149	8.9%
XSARA	0	0.0%	3,576	6.5%	-3,576
Subtotal	50,430	76.1%	53,320	97.3%	686	-5.4%
NEW MODELS
CORSA II	8,815		0		8,815
CLIO	7,053		1,491		5,562	373.0%
Subtotal	15,868		1,491		14,377	964.3%

* Sales of after market units have not been included

One relevant aspect to highlight is the approval given by the Secretary of Industry to Interclima which allows the Company to substitute its products in the old plant heat exchanger plant of Tierra del Fuegon.The plant had not had a significant activity since 2001.

The Company is studying alternatives to reopen the plant.

We have several plans to foster new projects that are available in the market.

We expect to be able to exceed a 40% participation in all the new vehicles assembled in Argentina during 2004, maybe even surpassing our best year, 1992 when we had a 44% market share.

Also, the production figures announced so far in 2004 and the estimations of the car manufacturers project a better performance for the current fiscal year.

1. During the present year, as a consecuence of new accounting rules effective on January 1st, 2003, the Company has absorbed accumulated results as of December 31st, 2002.

The total amount of the consolidated loss was P$ 2.98 million and it is mainly related to the valuation of credits and liabilities at its present value (to be collected or paid whatever is applicable).