AI assistant
Mirgor Earnings Release 2006
Preview isn't available for this file type.
Download source fileCONTACT IN BUENOS AIRES
Fabio Rozenblum
Mirgor S.A.C.I.F.I.A. Tel: (54-11) 6394-2826
MIRGOR REPORTS RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31st, 2006
Buenos Aires, March 12th, 2007 - 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 2006, ended on December31st, 2006. All figures were prepared according to generally accepted accounting principles in Argentina in Pesos as of December 31, 2006. The closing rate of exchange was P$3.036=US$ 1.0.
For the quarter ended December 31, 2006, the Company reported a net profit of P$ 14.6 million, compared to a net profit of P$ 8.64 million calculated for the same period of the previous year. The Company’s gross margin for the quarter ended on December 31, 2006 was P$ 26.1 million compared to P$15.9 reported for the same period of last year, a 64.2 % increase.
For the quarter ended December 31, 2006 sales increased 84.2% to P$195.3 million, from P$ 106 million for the same quarter of the previous year. This increase was shared almost equally between the growth of residential air conditioning sales and.automobile product sales. In the latter case, market share growth was very important for the Company.
In the case of Interclima condensers, the growth of Mirgor´s demand pushed the sales increase of the plant located in La Tablada.
Air-conditioning unit sales for the quarter were 55,331, a 119.5% increase compared to 25,206 units sold in the same period of last year. Non-air-conditioning units sales were 8,569 an increase of 10.6%, compared to 7,749 units sold during the same period of the previous year. Despite of the increase of this last figure, air conditioning penetration is growing in car production..
During the period, Mirgor also delivered 3,538 instrument panels to Volkswagen Argentina, a 39.8% decrease compared to the 5,873 units delivered on the fourth quarter of 2005. The reduction was due to need of VW to increase its production of the Suran model.
The Company’s administrative expenses increased to P$5.8 million from P$ 3.9 million, a 48.7% increase over the same period of last year. The increase in expenses was due to a small growth of our personnel and inflationary related expenses.
Selling expenses increased during the quarter ended December 31,2006 to P$6.06 million from P$3.19 million reported during the same period of last year, a 90%. Most of these expenses are variably related to sales volumes.
Other income/(expenses) was, P$ (0.23) million on the last quarter of 2006, compared to P$ (0.21) million. They correspond to minor expenses of the Company.
Financial results for the fourth quarter ended December 31, 2006 were neutral. In the same period of the previous year they have already been very small.
Annual results
For the year ended on December 31, 2006, the Company reported a net profit of P$ 40 million, compared to net profit of P$ 19.7 million in fiscal year 2005, an increase of 103%. As in the previous fiscal year the higher sales amounts of 2006 leveraged the result of the Company, which could absorb the higher activity with small increases in its structure.
The Company’s gross margin for the year ended on December 31, 2006 was P$ 80.7 million compared to P$ 47.5 reported for last year, a 70 % increase.
Sales increased 96% to P$ 566.3 million from P$ 288.9 million reported on the year ended on December 31, 2005.
Car production during the year increased 35.1%, reaching the third highest volume of its history. Exports and imports grew in line with production, reaching their historical records in the cases of the last two..
New models lauched recently by the local car manufacturers are helping this export surge of Argentina. Brazil has regained its place as the biggest customer, however, the dependency of our country is much lower than it was in the 90´s. Mexico and Chile are also very important markets for Argentina.
Local demand grew at lower rates, 14.4%, however, it has gotten very close to its maximum of 1994. Many analysts are forecasting that this year the 500,000 cars milestone will be surpassed
Air conditioning unit sales for 2006 increased to 173,228 units, a 91.2% increase compared to 90,593 units sold in the same period of the previous year. Non air-
conditioning sales were 32,994, an increase of 1.3% compared to 32,572 units sold during the same period of the previous year. Air-conditioning penetration on the sales mix of Mirgor increased again to 84% from 74% reported in 2005. As Argentina is specializing in medium sized cars, this is a logical trend which is expected to reach its peak at 90% of car production.
Instrument panel sales were 14,288 units compared to 22,359 sold in the previous year.
The launch of the new car by VW, the Suran, has impacted on the Polo production.
The condenser sales of Interclima changed its focus towards the higher demand of the domestic market. For this reason, considering the plant was working at high occupation levels, the export of units was reduced, especially at the end of the year.
The highest growth reported by the Company in 2006 was in the residential market activity. Its sales volumes increased from 61,425 in 2005 to 179,217 in 2006, a 191.8% growth.
As in the case of the car market, durable goods markets gained from the higher purchasing power and confidence on the preformance of the economic indicators of the country.
The Company´s administrative expenses increased 95.6% during the year ended in December 31st, 2006, to P$ 22.1 million, from P$ 11.3 million reported on the year before. Mirgor had to adapt its structures to a new level of activity. Also the Company had to face increases in its costs, many of which could not be passed further to its Customers.
Selling expenses were 129.6% higher than last year, from P$8.23 million in 2005 to P$ 18.9 million in 2006. These expenses are directly influenced by the higher volumes sold by the Company in 2006 and adjusted by its higher costs.
Other (expenses)/income changed from P$ (0.85) million in 2005 to P$ (0.23) million in 2006 because in the last year there were no additional expenses as it was in the case of fiscal 2005.
Financial results for the year ended on December 31, 2006 were P$ (0.56) million, compared to P$ (6.84) million reported for the same period of 2005.
The Company was able to balance its financial results.
CEO´s Statement
Mr. Roberto Vazquez, Chief Executive Officer of Mirgor, stated, “ We were able to obtain good results for the Company as a consecuence of two important factors. Firstly, our country is enjoying a good recovery of its activity and durable goods play a very significant role. Secondly, we are collecting the results of our hard work of the last years when we decided to diversify our Company and we were also able to obtain new contracts in the automotive industry. Climate Control Products for cars continue to be our main activity, but now we have only around 60% of our sales dependent on this market.
In the automotive business we have been able to profit from the good performance of the last contracts we obtained. VW Suran and Peugeot 307 have started to contribute to our sales amount as we had planned.
Unit sales of car products have exceeded by far our best previous year (1998). Residential units have also grown very much, so we have been forced to expand our facilities in Tierra del Fuego during 2006 to be ready for next year.
During the year we also obtained new contracts for climate control systems for cars. They will allow us to maintain our leadership in this market. Last year, our products were present in more than 50% of the cars assembled in Argentina.
The new orders were given by Peugeot Argentina for the Citroen C4 and by Daimler Chrysler Argentina are scheduled for introduction during 2007.
However, despite all these growth opportunities, there are still some concerns for the near future.
First, the strong competition between the car manufacturers and the need to keep steady prices on exported are reducing our margins and they are requiring new productivities.
Meanwhile, raw materials, salaries and other costs are rising, creating a very difficult bottleneck when theses issues are discussed.
Volume effect and competitive gains were exceeded by these cost increases.
Also, the price controls of the Government have been applied to car manufacturers but we have not seen the same action taken towards raw materials suppliers.
Therefore, we need to work hard to keep our Company in good condition to sustain its profitability and at least to be able to reinvest our benefits to continue to support our customers growth requirements.
With respect to residential air conditioning, we expect the market to continue its current levels.
The big challenge we face is to be able to keep our volumes, considering that many appliances chains are being authorized to manufacture its own products under the promotional regime and this could put at risk the production of the factories already working in Tierra del Fuego.”