Mirgor — Interim / Quarterly Report 2004

Aug 11, 2004

CONTACT IN BUENOS AIRES

Fabio Rozenblum

Mirgor S.A.C.I.F.I.A. Tel: (011-5411) 6394-2826

corozenblum@mirgor.com.ar

MIRGOR REPORTS RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2004

Buenos Aires, August 11th 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 2nd quarter of fiscal year 2004, ended on June 30 2004. All figures were prepared according to generally accepted accounting principles in Argentina in Pesos as of June 30, 2004. The closing rate of exchange was ­ P$2.935=US$ 1.0.

For the quarter ended June 30, 2004, the Company reported a net profit of P$ 0.70 million, compared to a net loss of P$ 2.16 million calculated for the same period of the previous year. The Company’s gross margin for the quarter ended on June 30, 2004 was P$ 5.15 million compared to P$2.00 reported for the same period of last year, a 157.5 % increase.

For the quarter ended June 30, 2004 sales increased 64.9% to P$43.7 million, from P$ 26.5 million for the same quarter of the previous year. The main reason for this change, as it was reported on the first quarter of this year, 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.

Air-conditioning unit sales for the quarter were 18,824, a 107.3% increase compared to 9,081 units sold in the same period of last year. Non-air-conditioning units sales were 8,789 an increase of 27.0%, compared to 6,921 units sold during the same period of the previous year.

During the period, Mirgor also delivered 5,020 instrument panels to Volkswagen Argentina, a 13.3% increase compared to the 4,432 units delivered on the second quarter of 2003.

The Company’s administrative expenses increased to P$2,33 million from P$ 1.96 million, a 19 % increase over the same period of last year. The change is related to the higher levels of activity of the Company and the addition of the outsourced logistics operation at General Motors and some inflationary recongitions. Mirgor is adapting its structure to the new levels as a once and for all adjustment.

Selling expenses increased during the quarter ended June 30, 2004 to P$0.94 million from P$0.40 million, a 136% increase over the expenses reported during the same period of last year as a result of the higher volumes that have to be transported by the Company. Freight costs have increased significantly during the last 12 months but a delay in recognition had been negotiated. However, the high cost of gasoline and amortization had finally been passed to the transport cost. The Company is transferring these increases to its selling prices.

Other (expenses)/income had been, P$ (0.59) million on the second quarter and this quarter the expense was reduced to P$ (0.19).

Financial results for the second quarter ended June 30, 2004 were P$ (0.68) million, compared to P$ (1.15), reported during the same period of the previous year. The main reason was the devaluation of the peso and interest expenses which partially conmpensated by asset holding gains based on the same reason.

CEO´s Statement

Mr. Roberto Vazquez, Chief Executive Officer of Mirgor, stated, “ The second quarter of the year has confirmed the trend started on the first period. The economy continues to grow and so does car production and sales.

Domestic car sales have grown 234% on the first semester and production has increased 48%. There are new upgraded forecasts once again. Still more important is the fact that we have known that in a study made by the automotive value chain, there are scenarios where car production can recover to the levels seen in 1998 by the years 2007/8.

Our sales are accompanying the production increase and also we are enjoying the new market share related to the contracts obtained last year.

Air conditioning penetration is still higher than last year and in the second quarter it grew from 57% in the second quarter of last year to 68% on the same period of this year.

Our higher sales and improved gross margins leverage our fixed cost structure and allow us to obtain positive net results.

The growth trend seems to be here to stay but we are never satisfied and we are always looking for new opportunities in the market. In this sense we are glad to confirm that Peugeot awarded a new contract to the Company.

This time it is a condenser for the Peugeot 206, which will add around 2000 pieces per month to our plant in Buenos Aires.

Our optimism is very high taking into account that we are working in other projects that can not only increase our sales in the short future but also because some of them represent longer term opportunities in the market.

With reference to Interclima, under the “product substitution scheme”, approved by the Secretary of Industry, we expect to start the necessary investments on the Plant of Rio Grande to produce and sell residential air conditioning units in the coming months.

Finally, I would like to add that we are very glad to see a strong effort from the Minister of Economy and the Secretary of Industry, with the creation of the Foro de Competitividad de la Industria Automotriz, in order to lay out a framework for the long term sustainability of our industry.”

MIRGOR S.A.C.I.F.I.A.- Consolidated Balance Sheet as of June 30th, 2004
(in thousands of pesos, except per share amounts)
ASSETS				2004		2003
Cash				11,172		11,973	-6.7%
Short term investments				2		2	0.0%
Accounts receivable				17,119		11,240	52.3%
Inventories				48,579		33,008	47.2%
Fiscal credits				231		486	-52.5%
Other credits				1,034		1,656	-37.6%
Total Current Assets				78,137		58,365	33.9%
Property, plant and equipment				21,363		25,129	-15.0%
(net of amortization and depreciation)
Intangible Assets				395		138	186.2%
Other credits				3,558		4,293	-17.1%
Fiscal credits				6,457		6,177	4.5%
Total				31,773		35,737	-11.1%
Total Assets				109,910		94,102	16.8%
CURRENT LIABILITIES
Commercial liabilities				28,213		10,276	174.6%
Bank debt				10,275		8,752	17.4%
Social and tax liablities				3,927		1,700	131.0%
Customer prepayments				4,315		2,914	48.1%
allowances				0		164	-100.0%
Other liabilities				274		145	89.0%
Total Current liabilities				47,004		23,951	96.3%
NON CURRENT LIBILITIES
Bank loans				6,448		11,418	-43.5%
Customer prepayments				0		3,892	-100.0%
Total Non Current liabilities				6,448		15,310	-57.9%
Common stock		20000000		0		0
Paid in capital				0		0
Retained earnings				0		0
Deferred compensation				0		0
Total liabilities				53,452		39,261	36.1%
Minority Participation				4		4	0.0%
Total stockholders equity				56,454		54,837	2.9%
Total Liabilities and share holders equity				109,910		94,102	16.8%

MIRGOR S.A.C.I.F.I.A.- Consolidated Statements of Income- As of June 30th, 2004
(in thousands of pesos, except per share amounts)
										Dif
			2nd Q 2004				2nd Q 2003			2004-2003
Net Sales			43,675				26,473			17,202	65.0%
Cost of sales			-38,527	-88.2%			-24,471	-92.4%		-14,056	57.4%
Gross profit			5,148	11.8%			2,002	7.6%		3,146	157.1%
Administrative expenses			-2,334	-5.3%			-1,961	-7.4%		-373	19.0%
Selling expenses			-943	-2.2%			-400	-1.5%		-543	135.8%
Other expenses/income			-186	-0.4%			-594	-2.2%		408	-68.7%
Financial expenses and holding losses
from assets			1,042	2.4%			-2,528	-9.5%
Interest		-36		-0.1%		-463		-1.7%		427	-92.2%
foreign exchange difference		129		0.3%		-461		-1.7%		590	-128.0%
holding gains (losses) – inventories		1,224		2.8%		-1,603		-6.1%		2,827	-176.4%
holding gains (losses) allowances / provisions		-240		-0.5%		285		1.1%		-525	-184.2%
gain (loss) on exposure to inflation		0		0.0%		-416		-1.6%		416	-100.0%
current investments and tax credits		-35		-0.1%		130		0.5%		-165	-126.9%
from liabilities			-1,724	-3.9%			1,379	5.2%
Interest		-529		-1.2%		-397		-1.5%		-132	33.2%
exchange rate difference		-1,195		-2.7%		1,371		5.2%		-2,566	-187.2%
gain (loss) on exposure to inflation		0		0.0%		416		1.6%		-416	-100.0%
Loss from long term investments		0		0.0%		-11		0.0%		11	-100.0%
E B I T			1,003	2.3%			-2,102	-7.9%		3,105	-147.7%
From subsidiaries			0	0.0%			0	0.0%		0
Income tax			-302	-0.7%			-53	-0.2%		-249	469.8%
Net Ordinary Income			701	1.6%			-2,155	-8.1%		2,856	-132.5%
Extraordinary results			0	0.0%			0	0.0%		0
Total net earnings/losses			701	1.6%			-2,155	-8.1%		2,856	-132.5%
Net earnings per share			0				-0			0

MIRGOR S.A.C.I.F.I.A.- Statements of Cash Flows
as of June 30th, 2004
		2004		2003
Changes in cash
cash at beginning of year		13,782		14,014
cash at end of year		11,173		11,974
cash (decrease) increase		-2,609		-2,040
Sources of changes in cash
Operating Activities
Ordinary income (loss) for the year		1,063		-3,461
Interest and translation difference produced upon debt		679		-2,138
Income tax		560		103
Adjustments to reach net cash flows deriving from operating activities
PP&E depreciation and intangible assets amortization		2,478		2,778
Minority interest		0		0
Provision for unrecoverable inventories		52		-976
Loss on long-term investments		0		21
Result on current investments		0		0
Contingency Provision		0		-879
Impairment in value of PP&E paid in advance from exposure to inflation		0		2
Changes in operating assets and liabilities:
Accounts receivables		-1,617		-2,434
Inventories		-11,931		8,784
Commercial liabilities		7,974		-1,364
Salaries, payroll and other taxes (net of receivables)		-51		96
Customer prepayments		-1,497		382
Other receivables/payables		237		1,226
Interest payed		-496		-1,450
Net Cash Flow Provided by operating
Activities		-2,549		690
Investment activities
Purchases of property, plant and equipment		-946		-195
Intangible investment		-435		0
Net Cash flow used in investment activities		-1,381		-195
Financing Activities
Loan Repayment		-3,079		-2,535
Income for short term loan		4,400		0
Net cash Flow used in financing activities		1,321		-2,535
Net cash (decrease) increase		-2,609		-2,040