Vitro Reports Second Quarter Sales; Rise of 4.7 Percent in Automotive Sales
July 27, 2012

by Erica Terrini,

Vitro has released its second quarter figures, which includes a rise of 4.7 percent for the company’s automotive sales that stem from increased volumes in the original equipment manufacturer (OEM) market. According to the San Pedro, Mexico-based company, OEM sales have risen by 21 percent – this counters a 12 percent decrease within the automotive glass replacement market, which occurred because of the depreciation of the Mexican peso and the deferment of capacity to the OEM market.

Hugo Lara, Vitro CEO, says the company reported “solid business growth” overall during the 2012 second quarter. Consolidated revenues rose by 12.3 percent in local currency but if measured in U.S. dollars, revenues are negative because of the depreciation of the Mexican peso. Still, the earnings before interest, taxes, depreciation, and amortization (EBITDA) were solid throughout 2011 and this year.

“EBITDA remained strong, driven by a better price mix and sales of higher value added products,” says Lara. “Increased production levels and lower natural gas prices, one of our main inputs, resulted in better fixed cost absorption throughout our facilities, and also contributed to this performance. These factors more than offset the increase in electricity prices, particularly at flat glass, derived from the electricity and steam supply interruption ...”

According to Vitro, because of an increase in higher value and “strong price-mix” of glass products and flat glass there was a rise in consolidated sales if measured in Mexican currency but the company reports a 3 percent decrease of sales ($447 million) when measured in U.S. dollars.

Within the report, Vitro officials also commented on the U.S. Court of Appeals for the Fifth Circuit’s recent ruling that granted the company the right to appeal a Texas court’s ruling to not enforce Vitro's Mexican Plan of Reorganization in the U.S.

Claudio Del Valle, Vitro’s chief restructuring officer says the string of court decisions has not prohibited the company’s current dealings with its customers.

“On June 19, Vitro filed an appeal following the ruling by the U.S. Bankruptcy Court denying the enforcement in the U.S. of Vitro’s Mexican court-approved Concurso Plan,” says Valle. “On July 16, 2012 the Temporary Restraining Order (TRO) ordered by the U.S. Bankruptcy Court in Dallas, Texas was extended. This extension will allow the Company to continue to do business with its customers uninterrupted, during the pendency of the appeal or until further order by the Court.”

Lara says the company is satisfied with the state of its Concurso Plan.

“We are very pleased with the operating results and the approval of our Concurso process in Mexico and remain focused on providing efficient service to our clients and to protecting the interests of our shareholders, suppliers, creditors and customers with whom we maintain long and productive business relationships by continuing to show solid operating results,” says Lara. “We also remain optimistic about having the appeal process resolved in due course.”

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