Investor Relations: Mariana Rojo [email protected]www.kuo.com.mx Media: Verónica Díez [email protected]Francisco Galindo [email protected]aerospace aftermarket dynasol elastomers herdez del fuerte plastics pork meat power systems by Mexico City, February 19 th , 2013. Grupo KUO, S.A.B. de C.V. (BMV: KUO) (Grupo KUO) reports its (unaudited) results for the fiscal period ended on December 31 st , 2012 and the fourth quarter of the same year. HIGHLIGHTS 2012 vs. 2011 Sales increased 6% to US $2.214 billion. EBITDA continued growing and rising by 16% this year to US $215 million, with an EBITDA margin of 10%. EBITDA includes non-recurring income of US $8 million from the valuation and registration of the FRITEC ® brand, acquired by the Aftermarket “SBU”. Operating profit significantly increased by 30%, reaching US $149 million. Majority Net Income (Controlling Interest) rose 17%, reaching US $28 million. HIGHLIGHTS 4Q12 vs. 4Q11 Sales increased 9% to reach US $527 million. EBITDA rose 24% to US $51 million, with an EBITDA margin of 10%, including the abovementioned nonrecurring income of US $8 million. Operating profit grew by 55% reaching US $34 million. “The sales and cash flow generation growth that we achieved in 2012 are a reflection of the composition of the business portfolio that we have built in recent years and of the continued discipline in the financial structure of the company. Last year's results reinforce our commitment to continue on this growth trend”, said Juan Marco Gutiérrez Wanless, Grupo KUO’s CEO, on this report. Grupo KUO, S.A.B. de C.V. and Subsidiaries Unaudited Consolidated Results (Millions of dollars) Variation Variation 2012 2011 2012 2011 Sales US $ 527 483 9% 2,214 2,083 6% Exports US $ 225 217 4% 1,049 997 5% Operating Profit US $ 34 22 55% 149 115 30% Operating Margin US 6% 5% 7% 6% EBITDA US $ 51 41 24% 215 186 16% EBITDA Margin US 10% 8% 10% 9% Controlling interest US $ -6 10 N/A 28 24 17% Accumulated Fourth Quarter
aerospace aftermarket dynasol elastomers herdez del fuerte plastics pork meat power systems by
Mexico City, February 19th, 2013.
Grupo KUO, S.A.B. de C.V. (BMV: KUO) (Grupo KUO) reports its (unaudited) results for the fiscal period ended on December 31
st, 2012 and the fourth quarter of the same year.
HIGHLIGHTS 2012 vs. 2011
Sales increased 6% to US $2.214 billion.
EBITDA continued growing and rising by 16% this year to US $215 million, with an EBITDA margin of 10%.
EBITDA includes non-recurring income of US $8 million from the valuation and registration of the FRITEC
® brand, acquired by the Aftermarket “SBU”.
Operating profit significantly increased by 30%, reaching US $149 million.
Majority Net Income (Controlling Interest) rose 17%, reaching US $28 million.
HIGHLIGHTS 4Q12 vs. 4Q11
Sales increased 9% to reach US $527 million.
EBITDA rose 24% to US $51 million, with an EBITDA margin of 10%, including the abovementioned nonrecurring income of US $8 million.
Operating profit grew by 55% reaching US $34 million.
“The sales and cash flow generation growth that we achieved in 2012 are a reflection of the composition of the business portfolio that we have built in recent years and of the continued discipline in the financial structure of the company. Last year's results reinforce our commitment to continue on this growth trend”, said Juan Marco Gutiérrez Wanless, Grupo KUO’s CEO, on this report.
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Explanatory note: The latest annual consolidated financial statements of the Company which were prepared under the Mexican Financial Reporting Standards ("NIF") are as of December 31, 2011. Accordingly, for comparability purposes, the consolidated financial statements as of December 31, 2011 and for the year then ended included in this report have been restated in accordance with the requirements of the International Financial Reporting Standards (“IFRS”), except for determining the EBITDA. The EBITDA calculation is determined as follows: Operating Profit plus depreciation and amortization (including the period’s cost for labor obligations). As of December 31st, 2012 the result of the joint ventures we have with our partners is recognized by the proportionate consolidation method. In the specific case of the carbon black business, consolidation of results is done at 100% as we control the business, and the 40% non-controlling participation is revealed. According to IFRS 11 “Joint Arrangements”, from 2013, the result of the joint ventures is recognized by the equity method. The results for 4Q12 and 4Q11 and accrued as of 4Q12 and 4Q11, as well as the financial position statement for 4Q12 present the particleboard and laminated business of the Consumer Sector and the Bioenergy and Macro-M projects as discontinued operations in accordance with IFRS 5 “Assets held for sale and discontinued operations”. The information and comparisons are presented either in millions of pesos or millions of dollars as indicated; consequently, the figures are obtained by rounding out the decimals to the nearest whole number, therefore percentage variations are calculated with rounded numbers. The dollar figures are calculated on the basis of dividing current pesos of each month by the monthly average exchange rate. Export figures are determined on the basis of Actual Sales invoiced in U.S. dollars.
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SALES AND EXPORTS
In 2012, sales continued to grow consistently, recording a 6% rise in dollars compared to the previous year, due to higher revenues in KUO Automotive, which had the largest increase with 27% and in KUO Consumer with 10%, which helped offset the slight 2% decrease in KUO Chemical. In pesos, sales rose by 13% thanks to higher sales in the three sectors: 35% in KUO Automotive, 16% in KUO Consumer and 5% in KUO Chemical.
Sales in 4Q12 were US $527 million, a 9% increase compared with 4Q11, therefore maintaining their upward trend, this was due to the impressive 35% sales increase in KUO Automotive, and the 13% positive performance of KUO Consumer which offset the slight 3% sales decline in KUO Chemical. In pesos, sales rose by 4%, with 29% in KUO Automotive and 8% in KUO Consumer which offset the 7% decrease in KUO Chemical.
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In accrued figures as of December 2012 the contribution to consolidated sales in dollars by KUO Chemical was 49%, while KUO Consumer provided 32% and KUO Automotive, 19%. In pesos percentages keep the same proportion. In 4Q12 the contribution to consolidated sales in dollars by KUO Chemical was 43%, while KUO Consumer provided 37% and KUO Automotive 20%. In pesos percentages keep the same proportion.
In 2012, total exports in dollars recorded an increase of 5% compared to the end of 2011 reaching US $1.049 billion, this is explained by the 30% increase in exports of KUO Consumer and of 18% in KUO Automotive, which allowed for the 5% decline in exports in KUO Chemical to be offset. The share of exports to total sales during the year was 47%. During the fourth quarter of 2012, total exports in dollars showed a 4% increase compared with the same quarter of 2011, reaching US $225 million. The share of exports to total sales during this period was 43%, due to the increase in domestic sales, mainly as a result of the valuation and recognition of the FRITEC® brand.
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OPERATING PROFIT AND EBITDA
Accrued operating profit and EBITDA, in terms of dollars as of December 2012, recorded significant growths of 30% and 16%, respectively, when compared to the previous year, reaching US $149 million and US $215 million, respectively. This is due to the aforementioned increase in sales and the higher generation in the three sectors derived from organic growth and the acquisitions made during the year, as well as operational efficiencies and the focus on higher value-added products. Both operating profit and EBITDA include non-recurring income of US $8 million resulting from the registration of the FRITEC® brand. Excluding this effect, growth in operating profit would be 23%, while growth in EBITDA would be 11%. In pesos, these items recorded increases of 38% and 23%, to reach $1.967 billion and $2.829 billion, respectively. Operating profit and EBITDA in dollars for 4Q12 recorded increases of 55% and 24%, respectively, when compared to 4Q11, reaching US $34 million and US $51 million, respectively, including the abovementioned nonrecurring income of US $8 million. Excluding this effect, growth in operating profit would have been 18%, while growth in EBITDA would have been 5%. In pesos, these items reported increases of 52% and 18%, to reach $447 million and $663 million, respectively.
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37%
38%
25%
Accum. EBITDA 2012
KUO Consumer KUO Chemical KUO Automotive
It should be noted that for the year ended on December 2012 KUO Chemical contributed 38% of the accrued consolidated EBITDA in dollars, while KUO Consumer and KUO Automotive contributed 37% and 25%, respectively, thanks to the strategy in each of these sectors of focusing in the business lines that generate the greatest benefit for our stakeholders. Excluding the effect of the non-recurring income of US $8 million from the registration of the FRITEC® brand, KUO Chemical contributed 40% of the accrued consolidated EBITDA in dollars as of December 2012, while KUO Consumer provided 39% and KUO Automotive 21%. In 4Q12 KUO Consumer contributed 41% of consolidated EBITDA in dollars and KUO Automotive 37%, while KUO Chemical provided 22%. In pesos percentages keep the same proportion.
Excluding the effect of the non-recurring income for the registration of the FRITEC® brand by US $8 million in 4Q12, KUO Consumer accounted for 49% of the consolidated EBITDA in dollars and KUO Automotive for 26%, while KUO Chemical contributed 25%.
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FINANCIAL EXPENSES / INCOME
In 2012, net financial expenses of US $60 million were recorded primarily due to bank interests of US $37 million and other net financing costs of US $31 million, which include among others, the non-recurrent expense of US $14 million for premium resulting from the prepayment of the US $250 million bond issued in 2007. Excluding this non-recurring expenses, net financial expenses rose to US $46 millions. These financial expenses mentioned were not offset by the net exchange gain of US $5 million due to the appreciation of the peso in 2012, from 13.8483 to 13.0101 pesos per dollar, together with the US $3 million in interest earned during the period. In pesos this item recorded $762 million. During 4Q12 net financial expenses of US $30 million were recorded primarily due to bank interests of US $9 million and other net financial expenses totaling US $18 million, that include, among others, the non-recurring expenses related to the aforementioned issuance of the new bond and the premium paid for the earlier bond; and the depreciation of the peso during the period, from 12.9170 to 13.0101 pesos per dollar, representing a net exchange loss of US $3 million. Excluding this non-recurring expenses, net financial expenses rose to US $16 million. In pesos, financial expenses of $388 million were recorded. INCOME TAXES Income taxes in 2012 were US $36 million, comprising US $33 million in current taxes and US $3 million in deferred taxes. In pesos, this item recorded $467 million. This is explained by the increase in business profits. Income taxes in 4Q12 were US $453 thousand, in terms of pesos, this item recorded $6 million. DISCONTINUED OPERATIONS
The loss from discontinued operations in 2012 amounted to US $22 million, which was primarily composed of the provision recorded for the availability for sale of the Particleboard business, whose income will be recognized once the transaction closes in 2013, and by the discontinuation of the nanotechnology and jatropha bioenergy projects. In pesos, this item recorded a $292 million loss. The loss from discontinued operations in 4Q12 was US $9 million. In pesos, this item recorded a $124 million loss.
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NET MAJORITY RESULT (CONTROLLING INTEREST)
The accrued Majority Net Result (Controlling Interest) in 2012 recorded a 17% increase, reaching US $28 million, and is explained by the generated operating profit, which was reduced by non-recurring charges such as the US $14 million premium resulted from the prepayment of the US $250 million bond issued in 2007, as well as by the discontinuation of the nanotechnology and bioenergy projects. In pesos this item was $389 million. In 4Q12, the Net Majority Result (Controlling Interest) was US -$6 million, for the abovementioned reasons. In pesos, this item was -$74 million.
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INVESTMENT IN PRODUCTIVE ASSETS (CAPEX)
Investment in productive assets during 4Q12 totaled US $38 million, while during 2012 the investment was US $108 million, mainly consisting of:
Pork Meat “SBU” − Investments were carried out mainly to expand farms in order to increase pigs’
annual production by 21%, and to increase production capacity of the feed plant by 60%, as well as to open new stores, reaching to 203 from 170.
Elastomers “SBU” − Investment in the development of specialty synthetic rubber, used in the production
of green tires. − The U.S. Patent Office granted us a patent to produce silane, hydrofobated silica,
silica masterbatch and rubber products. − The project to optimize installed capacity for production of carbon black continued. − Construction of the emulsion rubber plant located in Nanjing, China commenced,
as part of the 50/50 partnership signed with Jiangsu GPRO Group Co. Ltd. (“GPRO”).
Herdez Del Fuerte JV − Investment in the machinery modernization project to increase the productivity of
the Santa Rosa tomato paste plant continues. − Additionally, a project that will increase the capacity of avocado processing plant in
Mexico was carried out. − Improvement projects in overseas operations continued.
Dynasol “SBU” − Investment in revamping of the marine terminal in Santander, Spain. − Construction of the synthetic rubber plant in Liaoning, China began, through the
50/50 JV with Shanxi Northern Xing'an Chemical Industry Co. Ltd. ("SNXCI"). − Investment for the production of synthetic rubber in solution whose characteristics
will reduce the use of bromine in the retardants’ segment. − Investment to increase the production capacity of specialty synthetic rubber in
solution from a hydrogenation process. − Bale packaging capacity was installed for specialty products with performance
properties for oil that withstand high and/or low engine temperatures in the automotive industry.
Power Systems “SBU” − Investment for developing the TR6070 transmission for the new Corvette and the
TR3160 transmission for the newly launched Cadillac, as well as for the development of the infrastructure for the production of transmission components for Volvo.
Aftermarket “SBU” − Investment in product integration for engine lines and the expanding and
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DEBT Net Debt stood at US $423 million increasing by US $27 million because of the debt refinancing and investments in working capital and fixed assets resulting from businesses’ operations during 4Q12. Likewise, Total Debt was US $496 million, representing a 6% increase when compared to 3Q12. On November 29th, 2012 a US $325 million Bond due in 2022 was issued at a 6.25% rate. The proceeds from this issuance were primarily used to pay for the tender offer of the 9.75% Bond maturing in 2017, which will generate annual savings in interest expenses in future years of approximately US $8.75 million, and significantly improves the amortization profile, thus freeing cash flows that may be used for the company’s growth. At the end of 2012, the average life of the debt was 7.9 years, while as of 3Q12 it stood at 4.6 years. At the end of 2012, debt mix by currency was 68% in dollars and 32% in pesos, while by rate 35% was floating and 65% was fixed. The maturity profile at the end
of the year was 97% long-term and 3% short-term. At the end of 2012 the cost of debt was 6.5% which results of 6.3% in dollars and 6.8% in pesos, and it compares with a cost of 8.2% at the end of 2011, composed of 8.3% in dollars and 7.4% in pesos. The leverage ratio at the end of 4Q12 stands at 1.97x, while the interest coverage ratio stands at 5.8x and the capitalization ratio at 0.44x, despite the significant investments made during the year.
*This Maturity Profile does not include the effect of US $6 million resulting from the application of the amortized cost method under IFRS.
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Share Price Behavior in 2012 KUO “B” series
Value per Share
(MXN)
As of December 31st 2012, the book value per share decreased $0.28 pesos when compared to December 2011 despite a better net result, because of the decreased conversion effect by approximately $400 million, as a result of the exchange rate variation of $13.0101 per dollar as of December 2012 against the $13.8483 pesos as of December 2011.
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2012 HIGHLIGHTS (Ranked by importance)
On November 29th, 2012, Grupo KUO issued very successfully a Bond in the international
markets for a total of US $325 million at an annual rate of 6.25% and a 2022 maturity. The proceeds from this issuance were primarily used to fund the tender offer for its outstanding debt securities with a 9.75% rate maturing in 2017.
Senior Notes (Certificados Bursátiles) by $700 million were placed on June 22nd
, 2012 –a portion of a $2 billion program–. The Notes have a seven year maturity, pay a variable interest rate of TIIE plus 220 basis points and have a rating of “A (mex)” by Fitch Mexico and of “mxA” by Standard & Poor's.
Unconditional approval was received from the Federal Competition Commission (COFECO by its Spanish acronym) to complete the sale of the assets of the particleboard and laminates business to Maderas y Sintéticos de México, S.A. de C.V. (Masisa) on January 28
th, 2013. The transaction includes the sale of the laminates and resins plant in
Lerma, State of Mexico and the particleboard plants in Chihuahua, Chihuahua and Zitacuaro, Michoacán, as well as the Rexcel, Panelart and Wilsonart brands, among others. Upon closing of the transaction an amount of US $54.2 million plus the corresponding operating working capital will be received.
The participation in the equity of KUO Divgi Automotive Private Limited (“KUO Divgi”) was increased on January 31
st, 2013 to 100% through the subsidiary KUO India, S.A. de C.V.
Additionally the company’s name changed to Tremec Automotive India Private Limited.
The foundation stone of the Butadiene Nitrile Rubber manufacturing plant, in Nanjing Jiangsu Province, China was laid on June 28
th, 2012 through the 50/50 partnership (JV)
with the Chinese company Jiangsu GPRO Group Co. Ltd. (“GPRO”).
A dividend was paid to shareholders on June 28th, 2012 through a cash reimbursement
per agreement of Grupo KUO’s Annual General Ordinary and Extraordinary Shareholders Meeting held on April 23
rd, 2012 by an amount of $118,655,198.48 in order to distribute
$0.26 pesos to each of the outstanding shares.
The rating agency Standard & Poor's affirmed Grupo KUO ratings as follows: Global Scale “BB”, Domestic scale “mxA”, US $250 million Senior Notes due 2017 at “BB”, $700 million Peso Notes maturing on 2015 at “mxA” and $700 million Peso Notes maturing on 2019 at “mxA”. The ratings outlook is stable.
The rating agency Fitch Ratings affirmed Grupo KUO ratings as follows: Issuer Default Rating (IDR) in Foreign Currency Global Scale at “BB”, IDR rating in Local Currency “BB”, National Scale Long Term Rating “A (mex)”, US $250 million Senior Notes due 2017 at “BB”, $700 million Peso Notes due on 2015 at “A (mex)”. The ratings outlook is stable.
Grupo KUO and its subsidiary Kekén (Pork Meat “SBU”) received the Socially Responsible Company distinction (ESR by its Spanish acronym) from the Mexican Center for Philanthropy (CEMEFI by its Spanish acronym) and the Alliance for Corporate Social Responsibility (AliaRSE by its Spanish acronym), this recogniztion is granted to organizations that meet corporate social responsibility standards.
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RESULTS BY BUSINESS
Note: As a result of the previously mentioned divestiture process of the Particleboard SBU, in the consumer sector, the results of this business are not inlcuded.
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During 2012 sales in pesos of branded products, showed a 19% increase from $4.170 billion to $4.951 billion, primarily due to higher sales in the United States, resulting from the incorporation of the Fresherized Foods operations and the greater market participation of this business. The accrued dollar sales rose by 12% from US $335 million to US $376 million. During 4Q12 sales in pesos rose by 8% against 4Q11, reaching $1.325 billion, primarily because of the aforementioned sales in the United States. Dollar sales for 4Q12 were US $102 million, representing a 13% increase over revenues reported in 4Q11 of US $90 million.
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Accum. 2011 Accum. 2012
US $41 US $42
US $51 US $54
Operating Profit EBITDA
EBITDA and Operating Profit (MM USD)
In 2012 operating profit and EBITDA in pesos rose by 10% and 11%, respectively, compared with the 2011 accrued figures, this was due to increased product sales mainly in the United States, as well as by the integration of the abovementioned operations. Accrued operating profit and EBITDA in dollars increased 2% and 6%, respectively, to reach US $42 million and US $54 million. In 4Q12, operating profit and EBITDA in pesos decreased 12% and 16%, respectively when compared with 4Q11, totaling $149 million and $169 million, also respectively. This results from the sales mix of lower margin products due to higher raw material costs and higher advertising expenses that were not offset by the improved performance of the United States operations, mainly in Fresherized Foods. In dollars, operating profit remained unchanged at US $12 million while the EBITDA fell 13% to US $13 million because of the abovementioned reasons.
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Peso sales in the Pork Meat “SBU” during 2012 recorded a 13% increase reaching $4.335 billion mainly due to higher prices and volumes both in the domestic and export markets. The export market had a significant increase in sales to Japan, as well as an improved average selling price, while in the domestic market demand was met by opening stores and through our distribution channels. Accrued dollar sales as of December 2012 showed a 6% increase over 2011 from US $310 million to US $330 million. Peso sales in 4Q12 recorded a 7% increase from $1.117 billion in 4Q11 to $1.2 billion due to increased sales volume coupled with a greater number of stores. In dollars, sales showed a 13% increase against 4Q11, from US $82 million to US $93 million in 4Q12.
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The accrued operating profit in pesos as of December 2012 decreased by 2% reaching $221 million, while the EBITDA for the same period showed a 5% increase to $327 million, both compared to the 2011 accrued figures. This was because, despite the increase in the market price of our main raw materials (corn and soybean paste), the abovementioned higher sales, enabled us to partially offset the costs’ increase. In dollars, the accrued operating profit decreased 6% to US $17 million while the EBITDA was unchanged at US $25 million. In 4Q12 the operating profit and the EBITDA in pesos, recorded decreases of 22% and 12% when compared to 4Q11, totaling $73 million and $101 million, respectively. This is due to the aforementioned significant increase in the market price of our main raw materials: corn (+18.3%) and soybean paste (+50%), as well as by increased operating expenses due to new stores openings. In dollars, operating profit decreased by 14% reaching US $6 million while EBITDA was unchanged when compared to 4Q11 and reaching US $8 million. The Pork Meat “SBU” continues to implement its strategy of sales channels diversification, through increased presence in the export markets. Also, during 2012, 33 new stores were opened to a total of 203, which confirms the company's strategy of focusing on high value segments.
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During 2012 dollar sales in KUO Chemical reached US $1.083 billion, representing a slight 2% decrease when compared to 2011. This was due to a 1% decrease in the average sales volume, maintaining the average prices in the same level; caused primarily by lower volumes in the Elastomers “SBU” resulting from lower demand in Europe and North America and a decrease in the price of the butadiene, and the lower volume in the Plastics “SBU” due to decreased volume in the appliance market. This could not be offset by the increased volume of Dynasol “SBU” in the domestic and export markets, thanks to the high demand in the road asphalt modifiers segment in early 2012, and in the Carbon Black Business in the
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domestic market, due to the increased domestic production of light vehicles and an increase in car sales compared with 2011. Peso sales in KUO Chemical in 2012 recorded a 5% increase when compared with the previous year, reaching $14.259 billion. Dollar sales during 4Q12 at KUO Chemical recorded a 3% decrease compared to 4Q11, reaching US $224 million due to a 4% decrease in sales volumes, primarily in the Synthetic Rubber in Emulsion business because of a 32% decline in the price of butadiene coupled with lower requirements in the export market and in the retail market due to lower consumption of appliances at the Plastics “SBU”. This could not be offset by a 2% increase in average sales prices mainly in the Carbon Black Business and the Plastics “SBU”. Peso sales in KUO Chemical reached $2.906 billion in 4Q12, which represents a 7% decrease over the reported revenues in 4Q11. The accrued operating profit as of December 2012 increased by 13% in dollars when compared with 2011, while the EBITDA showed a 5% increase on the same basis to US $60 million and US $81 million, respectively. This is mainly due to better sales mix of differentiated products and the low costs of butadiene (17%), acrylonitrile (-22%) and natural gas (-28%), which allowed to offset the aforementioned lower sales. In pesos, the accrued 2012 operating profit grew 25% to reach $794 million, while the EBITDA recorded a 13% increase to reach $1.066 billion.
In 4Q12, operating profit and EBITDA in dollars increased 25% and 22% compared to 4Q11, reaching US $5 million and US $11 million, respectively. This increase is explained by higher sales volume and better margins in the Dynasol “SBU” caused by the decrease in the price of butadiene, coupled with better margins in the Plastics “SBU” and the carbon black business which allowed for an increase in average sales price and a better sales mix of differentiated products. 4Q12 operating profit in pesos increased 41%, likewise EBITDA recorded a 13% increase when compared with 4Q11 to stand at $69 million and $145 million, respectively.
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Accrued dollar sales in KUO Automotive as of 2012 were US $413 million, 27% up in comparison to the $325 million reported as of December 2011. This is explained by the incorporation of the spare brake business under the FRITEC® brand, the non-recurring income of US $8 million derived from the valuation and registration of the FRITEC® brand and the increase in sales in the domestic and export markets, primarily in the piston engine, aims, valves, gaskets and water pumps lines at the Aftermarket “SBU”, and the increased requirement for different components and transmissions at the Power Systems “SBU”, mainly of the TR6060, TR4050 and 71C, as well as the incorporation of the Dual clutch transmissions business in Belgium. In pesos accrued sales as of December 2012 were $5.440 billion and recorded a 35% growth over last year’s same period.
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Accum. 2011 Accum. 2012
US $11
US $31 US $32
US $52
Operating Profit EBITDA
EBITDA and Operating Profit (MM USD)
Dollar sales during 4Q12 reached US $104 million, a 35% increase over the US $77 million reported in last year’s same quarter. This is mainly due to the abovementioned reasons. The accrued operating profit as of December 2012 was US $31 million, up 182% when compared with December 2011. The accrued EBITDA as of December 2012 was US $52 million or 63% more than the figure reported in 2011. This is due to the incorporation of FRITEC®, the non-recurring income of US $8 million from the valuation and the registration of the FRITEC® brand and higher sales at the Power Systems “SBU”, as well as lower operating expenses. Excluding the non-recurring income, the growth in the accrued operating profit would have been 109%, and the growth in the accrued EBITDA for the same period, would have been 38%. In pesos, the accrued operating profit increased 206%, while EBITDA grew by 72%. The operating margin and EBITDA margin showed an increase of 5 and 3 percentage points, respectively, when compared with 2011. In 4Q12, operating profit in dollars was US $12 million; that is 300% more than the figure reported in 4Q11, while EBITDA increased 111% to US $19 million. This was due to the abovementioned incorporation of the spare brake business as well as the non-recurring income of US $ 8 million from the valuation and registration of FRITEC® brand. The operating and EBITDA margins recorded increases of 8 and 6 percentage points respectively compared to 4Q11. Excluding the non-recurring income, the growth in the operating profit in the 4Q12 would have been 33%, and the growth in the EBITDA for the same period would have been 22%.
In pesos, the operating profit in 4Q12 was $159 million, representing a 318% increase while the EBITDA increased by 108% to $241 million.
COVERAGE In accordance with the provisions of article 4.033.01 subsection VIII of the BMV’s rules of procedure on maintenance requirements, we report that the Broker/Credit Institutions which provide analysis coverage of our securities are HSBC México S.A. (Juan Carlos Mateos / Iván Enriquez), Grupo Bursátil Mexicano S.A. de C.V. “GBM” (Lilian Jeanette Ochoa Guerra) and Casa de Bolsa Banorte-Ixe (Idalia Yanira Cespedes Jaen / Miguel Angel Aguayo).
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ABOUT GRUPO KUO Grupo KUO’s is a leading industrial conglomerate in Mexico, with annual sales amounting to approximately US $2.2 billion as of December 31st, 2012, exports to more than 70 countries and has approximately 18,000 employees. Its current business portfolio includes seven Strategic Business Units: Aftermarket, Dynasol (rubber solution), Elastomers, Herdez Del Fuerte JV (brand processed foods), Plastics, Pork Meat and Power Systems, organized in the Consumer, Chemical and Automotive segments. It also has a developing business: KUO Aerospace. This press release contains forward-looking statements that reflect the current opinions of Grupo KUO’s management regarding future events. The words or phrases “predict”, “believe”, “expect”, “tend to”, “may”, “have the intention of” and “should” and similar expressions generally indicate comments about expectations. These comments are subject to risks, uncertainties and changing circumstances. Final results may be materially different from current expectations because of various factors, which include but are not limited to global and local changes in politics, the economy, competition and market and regulatory factors, cyclical trends in the automotive and chemical sectors, as well as other factors that are highlighted under the heading "Risk Factors" in the Annual Report submitted by Grupo KUO to the Mexican National Banking and Securities Commission (CNBV). Grupo KUO has no obligation whatsoever to update these comments on expectations. Any comment on expectation is valid only on the date on which it is made.
