Grupo Simec's Annual Performance Highlights: 2024 Update

Grupo Simec Reports Annual Operating Results

Grupo Simec, S.A.B. de C.V. (NYSE: SIM) has shared its operational outcomes for the year leading up to December 31, 2024. Addressing changes in the market, the company faced various challenges that affected its financial metrics compared to the previous year.

Comparative Analysis of Financial Performance

When we analyze the twelve-month period ending December 31, 2024, versus the previous year, several key metrics stand out. Notably, the net sales dropped by 18%, reflecting a combination of decreased shipment volumes and lower average prices.

Specifically, net sales fell from Ps. 41,139 million in 2023 to Ps. 33,658 million in 2024. Finished steel shipments also saw a decline, dropping to 2,056,000 tons from 2,176,000 tons year-over-year. Export sales reduced by 8%, reaching Ps. 15,388 million, while domestic sales experienced a more significant contraction of 25%, totaling Ps. 18,270 million.

Cost of Sales and Gross Profit

The cost of sales mirrored the trend of net sales, declining by 18% from Ps. 31,100 million to Ps. 25,468 million. This reduction positioned the cost of sales at 76% of net sales for both periods analyzed. The average cost of finished steel saw a 13% decrease, primarily attributed to lower scrap costs.

Gross profit amounted to Ps. 8,190 million, down from Ps. 10,039 million in 2023, maintaining a gross profit margin of 24% in both years.

Operating Expenses and Financial Results

On the operating front, expenditures associated with selling, general, and administrative tasks rose by 7%, reaching Ps. 2,487 million compared to Ps. 2,317 million in 2023. This increase equated to 6% of net sales in the previous year versus 7% in 2024.

Grupo Simec recorded a return to net income, reporting a significant increase of 168%, as net income surged to Ps. 11,475 million from Ps. 4,283 million in the previous year. Correspondingly, adjustments led to improved earnings before interest, taxes, depreciation, and amortization (EBITDA), totaling Ps. 6,864 million compared to Ps. 8,638 million last year.

Comprehensive Financial Insights

The comprehensive financial cost revealed a significant shift as it reflected a stunning recovery from a net expense of Ps. 1,588 million to a net income of Ps. 6,630 million in 2024. This turnaround was bolstered by a strong net interest income, demonstrating effective management of financial liabilities.

Income taxes for 2024 were recorded at Ps. 987 million, including deferred tax income of Ps. 370 million, a favorable contrast to a net tax expense of Ps. 1,740 million in 2023.

Quarterly Performance Review

Fourth Quarter versus Third Quarter Comparison

In a quarterly perspective, net sales displayed an upward trend from Ps. 8,549 million in the third quarter to Ps. 8,830 million in the fourth quarter of 2024. The volume of sales remained roughly the same, signifying stability despite the challenging economic backdrop.

The cost of sales also saw a sequential increase, escalating to Ps. 6,843 million in the fourth quarter versus Ps. 6,393 million in the previous quarter, emphasizing the impact of rising production costs.

Fourth Quarter versus Fourth Quarter Year-on-Year Comparison

However, when compared year-over-year, net sales experienced a slight increase of 1% from Ps. 8,738 million for the fourth quarter of 2023 to Ps. 8,830 million in the corresponding period of 2024. The pricing environment has remained relatively stable, with average prices seeing an uptick.

In evaluating profitability, operating income reached Ps. 1,389 million in the fourth quarter of 2024, representing a solid performance against the backdrop of operational adjustments. EBITDA for the quarter was reported at Ps. 1,673 million.

Future Outlook

Moving forward, Grupo Simec aims to enhance operational efficiency while navigating market fluctuations. Their projected strategies will focus on strengthening market presence and operational recovery in affected sectors. The management remains optimistic about improving net income and market share in the upcoming periods.

Frequently Asked Questions

1. What is Grupo Simec's main product line?

Grupo Simec primarily produces finished steel products, particularly Special Bar Quality (SBQ) steel and commercial profiles.

2. How has the market environment affected Grupo Simec?

The company faced challenges like reduced shipment volumes and price fluctuations, leading to a significant impact on sales and revenues.

3. What were Grupo Simec's revenue figures for 2024?

In 2024, the company's net sales totaled Ps. 33,658 million, significantly lower compared to Ps. 41,139 million in 2023.

4. What actions is Grupo Simec taking to improve profitability?

Grupo Simec is focusing on optimizing operations, managing costs effectively, and enhancing its market presence to drive profitability.

5. How is the company positioned financially after the latest results?

Overall, Grupo Simec's financial health has shown improvement, with a substantial net income boost of 168%, reflecting effective management strategies in a tough market.

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