Mexico City, July 21, 2021. Grupo Rotoplas S.A.B. de C.V. (BMV: AGUA*) (“Rotoplas” or “the Company”), America’s leading company in water solutions, reports its unaudited second quarter results from April to June. The information has been prepared in accordance with the International Financial Reporting Standards (IFRS).
Figures expressed in millions of Mexican pesos.
2Q21 vs 2Q20 – HIGHLIGHTS
- Rotoplas reported record net sales for a quarter, with an increase of 47.6%, driven by droughts, heat waves, and cuts in the water supply in some countries, as well as by an increase in market share in the regions where it operates, and the launch of new solutions.
- Product sales increased 52.1%, with double-digit growth in all countries and in all categories: storage, water flow, and improvement.
- Services sales contracted 3.8%, mainly due to the impact on the drinking fountain business as a result of school closures from the pandemic, and a slow recovery of the water treatment plant and water recycling business.
- With a long-term vision, and in a raw material scarcity environment, the Company decided to absorb the increase in raw material costs and prioritize the expansion in market share, which resulted in an impact of Ps. 130 million in gross profit. This strategy is estimated to increase the annual growth rate at the group level by 5.1% as a result of better brand positioning, thus generating a long-term value of 4.8x the absorbed cost.
- Gross margin decreased by 260 bps, however, greater efficiency in expenses helped offset this effect and the operating margin decreased by 70 bps.
- Adjusted EBITDA1 increased 42.5%, and reached a margin of 14.9%, 50 bps lower than 2Q20.
- Net income for the period was a profit of Ps. 65 million compared to a loss of Ps. 59 million in 2Q20, the period most affected by the pandemic.
- ROIC closed at 16.0%, an improvement of 720 bps vs. the same quarter of the previous year and 450 bps above the cost of capital.
- In April, the Sustainability Strategy 2021-2025 was launched, focused on creating 360* value, for all stakeholders and throughout the water cycle. Additionally, the strategy places people, the planet, and economic profit at the same level of importance.
- In May, a cash capital reimbursement of $0.45 per share was paid to shareholders.
CUMULATIVE 2021 vs 2020 – HIGHLIGHTS
- Net sales grew 36.9% driven by changes in consumer habits due to the pandemic that increased the demand for water, as well as internal initiatives focused on the effectiveness of the sales force and the market launch of new solutions.
- Product sales increased 40.9%, with double-digit growth in all counties and in the three categories.
- Services sales contracted 11.9%, impacted by the lack of revenue in drinking fountains and a slow closing of new treatment plant contracts.
- Gross margin contracted 280 bps, impacted by increases in raw material prices and in logistics expenses due to higher energy costs. Cost control helped offset the impact on operating margin, which decreased 150 bps, demonstrating operating leverage.
- Adjusted EBITDA1 increased 36.4%, in line with the growth in sales, to reach Ps. 892 million. Adjusted EBITDA margin amounted to 17.0%, 10 bps lower than in 2020.
- Cumulative net income reached Ps. 199 million, 150% higher than the first half of 2020, without considering the non-recurring financial gain from the closure of foreign exchange rate hedges in March 2020.
- At the end of June, the Net Debt / Adj. EBITDA leverage ratio closed at 1.0x. During the period, 3.4% of sales were allocated to CapEx and the stability of the supply chain was prioritized, which implied an increase in working capital, mainly in raw material inventories and accounts receivable.
- As a result of accelerated growth and various initiatives within the Flow program to negotiate better terms with distributors, suppliers and customers, the cash conversion cycle was optimized by 42 days compared to the same period in 2020.
1Adjusted EBITDA considers: operating income + depreciation and amortization + non-recurring expenses (donations and Flow implementation expenses). In 2Q21 it takes into account Ps. 75 million of Flow expense and Ps. 6 million of donations and in 2Q20 Ps. 21 million of Flow expenses and Ps. 5 million donations. Cumulatively, it considers Ps. 150 million of Flow expenses and Ps. 8 million for donations in 2021 as well as Ps. 21 million expense for Flow and Ps. 6 million for donations in 2020.
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Investor Relations Contact Details
Mariana Fernández
E-mail: mfernandez@rotoplas.com
María Fernanda Escobar
E-mail: mfescobar@rotoplas.com