Quarterly Results 1Q20 vs 1Q19:
(Figures in million Mexican pesos)
- Net sales grew by 2.2% to reach Ps. 1,982 million. This was driven by double-digit growth in the United States, Central America and Mexico offsetting lower revenues in Argentina, Peru and Brazil.
- Product sales, which represent 93% of total sales, grew by 1.5%, driven by the storage category.
- Services sales grew by 12.2%, as a result of a strong performance of drinking water fountains and bebbia, as well as stable income from water treatment plants. The drinking water platform achieved record sales for its value proposition to grant access to purified water without leaving the home.
- Gross profit increased by 5.1% and the gross margin showed and expansion of 120 bps, due to lower raw material costs and efficiencies achieved in manufacturing processes.
- Operating income increased by 1.8% to Ps. 261 million and the operating margin remained steady at 13.2%.
- Adjusted EBITDA reached Ps. 346 million, in line with 1Q19, while the margin decreased by 40 bps to 17.5%. This despite the impact on operations and demand experienced in March related to the COVID-19 emergency.
- Net income before discontinued operations reached Ps. 465 million, 4.9x higher than the same period of the previous year. This was driven by gains from financial instruments and foreign exchange gains due to the appreciation of the exchange rate of foreign currencies against the Mexican peso.
- Driven by the execution of Flow, the organizational transformation program, ROIC increased by 160 bps over the last 12 months, to reach 9.4%, the narrowest differential versus the cost of capital (WACC) since the Company went public in 2014.
- Net Debt / EBITDA leverage closed at 0.4x, compared to 1.4x at the end of March 2019.
- The cash conversion cycle improved by 18 days due to more efficient working capital management.
- During the quarter, the financial structure was strengthened with the prepayment of the short-term sustainable bond and a reopening of Ps. 1,600 million of AGUA 17-2X at a fixed rate and maturing in June 2027.
Miranda Newswire – Full Press Release: Download PDF
Message from the CEO – Carlos Rojas Aboumrad
We started the first quarter with a strong performance during January and February; however, in March we witnessed a complex global period due to the COVID-19 pandemic, impacting social dynamics and economies in the countries in which we operate.
Despite the interruption in operations in Argentina, Peru, El Salvador and Honduras, due to the obligatory suspension of activities as a result of the health emergency, sales grew by 2% and we maintained the EBITDA margin above 17%. Mexico, the United States and Central America stand out with double-digit sales growth in the quarter.
As a 100% client-oriented water solutions company, Rotoplas has played and will continue to play a key role in tackling this crisis – ensuring the availability and quality of water is paramount, now more than ever. I would like to highlight that in most of the locations in which we operate, the corresponding authorities have authorized us to continue or resume operations as our activity has been recognized as essential. We maintain strict safety and hygiene protocols to protect our employees and continue with our mission in the face of the crisis.
The strategic alignment of initiatives within the Flow transformation program has enabled us to respond quickly to new events, increase ROIC by 160 bps over the last 12 months, and strengthen our financial structure. Following the prepayment of the short-term sustainable bond and the reopening of the long-term bond, we completed a program of Ps. 4,000 million at a fixed rate maturing in 2027, improving the Company’s liquidity position and financial flexibility.
Additionally, our cash position increased by Ps. 372 million as a result of closing favorable hedging positions (interest rate swap and exchange rate hedge), protecting the exchange rate risk with the Group’s cash flow in dollars. Consequently, the Net Debt/EBITDA leverage was reduced from 0.8x at the end of 2019 to 0.4x.
Through “PAZA C-19” (Programa de Agua para Zonas Afectadas), the Water Program for Affected Areas, we are collaborating with various institutions to combat the spread of the disease through access to clean water, handwashing stations and purification points providing safe drinking water. We are confident that this is a time to stay united and overcome adversities together.
Investor Relations Contact Details
Mariana Fernández
Tel: +52 (55) 5201 5000 Ext. 50163
María Fernanda Escobar
Tel: +52 (55) 5201 5000 Ext. 50341