Volume 42, Issue 4 - April 2007

Financial Flash
Vitro Reports Record Results in Fourth Quarter 2006

Lower debt costs helped Monterrey, Mexico-based Vitro S.A.B. de C.V. raise its unaudited 2006 fourth quarter net income by $16 million compared to its 2005 performance.

During the quarter Vitro recorded a consolidated net income of $34 million, compared to a net income of $18 million during the same quarter last year. The company says the variation is mainly a result of a decline in total financing costs due to lower interest expense of $35 million compared with $44 million during the fourth quarter 2005 and an $11 million decrease in other financial expenses. It was also due to other income of $34 million resulting from a gain in the sale of real estate occupied by its subsidiary Vimex in Mexico City. But the variation in income was partially offset by a fixed asset impairment charge in flat glass during the quarter compared to other income of $3 million in the same quarter last year.

“We are also pleased to report that we have delivered on the financial plan established at the end of 2005, which led to the financial transformation of Vitro in 2006,” says Alvaro Rodriguez, chief financial officer. “This last quarter we completed a successful rights offering and the sale of land occupied by Vimex for a total of $150 million. As a result, during 2006 we closed transactions to reduce debt for a total of $332 million, exceeding our $300 million target.” 

Rodriguez continues, “In January 2007 we undertook a major debt refinancing and issued a total of $1 billion in senior unsecured notes, which were more than seven times oversubscribed. This was the largest high-yield rated offering by a non-government owned corporate in emerging markets to date. Through this offering we have transformed the company’s capital structure by simplifying it, concentrating debt in a single entity and eliminating structural subordination. In addition, we significantly reduced the cost of debt and extended debt maturities to an average life of debt of nearly eight years.” 

In December, Vitro also approved the merger of its subsidiary Vitro Plan S.A. de C.V. with Vimexico S.A. de C.V., a former creditor of Vitro Plan and a 100-percent owned subsidiary of Vitro S.A.B. de C.V. Through this merger, Vitro Plan aims to reduce its debt by $135 million and lower its debt to EBITDA ratio from 4.5 to 3.2. The company says the move will strengthen the flat glass business unit’s financial position. Upon approval of the union, Vitro will own 91.8 percent of Vimexico and its partner Pilkington will own the remaining 8.2 percent.  www.vitro.com

Kyro Announces Profits for 2006
Kyro Corp.’s, parent company of Glaston Technologies, net sales were EUR 268.9 (USD 358.6) million in 2006, compared to EUR 266.7 (USD 354.7) million in 2005. However, profit for the financial period was EUR 12.1 (USD 16.1) million, compared to EUR 22.4 (USD 29.7) million in 2005. 

Kyro’s subsidiary Glaston Technologies’ net sales totaled EUR 234.7 (USD 312.9) million in Jan-uary-December, compared to EUR 238.9 (USD 317.7) million in 2005. Glaston’s operating profit for 2006 was EUR 18.1 (USD 24.0) million, versus EUR 22.1 (USD 29.3) million in 2005.

Sales of safety glass machines, as expected, were strongest in the final quarter. However, the volume of safety glass machines delivered was lower than the previous year, which reduced the net sales and profitability of the Glass Machinery Group, a subsidiary of Glaston. In safety glass machines, unanticipated costs arising from new products and product series contributed to weakening the profitability of deliveries made. In the final quarter, Tamglass, another Glaston business area, initiated a program of measures that continues to improve the efficiency of delivery processes and to minimize their cost in the future, according to information from Kyro. 

Tamglass Glass Processing’s net sales grew slightly from the previous year. Its profitability improved, but remained unsatisfactory, according to information from the company. This was due in particular to European-wide delivery difficulties with raw glass at the end of the year. An increase in the price of raw glass and uneven availability caused a rise in Tamglass Glass Processing’s costs. 

In addition, the company estimated that efficiency programs initiated in 2006 will have a positive impact on profits of EUR 4.5 million in the current year. 

In September, Bavelloni began a program to boost the efficiency of its Italian operations, which led, among other things, to the closure of the Bergamo assembly plant. The program also includes other productivity-raising operational and process changes, with arrangements affecting personnel. As part of the program, the distribution logistics in Europe of Bavelloni’s tools and spare parts were enhanced. The area’s three tool and spare parts warehouses were centralized in Italy, from where they can be delivered to European customers more quickly than before.

Measures taken in the Glass Processing Group included the restructuring of Tamglass Finton, the merger of three Glass Processing Group companies into one company, and personnel reductions, a total of 36 employees, which followed from these.  www.Kyro.fi 


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