Growth in net sales for the 21st consecutive quarter.
Improvement over the last quarter.
CAPEX program on track and on budget.
Cash position greater than $3,500 million pesos.
ROIC of 24.0 percent versus 21.1 percent a year ago.
SELECTED INCOME STATEMENT DATA (1) & (2)
Quarter ended September 30th.
2007
2006
% CHG
NET SALES
$5,219
$5,018
4
INCOME AFTER GENERAL EXPENSES
1,313
1,373
(4)
INTEGRAL FINANCING COST RESULT & PROFIT S.
135
136
-
NET INCOME FROM CONTINUING OPERATIONS
879
877
-
DISCONTINUED OPERATIONS
-
103
N/A
NET INCOME
879
980
(10)
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
(PESOS)
0.78
0.76
3
EBITDA
1,580
1,645
(4)
The results of the third quarter improved over the second quarter and showed growth in net sales compared to the third quarter of 2006, which posted high growths in all segments. However, the company continued experiencing the
effects of weakness in economic activity and in increased cost pressures.
Net sales for the quarter grew 4 percent in real terms, 3 percent due to higher volume and 1 percent due to higher prices and product mix. The Company´s market shares were sustained, confirming the demand slowdown.
Although the income after general expenses (previously operating profit) improved over previous quarter, it was 4 percent lower versus prior year.
Pressures on cost continued for some of the Company’s main raw materials such as recycled fibers, which presented price increases of more than 40 percent year over year, as well as cost increases derived from oil. During the month of
September the company experienced lower production in four of its plants due to the lack of supply of natural gas during one week. In order to offset these cost increases the company has accelerated its programs and investments directed to
reduce and contain costs.
In the first nine months of the year, net sales grew 4 percent mainly due to volume growth, income after general expenses decreased 2 percent and net income from continuing operations grew 8 percent over the prior year. Earnings
per share from continuing operations grew 10 percent additionally supported by the share buyback program.
The quality of the corporation’s earnings is reflected in a solid financial position and an important generation of cash.
We generated EBITDA of almost $5,000 million pesos during the first nine months and as of September 30th, we ended with $3,500 million pesos in cash after having invested $2,392 million pesos ($1,387 in capital expenditures and $1,005 in the re-purchase of stock) and having paid out a regular dividend to our shareholders of $2,904 million pesos plus an extraordinary one for $3,021 million pesos in the last twelve months.
We continue with our CAPEX program. As part of this plan, we expect to start up a new tissue machine ($75 million dollars) during the fourth quarter of this year, which will add 8 percent to the existing tissue capacity. Also, during the second quarter of 2008, we plan to initiate local production of raw materials for wet wipes ($50 million dollars) which will translate into important cost savings.
Under United States generally accepted accounting principles (US GAAP), the quarterly results expressed in millions of dollars, were as follows: Net Sales of $473, 8 percent above the prior year; Operating Profit of $126, similar to the
previous year; and, Net Income from continuing operations of $77, 5 percent above 2006.
Consolidated Statements of Income Six months ended June 30th, 2007 and 2006 (1) & (2)
2007
2006
%
Net Sales
15,857
15,182
4
Cost of Sales
9,345
8,661
8
Gross Profit
6,512
6,521
-
Margin
41%
43%
General Expenses
2,386
2,321
3
Income after General Expenses
4,126
4,200
(2)
Margin
26%
28%
Employee Profit Sharing and Other
364
363
-
Integral Financing Cost Result
188
419
(55)
Income before Income Taxes
3,574
3,418
5
Income Taxes
913
956
(5)
Income from Continiung Operations
2,661
2,462
8
Discontinued Operations
-
219
N/A
Net Income
2,661
2,681
(1)
Margin
17%
18%
Earnings per share from Continuing Operations
2.36
2.14
10
EBITDA
4,921
5001
(2)
Share Buyback Program
2007
2006
Repurchased shares during the last twelve
months
21,675,500
9,746,000
Consolidated Balance Sheets (1) & (2)
as of September 30th, 2007 and 2006
2007
2006
Assets
Cash
3,500
2,504
Accounts and documents receivable
3,810
3,634
Inventories
1,773
1,572
Current assets from discontinued operations
48
2,272
Long term account receivable
592
-
Property, plant and equipment
13,719
13,197
Long term derivatives
24
-
Long term assets from discontinued operations
-
3,406
Total assets
23,466
26,585
Liabilities and consolidated stockholder's
equity
Bank loans
76
102
Derivative instruments
51
475
Suppliers
1,821
1,759
Accumulated liabilities
1,559
1,378
Dividends payable
1,484
1,409
Taxes and profit sharing payable
682
869
Current liabilities from discontinued operations
21
1,127
Long term loans
7,441
5,233
Deferred taxes
1,986
1,808
Long term liabilities from discontinued operations
-
656
Consolidated stockholder's equity
8,345
11,772
Total
23,466
26,585
Consolidated Statements of Changes in Financial Position
from January 1st
to September 30th, 2007 and 2006 (1) & (2)
2007
2006
Net income
2,661
2,681
Depreciation
794
801
Deferred Taxes
70
(130)
Changes in working capital
107
62
Sources generated by operating activities
3,632
3,414
Dividend payments
(1,518)
(1,455)
CAPEX
(969)
(447)
Share repurchases
(654)
(379)
Discontinued operations
(618)
78
Financing activities
2,337)
(105)
Derivative instruments
(526)
(520)
Sources generated
1,684
586
Cash at the beginning of the year
1,816
1,918
Cash at the end of the period
3,500
2,504
Prepared in accordance with Mexican financial information standards and expressed in millions of pesos as of September 30th, 2007 purchasing power.
Due to the divestiture of the Writing and Printing Papers and Notebooks businesses that was completed on October 27, 2006 and, in accordance with the guidelines established by the Mexican Financial Information Norms, the Financial Statements being presented include the detail of the operations of the Consumer, the Professional and the Export Products businesses that are the continuing operations plus a summary of the results for 2006 from the divested business as a separate line item denominated “Discontinued Operations” and finally the Net Income for the company.
Mainly taxes from the divestiture of the PRODIN business.
Kimberly Clark de Mexico is engaged in the manufacture and commercialization of disposable products for daily use by consumers within and away-from-home, such as: diapers and child care products, feminine pads, incontinence care products, bath tissue, napkins, facial tissue, hand and kitchen towels, wet wipes and health care products. Some of the main brands include: Huggies®, Kleen-Bebé®, Kleenex®, Kimlark®, Pétalo®, Cottonelle®, Depend® and Kotex®.
