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April 19th, 2007.

Highlights:

  • For 19th consecutive quarter, growth in net sales.
  • For 12th consecutive quarter, growth in operating profit.
  • Operating profit margin reached the level of 27.3 percent. 40 basis points above last year.
  • ROIC of 25.4 percent versus 18.7 percent a year ago when the discontinued business was still a part of KCM.
  • Cash position greater than 2.5 billion pesos.

SELECTED INCOME STATEMENT DATA (1) & (2)

 

Quarter ended March 31st.

 

2007

2006

% CHG

NET SALES

$5,209

$4,912

6

INCOME BEFORE PROFIT SHARING & IFCR

1,423

1,320

8

INTEGRAL FINANCING COST RESULT & PROFIT S.

171

338

N/A

NET INCOME FROM CONTINUING OPERATIONS

941

750

26

DISCONTINUED OPERATIONS

-

37

(100)

NET INCOME

941

787

20

EARNINGS PER SHARE FROM CONTINUING OPERATIONS (PESOS)

0.83

0.65

28

EBITDA

1,684

1,579

7

Net sales for the quarter grew 6 percent versus the prior year, driven mainly by the superior performance of the consumer products group which grew 6 percent in real terms, 4 percent due to a higher volume and 2 percent due to better prices and product mix.

The consumer products business which accounted for 90 percent of net sales, continued with the positive trend in net sales and operating profit initiated many years ago as a result of the strategy to more actively participate in all the segments of the market. The professional products business decreased 9 percent in net sales versus the prior year while the export product business grew 18 percent in net sales versus the prior year.

Pressures on cost continue and we continue to be affected by increases in the main inputs, particularly pulp and fibers for recycling as well as electricity and oil derivatives. Despite these cost increases, the income before profit sharing and integral financing cost result (IFCR) grew more than the growth in net sales due to the higher volume, to a better mix in the units sold and to improved operations and efficiencies in the manufacturing facilities. In addition, we continued to receive the benefit of with cost savings programs implemented in all areas. For these reasons, the margin for income before profit sharing & IFCR was 27.3 percent, 40 basis points higher than the previous year.

Net income from continuing operations was 26 percent higher than the prior year and exceeded operating profit growth. This was due mainly to not having been affected by the appreciation of the exchange rate over a long position in financial instruments which resulted in the integral financing cost being lower than the prior year.

The quality of the corporation's earnings is reflected in a solid financial position and an important generation of cash.

We generated an EBITDA of close to $1,700 million pesos, 7 percent above the previous year and reduced days in accounts receivables.

All this enabled to end the quarter with $2,513 million pesos in cash after having invested $1,785 million pesos ($1,018 in capital expenditures, $767 in the re-purchase of stock) and having paid out a regular dividend to our shareholders of $2,790 million pesos plus an extraordinary one for $2,986 million pesos in the last twelve months.

Under United States generally accepted accounting principles (US GAAP), the PROCON quarterly results expressed in millions of dollars, were as follows: Net Sales of $471, 6 percent above the prior year; Operating Profit of $135, 4 percent above the previous year; and, Net Income from continuing operations of $89, 23 percent above 2006.

Share Buyback Program

 

2007

2006

Repurchased shares during the quarter

1,587,900

907,700


Consolidated Balance Sheets (1) & (2) as of March 31st, 2007 and 2006

  2007 2006

Assets

   

Cash

2,513

2,041

Accounts and documents receivable

4,352

3,805

Inventories

1,680

1,310

Current assets from discontinued operations

35

1,979

Long term account receivable

573

-

Property, plant and equipment

13,559

13,451

Long term assets from discontinued operations

______-

___3,645

Total assets

22,712

26,231

   

Liabilities and consolidated stockholder's equity

Bank loans

99

102

Derivative instruments

-

438

Suppliers

2,388

1,541

Accumulated liabilities

1,327

1,271

Dividends payable

2,967

2,809

Taxes and profit sharing payable

1,102

642

Current liabilities from discontinued operations

650

1,149

Long term loans

5,009

5,273

Deferred taxes

1,917

1,944

Long term liabilities from discontinued operations

-

703

Consolidated stockholder's equity

__7,253

__10,359

Total

22,712

26,231



Consolidated Statements of Changes in Financial Position from January 1st to March 31st, 2007 and 2006 (1) & (2)

  2007 2006

Net income

941

787

Depreciation

261

259

Changes in working capital

___410

___(436)

Sources generated by operating activities

1,612

610

 

 

 

Dividend payments

-

(18)

CAPEX

(275)

(112)

Share repurchases

(79)

(34)

Discontinued operations

43

247

Financing activities

(12)

(2)

Derivative instruments

__(571)

__(545)

Sources generated

718

146

Cash at the beginning of the year

1,795

1,895

Cash at the end of the period

2,513

2,041


(1) Prepared in accordance with Mexican financial information standards and expressed in millions of pesos as of March 31st, 2007 purchasing power.

(2) 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.

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®.


 

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