Industry Dynamics - The steel industry is highly cyclical, with global demand and production capacity significantly influencing prices, which have shown volatility in recent years [27]. - Competition in the steel industry is intense, with significant pressure on prices and profit margins due to overcapacity and consolidation among larger producers [34]. - The company is unable to predict the future prices of steel, which remain sensitive to macroeconomic fluctuations and global demand [27]. - The company faces significant competition in the steel industry, which exerts downward pressure on prices and profit margins [148]. Economic Conditions - The U.S. economy has shown strong recovery post-COVID-19, but ongoing challenges such as labor shortages and supply chain disruptions continue to impact growth [28]. - The Mexican economy contracted by 8.5% in 2020 and grew by 5% in 2021 and 3% in 2022, indicating volatility that could affect demand for the company's products [72]. - Adverse economic conditions in Mexico, including high inflation and reduced international capital flows, could negatively impact the company's financial performance [72]. - The Mexican Central Bank increased the reference rate to 11.25% on March 1, 2023, which may negatively impact business operations and the economy [80]. Operational Challenges - The COVID-19 pandemic has led to ongoing supply chain disruptions and increased costs, which may continue to affect the company's operations and financial condition [38]. - The company may face challenges in passing on increased raw material costs to customers, which could adversely affect profitability [29]. - The company’s manufacturing capacity is dependent on the operation of critical equipment, and unexpected breakdowns could disrupt production [50]. - The company has not obtained insurance against all risks, which could lead to significant losses in case of manufacturing interruptions [51]. Financial Performance - In 2022, the company reported net sales of Ps. 54.2 billion, gross profit of Ps. 14.5 billion, and net profit of Ps. 7.7 billion [123]. - In 2022, the cost of sales in Mexico was 70% of sales, while in the U.S. it was 98% and in Brazil it was 71%, with a consolidated cost of sales at 73% [165]. - Scrap metal accounted for approximately 60.5% of the consolidated manufacturing conversion cost in 2022, down from 70% in 2021 [167]. - The company has faced risks related to currency fluctuations, interest rates, and exchange control policies that could adversely affect financial performance [89]. Customer Concentration - Sales to the ten largest customers in the U.S. accounted for approximately 72.1% of consolidated revenues in 2022, indicating a high customer concentration risk [48]. - The company faces continued price reduction pressure from automotive customers, which adversely affects profit margins and requires cost reduction initiatives [70]. - Sales to the automotive market accounted for approximately 20% of the company's net sales of SBQ steel products in 2022, making it vulnerable to fluctuations in automotive manufacturing [69]. Regulatory Environment - The company is subject to risks from international trade restrictions, which could impact its ability to export products and affect profit margins [42]. - The U.S. government imposed tariffs of 66.7% on rebar imports from Deacero, S.A.P.I de C.V. and 20.58% on imports from other Mexican producers [43]. - The company is subject to the Mexican Antitrust Law, which may lead to increased regulatory scrutiny due to its growth strategy and significant market share in certain products [199]. - The company has faced anti-dumping duties, with a preliminary dumping rate of 66.7% imposed on its rebar exports to the U.S. as of January 2021, which was ratified in June 2022 [215]. Environmental Compliance - The company’s operations are subject to stringent environmental laws, and failure to comply could result in significant fines or operational shutdowns [54]. - Significant capital investments have been made to ensure compliance with environmental regulations, including the General Law of Ecological Balance and Environmental Protection (LGEEPA) and the Law on Wastes [195]. - The company has obtained all necessary environmental authorizations and permits to operate its facilities and believes it is in substantial compliance with applicable environmental legislation [195]. - Future changes in environmental laws could lead to additional capital expenditures beyond current expectations [179]. Strategic Growth - The company aims to improve its cost structure and focus on high-margin, value-added products as part of its business strategy [124][125]. - The company has pursued strategic growth opportunities through acquisitions and reinvestment in existing facilities to enhance capacity and efficiency [127]. - Future acquisitions and expansions will require significant capital, and the company may need to seek additional financing, potentially diluting shareholder value [40]. Labor Relations - Approximately 88% of non-Mexican and 46% of Mexican employees were union members as of December 31, 2022, which could impact labor relations and operational stability [46]. - The company is in compliance with Brazilian labor regulations, which limit collective bargaining agreements [217]. Market Position - The company is a significant producer of SBQ and structural steel products in Mexico and the U.S., with operations strategically located to serve key markets [101]. - The Brazilian steel industry is the 9th largest producer in the world, with significant competition from major players like ArcelorMittal and Gerdau [159]. - The company maintains long-term relationships with major customers, some lasting over 10 to 20 years [144]. Financial Stability - The closure of Silicon Valley Bank and other financial institutions has raised concerns about the stability of the financial system, potentially affecting the company's access to credit [65]. - Approximately 49% of the company's shares are owned by Industrias CH, which can exert significant influence over business decisions and policies [96]. - The market price of the company's ADRs fluctuated between $36.96 and $30.75 during Q1 2023, indicating high volatility that could affect investor returns [92].

Financial Performance - Net sales decreased by 1% from Ps. 55,620 million in 2021 to Ps. 55,112 million in 2022, with shipments of finished steel products down 10% to 2.255 million tons[2]. - Cost of sales increased by 2% from Ps. 39,968 million in 2021 to Ps. 40,753 million in 2022, representing 74% of net sales in 2022 compared to 72% in 2021[3]. - Gross profit decreased from Ps. 15,652 million in 2021 to Ps. 14,359 million in 2022, with gross profit as a percentage of net sales dropping from 28% to 26%[4]. - Operating income fell by 11% from Ps. 13,532 million in 2021 to Ps. 12,045 million in 2022, representing 22% of net sales in 2022 compared to 24% in 2021[7]. - EBITDA decreased by 11% from Ps. 14,707 million in 2021 to Ps. 13,162 million in 2022[8]. - Net income decreased by 9% from Ps. 9,444 million in 2021 to Ps. 8,639 million in 2022[12]. - Selling, general and administrative expenses increased by 18% from Ps. 2,043 million in 2021 to Ps. 2,401 million in 2022[5]. - Total sales for the year 2022 were Ps. 55,112 million, a decline of 1% from Ps. 55,620 million in 2021[41]. - Gross profit for the year 2022 decreased by 8% to Ps. 14,359 million from Ps. 15,652 million in 2021[41]. - Net profit for the current year amounted to 8,639,334 thousand pesos, a decline of 8.5% from 9,444,208 thousand pesos in the previous year[47]. - Operating profit for the current year was 12,045,036 thousand pesos, down from 13,532,122 thousand pesos in the previous year, indicating a decrease of 11.0%[48]. Sales and Market Performance - Total sales outside of Mexico decreased by 8% to Ps. 25,468 million in 2022, while total sales in Mexico increased by 6% to Ps. 29,644 million[2]. - Total income for Grupo Simec in Q4 2022 reached Ps. 55,620,356 thousand, with domestic sales contributing Ps. 28,044,620 thousand and foreign sales contributing Ps. 19,072,122 thousand[150]. - Sales outside Mexico for Q4 2022 were Ps. 4,657 million, a decrease of 26% compared to Ps. 6,279 million in Q4 2021[41]. - Grupo Simec's commercial profiles accounted for 18,723,229 thousand in domestic sales volume, while special profiles contributed 9,321,391 thousand[150]. - Foreign subsidiaries generated Ps. 8,503,614 thousand in sales from special profiles[150]. Cash Flow and Assets - Cash and cash equivalents rose to Ps. 23,343,154 thousand in Q4 2022, up from Ps. 15,130,192 thousand in Q4 2021[44]. - Net cash flows from operating activities increased to 11,118,962 thousand pesos, compared to 8,387,332 thousand pesos in the previous year, representing a 32.6% increase[51]. - Cash flows from investing activities showed a net outflow of 2,286,967 thousand pesos, significantly higher than the previous year's outflow of 1,009,673 thousand pesos[51]. - Total assets increased to Ps. 67,439,536 thousand in Q4 2022 from Ps. 57,342,572 thousand in the previous year[44]. - The company reported a net increase in cash and cash equivalents of 8,685,514 thousand pesos for the current year, compared to an increase of 7,215,717 thousand pesos in the previous year[51]. Equity and Liabilities - Total equity increased to 48,175,412 thousand pesos, up from 41,962,528 thousand pesos in the previous year, representing a growth of 14.5%[47]. - Total non-current liabilities were reported at 4,395,389 thousand pesos, slightly down from 4,480,580 thousand pesos in the previous year[46]. - The company reported no current liabilities with cost, indicating a favorable financial position[147]. - The total investment in associates is reported as zero, indicating no current financial investment in these entities[141]. Employee and Shareholder Information - The number of employees decreased to 1,850 from 1,890 in the previous year, reflecting a reduction of 2.1%[46]. - The company repurchased 35,573,326 shares, an increase from 35,128,483 shares in the previous year[46]. - The total number of shares representing the capital stock is 497,709,214[151]. - The nominal value of the shares is set at 0 Mexican pesos[151]. - The total amount of capital stock is 1,978,444 Mexican pesos[151]. Financial Reporting and Compliance - The company continues to adopt IFRS standards for its financial reporting, ensuring compliance and transparency in its financial statements[59]. - The company follows the average cost method for inventory valuation, ensuring that the recorded value does not exceed the market value or net realizable value[81]. - Current income tax is based on fiscal profits and cash flows, with liabilities computed using enacted tax rates[101]. - Deferred tax assets are recognized for deductible temporary differences, provided future taxable profits are probable[102]. Risk Management and Derivatives - The company utilizes derivative financial instruments to manage exposure to natural gas price fluctuations, which are critical for production[130]. - Derivative contracts are initially recognized at fair value and subsequently remeasured at fair value at the end of the reporting period[130]. - Gains and losses on ineffective portions of hedging instruments are recognized immediately in income[133]. - The effective portion of changes in fair value of derivatives designated as cash flow hedges is recognized in other comprehensive income[133].

Financial Performance - Net sales increased by 3% to Ps. 44,012 million in the first nine months of 2022 compared to Ps. 42,736 million in the same period of 2021, driven by a 17% increase in average selling price despite a 12% decrease in shipments[2] - Cost of sales rose by 5% to Ps. 32,243 million in the first nine months of 2022, with cost of sales as a percentage of net sales increasing from 72% in 2021 to 73% in 2022[3] - Gross profit decreased by 1% to Ps. 11,769 million in the first nine months of 2022, with gross margin declining from 28% in 2021 to 27% in 2022 due to lower shipment volumes[4] - Operating income fell by 3% to Ps. 10,051 million in the first nine months of 2022, representing 23% of net sales compared to 24% in the same period of 2021[7] - EBITDA decreased by 3% to Ps. 10,885 million in the first nine months of 2022, reflecting a decline in net income from Ps. 8,290 million in 2021 to Ps. 8,037 million in 2022[8] - In the third quarter of 2022, net sales decreased by 7% to Ps. 13,433 million compared to Ps. 14,122 million in the third quarter of 2021, with shipments of finished steel products down to 541 thousand tons[28] - Cost of sales in the third quarter of 2022 increased by 4% to Ps. 10,271 million, with cost of sales as a percentage of net sales rising from 70% in Q3 2021 to 76% in Q3 2022[29] - Gross profit for the third quarter of 2022 decreased by 25% to Ps. 3,162 million, with gross margin declining from 30% in Q3 2021 to 24% in Q3 2022[30] - Net income for the third quarter of 2022 was Ps. 1,940 million, a significant decrease from Ps. 3,604 million in the second quarter of 2022[26] - Selling, general and administrative expenses increased by 17% to Ps. 595 million in the third quarter of 2022 compared to Ps. 508 million in the same quarter of 2021[31] - Operating income decreased by 30% from Ps. 3,681 million in Q3 2021 to Ps. 2,572 million in Q3 2022, with operating income as a percentage of net sales dropping from 26% to 19%[33] - EBITDA fell by 28% from Ps. 3,974 million in Q3 2021 to Ps. 2,857 million in Q3 2022[35] - Net income decreased from Ps. 3,313 million in Q3 2021 to Ps. 1,940 million in Q3 2022, representing a decline of 41%[39] Assets and Liabilities - Total assets increased from Ps. 57,342,572 thousand in the previous year to Ps. 66,436,773 thousand in the current quarter[43] - Cash and cash equivalents grew from Ps. 15,130,192 thousand in the previous year to Ps. 21,620,790 thousand in the current quarter[43] - Total liabilities rose from Ps. 15,380,044 thousand in the previous year to Ps. 18,638,185 thousand in the current quarter[43] - Total equity increased to 47,798,588 thousand pesos from 41,962,528 thousand pesos, representing a growth of about 14%[44] - The company has current assets to current liabilities ratio of 3.22 times, exceeding the requirement of 1.0 times[144] - Total liabilities to total assets ratio stands at 0.28, well below the maximum limit of 0.60[144] - Monetary assets total 28,615,311 thousand pesos, while liabilities amount to 11,341,180 thousand pesos[141] - The company has secured a total of 863,109 thousand pesos in current and non-current liabilities[141] Cash Flow and Investments - Cash flows from operating activities improved to a net inflow of 8,751,998 thousand pesos, compared to a net outflow of 5,668,884 thousand pesos in the previous year[51] - Net cash flows used in investing activities decreased to 407,835 thousand pesos from 856,916 thousand pesos year-over-year, indicating a reduction in capital expenditures[51] - Net cash flows used in financing activities increased significantly to 1,731,833 thousand pesos from 113,728 thousand pesos, primarily due to share repurchases and interest expenses[51] - Cash and cash equivalents at the end of the period rose to 21,620,790 thousand pesos, up from 12,598,074 thousand pesos, reflecting strong liquidity[51] Shareholder Information - Net profit attributable to owners of the parent for the current year was 9,161,135 thousand pesos, compared to 9,007,130 thousand pesos in the previous year, reflecting an increase of about 1.7%[48] - The company repurchased 35,459,348 shares, up from 35,128,483 shares in the previous year, indicating an increase of about 0.9%[45] - The company has a total of 497,709,214 shares representing its capital stock[149] - The number of shares in series B 0 is 90,850,050, with a fixed portion of 406,859,164[149] Operational Overview - Grupo Simec focuses on manufacturing and selling special bar quality (SBQ) steel products for the automotive and construction industries in Mexico, the USA, and Canada[56] - The company reported a 50.22% equity ownership in Republic Steel, which decreased from 52.00% in the previous year[75] - The company has significant investments in associates and joint ventures, with ownership stakes ranging from 50.22% to 100% in various entities[139] Financial Management and Accounting Policies - The company follows the average cost method for inventory valuation, ensuring that the cost does not exceed the market value[83] - Borrowing costs directly attributable to qualifying assets are capitalized until the assets are ready for use or sale[90] - The company recognizes goodwill as an asset at the acquisition date, less accumulated impairment losses, and conducts annual impairment reviews for cash generating units[95] - Current income tax is based on fiscal profits and cash flows, with liabilities computed using tax rates enacted at the end of the reporting period[101] - Deferred tax assets are recognized for deductible temporary differences, provided it is probable that future taxable profits will be available[102] Market and Sales Performance - Total revenue for the current year reached 56,896,386 thousand pesos, an increase from 52,954,189 thousand pesos in the previous year, representing a growth of approximately 3.7%[48] - Domestic sales amounted to 23,200,432 thousand pesos, with commercial profiles contributing 15,854,911 thousand pesos[147] - Foreign sales totaled 15,495,398 thousand pesos, with commercial profiles accounting for 11,655,238 thousand pesos[147] - The total volume of sales across all categories was 1,720 units[147] - The company has not reported any market share percentage for its products[147] Risk Management - The Company uses derivative financial instruments to manage exposure to natural gas price fluctuations, which are recognized at fair value[129] - The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recognized in other comprehensive income, with gains and losses on ineffective portions recognized immediately in income[132] - The Company assesses changes in cash flows from derivative financial instruments to ensure swaps effectively reduce exposure to natural gas price fluctuations[132]

Financial Performance - Net sales increased by 7% from Ps. 28,613 million in the first half of 2021 to Ps. 30,579 million in the first half of 2022, driven by a 24% increase in average sales price despite a 14% decrease in shipments[2] - Gross profit rose by 12% from Ps. 7,704 million in the first half of 2021 to Ps. 8,607 million in the first half of 2022, with gross profit as a percentage of net sales increasing from 27% to 28%[4] - Operating income increased by 12% from Ps. 6,690 million in the first half of 2021 to Ps. 7,479 million in the first half of 2022, representing 24% of net sales compared to 23% in the previous year[7] - Net income grew by 23% from Ps. 4,977 million in the first half of 2021 to Ps. 6,098 million in the same period of 2022[12] - EBITDA increased from Ps. 7,283 million in the first half of 2021 to Ps. 8,029 million in the first half of 2022[9] Quarterly Performance - In the second quarter of 2022, net sales increased by 3% to Ps. 15,547 million compared to the first quarter of 2022, despite a decrease in shipments from 623 thousand tons to 556 thousand tons[14] - Gross profit for the second quarter of 2022 increased by 24% to Ps. 4,764 million, with gross profit as a percentage of net sales rising from 26% to 31%[16] - The company recorded a net income of Ps. 3,604 million in Q2 2022, representing a 54% increase compared to Ps. 2,333 million in Q2 2021[40] - Operating income increased to Ps. 4,154 million in Q2 2022, up 7% from Ps. 3,878 million in Q2 2021, with an operating margin of 27% compared to 25% in the previous year[33] - EBITDA rose to Ps. 4,424 million in Q2 2022, a 6% increase from Ps. 4,170 million in Q2 2021[35] Expenses and Costs - Selling, general and administrative expenses rose by 15% from Ps. 984 million in the first half of 2021 to Ps. 1,130 million in the first half of 2022, representing 4% of net sales[5] - The cost of sales for Q2 2022 was Ps. 10,783 million, a decrease of 1% compared to Ps. 10,854 million in Q2 2021[41] Assets and Equity - The company’s total assets increased to Ps. 63,289,947 thousand in Q2 2022 from Ps. 57,342,572 thousand in the previous year[43] - Cash and cash equivalents rose to Ps. 17,906,550 thousand in Q2 2022, compared to Ps. 15,130,192 thousand in Q2 2021[43] - Total equity increased to 47,902,993 thousand pesos from 41,962,528 thousand pesos, showing a growth of approximately 14.2%[48] Shareholder Activity - The company repurchased 35,321,315 shares during the current period, compared to 35,128,483 shares in the previous period, indicating a slight increase in share repurchase activity[46] - The company repurchased shares worth 38,459 thousand pesos during the period, a decrease from 41,917 thousand pesos in the previous year[54] Tax and Income - The company recorded an income tax expense of Ps. 693 million in Q2 2022, down from Ps. 1,240 million in Q2 2021[38] - Basic earnings per share for the current quarter were 12.25 pesos, compared to 10.0 pesos in the previous year, marking an increase of 22.5%[48] Cash Flow - Cash flows from operating activities showed a net outflow of 4,341,676 thousand pesos, compared to an outflow of 4,142,787 thousand pesos in the previous year, indicating a decline in operational cash generation[53] - Net cash flows from investing activities were a negative 447,931 thousand pesos, an improvement from a negative 533,588 thousand pesos in the previous year[53] - The company reported a net increase in cash and cash equivalents of 2,918,100 thousand pesos, up from 2,468,061 thousand pesos in the previous year[53] Financial Ratios - The company has current assets to current liabilities ratio of 3.95 times, indicating strong liquidity[151] - Total liabilities to total assets ratio stands at 0.24, well below the 0.60 limit[151] - Operating income plus non-cash items is 148.38 times, significantly exceeding the required 2.0 times[151] Market and Sales - Sales in Mexico increased by 15% to Ps. 16,327 million in H1 2022, while total sales (in tons) decreased by 14% to 1,179 thousand tons[41] - The company is focusing on expanding its market share, particularly in the foreign sales segment[154] - Future guidance indicates a strategic emphasis on increasing both domestic and foreign sales volumes[154] Strategic Initiatives - New product lines are being developed to enhance the commercial profiles offered[154] - The company is exploring potential mergers and acquisitions to strengthen its market position[154] - Future outlook includes potential market expansion and product development strategies[153]

UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR GROUP SIMEC (Translation of registrant's name into English) UNITED MEXICAN STATES (Jurisdic ...

Financial Performance - Net sales increased by 55% from Ps. 35,869 million in 2020 to Ps. 55,620 million in 2021, driven by higher shipments and a 51% increase in average sales price[2] - Gross profit increased to Ps. 15,652 million in 2021, representing 28% of net sales, up from 19% in 2020[4] - Operating income surged by 161% from Ps. 5,185 million in 2020 to Ps. 13,532 million in 2021, with operating income as a percentage of net sales rising from 14% to 24%[7] - EBITDA increased by 122% to Ps. 14,707 million in 2021, compared to Ps. 6,637 million in 2020[8] - Net income rose by 238% from Ps. 2,798 million in 2020 to Ps. 9,444 million in 2021[12] - Total sales for the year 2021 reached Ps. 55,620 million, a 55% increase from Ps. 35,869 million in 2020[40] - Gross profit for 2021 was Ps. 15,652 million, representing a 135% increase from Ps. 6,657 million in 2020[40] - The company’s net income for the full year 2021 was Ps. 9,444 million, a 238% increase from Ps. 2,798 million in 2020[40] Sales and Shipments - Shipments of finished steel products rose by 3% to 2,504 thousand tons in 2021 compared to 2,441 thousand tons in 2020[2] - Total sales outside of Mexico increased by 55% to Ps. 27,576 million in 2021, while total sales in Mexico also rose by 55% to Ps. 28,044 million[2] - Total revenue for Grupo Simec in Q4 2021 reached Ps. 55,620,356 thousand, with domestic sales contributing Ps. 28,044,620 thousand and foreign sales contributing Ps. 19,072,122 thousand[152] Costs and Expenses - Cost of sales increased by 37% to Ps. 39,968 million in 2021, with cost of sales as a percentage of net sales decreasing from 81% in 2020 to 72% in 2021[3] - Selling, general and administrative expenses increased by 1% to Ps. 2,043 million in 2021, representing 4% of net sales[5] - The company incurred finance costs of 87,445 thousand pesos, a decrease from 416,910 thousand pesos in the previous year, reflecting a reduction of 79.0%[51] Profitability Metrics - Basic earnings per share for the current year were 20.41 pesos, a substantial rise from 5.94 pesos in the previous year, representing an increase of 244.4%[51] - Profit before income tax for the current year reached 13,835,636 thousand pesos, a significant increase from 4,875,927 thousand pesos in the previous year, representing a growth of approximately 184%[55] - Comprehensive financial cost improved to a net income of Ps. 304 million in 2021, compared to a net expense of Ps. 309 million in 2020[10] Cash Flow and Assets - Net cash flows from operating activities amounted to 8,387,332 thousand pesos, compared to 3,633,875 thousand pesos in the previous year, indicating a year-over-year increase of about 131%[55] - Cash flows from investing activities showed a net outflow of 1,009,673 thousand pesos, which is a decrease from the previous year's outflow of 832,671 thousand pesos[55] - The company reported a net increase in cash and cash equivalents of 7,215,717 thousand pesos, up from 715,474 thousand pesos in the previous year, reflecting a growth of over 909%[55] - Total assets at the end of Q4 2021 were Ps. 57,342,572 thousand, up from Ps. 45,438,156 thousand at the end of the previous year[44] Equity and Shareholder Information - Total equity increased to 41,962,528 thousand pesos from 33,181,119 thousand pesos, reflecting a growth of 26.5%[51] - The company repurchased shares worth 74,497 thousand pesos during the year, compared to 41,984 thousand pesos in the previous year, indicating an increase in share repurchase activity[57] - Total equity attributable to owners of the parent at the end of the year was 33,145,109 thousand pesos, an increase from 32,584,977 thousand pesos at the end of the previous year[59] Employee and Operational Metrics - The number of employees increased to 1,890 from 1,763, showing a growth of 7.2%[46] - The company reported a total of 2,504 sales transactions across various product lines in Q4 2021[152] Financial Reporting and Accounting Policies - The functional currency for the company is the Mexican peso, with U.S. subsidiaries using the U.S. dollar and Brazilian subsidiaries using the Brazilian real for financial reporting[82][83] - The company follows a practice of estimating allowances for doubtful accounts based on customer balances over one year old, which may lead to material differences in future results[86] - Inventories are recorded at the lower of acquisition cost and market value, with a reserve for slow-moving inventory established for products not consumed within one year[87][88] - Property, plant, and equipment are recorded at cost less impairment losses, with estimated useful lives ranging from 3 to 65 years depending on the asset type[90] Financial Instruments and Risk Management - The Company uses derivative financial instruments to manage exposure to natural gas price fluctuations, recognizing gains or losses immediately unless designated as hedging instruments[131] - The Company assesses the effectiveness of hedging instruments, considering them highly effective if they offset 80% to 125% of the changes in fair value or cash flows[135]

Financial Performance - Net sales increased by 55% from Ps. 35,869 million in 2020 to Ps. 55,622 million in 2021, driven by a 51% increase in average sales price and a 3% increase in shipments of finished steel products [2]. - Gross profit rose to Ps. 15,498 million in 2021, representing 28% of net sales, compared to Ps. 6,657 million and 19% in 2020 [4]. - Operating income surged by 158% from Ps. 5,185 million in 2020 to Ps. 13,380 million in 2021, with operating income as a percentage of net sales increasing from 14% to 24% [7]. - EBITDA increased by 119% to Ps. 14,542 million in 2021, compared to Ps. 6,637 million in 2020 [8]. - Net income rose by 246% from Ps. 2,957 million in 2020 to Ps. 10,227 million in 2021 [12]. - Total sales for the year 2021 were Ps. 55,622 million, a 55% increase from Ps. 35,869 million in 2020 [37]. - Gross profit for 2021 was Ps. 15,498 million, reflecting a 133% increase from Ps. 6,657 million in 2020 [37]. - Operating profit for the current year was 13,380,451 thousand pesos, compared to 5,185,011 thousand pesos in the previous year, marking an increase of around 158% [45]. - Net profit for the current year was 10,226,971 thousand pesos, compared to 2,957,393 thousand pesos in the previous year, indicating an increase of about 245% [44]. Cost and Expenses - Cost of sales increased by 37% from Ps. 29,212 million in 2020 to Ps. 40,124 million in 2021, with cost of sales as a percentage of net sales decreasing from 81% to 72% [3]. - Selling, general and administrative expenses increased by 3% to Ps. 2,087 million in 2021, representing 4% of net sales compared to 6% in 2020 [5]. - The average cost of finished steel produced increased by 34% in 2021, primarily due to higher scrap costs and supply costs [3]. Quarterly Performance - Operating income for Q4 2021 was Ps. 3,009 million, a significant increase from an operating profit of Ps. 1,401 million in Q4 2020, representing a change from an operating loss of 14% to a profit margin of 23% [31]. - Net income for Q4 2021 was Ps. 1,937 million, compared to a net loss of Ps. 498 million in Q4 2020, marking a turnaround in profitability [36]. - EBITDA for Q4 2021 reached Ps. 3,285 million, up 73% from Ps. 1,895 million in Q4 2020 [33]. Sales and Revenue - Total sales outside of Mexico increased by 55% to Ps. 27,576 million in 2021, while total sales in Mexico also increased by 55% to Ps. 28,046 million [2]. - Sales outside Mexico for 2021 were Ps. 27,576 million, also reflecting a 55% increase from Ps. 17,746 million in 2020 [37]. - Total income for Grupo Simec in Q4 2021 reached 55,621,967 thousand pesos, with domestic sales contributing 28,046,231 thousand pesos and foreign sales contributing 19,072,122 thousand pesos [141]. Assets and Equity - The company recorded a total asset value of Ps. 56,693,608 million at the end of the current quarter, up from Ps. 45,438,156 million the previous year [40]. - Total equity increased to 42,623,005 thousand pesos from 33,181,119 thousand pesos, showing a growth of about 28% [44]. - Total equity attributable to owners of the parent increased to 33,145,109 thousand pesos, up from 32,609,777 thousand pesos, reflecting a growth of approximately 1.6% [50]. Cash Flow and Investments - Cash and cash equivalents increased to Ps. 15,150,368 million, compared to Ps. 7,727,698 million in the previous year [40]. - Cash flows from operating activities showed a net outflow of 6,145,903 thousand pesos, compared to an outflow of 2,652,315 thousand pesos in the previous year, indicating a worsening cash flow situation [48]. - Net cash flows from investing activities were negative at 1,300,539 thousand pesos, increasing from a negative 832,671 thousand pesos in the previous year, reflecting higher investments in property, plant, and equipment [48]. - The company reported a net increase in cash and cash equivalents of 7,235,173 thousand pesos, up from 715,474 thousand pesos in the previous year, indicating improved liquidity [49]. Shareholder Actions - The company repurchased 35,128,483 shares during the current period, compared to 34,465,803 shares in the previous period [42]. - The company repurchased shares worth 74,497 thousand pesos during the year, compared to 41,984 thousand pesos in the previous year, indicating a strategy to enhance shareholder value [49]. - The company reported a basic earnings per share of 20.55 for the current quarter, compared to 5.94 in the same quarter last year, representing an increase of approximately 247% [44]. Financial Management - Comprehensive financial cost improved to a net income of Ps. 283 million in 2021 from a net expense of Ps. 309 million in 2020 [10]. - Comprehensive financial cost for Q4 2021 was a net income of Ps. 58 million, a significant improvement from a net expense of Ps. 1,288 million in Q4 2020 [34]. - The total liabilities to total assets ratio was maintained below 0.60, reflecting prudent financial management [138]. Compliance and Reporting - The financial statements were prepared under International Financial Reporting Standards (IFRS), ensuring compliance and transparency in financial reporting [54]. - The company recognizes provisional amounts for business acquisitions that are not completed by the end of the reporting period, allowing for adjustments based on new information obtained during the valuation period [67]. Employee and Operational Metrics - The number of employees increased to 1,890 from 1,763, indicating a growth of approximately 7% [42]. - The company has maintained its focus on manufacturing and selling special bar quality (SBQ) steel products for the automotive and construction industries in Mexico, the USA, and Canada, indicating a stable market presence [52].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F ___________________ ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-11176 _________________________________ GRUPO SIME ...