Grupo Simec(SIM) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales decreased by 23% to Ps. 24,828 million in the first nine months of 2024 from Ps. 32,401 million in the same period of 2023, with shipments of finished steel products down 6% to 1,536 thousand tons [2]. - Cost of sales decreased by 23% to Ps. 18,625 million in the first nine months of 2024, maintaining a cost of sales percentage of 75% of net sales for both periods [3]. - Gross profit fell by 23% to Ps. 6,203 million in the first nine months of 2024, with a gross margin of 25% for both periods [4]. - Operating income decreased by 33% to Ps. 4,440 million in the first nine months of 2024, representing 18% of net sales compared to 21% in the same period of 2023 [7]. - EBITDA decreased by 31% to Ps. 5,189 million in the first nine months of 2024 from Ps. 7,499 million in the same period of 2023 [8]. - Net income increased by 125% to Ps. 8,587 million in the first nine months of 2024, up from Ps. 3,821 million in the same period of 2023 [12]. - Total revenue for the current year reached 24,827,746 thousand pesos, a decrease from 32,401,468 thousand pesos in the previous year, representing a decline of approximately 23.1% [47]. - Net income for the current period was 8,587,182 thousand pesos, significantly higher than 4,282,906 thousand pesos in the previous period, marking an increase of about 100.5% [47]. - Gross profit for the current quarter was 6,202,579 thousand pesos, compared to 8,095,865 thousand pesos in the previous year, indicating a decrease of approximately 23.4% [47]. - Operating profit for the current year was reported at 5,584,062 thousand pesos, down from 8,715,160 thousand pesos in the previous year, reflecting a decline of around 36.8% [48]. - Basic earnings per share for the current quarter were 17.25 pesos, up from 6.33 pesos in the previous year, representing an increase of approximately 172.5% [47]. - Total comprehensive income for the current year was 7,719,704 thousand pesos, compared to 2,589,414 thousand pesos in the previous year, an increase of about 197.5% [48]. - Profit before income tax increased to 9,347,050 thousand pesos from 5,357,891 thousand pesos, representing a growth of 74.1% year-over-year [52]. - Total sales for the first nine months of 2024 were Ps. 24,828 million, a decrease of 23% compared to Ps. 32,401 million in the same period of 2023 [37]. Expenses and Costs - Selling, general and administrative expenses rose by 16% to Ps. 1,834 million in the first nine months of 2024, representing 7% of net sales [5]. - Selling, general and administrative expenses increased by 16% from Ps. 1,587 million in Jan-Sep 2023 to Ps. 1,834 million in Jan-Sep 2024 [37]. - Cost per ton decreased by 18% from Ps. 14,820 in Jan-Sep 2023 to Ps. 12,126 in Jan-Sep 2024 [37]. - Comprehensive financial cost showed an income of Ps. 4,907 million in the first nine months of 2024, compared to an expense of Ps. 1,318 million in the same period of 2023 [10]. Cash Flow and Liquidity - Cash flows from operating activities showed a net outflow of 4,195,055 thousand pesos, compared to a net outflow of 2,594,816 thousand pesos in the previous year, indicating a worsening cash flow situation [52]. - Net cash flows from investing activities improved to a net outflow of 388,221 thousand pesos from a net outflow of 558,909 thousand pesos, reflecting better management of investment expenditures [52]. - Cash and cash equivalents at the end of the period increased to 28,267,462 thousand pesos from 23,509,444 thousand pesos, marking a rise of 20.5% [52]. - The company reported a net balance of Ps. 21,253,460 thousand in its monetary foreign currency position, with monetary assets totaling Ps. 33,595,190 thousand and liabilities amounting to Ps. 12,341,730 thousand [151]. - The company achieved a current assets to current liabilities ratio of 3.72 times, indicating strong liquidity [154]. - Total liabilities to total assets ratio stands at 0.18, well below the 0.60 threshold [154]. - Operating income plus non-cash items is 483.02 times, significantly exceeding the 2.0 times requirement [154]. Assets and Liabilities - Total assets increased to Ps. 74,847 million in the current quarter from Ps. 66,787 million in the previous year [41]. - Cash and cash equivalents rose to Ps. 28,267 million from Ps. 23,584 million year-over-year [41]. - Total liabilities increased to Ps. 17,409 million from Ps. 16,982 million year-over-year [41]. - The total equity attributable to owners of the parent increased to 57,411,794 thousand pesos, up from 49,780,624 thousand pesos, reflecting a growth of 15.3% [59]. - The company reported a significant increase in retained earnings, with unappropriated earnings rising to 50,972,036 thousand pesos from 42,384,854 thousand pesos, an increase of 20.5% [59]. Shareholder Activities - The company repurchased 36,493,310 shares, an increase from 36,023,685 shares in the previous year, indicating a rise of about 1.3% [43]. - The company repurchased shares worth 86,861 thousand pesos during the period, compared to 69,491 thousand pesos in the previous year, indicating an increase in share buyback activity [55]. Financial Instruments and Risk Management - The Company uses derivative financial instruments to manage exposure to natural gas price fluctuations, recognizing gains or losses in income unless designated as hedging instruments [135]. - The effective portion of changes in the fair value of designated derivatives is recognized in other comprehensive income, while ineffective portions are recognized immediately in income [138]. - The Company employs exchange contracts or swaps to mitigate risks associated with natural gas price fluctuations, impacting operating costs [136]. - Hedge accounting is discontinued when the hedging relationship is reversed or the hedging instrument no longer meets criteria, with cumulative gains or losses remaining in equity until the forecast transaction is recognized [141]. - The Company assesses the effectiveness of hedging instruments periodically, considering them highly effective if they offset changes in fair value or cash flows between 80% and 125% [138]. Accounting Policies - The company recognizes contingent liabilities and assets in accordance with IAS 37, with corresponding gains or losses recorded in the utility [78]. - The company’s accounting policies include the capitalization of borrowing costs directly attributable to the acquisition or construction of qualifying assets [98]. - Current income tax is based on fiscal profits and cash flows, with liabilities computed using enacted tax rates [109]. - Deferred tax assets and liabilities are recognized for temporary differences, with assets recognized only if future taxable profits are probable [110]. - Earnings per share are calculated by dividing net income attributable to controlling interest by the weighted average shares outstanding [111].