Grupo Simec(SIM) - 2022 Q2 - Quarterly Report

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]