MEXICO CITY, MEXICO--(Marketwire - October 28, 2008) - Grupo TMM, S.A.B. (
MANAGEMENT OVERVIEW
José F. Serrano, chairman and chief executive officer of Grupo TMM, said, "Despite weak global economic conditions, in the third quarter of 2008 TMM reported a revenue increase of 24.1 percent, net income of $14.0 million and earnings per share of $0.25. The Maritime division continues to produce solid results, confirming our strategy to grow revenues by acquiring vessels. With the acquisition of new vessels in 2008 and 2009, TMM will manage a significantly larger owned fleet than in the past several years. The increase in the number of owned vessels is a direct result of the completed funding of our peso denominated 20-year Trust Certificates Program, which is non-recourse to the Company, and our commitment to capitalize on the growing demands for oil distribution and exploration in Mexico. Our strategy is to pursue sustainable long-term growth and gradually expand our revenue and profit-generation capabilities.
"In these uncertain economic times, it is easy to focus on negative reports about the global credit crisis that dominates the headlines. However, TMM is not involved in any speculative derivative instruments, and our only outstanding hedge is on the Company's Mexican Trust Certificates Program, which has a cap on the TIIE rate, or Mexico's Interbank Equilibrium Interest Rate, of 9.25 percent for three years. Moreover, with only 18 percent of our debt denominated in U.S. Dollars, the strengthening of the U.S. dollar versus the peso in the third quarter resulted in an exchange gain of $32 million for the quarter and of $21.7 million for the nine months of 2008.
"With only 1.1 percent, or $10.8 million, of our total debt classified as short term, our earliest significant amortization is in October 2010. Last quarter we discussed our intention to negotiate new terms on the outstanding balance of our securitization facility. Given the current credit market conditions, we are re-evaluating several alternatives.
"At the offshore segment, three new vessels will start working under two- and three-year contracts with Pemex during the fourth quarter. We expect to add three vessels in the first quarter of 2009 and five throughout the remainder of 2009. Of these five vessels, three are already fixed with five-year contracts with Pemex and other clients, starting during the second and third quarters of 2009. With the addition of these vessels, TMM will manage a fleet comprised of 53 vessels, solidifying TMM as the leading Mexican maritime company."
Serrano added, "TMM's long standing strategy of having the majority of its fleet employed under medium- to long-term contracts has allowed the Company's Maritime business to continue to provide consistent returns. By continuing to focus on linking vessels to profitable contracts, we will lock in our maritime related revenues and cash flows to service our peso denominated debt for the remainder of 2008 and following years.
"Moreover, our offshore and product tanker vessels currently under contract have no exposure to fluctuating fuel prices. While our parcel tankers do have exposure, we have put in place a surcharge clause with several of our clients, which partially offsets fuel price increases. All of our current Maritime fleet is employed, and approximately 94 percent of these revenues are generated in U.S. dollars.
"While revenues were strong in the third quarter, transportation income at the Maritime division was impacted by delays from shipyards in delivering two offshore vessels, which will start contributing revenue and profit in the fourth quarter-, by increased costs related to higher crew costs associated with the Company's continuing efforts to retain qualified crews, and by higher fuel expenses in parcel tankers and product tankers working in the spot market. These cost increases have also affected the shipping industry worldwide."
Serrano continued, "After carefully and comprehensively evaluating all of our businesses, TMM's management and board of directors are taking critical actions that we believe will position the Company for continued growth. For several decades, TMM's core business has been Maritime, and we have consistently proven our operating excellence in that market. Therefore, we have decided to focus all our efforts on growing our Maritime division, and will enact a corporate restructuring, including the sale of certain non-productive and non-strategic assets, and significantly reduce personnel and related costs, which we believe will result in improved profits and cash flows. We expect to promptly complete these actions now underway.
"Additionally, as part of our long-term growth strategy and taking advantage of TMM's experience in managing operations at Ports, we intend to participate in the Mexican government's developing plan at several Ports throughout Mexico, as bids are announced in the years to come."
Serrano concluded, "We believe our strong competitive advantages in Maritime, our focused business strategy, our successful financial strategy of having long-term financing in pesos with no recourse to the Company, our fleet of young, high-quality vessels and long-term employment with established charterers, will enable us to deliver strong and stable results in 2009 and forward. The sale of non-strategic assets, corporate restructuring and the anticipated improved liquidity from these actions, will position TMM for long-term success, realizing the inherent value in the Company."
FINANCIAL RESULTS
In the third quarter of 2008, consolidated revenues increased 24.1 percent to $95.4 million, compared to $76.9 million in the same period of 2007. In the nine-month period of 2008, consolidated revenues improved 25.1 percent to $273.8 million compared to $218.8 million in the 2007 period.
At Maritime, increased revenues in both periods were mainly due to higher average daily rates at the offshore segment and to additional offshore and product tankers in operation.
In the third quarter of 2008, Port revenues increased 14.3 percent due to improved revenues at Acapulco, resulting from increased cruise ship calls and from higher volumes at the auto handling business. In the nine-month period of 2008, Port revenues decreased 4.7 percent attributable to lower volumes at shipping agencies. Notwithstanding, the Company believes the Port division will meet its 2008 EBITDA goal.
The Logistics division also contributed to higher consolidated revenues for the quarter and nine-month periods. Revenue increased at trucking from improved freight volumes, extended contracts and new customers, and at the warehousing business due to the start of the peak season. Additionally, the auto hauling business, which began in 2008, also contributed to this division's improved revenue base.
In the nine-month period of 2008, costs and operating expenses increased due to one-time charges at Maritime from the addition of new vessels, and at Logistics due to the rehabilitation of equipment at the auto hauling business, and to severance payments from a reduction of personnel.
In the third quarter of 2008, transportation income at Maritime decreased 10.4 percent, mainly due to results at the parcel tanker segment, which was impacted by increased fuel costs, cargo delays at Houston due to bad weather conditions, and to one vessel in mandatory dry dock. Reduced profits in the third quarter at this division resulted in a transportation income decrease of $0.3 million in the nine-month period of 2008 compared to the same period of 2007.
In the nine-month period of 2008, Logistics reported a transportation loss of $6.6 million. This loss was mainly attributable to profit reductions at certain business segments, including auto hauling and automotive, mainly attributable to a slowdown in production at auto plants, at maintenance and repair due to lower container volumes at Veracruz, and to losses from discontinued businesses.
In the third quarter of 2008, the ratio of corporate expenses to total revenue remained at 6.4 percent and decreased to 5.4 percent in the nine months of 2008 compared to 6.4 percent in the same period of 2007. In the nine months of 2008, corporate expenses increased compared to the same period last year, mainly due to non-recurrent expenses incurred in the third quarter from severance payments and other related costs, as part of the Company's corporate restructuring. This ongoing personnel reduction will result in cost efficiencies going forward.
Additionally, the appreciation of the peso versus the dollar from January through August of 2008 negatively impacted orporate expenses. The recent strengthening of the U.S. dollar versus the peso will benefit corporate expenses in the fourth quarter of 2008.
Net financial cost in the third quarter and nine months of 2008 was significantly reduced by exchange gains of $32.0 million and $21.7 million, respectively, due to the devaluation of the peso versus the dollar in the third quarter, as the majority of the Company's debt is denominated in pesos.
In the third quarter of 2008, the Company reported $14.0 million of net income compared to a net loss of $45.6 million in the same period last year. In the nine-month period of 2008, net loss was $11.1 million compared to a net loss of $51.3 million in the 2007 period.
TOTAL NET DEBT
The total debt from the Company's Mexican Trust Certificates was valued at $868 million dollars at July 1, 2008. Due to the devaluation of the peso versus the dollar in the third quarter, the total value of this debt was $798 million* as of September 30, 2008, and approximately $656 million* as of October 27, 2008.
The Company's total debt is supported by approximately $380 million of long-term contracted revenues. The total market value of the Company's vessels is estimated to exceed their book value by $104 million.
Total Net Debt as of September 30, 2008
(Millions of dollars)
Mexican Trust Certificates ("MTC") (1)
Non-recourse secured portion $ 706.2
Non-recourse unsecured portion 91.8
============
Total MTC $ 798.0
Securitization Facility 118.6
Other corporate debt 76.5
============
Total Debt $ 993.1
Unsecured portion of the MTC 91.8
Cash and reserves 281.7
============
Total Net Debt excluding the non-recourse
unsecured portion of the MTC $ 619.6
------------
* Exchange Rate: 10.94 pesos/dollar at September 30 and 13.31 pesos/dollar
at October 27
(1) The Mexican Trust Certificates ("MTC") have two portions, one secured
by the assets contributed to the Trust (vessels and cash), and another
one which shows the difference between the net balance of the Trust
assets and the Trust liabilities, and represents a deferred credit
without recourse to the Company, which will be paid with future
services rendered over the life of the Trust
CONFERENCE CALL
TMM's management will host a conference call and Webcast to review financial and operational highlights on Wednesday, October 29 at 11:00 a.m. Eastern time.
To participate in the conference call, please dial (877) 719-9801 (domestic) or (719) 325-4801 (international) at least five minutes prior to the start of the event. Accompanying visuals and a simultaneous Webcast of the meeting will be available at http://www.visualwebcaster.com/event.asp?id=52149.
A replay of the conference call will be available through November 12 at 11:59 p.m. Eastern time, by dialing (888) 203-1112 or (719) 457-0820, and using passcode 2039847. On the Internet a replay will be available for 30 days at http://www.visualwebcaster.com/event.asp?id=52149.
Headquartered in Mexico City, TMM is a Latin American intermodal transportation company. Through its branch offices and network of subsidiary companies, TMM provides a dynamic combination of ocean and land transportation services. Visit TMM's Web site at www.grupotmm.com. The site offers Spanish/English language options.
Included in this press release are certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements speak only as of the date they are made and are based on the beliefs of the Company's management as well as on assumptions made. Actual results could differ materially from those included in such forward-looking statements. Readers are cautioned that all forward-looking statements involve risks and uncertainty. The following factors could cause actual results to differ materially from such forward-looking statements: global, US and Mexican economic and social conditions; the effect of the North American Free Trade Agreement on the level of US-Mexico trade; the condition of the world shipping market; the success of the Company's investment in new businesses; risks associated with the Company's reorganization and restructuring; the ability of the Company to reduce corporate overhead costs; the ability of management to manage growth and successfully compete in new businesses; and the ability of the Company to restructure or refinance its indebtedness. These risk factors and additional information are included in the Company's reports on Form 6-K and 20-F on file with the United States Securities and Exchange Commission.
Financial tables follow...
Grupo TMM, S.A.B. and subsidiaries
Balance Sheet (under discontinuing operations)*
- millions of dollars -
September 30, December 31,
2008 2007
------------ ------------
Current assets:
Cash and cash equivalents 281.741 52.235
------------ ------------
Accounts receivable
Accounts receivable - Net 62.436 44.812
------------ ------------
Other accounts receivable 37.209 32.698
------------ ------------
Prepaid expenses and others current
assets 14.745 12.506
------------ ------------
Total current assets 396.131 142.251
============ ============
Property, machinery and equipment 749.978 453.069
------------ ------------
Cumulative Depreciation (125.002) (108.830)
------------ ------------
Property, machinery and equipment - Net 624.976 344.239
============ ============
Other assets 62.583 59.866
============ ============
Deferred taxes 115.818 115.818
============ ============
Total assets 1,199.508 662.174
============ ============
Current liabilities:
Bank loans and current maturities of
long-term liabilities 36.100 10.547
------------ ------------
Sale of accounts receivable 14.493 13.463
------------ ------------
Suppliers 34.840 28.660
------------ ------------
Other accounts payable and accrued expenses 41.454 40.127
------------ ------------
Total current liabilities 126.887 92.797
============ ============
Long-term liabilities:
Bank loans 65.656 49.707
------------ ------------
Trust certificates debt (1) 680.907 139.231
------------ ------------
Deferred Credit related to the trust
certificates debt (1) 91.840 121.531
------------ ------------
Sale of accounts receivable 104.089 113.362
------------ ------------
Other long-term liabilities 25.915 26.684
------------ ------------
Total long-term liabilities 968.407 450.515
============ ============
Total liabilities 1,095.294 543.312
============ ============
Stockholders' equity
Common stock 117.518 121.094
------------ ------------
Retained earnings 2.119 11.885
------------ ------------
Initial accumulated translation loss (17.757) (17.757)
------------ ------------
Cumulative translation adjusted (3.587) (2.263)
============ ============
98.293 112.959
------------ ------------
Minority interest 5.921 5.903
------------ ------------
Total stockholders' equity 104.214 118.862
============ ============
Total liabilities and stockholders' equity 1,199.508 662.174
============ ============
* Prepared in accordance with International Financial Reporting Standards.
(1) The Trust Certificates have two portions, one secured by the assets
contributed to the Trust (vessels and cash), and another one which
shows the difference between the net balance of the Trust assets and
the Trust liabilities, and represents a deferred credit without
recourse to the Company, which will be paid with future services
rendered over the life of the Trust.
Grupo TMM, S.A.B. and subsidiaries
* Statement of Income (under discontinuing operations)
- millions of dollars -
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Ports 1.343 1.175 5.578 5.852
Maritime 52.602 44.410 151.687 131.789
Logistics 36.656 30.251 106.027 78.962
Corporate and others 4.758 1.086 10.544 2.242
-------- -------- -------- --------
Revenue from freight and services 95.359 76.922 273.836 218.845
-------- -------- -------- --------
Ports (1.481) (1.401) (4.454) (4.315)
Maritime (37.491) (29.284) (106.116) (87.683)
Logistics (38.715) (30.191) (109.291) (79.485)
Corporate and others (5.104) (1.279) (10.977) (2.407)
-------- -------- -------- --------
Cost of freight and services (82.791) (62.155) (230.838) (173.890)
-------- -------- -------- --------
Ports (0.208) (0.187) (0.645) (0.571)
Maritime (4.782) (3.594) (12.282) (10.522)
Logistics (0.940) (0.746) (3.301) (1.628)
Corporate and others 0.001 (0.003) (0.013) (0.011)
-------- -------- -------- --------
Depreciation of vessels and
equipment (5.929) (4.530) (16.241) (12.732)
-------- -------- -------- --------
Corporate expenses (6.147) (4.987) (14.736) (14.051)
-------- -------- -------- --------
Ports (0.346) (0.413) 0.479 0.966
Maritime 10.329 11.532 33.289 33.584
Logistics (2.999) (0.686) (6.565) (2.151)
Corporate and others (6.492) (5.183) (15.182) (14.227)
-------- -------- -------- --------
Transportation Income 0.492 5.250 12.021 18.172
-------- -------- -------- --------
Other (expenses) income - Net (1.408) (0.660) (1.024) 2.503
-------- -------- -------- --------
Operating (loss) Income (0.916) 4.590 10.997 20.675
======== ======== ======== ========
Financial (expenses) income - Net (18.321) (13.794) (43.007) (34.289)
-------- -------- -------- --------
Exchange gain (loss) - Net 32.051 1.966 21.663 1.534
-------- -------- -------- --------
Net financial cost 13.730 (11.828) (21.344) (32.755)
-------- -------- -------- --------
Gain (loss) before taxes 12.814 (7.238) (10.347) (12.080)
======== ======== ======== ========
Benefit (provision) for taxes 1.155 0.223 (0.305) (0.576)
-------- -------- -------- --------
Net Income (loss) before
discontinuing operations 13.969 (7.015) (10.652) (12.656)
======== ======== ======== ========
Loss from disposal discontinuing
business (38.563) (38.563)
-------- -------- -------- --------
Net income (loss) for the period 13.969 (45.578) (10.652) (51.219)
======== ======== ======== ========
Attributable to:
Minority interest (0.082) 0.007 0.482 0.073
-------- -------- -------- --------
Equity holders of GTMM, S.A.B. 14.051 (45.585) (11.134) (51.292)
======== ======== ======== ========
Weighted average outstanding shares
(millions) 55.956 56.963 56.518 56.963
Income (loss) earnings per share
(dollars / share) 0.25 (0.80) (0.20) (0.90)
Outstanding shares at end of period
(millions) 55.252 56.963 55.252 56.963
Income (loss) earnings per share
(dollars / share) 0.25 (0.80) (0.20) (0.90)
======== ======== ======== ========
* Prepared in accordance with International Financial Reporting Standards.
Grupo TMM, S.A.B. and subsidiaries
Statement of Cash Flow (under discontinuing operations)*
- millions of dollars -
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Cash flow from operation activities:
Net Income (loss) before
discontinuing operations 13.969 (7.015) (10.652) (12.656)
-------- -------- -------- --------
Charges (credits) to income not
affecting resources:
Depreciation & amortization 8.674 6.757 25.909 20.094
-------- -------- -------- --------
Deferred income taxes (2.216)
-------- -------- -------- --------
Other non-cash items (12.476) 19.147 32.515 40.065
-------- -------- -------- --------
Total non-cash items (3.802) 25.904 58.424 57.943
-------- -------- -------- --------
Changes in assets &
liabilities (31.437) (17.245) (59.421) (7.407)
-------- -------- -------- --------
Total adjustments (35.239) 8.659 (0.997) 50.536
-------- -------- -------- --------
Net cash (used in) provided by
operating activities (21.270) 1.644 (11.649) 37.880
======== ======== ======== ========
Cash flow from investing
activities:
Proceeds from sales of assets 0.489 0.163 1.008 6.997
-------- -------- -------- --------
Payments for purchases of assets (196.136) (30.242) (298.137) (106.866)
-------- -------- -------- --------
Acquisition of shares of
subsidiaries 24.504
-------- -------- -------- --------
Paid to minority partners (2.450)
-------- -------- -------- --------
Common stock decrease of
subsidiaries (0.490)
-------- -------- -------- --------
Dividends from non-consolidated
subsidiaries 1.001 0.195 1.001 0.195
-------- -------- -------- --------
Net cash used in investment
activities (194.646) (29.884) (296.618) (77.620)
======== ======== ======== ========
Cash flow provided by financing
activities:
Short-term borrowings (net) (2.277) (1.883) 0.249 0.434
-------- -------- -------- --------
Sale (repurchase) of accounts
receivable (net) (7.240) (10.001) (21.777) (30.139)
-------- -------- -------- --------
Repayment of long-term debt 0.615 (158.987) (56.248) (179.514)
-------- -------- -------- --------
Proceeds from issuance of
long-term debt 426.404 255.377 628.815 307.877
-------- -------- -------- --------
Acquisition of treasury shares,
net (1.367) (2.208)
-------- -------- -------- --------
Net cash provided by financing
activities 416.135 84.506 548.831 98.658
======== ======== ======== ========
Exchange losses on cash (11.058) (11.058)
======== ======== ======== ========
Net increase in cash 189.161 56.266 229.506 58.918
-------- -------- -------- --------
Cash at beginning of period 92.580 41.318 52.235 38.666
-------- -------- -------- --------
Cash at end of period 281.741 97.584 281.741 97.584
======== ======== ======== ========
* Prepared in accordance with International Financial Reporting Standards.
Contact Information: TMM COMPANY CONTACT: Jacinto Marina Chief Financial Officer 011-525-55-629-8866 ext. 2901 Monica Azar Investor Relations 917-597-5361 or 011-525-55-629-8866 ext. 3421 AT DRESNER CORPORATE SERVICES: Kristine Walczak (investors, analysts, media) 312-726-3600