#Manufacturing #Mexico #Guadalajara #Grupo Simec #Steel Products

Overview of Grupo Simec's Financial Year 2024

Grupo Simec, a prominent player in the steel manufacturing industry, recently published its audited operational results for the twelve-month period concluding on December 31, 2024. The report outlines significant shifts in the company's performance metrics compared to 2023, revealing both challenges and areas of resilience. This year has been marked by a notable decrease in net sales, influenced by a combination of reduced shipment volumes and a decline in average sales prices.

Key Financial Metrics

Net Sales: The company's net sales dropped by 18% year-on-year, plummeting from Ps. 41,139 million in 2023 to Ps. 33,658 million in 2024. This decline can be attributed to a 6% decrease in shipments of finished steel products alongside a 13% reduction in average pricing.

Regional Sales Performance: Delving deeper, total sales outside Mexico also experienced a downturn, decreasing by 8% to Ps. 15,388 million compared to Ps. 16,814 million in the prior year. The domestic market witnessed an even sharper decline, with sales dropping by 25% from Ps. 24,325 million to Ps. 18,270 million.

Cost and Profit Analysis

Cost of Sales: On the cost front, Grupo Simec managed to decrease its cost of sales by 16%, falling from Ps. 31,100 million to Ps. 26,033 million. The overall cost of sales was consistent with a marginally improved percentage of net sales when contrasted with the previous year, standing at 77% for 2024 versus 76% for 2023. A notable factor contributing to this reduction was an 11% decrease in average production costs of finished steel, driven primarily by lower scrap costs.

Gross Profit: This was reflected in the gross profit figures, which indicated a decline from Ps. 10,039 million in 2023 to Ps. 7,625 million in 2024. As a percentage of net sales, this translated to 23% for the latest fiscal year against 24% in the previous year.

Operating Expenses and Income

Operating Expenses: The company's selling, general, and administrative expenses rose by 12%, amounting to Ps. 2,603 million in comparison to Ps. 2,317 million the year before. This increased burden on operational expenses is evidenced by their footprint growing from 6% of net sales in 2023 to 8% in 2024.

Operating Income: As a result of these financial dynamics, Grupo Simec faced a nett operating income reduction of 30%, decreasing to Ps. 5,301 million from Ps. 7,603 million the previous year. This downturn in operating income also indicates a diminishing percentage of net sales, where the latest fiscal year reflected 16% versus 18% in 2023.

EBITDA and Net Income

EBITDA: The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was reported at Ps. 6,367 million for 2024, representing a 26% decrease from Ps. 8,638 million in the previous year.

Net Income Overview: In contrast to the operational downturns, Grupo Simec reported a substantial increase in net income, surging by 145% from Ps. 4,283 million in 2023 to Ps. 10,488 million in 2024, indicative of effective cost management and financial strategies despite declines in sales.

Comparative Sales Examined

A brief examination of the latest quarters illustrates a sequential improvement in net sales from Ps. 8,549 million in Q3 2024 to Ps. 8,830 million in Q4 2024, showcasing a slight resilience against a backdrop of challenges.

Future Outlook

As Grupo Simec moves forward, it faces the dual challenge of bolstering its sales performance while managing operational expenses effectively amidst a fluctuating market landscape. Industry analysts will be keenly observing how the company adapts its strategies to thrive in the competitive steel producing sector.

In summary, while Grupo Simec has encountered a drop in net sales indicative of broader market pressures, it has simultaneously demonstrated robust net income growth, positioning itself for potential recovery in the upcoming fiscal periods.