#Mexico #financial results #Guadalajara #Grupo Simec #SIMEC

Introduction

In a recent announcement, Grupo Simec, S.A.B. de C.V. (NYSE: SIM) reported its operational results for the twelve months ending December 31, 2025. The company, known for its production of finished steel products, has faced a tough market, leading to significant changes in its financial metrics compared to the previous year.

Financial Overview

For the year 2025, Grupo Simec saw its net sales decrease by 10%, dropping from Ps. 33,658 million in 2024 to Ps. 30,291 million in 2025. This decline was attributed to a 6% reduction in shipments of finished steel products, which fell from 2,056,000 tons in 2024 to 1,933,000 tons in 2025. Additionally, the average selling price also dipped by 4%, further impacting overall sales volume.

International sales were not spared either, as they fell by 14%, from Ps. 15,388 million in 2024 to Ps. 13,234 million in 2025. However, domestic sales in Mexico experienced a smaller decline of 7%, with total sales dropping from Ps. 18,270 million to Ps. 17,057 million.

Cost of Sales and Profit Margins

On a slightly positive note, the cost of sales saw a decrease of 13% from Ps. 26,033 million to Ps. 22,657 million. This reduction in costs improved the gross profit margin. The company's gross profit was Ps. 7,634 million in 2025, almost the same as the previous year’s Ps. 7,625 million. Gross profit as a percentage of net sales improved from 23% in 2024 to 25% in 2025, showcasing better management of direct costs despite lower revenues.

However, operating income increased marginally by 1%, rising from Ps. 5,301 million to Ps. 5,365 million, reflecting the tightrope of maintaining profitability amid declining sales. The operating profit margin also saw an uptick, moving from 16% to 18%.

Performance of Key Financial Metrics

EBITDA also saw a slight increase, up by 1% from Ps. 6,367 million in 2024 to Ps. 6,446 million in 2025. In contrast, net income took a significant hit, plunging by 85%. It decreased from Ps. 10,488 million in 2024 to just Ps. 1,533 million in 2025. The stark difference was primarily due to a reversal of the previous year’s foreign exchange gains, turning into losses that totaled Ps. 3,602 million.

Quarter-by-Quarter Analysis

Examining the fourth quarter of 2025 compared to the previous quarter, Grupo Simec reported a 7% increase in net sales, from Ps. 7,485 million in Q3 to Ps. 7,972 million in Q4. This modest growth illustrated some recovery, backed by a 7% increase in shipments from 499,000 tons to 532,000 tons.

The cost of sales remained relatively stable, resulting in an impressive 26% increase in gross profit to Ps. 2,208 million for the fourth quarter. Operating income also jumped significantly to Ps. 1,582 million, representing a 36% increase. Notably, the net income for Q4 showed significant improvement, reaching Ps. 770 million, compared to Ps. 459 million in Q3.

Conclusion

Overall, Grupo Simec's results for 2025 underline a challenging year marked by decreased sales and significant fluctuations in net income. However, strategic cost management has allowed the company to maintain margins despite lower revenues. As Grupo Simec continues to navigate the global steel market’s difficulties, stakeholders will be keen to observe how the company adapts its strategies for future growth.