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Overview of Grupo Simec's First Half 2025 Results

Grupo Simec, S.A.B. de C.V. (NYSE: SIM) reported its financial results for the first six months ending June 30, 2025, revealing a challenging operational landscape. The results highlighted a notable decline in net sales and profitability compared to the same period in the previous year.

Key Financial Highlights

• - Net Sales: The company experienced a 9% drop in net sales, totaling Ps. 14,835 million in H1 2025, down from Ps. 16,279 million in H1 2024. The decrease was primarily attributed to an 11% reduction in shipments of finished steel products, which amounted to 901 thousand tons compared to 1,015 thousand tons in the prior year. Additionally, total sales outside of Mexico saw a decline of 10% to Ps. 6,573 million, while domestic sales fell 8% to Ps. 8,262 million.

• - Cost of Sales: The cost of sales also dropped by 9%, going from Ps. 12,232 million in H1 2024 to Ps. 11,167 million in H1 2025. The cost of sales remained consistently at 75% of net sales for both periods.

• - Gross Profit: In terms of gross profit, Grupo Simec reported Ps. 3,668 million, marking a reduction from Ps. 4,047 million from the previous year. This indicates a gross profit margin of 25% for both H1 2025 and H1 2024.

• - Expenses: Selling, general and administrative expenses increased by 11% to Ps. 1,307 million, with these costs representing 9% of net sales in H1 2025, compared to 7% in H1 2024.

• - Operating Profit: The operating profit for the company saw a 10% decline, dropping to Ps. 2,624 million, with the operating income margin maintaining at 18%.

• - Net Income: The net income fell sharply by 94%, from Ps. 5,435 million in H1 2024 to just Ps. 304 million in H1 2025, reflecting significant operational challenges.

Analysis of Quarterly Performance

When examining the second quarter of 2025 versus the first, Grupo Simec reported a 9% decrease in net sales, from Ps. 7,783 million in Q1 2025 to Ps. 7,052 million in Q2 2025. This decrease mirrored a decline in shipment volumes, from 476 thousand tons to 425 thousand tons. Furthermore, both domestic and international sales took a hit, with declines of 8% and 11% respectively.

Comparative Q2 Findings:

• - Sales: Total sales in Q2 2025 reported Ps. 7,052 million, down from Ps. 8,394 million in Q2 2024, a significant 16% year-over-year decline.
• - Cost Implications: Cost of sales decreased by 15% from the previous year, aligning with reduced shipment volumes and a shortfall in production capacity.

Financial Position and Projections

Despite the challenges faced in 2025, Grupo Simec continues to navigate the competitive landscape of the steel industry, striving to regain footing in the market. The comprehensive financial costs reflected a burden of Ps. 1,845 million for H1 2025 owing to net exchange losses, contrasting sharply with the previous year's financial gains. The fluctuating expenses reflect the ongoing volatility in the economic environment and raw material pricing impacts, particularly the costs of scrap, which showed incremental increases impacting overall profitability.

Future Outlook

As Grupo Simec moves deeper into 2025, stakeholders will be closely monitoring how the company addresses the operational challenges revealed in this report. The sharp decline in net income and sales volumes is likely to prompt strategic adjustments moving forward, potentially focusing on cost management, operational efficiency, and market responsiveness. The leadership will need to address these challenges head-on to position the company favorably for recovery.

Conclusion

In summary, Grupo Simec's operational results for the first half of 2025 indicate a period of significant financial hurdles, underscoring the need for strategic pivots to enhance both top-line and bottom-line performance amid a challenging market landscape. Investors and analysts will be keen to see the company's actions to stabilize and foster future growth.