MORE THANDISTRIBUTION2013 ANNUAL REPORT
Thanks to our successful business model based on product, customer, industry and region diversification, we were able to minimize the effect of adverse factors in 2013 achieving double-digit growth in revenue while increasing gross margins and maintaining a healthy balance of accounts receivable.
Among the most significant adverse effects were:
- The generalized drop in prices of the raw materials which are part of the Company’s portfolio. A generally depressed world economy resulted in lower prices for a large number of raw materials throughout the world. High-volume products for Grupo Pochteca, such as sodium cyanide or titanium dioxide, suffered double-digit price declines during the year. These price contractions resulted in significant losses from holding inventories, coupled to increasingly lower sales per ton sold. Fortunately, we were able to increase the volume of tons sold by 42%, offsetting a portion of the price reductions, thus being able to attain a 15% growth in total sales. Likewise, despite the considerable losses from declining value of inventories, gross profit as percentage of sales increased to 16.8% from the 16.1% margin observed in the previous year.
- The slowdown of the oil exploration and drilling sectors, along with generalized delays in collections throughout this industry, resulted in lower than expected sales and in increased days outstanding in our receivables with the industry. This inevitably affected our revenues, given that oil and gas represent in excess of 7% of Grupo Pochteca's sales.
- The decline in construction activity severely affected manufacturers of paints, lacquers, coatings and other construction materials. These sectors are an important part of the solvent, blends and coating segment’s sales. This segment, by itself, is the most important revenue generator for Pochteca. Similarly, the weakness in construction and infrastructure projects impacted negatively on the sale of lubricants and greases. The government's underspending on construction and infrastructure projects affected these sectors in particular and industry in general, thus affecting demand.
- The drop in prices for minerals affected both the prices of raw materials used in mining processes (i.e. cyanide) as well as the volumes sold of those materials, as the lower prices of minerals resulted in many mines reducing the production volumes.
This diversified model will allow Pochteca to capture significant benefits once the energy reform is consolidated and the economy resumes its growth. The positive impact will be seen not only in the oil exploration and drilling industries, the most important markets for Grupo Pochteca, but in over 30 industrial activities that rely on energy and/or basic petrochemicals for their processes. All these industries are served by Grupo Pochteca and therefore their growth will result in an increase in the demand of the Company’s portfolio of products.
Ps.4,473 million in sales
15% growth against 2012
Ps.40 million Net Income
Ps.216 million EBITDA
Ps.623 million Net Debt