Organizacion Cultiba Announces Second Quarter and First Half 2013 Financial Results

 Organizacion Cultiba Announces Second Quarter and First Half 2013 Financial
                                   Results

- Total case volume in 2Q13 rose 3.2% year-over-year despite consumer
contraction

- EBITDA in 2Q13 increased 25.4% year-over-year and margin expansion on track

- Capturing synergies and staying the course

PR Newswire

MEXICO CITY, July 24, 2013

MEXICO CITY, July 24, 2013 /PRNewswire/ --Organizacion Cultiba, S.A.B. de
C.V. ("Cultiba") (BMV: CULTIBAB), a holding company with a majority interest
in one of Mexico's largest bottlers of soft drinks and jug water, and the
exclusive bottler of PepsiCo beverage products in Mexico, as well as a holding
company of a leading sugar producer, today reported consolidated financial
results for the quarter ended June 30, 2013. Total revenue for the quarter
increased 4.8% year-over-year to Ps.9,201 million, primarily reflecting
above-industry beverage growth as well as improved prices. Consolidated
EBITDA for the quarter was Ps.978 million compared to Ps.780 million in the
same period of last year due to synergies achieved as well as a good
performance in the beverage operations. Net income for the quarter was Ps.395
million, compared to net income of Ps.133 million in second quarter 2012.

Select Operating and Financial Information

                           Second Quarter              First Half
                           2013     2012    % Chg      2013    2012    % Chg
OPERATING HIGHLIGHTS
Total Case Volume (mm 8    448.4    434.7   3.2%       813.7   784.0   3.8%
oz)
Soft drinks & bottled     220.9    221.1   -0.1%      402.0   396.3   1.4%
water
Jug Water                227.5    213.6   6.5%       411.7   387.7   6.2%
FINANCIAL HIGHLIGHTS (PsMM)
Total Revenue            9,201    8,782   4.8%       17,007  16,360  4.0%
Total EBITDA             978      780     25.4%      1,596   1,519   5.1%
Total Net Income         395      133     196.8%     372     433     -14.2%
Beverage Segment
Revenue                  8,605    8,145   5.6%       15,642  14,841  5.4%
EBITDA                  828      664     24.6%      1,278   1,069   19.6%
Net Income               369      263     40.3%      254     17      NM
EBITDA = Net income plus (1) Depreciation and amortization, (2) Other income
(expenses), (3) Net financing cost
and (4) Provision for taxes



CEO COMMENT

Commenting on the quarter's results, Mr. Juan Gallardo, Chairman and CEO
stated, "Our beverage group continues to perform in line with our
expectations, delivering a good second quarter performance, driven by a
combination of volume growth and improved prices. We have completed the
realignment of our product portfolio to focus on strong brands with national
reach – brands that are expected to deliver above average industry growth.
Along with leveraging our nationwide distribution network, we are focusing on
our more profitable channels. Our strategy is working, as in a weak consumer
environment we reported volume growth ahead of the industry and reported
improved EBITDA margins."

"Our results to date are indicative that we are well on our way to achieving
the goals we laid out at the beginning of the year. Volume is increasing due
to multiple initiatives we have underway, revenue is growing and margins are
expanding. We are also delivering a higher quality EBITDA reflecting
improvements in our operations. Equally important, we are capturing synergies
according to plan and are more than halfway towards reaching our goal of
Ps.900 million by 2014. To date, the largest synergies have been captured in
strategic raw materials as we are able to leverage higher volumes, in
optimizing our distribution network and streamlining our operational
processes. Additionally, our vertical integration into sugar is reflected in
improved margins. We are optimistic for the remainder of the year and are
reaffirming our original 2013 guidance at this time, including expected EBITDA
growth year over year of 40%, despite the challenging market conditions faced
in the first half of the year," concluded Mr. Gallardo.

2Q13 RESULTS COMMENTARY

Volume

During the quarter, total beverage sales increased 3.2% to 448.4 million eight
ounce cases primarily due to higher jug water sales. The company was able to
deliver this above industry growth rate even as the Mexican economy
decelerated and consumer spending weakened.

Total soft drink and bottled water case volume was 220.9 million eight-ounce
cases, basically flat with the same period in the prior year. The company's
focus on its most profitable channels and continued expansion throughout the
country are contributing to the beverage division's results.

Jug water performed well in the quarter, increasing 6.5% to 227.5 million
eight-ounce cases from 213.6 million eight-ounce cases in second quarter
2012. Increased direct-to-home routes as well as improved execution at points
of sale contributed to this good performance.

Revenue

Total company revenue in second quarter 2013 increased 4.8% to Ps.9,201
million from Ps.8,782 million in the second quarter of 2012. Revenue growth
was primarily due to a 3.2% expansion in total beverage volume and an increase
in overall average revenue per case. Average revenue per case increased 2.4%
to Ps.19.19 in second quarter 2013, up from Ps.18.74 in the same period of the
prior year. With a re-aligned beverage portfolio focused on strong brands
with national consumer relevance, the beverage division is benefitting from an
improved product offering.

Costs of Goods Sold

Total company cost of goods sold, was Ps.5,355 million in the quarter,
basically flat with the same period in the prior year. Gross profit margin in
the quarter was 41.8%, up from 39.2% in the same period of the prior year.
This improvement reflects the benefits of the synergies the company is
capturing. Unit costs per case in second quarter 2013 improved by
approximately 1.6% in comparable terms over the same period in the prior year.
As a result of price improvement and unit cost reduction, the beverage
division´s gross profit per case increased 6.3% year over year.

Selling, General & Administrative Expenses

Consolidated selling, general and administrative costs (SG&A) in second
quarter 2013 increased 6.7% to Ps.3,447 million, up from Ps.3,232 million in
second quarter 2012. As a result, SG&A, as a percent of revenue increased to
37.5% in second quarter 2013 from 36.8% in second quarter 2012 primarily due
to higher marketing programs related to, and which should be absorbed by,
higher expected volumes in the second half of 2013.

EBITDA

Consolidated EBITDA in the quarter increased 25.4% to Ps.978 million compared
to Ps.780 million in the same period of the prior year. The beverage
operations reported a 105% increase in operating income to Ps.317 million,
compared to Ps.155 million in second quarter 2012. As a result beverage
EBITDA increased 24.6% to Ps.828 million from Ps.664 million in the comparable
period. Consolidated EBITDA margin in the second quarter of 2013 increased to
10.6% up from 8.9% in the same period of the prior year.

Financing Costs

Financing costs in second quarter 2013 was a net expense of Ps.183 million,
compared to a net expense of Ps. 153 million in second quarter 2012. During
the second quarter of 2013 the peso depreciated 5.4% causing a non-cash impact
to financing costs. The company´s dollar denominated debt is fully hedged,
thus the peso devaluation did not have a negative impact on cash flow. Both
the holding company and beverage division are working on optimizing their debt
structures.

Net Income

In second quarter 2013 net income increased 196.8% to Ps.395 million, compared
to a net income of Ps.133 million in the same period last year. Likewise, net
income for the quarter at the beverage division increased 40.3% to Ps.369
million, compared to Ps.263 million in the comparable period of 2012.

OVERVIEW FIRST HALF 2013 RESULTS

Volume

Despite a challenging economic environment during the first half of 2013,
total beverage volume increased 3.8% in the period. This growth has been
higher than the industry growth rate reflecting the success of the company's
product portfolio realignment. Total soft drink and bottled water case volume
increased 1.4% to 402.0 million eight-ounce cases from 396.3 million
eight-ounce cases in the first six months of 2012. This performance is
primarily due to the launch of Jumex Fresh in the juice drink category, the
re-launch of E-pura as the company's nationwide bottled water brand, the
consolidation of the Jarritos brand in the traditional Mexican flavors segment
where the company operates, an increase in direct distribution of Gatorade in
the traditional trade channel, and continued expansion throughout the country
for the Pepsi brands.

Jug water performed well through June 2013, increasing volume by 6.2% to 411.7
million eight-ounce cases from 387.7 million eight-ounce cases in the first
six months of 2012. Increased direct-to-home routes as well as improved
execution at various points of sale contributed to this growth.

Revenue

Consolidated revenue in the first six months of 2013 increased 4.0% to
Ps.17,007 million from Ps.16,360 million in the same period of the prior
year. Revenue growth was primarily due to a 3.8% expansion in total beverage
volume and a 2.4% increase in overall average price per case.

Costs of Goods Sold

Total consolidated cost of goods sold, was Ps.10,005 million through June
2013, up 2.7% from the same period of the prior year. Gross Profit as a
percent of total sales was 41.2% in the six month period, approximately 80
basis points higher than the same period in the prior year, reflecting the
synergies the company is capturing. Additionally, in the beverage division,
due to price improvement and unit cost reductions, the gross profit per case
increased 5.4% year over year.

Selling, General & Administrative Expenses

Consolidated selling, general and administrative costs (SG&A) through June
2013, were Ps.6,538 million, up from Ps.6,169 million in the first six months
of 2012. As a result, SG&A, as a percent of revenue increased to 38.4% in the
first six months of 2013 from 37.7% in the first six months of 2012 primarily
due to increased marketing programs which the company is expected leverage
over higher volume in the second half of the year. 

EBITDA

Consolidated EBITDA in the first six months of 2013 was Ps.1,596 million, an
increase of 5.1% compared to Ps.1,519 million in the same period of the prior
year. The beverage operations reported a more than doubling of operating
income to Ps.279 million from Ps.105 million while EBITDA increased 19.6% to
Ps.1.278 million. GAM, the sugar business, contributed approximately 100
basis points to consolidated margin during the first half despite
significantly lower sugar prices compared to the first half of 2012 and
increased exports due to higher production in Mexico. As a result,
consolidated EBITDA margin in the first half of 2013 was 9.4%, up from 9.3% in
the same period of the prior year. The company continues to expect the sugar
division to be a margin enhancer and account for approximately 10% of total
company consolidated revenues and EBITDA.

Financing Cost

Financing cost for the first half of 2013 resulted in a net expense of Ps.190
million compared to a net expense of Ps.28 million in the first half of 2012.
It is important to note that the significant increase in the financing cost
during the first half of 2013 is primarily a result of not having the non-cash
benefit of Ps.132.1 million in exchange rate gains that the company reflected
in the first half of 2012 when the outstanding dollar denominated debt was
$190 million and the Mexican peso revaluated 2.3% against the US dollar.

Net Income

Through June 2013 the company reported net income of Ps.372 million, compared
to net income of Ps.433 million in the same period last year. Of note, net
income in the first half of 2012 included Ps.132.1 million in foreign exchange
gains as a result of the peso appreciation in the company´s dollar denominated
debt. During the first half of 2013 there is no material foreign exchange
gains included in net income.

BALANCE SHEET AND CASH FLOW

The company ended the quarter with Ps.545 million in cash and equivalents,
compared to Ps.589 million at the end of 2012. Total net debt at the holding
company level has been reduced by 80% utilizing proceeds from the January 2013
equity offering. Long-term debt totaled Ps.2,624 million, down from Ps.4,848
million at year-end 2012.

Capital expenditures were approximately Ps.1,423 million in the first six
months of 2013. Funds were utilized primarily in the beverage division for
expanding and strengthening logistics and distribution network, increasing
production and packaging capacity and enhancing commercial tools to service
clients as well as for maintenance at the sugar factories.

NOTEWORTHY EVENTS IN FIRST HALF 2013

  oCultiba completed an equity offering in January 2013 raising approximately
    Ps.2,599 million (US $200 million). The company used the proceeds to
    reduce dollar denominated debt by $40 million and its peso denominated
    debt by Ps.1,607 million. The company is reviewing its actual debt
    structure both at the holding company and at the beverage division.
  oCultiba also refinanced its $85 million debt with Rabobank International.
    The debt will be amortized over the following schedule: 20% in 2014, and
    30%, 30% and 20% in 2015, 2016 and 2017, respectively. The refinancing
    carries an interest rate of LIBOR + 200 basis points.
  oReflecting Cultiba's solid current financial position, strong cash flow
    and positive outlook, the company authorized a dividend payment of Ps.128
    million.

ANALYST COVERAGE

Bank of America Merrill Lynch, Credit Suisse, GBM Grupo Bursatil Mexicano, JP
Morgan and Ve Por Mas.

[Note: Organizacion Cultiba, S.A.B. de C.V. (Cultiba) is covered by the
analysts listed above. Please note that any opinions, estimates or forecasts
regarding the performance of Cultiba issued by these analysts reflect their
own views, and therefore do not represent the opinions, estimates or forecasts
of Cultiba or its management. Although Cultiba may refer to or distribute such
statements, this does not imply that Cultiba agrees with or endorses any
information, conclusions or recommendations included therein.]

CONFERENCE CALL INFORMATION

Management of Cultiba will host a conference call with analysts and investors
to discuss second quarter 2013 results. The call will take place on Thursday,
July 25, 2013 at 12:00 p.m. Mexico Time (1:00 p.m. ET). To access the call,
please dial 1-888-572-7034 if calling from the United States or
001-800-514-1067 if calling within Mexico or 1-719-325-2494 if calling from
outside the United States and/or Mexico. The passcode is 5961875. If you are
unable to listen to the live call, a replay will be available until 11:59 p.m.
(New York time) on August 1, 2013. The dial in info is 1-877-870-5176 from
within the United States and 1-858-384-5517 from outside the United States.
The passcode for the replay is 5961875. The conference call will also be
webcast and can be accessed from the following link:
http://public.viavid.com/index.php?id=105276.

ABOUT CULTIBA

Organizacion Cultiba, S.A.B. de C.V. ("Cultiba") is a holding company with a
majority interest in one of Mexico's largest bottlers of soft drinks and jug
water, and the exclusive bottler of PepsiCo beverage products in Mexico, as
well as a holding company of a leading sugar producer. Carbonated and
non-carbonated soft drinks and jug water are marketed under its own brands as
well as third party brands. Cultiba has 43 bottling facilities in Mexico and
is the only bottler with nationwide distribution. The Company is listed on
the Bolsa Mexicana de Valores, where it trades under the symbol CULTIBAB. For
more information, please visit www.cultiba.mx.

FORWARD LOOKING STATEMENTS

This press release may contain forward-looking statements. All statements
other than statements of historical fact included in this press release,
including, without limitation, those regarding our prospective financial
position, business strategy, management plans and objectives, future
operations and synergies are forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and other factors,
which may cause actual results, performance or achievements to be materially
different from those expressed or implied by these forward-looking statements.
These forward-looking statements are based on numerous assumptions regarding
present and future business operations and strategies and the environment in
which the Company expects to operate in the future. Forward-looking statements
speak only as of the date of this press release and the Company expressly
disclaims any obligation or undertaking to release any update of or revisions
to any forward-looking statements in this press release, any change in
expectations or any change in events, conditions or circumstances on which
these forward-looking statements are based.

ORGANIZACION CULTIBA, S.A.B. de C.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

Prepared in accordance with International Financial Reporting Standards
("IFRS")

(Ps in millions)

(unaudited)
                                    Jun 30,          Jun 30,
                                    2013             2012             Percent
                                                                      Change
Net sales                           $         $         4.8%
                                     9,201         8,782
Cost of goods sold                  5,355            5,337            0.3%
Gross profit                        3,846            3,445            11.6%
Selling, general and administrative 3,447            3,232            6.7%
expenses
Income from operations              399              213              87.1%
Other income                        35               11               218.6%
Comprehensive cost of financing     183              153              19.8%
Share in joint ventures             12               14               -11.1%
Income before tax provisions        263              85               209.2%
Tax provisions/(Benefit)            (132)            (48)             174.9%
Net income                         $         $         196.8%
                                       395         133
EBITDA:                             978              780              25.4%
%:                                  10.6%            8.9%
                                    Six Months Ended
                                    Jun 30,          Jun 30,
                                    2013             2012             Percent
                                                                      Change
Net sales                           $          $           4.0%
                                    17,007          16,360
Cost of goods sold                  10,005           9,745            2.7%
Gross profit                        7,002            6,615            5.9%
Selling, general and administrative 6,538            6,169            6.0%
expenses
Income from operations              464              446              4.1%
Other income                        46               13               255.4%
Comprehensive cost of financing     190              28               577.7%
Share in joint ventures             (6)              24               -127.0%
Income before tax provisions        314              455              -30.9%
Tax provisions/(Benefit)            (57)             22               -359.9%
Net income                         $         $         -14.2%
                                      372          433
EBITDA:                             1,596            1,519            5.1%
%:                                  9.4%             9.3%
EBITDA = Net income plus (1) Depreciation and amortization, (2) Other income
(expenses), (3) Net financing cost
and (4) Provision for taxes



ORGANIZACION CULTIBA, S.A.B. de C.V.

BALANCE SHEETS

Prepared in accordance with International Financial Reporting Standards
("IFRS")

(Ps in millions)

(unaudited)
                                         Jun- 13           Dec - 12
Current Assets
Cash & Equivalents                       $    545       $    589
Clients                                  2,350              1,898
Other receivables                        2,407              2,148
Inventories                              2,348              1,586
Prepaid expenses                         278                276
Other assets                             133                122
Total Current Assets                     8,060              6,619
Accounts receivable                      137                69
Joint Ventures                           814                598
Property, plant & equipment             14,583             14,486
Intangible assets                        7,506              7,569
Other assets                             217                205
Long-term Assets                         23,258             22,927
TOTAL ASSETS                             31,318             29,546
Liabilities and Equity
Current Liabilities
Bank loans                               $  3,155         $  1,816
Suppliers                                3,273              2,704
Other liabilities                        1,080              1,448
Total Current Liabilities                7,509              5,968
Long-term debt                           2,624              4,848
Deferred Taxes and Others                1,118              1,649
Employee Benefits                        1,284              1,239
Long-term Liabilities                    5,025              7,736
Total Liabilities                        12,534             13,704
Stockholders equity                      18,784             15,842
Liabilities and stockholders equity      31,318             29,546



SOURCE Organizacion Cultiba, S.A.B. de C.V.

Website: http://www.cultiba.mx
Contact: Mexico: Carlos Orozco, CFO, cgorozco@gamsa.com.mx; United States:
Breakstone Group, Kalle Ahl / Kathleen Heaney, (646) 452-2330 / (646)
912-3844, Kahl@breakstone-group.com, kheaney@breakstone-group.com
 
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