Vitro Reports Decline in Flat Glass Sales, Officials Comment on U.S. Bankruptcy Court Ruling
July 27, 2012

Vitro has released its second-quarter figures, which include a decrease of 3.9 percent for flat glass sales. According to the San Pedro, Mexico-based company, sales declined from $146 million in 2011 to $141 million this year.
While there was a slight rise in sales volume for its construction sector,Vitro's domestic sales have fallen 3.7 percent from $94 million to $91 million. The company attributes the drop in domestic sales attributed to the 15.8 percent peso depreciation since 2011.

Additionally, Vitro reported its flat glass export sales have decreased by 7.1 percent - falling to $39 million this quarter from $42 million last year. Company officials say the decline occurred because of a low demand from South and Central America. In regards to its foreign subsidiaries' sales, Vitro reports an increase of 7.6 percent, stemming from $9.6 million in 2011 to $10.6 million for the same period in 2012.

Hugo Lara, CEO, says the company reported "solid business growth" overall during the 2012 second quarter.
"EBITDA remained strong, driven by a better price mix and sales of higher value added products," Lara says. "Increased production levels and lower natural gas prices, one of our main inputs, resulted in better fixed cost absorption throughout our facilities, and also contributed to this performance. These factors more than offset the increase in electricity prices, particularly at flat glass, derived from the electricity and steam supply interruption … "

According to Vitro, because of an increase in higher value and "strong price-mix" of glass products and flat glass there was a rise in consolidated sales if measured in Mexican currency, but the company reports a 3 percent decrease of sales ($447 million) when measured in U.S. dollars.

Within the report, Vitro officials also commented on the U.S. Court of Appeals for the Fifth Circuit's recent ruling that granted the company the right to appeal a Texas court's ruling to not enforce Vitro's Mexican Plan of Reorganization in the U.S.

Claudio Del Valle, Vitro's chief restructuring officer, says the string of court decisions has not prohibited the company's current dealings with its customers.

"On June 19, Vitro filed an appeal following the ruling by the U.S. Bankruptcy Court denying the enforcement in the U.S. of Vitro's Mexican court-approved Concurso Plan," Valle says. "On July 16, 2012, the Temporary Restraining Order (TRO) ordered by the U.S. Bankruptcy Court in Dallas, Texas, was extended. This extension will allow the company to continue to do business with its customers uninterrupted, during the pendency of the appeal or until further order by the Court."

Lara says the company is satisfied with the state of its Concurso Plan.

"We are very pleased with the operating results and the approval of our Concurso process in Mexico and remain focused on providing efficient service to our clients and to protecting the interests of our shareholders, suppliers, creditors and customers with whom we maintain long and productive business relationships by continuing to show solid operating results," Lara says. "We also remain optimistic about having the appeal process resolved in due course."

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