SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16
OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 28, 2004
Durango Corporation
(f/k/a Grupo Industrial Durango, S.A. de C.V.)
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(Translation of registrant's name into English)
Torre Corporativa Durango, Potasio 150, Cuidad Industrial,
Durango, Durango, Mexico
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(Address of principal executive offices)
Durango, Mexico, July 28th, 2004 Corporacion Durango, S.A. de
C.V., the largest integrated paper producer in Mexico, today
announced its unaudited consolidated results for the for the
second quarter of 2004. All figures were prepared in accordance
with Mexican generally accepted accounting principles and are
stated in constant Mexican pesos as of the end of each period and
converted into U.S. dollars using the exchange rate at the end of
each period. All comparative figures for the second quarter 2004
and 2003 were prepared on a pro-forma basis after excluding the
results of the Pronal and Molded Pulp operations.
HIGHLIGHTS
Shipment growth of 12% in 2Q04 vs. 2Q03
Reduction of average prices of 6% in 2Q04 vs. 2Q03
Net sales growth of 5% in 2Q04 vs. 2Q03
Unit production costs reduced by 5% in 2Q04 vs. 2Q03
EBITDA 3% greater in 2Q04 vs. 2Q03
Negotiations progressing on financial restructuring
INDUSTRY OUTLOOK
Favorable international market conditions
Price increases in pulp, paper and packaging continue
to be implemented
Global demand expected to improve
Newsprint consumption expected to improve in 2005
Pricing recovery in Mexico lagging
PERFORMANCE
Item 2Q04 2Q03 VAR
Total Shipments ('000 Short Tons) 365.4 327.5 12%
Pricing (US$/Short Ton) 468 496 -6%
Net Sales (US$Million) 170.9 162.4 5%
Unit Cost (US$/Short Ton) 410 431 -5%
EBITDA (US$Million) 18.3 17.7 3%
EBITDA Margin 11% 11% 0%
*US$Million
HIGHLIGHTS FOR THE SECOND QUARTER 2004
Shipments (000 Short tons) 2Q04 2Q03
Paper 160.1 144.1
Packaging 166.2 160.7
Other 39.1 22.7
Total 365.4 327.5
Net Sales (US$ Million) 2Q04 2Q03
Paper 73.9 65.1
Packaging 87.2 91.2
Other 9.8 6.1
Total 170.9 162.4
Unit Cost (US$/ Short Ton) 2Q04 2Q03
Total 410 431
Prices (US$/Short Ton) 2Q04 2Q03
Paper 461 451
Packaging 525 568
Other 250 269
Total 468 496
EBITDA (US$ Million) 2Q04 Margin 2Q03 Margin
Paper 5.2 7% 5.2 8%
Packaging 11.6 13% 12.9 14%
Other 1.4 15% -0.4 -7%
Total 18.3 11% 17.7 11%
Special Note Regarding Forward-Looking Statements
This press release contains statements that are forward-looking within
the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such forward-looking
statements are only predictions and are not guarantees of future
performance. Investors are cautioned that any such forward-looking
statements are and will be, as the case may be, subject to many risks,
uncertainties and factors relating to the operations and business
environments of Corporacion Durango and its subsidiaries that may cause
the actual results of the companies to be materially different from any
future results expressed or implied in such forward-looking statements.
Factors that could cause actual results to differ materially from these
forward-looking statements include, but are not limited to, the
following: the ability of Corporacion Durango and its subsidiaries to
continue as going concerns; the success of Corporacion Durango to
negotiate a restructuring with its creditors; their ability to obtain
and maintain normal terms with vendors and service providers; their
ability to maintain contracts that are critical to their operations;
their ability to fund and execute their business plan; their ability
to attract, motivate and/or retain key executives and associates; their
ability to attract and retain customers; general economic, market, or
business conditions; the opportunities (or lack thereof) that may be
presented to and pursued by the Company and its subsidiaries; the
availability of raw materials used by the Company and its subsidiaries;
competitive actions by other companies; changes in laws or regulations,
and other factors, many of which are beyond the control of the Company
and its subsidiaries.
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 2003 AND JUNE 30, 2004 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF JUNE 30, 2004
(Stated in thousands of Pesos and Dollars)
US$ DLLS.
December 31, June 30, June 30,
2003 2004 2004
(Audited) (Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................$ 667,850$ 642,905 55,780
Accounts receivable, net ......................... 1,811,844 1,855,954 161,026
Taxes recoverable and other assets ............... 94,712 54,834 4,758
Inventories, net ................................. 1,142,239 1,159,460 100,597
Prepaid expenses ................................. 24,023 36,373 3,156
Total current assets ................... 3,740,668 3,749,526 325,316
RESTRICTED CASH .................................... 160,059 162,440 14,094
PROPERTY, PLANT AND EQUIPMENT, net ................. 11,813,298 10,966,203 951,448
OTHER ASSETS, net .................................. 549,620 499,497 43,337
Total assets ..........................$ 16,263,645$ 15,377,666 1,334,195
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans and current portion of long-term debt . 8,828,926 8,389,332 727,874
Interest payable ................................. 1,415,800 1,987,566 172,445
Trade accounts payable ........................... 971,623 878,495 76,220
Notes payable .................................... 53,370 55,708 4,833
Accrued liabilities .............................. 473,580 475,500 41,255
Employee profit-sharing .......................... 2,451 2,249 195
Total current liabilities ............. 11,745,750 11,788,850 1,022,823
LONG-TERM DEBT ..................................... 524,622 939,209 81,488
LONG-TERM NOTES PAYABLE ............................ 104,812 116,486 10,107
DEFERRED TAXES...................................... 2,033,294 1,818,279 157,757
LIABILITY FOR EMPLOYEE BENEFITS..................... 203,739 202,343 17,556
Total long term liabilities ............ 2,866,467 3,076,317 266,907
Total liabilities ..................... 14,612,217 14,865,167 1,289,730
STOCKHOLDERS' EQUITY:
Majority interest ................................ 1,582,554 450,476 39,084
Minority interest ................................ 68,874 62,023 5,381
Total stockholders' equity ............. 1,651,428 512,499 44,465
Total liabilities and stockholders' equi$ 16,263,645$ 15,377,666 1,334,195
Exchange rate: $ 11.5258
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF JUNE 30, 2004
(Stated in thousands of Pesos and Dollars)
*
Full Year Acum.June Acum.June
2003 2004 US$ 2004
(Audited) (Unaudited)
OPERATING ACTIVITIES:
Net income (loss) ..............................................$ -3,409,832$ -1,028,476 -89,233
Add (deduct)- Charges (credits) to income which do
not require (provide) cash-
Depreciation and amortization ........................... 417,894 211,774 18,374
Provision for employee benefits ......................... 41,192 1,857 161
Loss on sale of property, plant and equipment ........... 202,899 5,316 461
Amortization of Financial Comissions .................... 94,259 53,557 4,647
Provision for deferred taxes ............................ -186,505 -207,261 -17,982
Impairment .............................................. 966,664 512,543 44,469
Other.................................................... 609,965 -15,649 -1,358
Total items which do not require cash.................... 2,146,368 562,137 48,772
Net resources generated from income .......................... -1,263,464 -466,339 -40,460
Changes in operating assets and liabilities:
Decrease (Increase) in inventories ......................... 24,873 -17,221 -1,494
Decrease (Increase) in current assets ...................... 7,115 27,528 2,388
Decrease (increase) in account receivables, net ............ -149,615 -44,110 -3,827
(Decrease) increase in accounts payable and
accrued liabilities ...................................... 855,546 482,694 41,879
Resources generated by continued operating .................. -525,545 -17,448 -1,514
Assets and liabilities discontinued .......................... 82,066 0 0
Resources generated by operating activities .................. -443,479 -17,448 -1,514
FINANCING ACTIVITIES:
Increase (Decrease) in bank loans and others ............ -56,737 48,532 4,211
Net resources generated from financing activities ............ -56,737 48,532 4,211
INVESTMENT ACTIVITIES:
Restricted cash.......................................... -160,056 -2,384 -207
Additions to property, plant and equipment............... -108,448 -79,286 -6,879
Divestiture to property, plant and equipment............. 235,082 29,877 2,592
Revenues from sale of discontinued operations ........... 939,599 0 0
Increase in deferred assets ............................. 18,906 -4,236 -368
Net resources applied to investing activities ................ 925,083 -56,029 -4,861
INCREASE IN CASH AND CASH EQUIVALENTS .......................... 424,867 -24,945 -2,164
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 242,983 667,850 57,944
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 667,850$ 642,905US 55,780
* The exchange rate of 11.5258 was used for translation purposes.
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF JUNE 30, 2004
Thousands of Pesos Thousands of Dollars
2Q 2Q 2Q 2Q
2003 2004 Var 2003 2004 Var
(Audited) (Unaudited) (Audited) (Unaudited)
NET SALES ...............................$ 1,795,192$ 1,969,488 10% 162,402 170,876 5%
COST OF SALES ........................... 1,561,200 1,725,078 10% 141,137 149,671 6%
Gross profit........................ 233,992 244,410 4% 21,265 21,205 0%
Selling and Administrative expenses 144,327 136,411 -5% 13,112 11,835 -10%
Operating income ................... 89,665 107,999 20% 8,153 9,370 15%
FINANCIAL EXPENSE:
Interest expense ........................ 322,455 372,489 16% 29,574 32,318 9%
Interest income ......................... -10,741 -12,050 12% -952 -1,046 10%
Exchange (gain) loss, net ............... -298,895 369,584 N/A -27,442 32,065 N/A
Gain on monetary position ............... 7,463 11,408 53% 686 990 44%
Total financial expense ............... 20,282 741,431 3556% 1,866 64,327 3347%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. -222,582 -23,450 -89% -20,399 -2,034 -90%
Total other income (expense) .......... -222,582 -23,450 -89% -20,399 -2,034 -90%
Income (loss) before income and asset t -153,199 -656,882 329% -14,112 -56,991 304%
Provisions for income and asset taxes ... 6,471 8,366 29% 560 726 30%
Provision for deferred income taxes ..... -73,963 57,817 N/A -6,749 5,017 N/A
Net income after taxes ................ -85,707 -723,065 744% -7,923 -62,734 692%
Impairment .............................. 0 -405,898 0 -35,216
Discontinued operations ................. 10,802 0 -100% 992 0 -100%
Net income before minority interest......$ -96,509$ -317,167 229% -8,915 -27,518 209%
Minority interest...................... 97 -2,144 N/A 9 -186 N/A
Majority net income....................$ -96,606$ -315,023 226% -8,924 -27,332 206%
Depreciation & amortization 104,990 102,456 -2% 9,516 8,889 -7%
EBITDA 194,655 210,455 8% 17,669 18,259 3%
CORPORACION DURANGO, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF JUNE 30, 2004
Thousands of Pesos Thousands of Dollars
Ac Ac Ac Ac
2003 2004 Var 2003 2004 Var
(Audited) (Unaudited) (Audited) (Unaudited)
NET SALES ...............................$ 3,516,241$ 3,763,911 7% 313,719 329,971 5%
COST OF SALES ........................... 3,071,344 3,339,372 9% 273,856 292,704 7%
Gross profit........................ 444,897 424,539 -5% 39,863 37,267 -7%
Selling and Administrative expenses 283,630 261,337 -8% 25,424 22,926 -10%
Operating income ................... 161,267 163,202 1% 14,439 14,341 -1%
FINANCIAL EXPENSE:
Interest expense ........................ 652,627 700,344 7% 58,902 61,625 5%
Interest income ......................... -19,993 -24,835 24% -1,751 -2,168 24%
Exchange (gain) loss, net ............... 57,825 297,909 415% 4,266 25,654 501%
Gain on monetary position ............... -107,061 -136,163 27% -9,516 -12,257 29%
Total financial expense ............... 583,398 837,255 44% 51,901 72,854 40%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. -271,019 -6,958 -97% -24,705 -598 -98%
Total other income (expense) .......... -271,019 -6,958 -97% -24,705 -598 -98%
Income (loss) before income and asset t -693,150 -681,011 -2% -62,167 -59,111 -5%
Provisions for income and asset taxes ... 46,008 42,183 -8% 4,042 3,640 -10%
Provision for deferred income taxes ..... -129,182 -207,261 60% -11,652 -18,762 61%
Net income after taxes ................ -609,976 -515,933 -15% -54,557 -43,989 -19%
Impairment .............................. 0 512,543 0 46,932
Discontinued operations ................. -319,357 0 -100% -28,355 0 -100%
Net income before minority interest......$ -290,619$ -1,028,476 254% -26,202 -90,921 247%
Minority interest...................... 403 -8,395 N/A 37 -745 N/A
Majority net income....................$ -291,022$ -1,020,081 251% -26,239 -90,176 244%
Depreciation & amortization 202,313 211,774 5% 18,096 18,604 3%
EBITDA 363,580 374,976 3% 32,535 32,945 1%
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. CORPORACION DURANGO, S.A. DE C.V.
Date: July 28, 2004 By /s/ Mayela Rincon de Velasco
Durango, Mexico --------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer