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 February, 2006
Durango Corporation
(f/k/a Grupo Industrial Durango, S.A. de C.V.)
- -------------------------------------------------------------------
(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)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F. Form 20-F [x] Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934. Yes No [x]
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-_____________.
Durango, Durango, Mexico - Corporacion Durango, S.A.B. de C.V. (BMV: CODUSA)
("Durango" or the "Company"), the largest integrated paper producer in Mexico,
today announced its unaudited consolidated results for its first fiscal
quarter 2007. All figures were prepared in accordance with Mexican generally
accepted accounting principles and are stated in constant Mexican pesos as of
March 31, 2007 converted into U.S. dollars using the exchange rate at the
end of each period reported.
INDUSTRY BUSINESS ENVIRONMENT 2007
During the first quarter of this year the North American paper
industry experienced a generally favorable positive business environment
which included, better prices and lower energy cost in spite of higher raw
material. Such environment enabled the industry to achieve better results
than those of 1Q'06 but worse than those of the 4Q'06. A positive feature
of the current environment is the industry's below-average inventories.
However a recovery in demand is needed to further increase prices.
The Mexican industry continue lagging on the implementation of price
increases mainly due to weaker market conditions and a stronger Mexican
Peso.
DURANGO'S PERFORMANCE 2007
Despite challenging market conditions in Mexico, Durango's results improved
year over year. Such improvement reflects the impact of higher volumes,
higher prices for our products and the benefits achieved from our strategic
initiatives plan which compensated the escalating cost of recycled fiber.
OPERATING PERFORMANCE
Item 1Q07 1Q06 % 4Q06 %
Total Shipments ('000 Short Tons) 371.6 343.7 8% 384.8 -3%
Pricing (US$/Short Ton) 604.3 548.1 10% 602.4 0%
Net Sales (US$ Million) 224.6 188.4 19% 231.8 -3%
Unit Cost (US$/Short Ton) 508.7 472.7 8% 491.0 4%
EBIT (US$ Million) 19.3 11.5 68% 24.1 -20%
EBITDA (US$ Million) 30.4 22.3 37% 36.0 -15%
EBITDA Margin 14% 12% - 16% -
FINANCIAL HIGHLIGHTS 2007
During the first quarter 2007, the Company continued to carry out its
strategy of strengthening its financial structure and balance sheet,
reducing debt by US14.3 million. This reduction of debt substantially
enhanced our main financial ratios.
Item 1Q07 1Q06 2006 A
Accumulated EBITDA (US$ Million) 30.4 22.3 120.5
Consolidated Debt (US$ Million) 521.6 579.3 535.9
Interest Coverage 2.3X 1.7X 2.3X
Leverage Ratio LTM 4.0X 7.2X 4.4X
Net Debt Leverage Ratio LTM 3.7X 6.8X 4.1X
SHIPMENTS
The Company increased shipments by 8% from 343.7 thousand short tons
in 1Q06 to 371.6 thousand short tons in 1Q07.
Shipments (000 Short Tons) 1Q07 1Q06 % 4Q06 %
Paper 183.1 169.2 8% 196.6 -7%
Packaging 186.5 171.9 9% 185.6 1%
Other 2.0 2.7 -25% 2.7 -26%
Total 371.6 343.7 8% 384.8 -3%
PRICE
Our prices increased by 10% from US$548.1 per short ton in 1Q06 to
US$604.3 per short ton in 1Q07. Mexican market pricing continued to
lag behind the US.
Prices (US$/Short Ton) 1Q07 1Q06 % 4Q06 %
Paper 580.8 496.9 17% 582.7 0%
Packaging 623.3 591.8 5% 617.3 1%
Other 994.0 983.2 1% 1,001.8 -1%
Mix Price (US$/Short Ton) 604.3 548.1 10% 602.4 0%
NET SALES
Due to the higher volumes, net sales grew by 19% from US$188.4
million in 1Q06 to US$224.6 million in 1Q07.
Net Sales (US$ Million) 1Q07 1Q06 % 4Q06 %
Paper 106.3 84.1 26% 114.5 -7%
Packaging 116.2 101.7 14% 114.5 1%
Other 2.0 2.6 -25% 2.7 -27%
Total 224.6 188.4 19% 231.8 -3%
PRODUCTION COST
The impact of OCC and ONP increases affected the Company's unit
production cost, which increased by 8% in 1Q07 compared to 1Q06.
Unit Cost (US$/Short Ton) 1Q07 1Q06 % 4Q06 %
Total 508.7 472.7 8% 491.0 4%
EBITDA
Greater shipments, better product mix and price increases
allowed the Company to offset increases in recycled fiber
cost. Our EBITDA grew by 37% from US$22.3 million in 1Q06 to
US$30.4 in 1Q07.
EBITDA (US$ Million) 1Q07 Margin 1Q06 Margin %
Paper 21.6 20% 11.0 13% 96%
Packaging 9.3 8% 10.9 11% -14%
Other -0.5 -23% 0.4 15% N/A
Total 30.4 14% 22.3 12% 37%
*EBITDA.- According to the Company's Restructured Credit
Agreement, Consolidated EBITDA means, for any period, the sum
of the following for the Company and its Subsidiaries:
a) operating income for such period; b) to the extent deducted
in determining such operating income for such period, the sum
of the following: i) depreciation, ii) amortization, iii) any
other non-cash charges other than any such non-cash charges
that represent accruals of, or reserves for, cash disbursements
to be made in any future accounting period, iv) the aggregate
amount of all cash severance payments actually made in cash,
v) taxes paid or payable, and vi) non-cash charges incurred in
connection with pension plans; and c) the aggregate amount of
interest income accrued during such period.
CEO STATEMENT
Commenting on the industry and the Company's outlook, Miguel
Rincon, Durango's Chairman and CEO, said ... "Our enhanced
operating fundamentals allowed us to offset much of the high
raw material cost and continue our strong operating and
financial performance. We expect the market conditions in
Mexico will remain weak and higher raw material prices will
continue for the following quarter. The Company's management
will continue to focus on improving operating and financial
fundamentals. We are pursuing every opportunity to improve
the Company's cost structure and debt reduction"...
concluded Rincon.
CONFERENCE CALL
You are cordially invited to our Company's First Quarter
2007 Results Conference Call, which will be held on Wednesday,
May 2, 2007 - 1:00 p.m. (EST) // 12:00 p.m. (Mexico - Durango).
Investors may participate in the live Conference Call by
dialing (800) 910 5247 (US Participants) or (617) 786 4501
(International Participants) with 68425344 as Passcode.
Please dial in at least 10 minutes prior to the start of the
call. Replay will be available from 05-02-2007 3:00 p.m. to
05-16-2007 11.59 p.m. by dialing (888) 286 8010
(US Participants) or (617) 801 6888 (International Participants)
with 79402244 as Passcode.
CORPORACION DURANGO, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND MARCH 31, 2007 (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2007
(Stated in thousands of Pesos and Dollars)
US$ DLLS.
December 31, Mar 31, Mar 31,
2006 2007 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................$ 471,941$ 315,463 28,595
Accounts receivable, net ......................... 1,947,947 1,970,105 178,578
Other assets ..................................... 2,178 2,156 195
Inventories, net ................................. 1,227,602 1,349,907 122,361
Prepaid expenses ................................. 32,481 32,617 2,957
Total current assets ................... 3,682,149 3,670,248 332,685
PROPERTY, PLANT AND EQUIPMENT, net ................. 11,381,035 11,417,539 1,034,929
OTHER ASSETS, net .................................. 268,997 268,375 24,327
Total assets ..........................$ 15,332,181$ 15,356,162 1,391,940
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans and current portion of long-term debt . 171,201 189,747 17,199
Interest payable ................................. 6,556 2,268 206
Trade accounts payable ........................... 933,057 1,086,430 98,478
Notes payable .................................... 55,627 57,756 5,235
Accrued liabilities .............................. 682,683 529,474 47,994
Employee profit-sharing .......................... 4,830 4,781 433
Total current liabilities ............. 1,853,954 1,870,456 169,545
LONG-TERM DEBT ..................................... 5,681,264 5,564,262 504,366
LONG-TERM NOTES PAYABLE ............................ 143,490 157,588 14,284
DEFERRED TAXES...................................... 2,073,204 2,173,089 196,977
LIABILITY FOR EMPLOYEE BENEFITS..................... 310,186 308,221 27,938
Total long term liabilities ............ 8,208,144 8,203,160 743,565
Total liabilities ..................... 10,062,098 10,073,616 913,110
STOCKHOLDERS' EQUITY:
Majority interest ................................ 4,846,732 4,847,218 439,370
Minority interest ................................ 423,351 435,328 39,460
Total stockholders' equity ............. 5,270,083 5,282,546 478,830
Total liabilities and stockholders' equi$ 15,332,181$ 15,356,162 1,391,940
Exchange rate: $ 11.0322
CORPORACION DURANGO, S.A.B. 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 MARCH 31, 2007
(Stated in thousands of Pesos and Dollars)
*
Full Year Acum. Mar Acum. Mar
2006 2007 US$ 2007
OPERATING ACTIVITIES:
Net income (loss) ..............................................$ -31,184$ -30,403 -2,756
Add (deduct)- Charges (credits) to income which do
not require (generate) resources:
Depreciation and amortization ........................... 415,622 101,425 9,194
Impairment of long-lived assets ......................... -26,178 0 0
Deferred income taxes ................................... 412,899 65,910 5,974
Other.................................................... 41,782 11,425 1,036
Total items which do not require cash.................... 844,125 178,760 16,203
Net resources generated from income .......................... 812,941 148,357 13,448
Changes in operating assets and liabilities:
Decrease (Increase) in inventories ......................... 114,754 -122,305 -11,086
Decrease (Increase) in current assets ...................... -18,146 -114 -10
Decrease (increase) in account receivables, net ............ -109,705 -22,158 -2,008
(Decrease) increase in accounts payable and
accrued liabilities ...................................... 98,598 -2,044 -185
Resources generated by operating activities .................. 898,442 1,736 157
FINANCING ACTIVITIES:
Increase (Decrease) in bank loans and others ............ -893,586 -76,949 -6,975
Net resources generated from financing activities ............ -893,586 -76,949 -6,975
INVESTMENT ACTIVITIES:
Acquisition and sale of property, plant and equipment.... -229,385 -77,014 -6,981
Decrease (Increase) in deferred assets .................. -39,502 -4,251 -385
Net resources applied to investing activities ................ -268,887 -81,265 -7,366
INCREASE IN CASH AND CASH EQUIVALENTS .......................... -264,031 -156,478 -14,184
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD............ 735,972 471,941 42,779
CASH & CASH EQUIVALENTS AT END OF THE PERIOD ...................$ 471,941$ 315,463US 28,595
* The exchange rate of 11.0322 was used for translation purposes.
CORPORACION DURANGO, S.A.B. DE C.V. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
EXPRESSED IN TERMS OF THE PURCHASING POWER OF MEXICAN PESOS
AS OF MARCH 31, 2007
Thousands of Pesos Thousands of Dollars
1Q 1Q 1Q 1Q
2006 2007 Var 2006 2007 Var
NET SALES ...............................$ 2,136,806$ 2,477,503 16% 188,402 224,570 19%
COST OF SALES ........................... 1,842,808 2,085,225 13% 162,483 189,013 16%
Gross profit........................ 293,998 392,278 33% 25,919 35,557 37%
Selling and Administrative expenses 163,351 178,897 10% 14,401 16,215 13%
Operating income ................... 130,647 213,381 63% 11,518 19,342 68%
FINANCIAL EXPENSE:
Interest expense ........................ 154,935 153,896 -1% 13,651 13,949 2%
Interest income ......................... -8,630 -4,970 -42% -761 -451 -41%
Exchange (gain) loss, net ............... 168,390 140,361 -17% 14,835 12,723 -14%
Gain on monetary position ............... -55,746 -54,909 -2% -4,909 -4,978 1%
Total financial expense ............... 258,949 234,378 -9% 22,816 21,243 -7%
OTHER INCOME (EXPENSES):
Other income (expense), net ............. 55,826 62,642 12% 4,918 5,678 15%
Total other income (expense) .......... 55,826 62,642 12% 4,918 5,678 15%
Income (loss) before income and asset t -72,476 41,645 N/A -6,380 3,777 N/A
Provisions for income and asset taxes ... 12,686 6,138 -52% 1,121 557 -50%
Provision for deferred income taxes ..... 25,827 65,910 155% 2,275 5,974 163%
Net income before minority interest......$ -110,989$ -30,403 -73% -9,776 -2,754 -72%
Minority interest...................... 4,516 9,337 107% 397 847 113%
Majority net income....................$ -115,505$ -39,740 -66% -10,173 -3,601 -65%
Operating income ...................... 130,647 213,381 63% 11,518 19,342 68%
Depreciation & amortization ........... 99,356 101,425 2% 8,759 9,194 5%
Interest income ....................... 8,630 4,970 -42% 761 451 -41%
Employee retirement obligations ....... 11,174 11,425 2% 984 1,036 5%
Allowance for doubtful accounts ....... 2,653 4,682 76% 234 424 81%
EBITDA ................................ 252,460 335,883 33% 22,256 30,447 37%
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: April 30, 2007 By /s/ Mayela Rincon de Velasco
--------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer