Grupo TMM Maritime’s Business Continues Growing Revenue, Operating Profit and Utilization

Zacks Small Cap Research

By Ken Nagy, CFA

Grupo TMM Maritime’s Business Continues Growing Revenue, Operating Profit and Utilization

On October 25, 2013 Grupo TMM (GTMAY) the Mexican intermodal transportation and logistics Company, released results for the third quarter ended September 30, 2013.

Maritime’s revenue, operating profit and EBITDA continued its trend of solid performance. Likewise, Maritime’s offshore and product tanker fleet utilization sequentially improved throughout 2013.

As a result, Grupo’s consolidated revenue for the third quarter fiscal 2013 was sturdy at $738.4 million pesos, improving year over year by nearly 7 percent or $46.3 million pesos, from $692.1 million pesos for the comparable quarter of 2012.

The improvement in year over year sales was primarily due to a 10 percent revenue increase at Maritime as a result of revenue improvements at all business segments except for the shipyard, as well as to solid utilization of 94.9 percent in the third quarter. Additionally, product tanker utilization in the 2013 third quarter was 90.7 percent, sequentially improving from 89.6 percent during the second quarter and from 71.2 percent in the fiscal 2013 first quarter. Still, the improvement in Maritime revenue was offset by Grupo’s Ports and Terminals revenue.

Grupo’s Maritime revenue during the third quarter improved year over year by $59.7 million pesos to $649.2 million pesos. Third quarter 2013 Maritime operating profit increased year over year by over 7 percent or by $10.1 million pesos to $148.5 million pesos.

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Third-quarter 2013 consolidated operating profit decreased by $45.0 million pesos to $121.8 million pesos from $166.8 million pesos in the third quarter of 2012. Still, quarter over quarter, operating profit improved by $22.0 million pesos from $99.8 million pesos during the three months ended June 30, 2013.

Third-quarter 2013 other income net of $25.6 million pesos mainly included a profit of $25.3 million pesos of net tax recoveries. Third-quarter 2012 other income net of $73.5 million pesos mainly included a profit of $69.0 million pesos from the acquisition of a subsidiary in January 2012 and $4.8 million pesos of net tax recoveries.

Excluding the above, non-recurrent events, consolidated operating profit in the 2013 third quarter improved to $96.1 million pesos compared to $93.3 million pesos in the same period of 2012.

Third-quarter 2013 consolidated EBITDA was $268.1 million pesos, down 15 percent from $316.5 million pesos in the 2012. Sequentially, EBITDA improved from $245.4 million pesos in the second quarter of fiscal 2013.

Net interest expense during the third quarter was $206.9 million pesos, resulting in free cash flow of $61.2 million pesos. This compares to free cash flow of $35.5 million pesos in the fiscal 2013 second quarter.

As of September 30, 2013, TMM's total net debt was $9,781.3 million pesos compared to total net debt of $9,887.0 million pesos at the end of the second quarter of 2013. Of TMM’s total debt, only $247.9 million pesos, or 2.3 percent, is short term. In the nine months of 2013, the Company paid accrued interest of $784.9 million pesos and a capital prepayment of $5.0 million pesos for its Trust Certificates debt.

A copy of the latest research report can be downloaded here >> Grupo TMM

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