Fabricato 1H 2017 Sales, EBITDA Decline Year-on-Year; Net Income Rises
Medellin-based textiles giant Fabricato announced August 10 that its first-half (1H) 2017 sales fell 5.6% year-on-year, to COP$90.8 billion (US$30 million), while earnings before interest, taxes, depreciation and amortization (EBITDA) margin fell by more than half, to 2.7%.
On the up-side, Fabricato recorded a COP$45 billion (US$15 million) gain on the transfer of its 70% fiduciary rights in the “Pantex” real estate development project to the promoter-builder. This boosted net income 17.8% year-on-year, to COP$16 billion (US$5.3 million)
“The transfer of fiduciary rights is executed with due guarantees, and said transfer does not imply or represent for Fabricato any impairment or decrease in the quality or valuation of the guarantees granted by the promoter-builder group in favor of the company,” according to the company.
‘Somewhat Better’ 2H Outlook
“The business environment of the second quarter of 2017 showed no improvement compared to the first quarter, which was admittedly one of the worst for the Colombian economy since the crisis of 2008-2009,” according to Fabricato.
“As for the textile sector, the demand rebound for finished [domestically produced clothing] products was not perceived, in spite of the constant promotions that we have seen in the points of sale during the whole semester [and also because of] increased importation of finishing clothing, the result of the change in the tariff policy produced in November 2016.
“Another relevant element was the perceived increase in technical contraband (under-invoicing) in the period. This is an unresolved issue for a long time, which is causing damage to the sector.
“Some elements allow a somewhat better scenario to be projected in the [2017] second half : (1) inflation and the interest rates to the downside; (2) the consumer confidence index maintains a recovery trend; and (3) the commitments assumed publicly by the [port] authorities to combat some practices of unfair competition.
“We understand that at Fabricato, our state-of-the-art technology and resource optimization were decisive in cushioning the negative impacts. But in any case, in a capital- and labor-intensive sector, reducing the utilization of installed capacity will always lead to a negative effect on our results.
“Fabricato reduced its [employed] installed capacity to 80% in the period, with the objective of optimizing its cash flow and consequently preserving the capacity to comply with all contracted obligations,” the company added.
On the labor front, Fabricato took a COP$13.8 billion (US$4.6 million) charge for eliminating 200 positions at the company — although this move will cut future payroll expenses by about COP$900 million each month.
