Vitro Reports 3Q 11 increase of 10% in Sales and 11% in EBITDA

Transcription

1 Vitro Reports 3Q 11 increase of 10% in Sales and 11% in EBITDA San Pedro Garza Garcia, Nuevo Leon, Mexico October 28, 2011 Vitro S.A.B. de C.V. (BMV: VITROA) one of the world's largest producers and distributors of glass products, today announced 3Q 11 unaudited results. As a result of the sale of Vitro America Group, and according to Mexican Financial Accounting Standars (MFRS), for a comparative purpose, current and historical figures of such company are shown as discontinued operation in every period, except where indicated otherwise. (For more details, please refer to our previous quarter report available in our website). Year-over-year consolidated net sales increased 10 percent mostly benefited by temporary increased sales volume in Glass Containers and a 1.8 percent peso appreciation YoY (quarterly average). Consolidated EBITDA increased 11 percent YoY, benefited by the higher sales and production volumes, which translates into improved fixed cost absorption, coupled with a 4 percent decrease in energy prices. FINANCIAL HIGHLIGHTS* 3Q'11 3Q'10 % Change Consolidated Net Sales % Glass Containers % Flat Glass % Cost of Sales % Gross Income % Gross Margins 29.6% 26.4% 3.2 pp SG&A % SG&A % of sales 20.1% 17.1% 3 pp EBIT % EBIT Margins 9.5% 9.3% 0.2 pp EBITDA % Glass Containers % Flat Glass % EBITDA Margins 18.3% 18.1% 0.2 pp Net Income (loss) 9 (14) - Net Income (loss) Margins 2.0% -3.5% +6 pp Total Debt (1) 1,518 1, % Short Term Debt (2) 1,386 1, % Long Term Debt % Cash & Cash Equivalents (3) % Total Net Debt (1) 1,360 1, % * Million US$ Nominal (1) Total debt includes account receivables debt programs according to M exican FRS. (2) Since we are not in compliance under our bond indentures, the outstanding amount of the Senior Notes debt was reclassified from long-term to short-term. (3) In 3Q'10, Cash & Cash Equivalents include restricted cash for interest and lease payments and cash on our accounts receivables debt programs. In 3Q'11, it includes restricted cash for our accounts receivables debt programs, lease payments and cash related to consent fees. Mr. Hugo Lara, Chief Executive Officer, commented: "Vitro s debt restructuring process continues to progress successfully, despite ongoing disruptive actions from dissident bondholders. Now the last stage of the conciliation process is taking place. Revenue growth reflects a temporary increase in sales volumes at Glass Containers, a slight gain in automotive glass sales volumes and higher supply of float glass. A better price mix and a 1.8 percent peso appreciation also contributed to this performance. EBITDA growth benefited from higher fixed cost absorption from increased production, a 4 percent decline in natural gas prices, and the positive impact from the peso appreciation. Despite favorable year-on-year results, the challenging global economic climate threatens the ongoing recovery in the short- and mid-term, Mr. Lara continued. Domestic Glass Containers sales volumes rose 19 percent YoY, still aided by a temporary increase in volume demand from one client in the beer segment as well as new orders placed by another customer in the same segment. Volume growth in the beer, CFT (Cosmetics, Fragrances & Toiletries), soft drinks and wine & liquor segments more than offset a decline in the food segment. Slightly higher domestic prices reflect a better mix, mainly at the soft drinks segment. Export volumes remained flat during the quarter, as growth in the beer and CFT segments, was offset by lower sales volumes in the food and soft drinks segments. The price mix also remained stable YoY. Higher domestic sales volume and production levels, together with the peso appreciation and lower energy prices, resulted in a 13.6 percent increase in Glass Containers EBITDA. In the Flat Glass business unit, domestic sales increased, reflecting easier YoY comparisons due to the temporary shutdown in 3Q 10 of one of our float glass plants damaged by Hurricane Alex which limited supply. Prices YoY also increased driven by the overall product scarcity associated with the repair of one of our competitor s furnaces as well as one of ours during the quarter. The ongoing recovery in the Original Equipment Manufacturer ( OEM ) market, both in terms of demand and better price mix, resulted in a 12.5 percent increase in auto glass sales including domestic and exports. Export sales remained stable YoY, showing an increase in volume but a weaker price mix. Higher volumes reflect stronger YoY comparisons as we have regained capacity to serve this market while in 3Q 10 following the impact of Hurricane Alex we were forced to reduce supply and focus on the domestic market. Foreign subsidiaries, however, experienced a 23.8 percent decline in sales, still driven by weakness in the Spanish construction market. Higher production volumes and fixed cost absorption resulted in EBITDA of US$10 million, noted Mr. Lara. Net Free Cash Flow for the quarter decreased to US$14 million from US$49 million in 3Q 10, reflecting a US$22 million investment in working capital compared with a US$10 million recovery in the year-ago quarter. While an investment in working capital is unusual for a third quarter, we increased Glass Containers inventory to keep up with our service levels to the export market and a scheduled furnace repair. Lower accounts payable also contributed to a higher working capital.

2 Cash Flow was also used to fund a CapEx investment of US$26 million for scheduled furnace repairs and capacity expansion to service our CFT market. This compares to an investment of US$16 million in 3Q 10, continued Mr. Lara In terms of Vitro s natural gas hedges, Mr. Lara said: We continue to maintain our natural gas hedges with PEMEX, 18 percent of our annual estimated consumption at US$7.3/mmbtu for 2011, with no margin call requirements. Regarding the status of the Concurso Mercantil in Mexico, Mr. Claudio Del Valle, Chief Restructuring Officer, noted, In terms of the prepackaged voluntary Concurso Mercantil proceedings submitted by Vitro and declared by the court on April 8, the Conciliator, after taking into consideration creditors objections, prepared and delivered to the judge on July 15 the final list of creditors. On August 15, the Court issued its Decision for the Acknowledgement, Value and Order of Credits ( Sentencia de Reconocimiento, Graduación y Prelación de Créditos ). The following step in this process will be to conclude the conciliation stage, in which the Conciliador will submit the restructuring plan to Vitro and its creditors for its approval. We expect the forgoing to occur any time soon. Mr. Del Valle continued Concerning the Chapter 15 proceeding in the United States, Mr. Del Valle observed: After Vitro was declared in Concurso Mercantil, the Company filed for a new petition to commence an ancillary case under Chapter 15 of the U.S. Bankruptcy Code in the New York Court, requesting that the U.S. Bankruptcy Court recognize and give deference to its proceedings in Mexico. At the request of the dissident bondholders, the judge granted the change in venue from New York to the Northern District of Texas, where on July 21 a Chapter 15 was issued in favor of Vitro, providing the required protection from dissident bondholders actions. To protect Vitro s assets in the US from further actions from bondholders, the Company filed a petition for a Voluntary Concurso Mercantil in Mexico for Vitro Packaging de Mexico (VIP), its distribution subsidiary of glass containers into the U.S. On October 26, the Federal Court in Monterrey declared Vitro Packaging de Mexico in Concurso Mercantil. A Preliminary Injunction was issued for VIP on July 15, which protects its assets in the U.S. from any further actions from all creditors, including dissident bondholders, until the Chapter 15 is resolved. The next hearing is scheduled for November 17, to consider entry of a Recognition Order for VIP. continued Mr. Del Valle. We remain focused on completing Vitro s restructuring process in an effective and efficient manner to preserve the value of the Company and to protect the interests of our creditors, shareholders and customers with whom we maintain long and productive business relationships. Throughout this process, Vitro and its subsidiaries continue to operate as usual, fulfilling our ongoing commitments to customers, suppliers, and employees. concluded Mr. Lara. All peso figures provided in this announcement are in accordance with Mexican Financial Reporting Standards (Mexican FRS or NIFs) issued by the Mexican Board of Financial Reporting Standards (CINIF), except otherwise indicated. The Peso Figures included in the document are presented in nominal Pesos which could affect its comparability. Dollar figures are in nominal US dollars and are obtained by dividing nominal pesos for each month by the end of month fix exchange rate published by Banco de Mexico. In the case of the Balance Sheet, US dollar translations are made at the fix exchange rate as of the end of the period. Certain amounts may not sum due to rounding. All figures and comparisons are in US dollar terms, unless otherwise stated, and may differ from the peso amounts due to the difference in exchange rates. This announcement contains historical information, certain management s expectations, estimates and other forward-looking information regarding Vitro, S.A.B. de C.V. and its Subsidiaries (collectively the Company ). While the Company believes that these management s expectations and forward looking statements are based on reasonable assumptions, all such statements reflect the current views of the Company with respect to future events and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated in this report. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political, governmental and business conditions worldwide and in such markets in which the Company does business, changes in interest rates, changes in inflation rates, changes in exchange rates, the growth or reduction of the markets and segments where the Company sells its products, changes in raw material prices, changes in energy prices, particularly gas, changes in the business strategy, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may Sep'11 Sep'10 Inflation in Mexico Quarter 1.0% 1.0% Accumulated 1.3% 2.4% LTM 3.2% 3.7% Inflation in USA Quarter 0.3% 0.2% Accumulated 3.2% 1.2% LTM 3.6% 1.1% Exchange Rate Closing Average (year) Average (3Q) Devaluation Quarter (closing) QoQ 13.4% -1.2% Accumulated 8.6% -4.3% LTM (closing) 7.4% -7.4% Quarter (average) YoY -1.8% -4.5% UDIs Closing previous quarter Closing current quarter vary materially from those described herein as anticipated, believed, estimated or expected. The Company does not assume any obligation, to and will not update these forward-looking statements. ADVANCE PAYMENTS AND OTHER ASSETS NIF C-5, Advance Payments and Other Assets - This standard establish that a basic feature of advance payments is the fact that they do not transfer the risks and rewards of the ownership of goods and services to the Company. Therefore, advances for the purchase of inventories or property, plant and equipment, among others, must be presented separately from inventory or property, plant and equipment if the risks and rewards of ownership of those goods have not transferred to the Company. The standard requires that advance payments be impaired when they lose their ability to generate future economic benefits. This standard also requires classification of advance payments as current or noncurrent, depending on their nature. 2

3 SPECIAL NOTE REGARDING NON-GAAP FINANCIAL MEASURES A body of generally accepted accounting principles is commonly referred to as GAAP. A non-gaap financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. We disclose in this report certain non-gaap financial measures, including EBITDA. EBITDA for any period is defined as consolidated net income (loss) excluding (i) depreciation and amortization, (ii) non-cash items related to pension liabilities, (iii) total net comprehensive financing cost (which is comprised of net interest expense, exchange gain or loss, monetary position gain or loss and other financing costs and derivative transactions), (iv) other expenses, net, (v) income tax, (vi) provision for employee retirement obligations, (vii) cumulative effect of change in accounting principle, net of tax and (viii) (income) loss from discontinued operations. In managing our business we rely on EBITDA as a means of assessing our operating performance and a portion of our management s compensation and employee profit sharing plan is linked to EBITDA performance. We believe that EBITDA can be useful to facilitate comparisons of operating performance between periods and with other companies because it excludes the effect of (i) depreciation and amortization, which represents a non-cash charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax and tax on assets and statutory employee profit sharing, which is similar to a tax on income and (iv) other expenses or income not related to the operation of the business. EBITDA is also a useful basis of comparing our results with those of other companies because it presents operating results on a basis unaffected by capital structure and taxes. We also calculate EBITDA in connection with covenants related to some of our financings. We believe that EBITDA enhances the understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness as well as to fund capital expenditures and working capital requirements. EBITDA is not a measure of financial performance under U.S. GAAP or Mexican FRS. EBITDA should not be considered as an alternate measure of net income or operating income, as determined on a consolidated basis using amounts derived from statements of operations prepared in accordance with Mexican FRS, as an indicator of operating performance or as cash flows from operating activity or as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of a company s overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes, depreciation, pension plan reserves or capital expenditures and associated charges. The EBITDA presented herein relates to Mexican FRS, which we use to prepare our consolidated financial statements. Vitro, S.A.B. de C.V. (BMV: VITROA), is the leading glass manufacturer in Mexico and one of the largest in the world backed by more than 100 years of experience. Through our subsidiary companies we offer products with the highest quality standards and reliable services to satisfy the needs of two distinct business sectors: glass containers and flat glass. Our manufacturing facilities produce, process, distribute and sell a wide range of glass products that form part of the everyday lives of millions of people as well as offering excellent solutions to multiple industries that include: wine, beer, cosmetic, pharmaceutical, food and beverage, as well as the automotive and construction industry. In addition, we supply raw materials, machinery and industrial equipment to different industries. We constantly strive to improve the quality of life of our employees, as well as the communities where we operate, by generating employment and economic prosperity given our permanent focus on quality and continuous improvement, as well as through our consistent efforts to promote sustainable development. Located in Monterrey, Mexico, and founded in 1909, Vitro currently has major facilities and a broad distribution network in 10 countries in the Americas and Europe and the Company s products can be found all around the world. For more information, you can access Vitro s Website at: For further information, please contact: Investor Relations Jesús N. Medina Vitro S.A.B. de C.V. + (52) / 1730 jnmedina@vitro.com U.S. agency Susan Borinelli / Barbara Cano Breakstone Group (646) / sborinelli@breakstone-group.com bcano@breakstone-group.com DETAILED FINANCIAL INFORMATION FOLLOWS: Media Roberto Riva Palacio Vitro, S.A.B. de C.V. + (52) rriva@vitro.com Consolidated Results Sales 4 EBIT and EBITDA 5 Total Financing Result 6 Taxes 6 Consolidated Net Income 7 Capital Expenditures 7 Consolidated Financial Position 8 Cash Flow 9 Key Developments 10 Glass Containers 14 Flat Glass 15 Consolidated Financial Statements 16 Segmented Information 18 3

4 Consolidated Results As a result of the sale of Vitro America Group, and according to MFRS, for comparative purposes, historical figures of such company are shown as discontinued operation in every period, except where indicated otherwise. (For more details, please refer to our previous quarter report available in our website). Sales Consolidated net sales for 3Q 11 increased 10 percent YoY, from US$411 million in 3Q 10 to US$452 million in 3Q 11, primarily driven by the temporary sales growth in the Glass Containers started last quarter, a 1.8 percent peso appreciation versus the dollar YoY (quarterly average) and a recovered supply capacity once lost as a consequence of hurricane Alex in 3Q 10. For LTM 3Q 11, consolidated net sales increased 14 percent to US$1,762 million from US$1,545 million during the same period last year. Glass Containers sales for the quarter increased 9.9 percent Yoy, while Flat Glass sales increased 8.7 percent over the same period. During the quarter, domestic and export sales increased 22 percent and 0.2 percent YoY, respectively, while foreign subsidiaries sales decreased 23 percent YoY. Table 1: Total Sales Table 1 Sales (Million) YoY% YoY% LTM YoY% 3Q'11 3Q'10 Change 9M'11 9M'10 Change 3Q'11 3Q'10 Change Pesos Total Consolidated Sales 5,634 5, ,315 15, ,388 19, Glass Containers 3,596 3, ,356 9, ,529 11, Flat Glass 1,939 1, ,717 5, ,504 7,541 (0.5) Domestic Sales 3,480 3, ,975 8, ,113 11, Export Sales 1,781 1,817 (2.0) 5,365 5, ,959 6, Foreign Subsidiaries (0.1) 1,316 1,381 (4.7) Nominal Dollars Total Consolidated Sales ,353 1, ,762 1, Glass Containers , Flat Glass Domestic Sales , Export Sales Foreign Subsidiaries (23.0) % Foreign Currency Sales* / Total Sales 39% 45% -6.1 pp 39% 41% -1.8 pp 39% 40% -1.2 pp % Export Sales / Total Sales 32% 35% -3.1 pp 33% 34% -1.3 pp 33% 34% -1 pp * Exports + Foreign Subsidiaries 4

5 EBIT and EBITDA Consolidated EBIT for the quarter increased 11.9 percent YoY, from US$38 million in 3Q 10 to US$43 million during 3Q 11. EBIT margin increased 0.2 percentage points, from 9.3 percent to 9.5 percent. For LTM 3Q 11, consolidated EBIT increased 21 percent from US$128 million in LTM 3Q 10 to US$155 million in LTM 3Q 11. During this same period, EBIT margin increased 0.5 percentage points, from 8.3 percent to 8.8 percent. EBIT for the quarter at Glass Containers increased by 17 percent YoY, from US$41 million to US$48 million, while at Flat Glass, EBIT reduced its loss, from US$5 million in 3Q 10 to a loss of US$3 million in 3Q 11. Consolidated EBITDA for the quarter increased 11 percent, from US$74 million in 3Q 10 to US$83 million in 3Q 11, mainly driven by higher production levels both in Glass Containers and Flat Glass, which translates into improved fixed cost absorption, a 4 percent decrease in energy prices and a 1.8 percent peso appreciation, YoY (quarterly average). EBITDA margin increased 0.2 percentage points, from 18.1 percent to18.3 percent, YoY. For LTM 3Q 11, consolidated EBITDA increased 13.6 percent, from US$271 million in 3Q 10 to US$308 million in this period. During the quarter, EBITDA at Glass Containers increased 13.6 percent, YoY, from US$63 million in 3Q 10 to US$72 million in 3Q 11, while EBITDA at Flat Glass increased from US$6 million in 3Q 10 to US$10 million in 3Q 11. For details on both business units please refer to page 14 and 15. Table 2: EBIT and EBITDA Table 2 EBIT and EBITDA (Million) YoY% YoY% LTM YoY% 3Q'11 3Q'10 Change 9M'11 9M'10 Change 3Q'11 3Q'10 Change Pesos Consolidated EBIT ,626 1, ,866 1, Margin 9.4% 9.4% 0 pp 10.0% 8.2% 1.8 pp 8.7% 8.3% 0.4 pp Glass Containers ,456 1, ,889 1, Flat Glass (33) (64) (18) (71) -- Consolidated EBITDA 1, ,982 2, ,738 3, Margin 18.2% 18.2% 0 pp 18.3% 17.3% 1 pp 17.5% 17.6% -0.1 pp Glass Containers ,311 2, ,064 2, Flat Glass Nominal Dollars Consolidated EBIT Margin 9.5% 9.3% 0.2 pp 10.0% 8.2% 1.8 pp 8.8% 8.3% 0.5 pp Glass Containers Flat Glass (3) (5) (2) -- 3 (6) -- Consolidated EBITDA Margin 18.3% 18.1% 0.2 pp 18.3% 17.3% 1 pp 17.5% 17.6% -0.1 pp Glass Containers Flat Glass

6 Total Financing Result On April 8, 2011 Vitro SAB was declared in Concurso Mercantil, therefore according to Mexican law, all of its debt, including Senior Notes, was converted to Unidades de Inversion ( UDIS ) and stopped accruing interest. Under Mexican FRS, the fluctuation in the value of the UDIS is considered as an interest expense. For reporting purposes, UDIS figures were reconverted at the dollar exchange rate of the closing period. (For more details please refer to our previous quarter report available in our website). Total Financing Result for the quarter resulted in an expense of US$10 million compared to an expense of US$40 million during 3Q 10. This result was mainly driven by a decrease of our interest expense from US$42 million in 3Q 10 to US$18 million in 3Q 11 which reflected a small variation in UDIS, related to our UDIS denominated debt, and accrued interest on our debt not subject to restructuring. Also, due to our debt conversion to UDIS, our monetary assets in this quarter were higher than our monetary liabilities, which paired with a 13.4 percent peso depreciation, QoQ, yielded a Foreign Exchange Gain of US$25 million, compared to a gain of US$15 million in 3Q 10 due to a 1.2 percent peso appreciation in that period. This was partially offset by higher restructuring expenses, accounted for in Other Financial Expenses. For LTM 3Q 11, Total Financing Result decreased 71.9 percent to an expense of US$40 million from an expense of US$141 million in LTM 3Q 10, mainly benefited by a net interest expense of US$101 million from a net interest expense of US$170 million in LTM 3Q 10, due to our debt conversion to UDIS on April 8, 2011, and from a non-cash foreign exchange gain of US$119 million compared to a gain of US$84 million for the same period last year, due to the above mentioned factors. Table 3: Total Financing Result Table 3 Total Financing Result (2) (Million) YoY% YoY% LTM YoY% 3Q'11 3Q'10 Change 9M'11 9M'10 Change 3Q'11 3Q'10 Change Pesos Net Interest (expense) income (222) (536) 58.6 (652) (1,625) 59.9 (1,238) (2,172) 43.0 Other Financial Expenses (1) (214) (162) 32.6 (542) (416) 30.2 (699) (713) 2.0 Foreign Exchange Gain (Loss) , ,425 1, Total Financing Result (129) (528) (1,587) -- (512) (1,832) 72.1 Nominal Dollars Net Interest (expense) income (18) (42) 57.3 (53) (128) 58.2 (101) (170) 40.7 Other Financial Expenses (1) (17) (13) 34.2 (45) (33) 37.4 (58) (55) 3.9 Foreign Exchange Gain (Loss) Total Financing Result (10) (40) (122) -- (40) (141) 71.9 (1) Includes natural gas hedgings and expenses related to debt restructuring. (2) On April 8, 2011 Vitro SAB de CV was declared in Concurso M ercantil, therefore according to M exican law, all of its debt, including Senior Notes, was converted to UDIS and stopped accruing interest. For reporting purposes, UDIS figures were reconverted at the dollar exchange rate of the closing period. Taxes Total Income Tax increased from a gain of US$3 million in 3Q 10 to a loss of US$21 million during this quarter. This was mainly due to an increase in Accrued Income Tax, which presented an expense of US$34 million compared to a gain of US$10 million on the same period last year but partially offset by a gain in Deferred Income Taxes of US$13 million in this quarter compared to an expense of US$7 million in 3Q 10. For LTM 3Q 11, Total Income Tax decreased to an expense of US$41 million from a gain of US$65 million in LTM 3Q 10. 6

7 Table 4: Taxes Table 4 Taxes (Million) YoY% YoY% LTM YoY% 3Q'11 3Q'10 Change 9M'11 9M'10 Change 3Q'11 3Q'10 Change Pesos Accrued Income Tax 430 (123) Deferred Income Tax (gain) (146) (225) (449) (49.8) (287) (1,034) 72.3 Total Income Tax 284 (46) (200) (867) -- Nominal Dollars Accrued Income Tax 34 (10) Deferred Income Tax (gain) (13) 7 -- (20) (33) (39.5) (25) (78) 68.0 Total Income Tax 21 (3) (14) (65) -- Consolidated Net Income 43 EBIT (10) Total Financing Result Consolidated Net Income (million dollars) (3) Other (Expenses) Income (21) Taxes 9 Consolidated Net Income During 3Q 11 the Company recorded a Consolidated Net Income of US$9 million compared to a Consolidated Net Loss of US$14 million during the same period last year. This variation is principally explained by the increase in the Operating income of US$43 million compared with an operating income of US$38 million in 3Q 10, a Total Income Tax loss of US$21 million compared to a gain of US$3 million on the same period last year and a loss from discontinued operations of US$6 million in 3Q 10, due to the sale of Vitro America which according to accounting principles and for comparative purposes, is shown as discontinued operation in every period. Capital Expenditures (CapEx) Capital expenditures for the quarter totaled US$26 million, compared with US$16 million in 3Q 10. Glass Containers represented 66 percent of total CapEx, mainly invested in capacity expansion to service CFT segment, furnace repairs, molds and maintenance. Flat Glass accounted for 34 percent, which was mainly invested in furnace repairs due to damages from last year s Hurricane Alex, maintenance, repairs and capacity expansion for the auto segment glass. 7

8 Consolidated Financial Position On April 8, 2011 Vitro SAB was declared in Concurso Mercantil, therefore according to Mexican law, all of its debt, including Senior Notes, was converted to UDIS and stopped accruing interest. For reporting purposes, UDIS figures were reconverted at the dollar exchange rate of the closing period. For 3Q 11, Net Debt, which is calculated by deducting cash and cash equivalents classified in short and long term assets, decreased QoQ by US$184 million to US$1,361 million mainly driven by debt conversion into UDIS and the 13.4 percent peso depreciation for the quarter. On a YoY comparison, Net Debt decreased by US$130 million, mainly due to debt conversion to UDIS, and 7.4 percent peso depreciation, LTM 3Q 11. As of September 30, 2011 the Company had a cash balance of US$158 million, of which US$2 million are classified as other long-term assets and US$43 million are restricted cash collateralizing lease payments, cash on our accounts receivable financing programs and cash related to payments associated to Consent and Restructuring Fee. Therefore, unrestricted cash balance as of September 30, 2011 was US$115 million. Consolidated gross debt as of September 30, 2011 totaled US$1,519 million, which represent a US$184 million decrease QoQ; YoY debt decreased US$172 million. Both changes driven by the explanations mentioned above. Interest Coverage (1) Table 5 Debt Indicators (Million dollars; except as indicated) 3Q'11 2Q'11 1Q'11 4Q'10 3Q'10 (EBITDA/ Interest Expense) (Times) LTM Leverage (1) (Total Debt / EBITDA) (Times) LTM (Total Net Debt / EBITDA) (Times) LTM Total Debt (4)(5) 1,518 1,703 1,706 1,697 1,691 Short-Term Debt (2) 1,386 1,547 1,608 1,585 1,556 Long-Term Debt Cash and Equivalents (3) Total Net Debt 1,360 1,545 1,590 1,526 1,491 Currency Mix (%) Dlls & Euros / Pesos / UDIS 9/6/85 8/7/85 94/6/0 93/7/0 92/8/0 (1) Financial ratios are calculated using figures in pesos. (2) Since we are not in compliance under our bond indentures, the outstanding amount of the Senior Notes debt was reclassified from long-term to short-term. (3) Cash & Cash Equivalents include restricted cash related to consent payment and restructuring consideration, lease payments and cash on our accounts receivables financing programs. (4) NIF B-8, Due to changes in M exican FRS, regarding to consolidation or controlled entities, our accounts receivable securitization trusts and off-balance sheet debt were included in the Consolidated Financial Statements of Vitro and Subsidiaries. The effects of the changes in accounting principles increased debt of all periods herein presented. (5) On April 8, 2011 Vitro SAB de CV was declared in Concurso M ercantil, therefore according to M exican law, all of its debt, including Senior Notes, was converted to UDIS and stopped accruing interest. For reporting purposes, UDIS figures were reconverted at the dollar exchange rate of the closing period. 8

9 Debt Profile as of September 30, 2010 and 2011 Fixed Rate (1) Floating Rate + Fixed Spead Rate Exposure Sep. 10 Sep % 86% 14% 14% Dollars Pesos Euros UDIS Currency Exposure (2) Sep. 10 Sep. 11 7% 6% 2% 90% 85% 8% 2% Banks Market Source Sep. 10 Sep % 24% 73% 76% (1) LIBOR and TIIE based rates (2) On April 8, 2011, Vitro was declared in Concurso Mercantil, therefore according to Mexican law, all of its debt, including Senior Notes, was converted to UDIS and stopped accruing interest. Based on the original issuance currency, the mix is 92% dollars, 6% pesos, and 2% Euros. Cash Flow Net Free Cash Flow decreased from US$49 million in 3Q 10 to US$14 million in 3Q 11. This was mainly the result of an investment in Working Capital of US$22 million in 3Q 11 compared to a US$10 million recovery in 3Q 10. This investment was mainly driven by an increasing inventory in Glass Containers in order to keep our service levels and due to a scheduled furnace repair coupled with a reduction of our accounts payable. Operating Cash Flow was also used to fund the US$26 million CapEx investment this quarter, which is a 66 percent increase, when compared with US$16 million in 3Q 10. For the LTM 3Q 11, the Company recorded a Net Free Cash Flow of US$35 million compared to US$136 million during the previous year. This change was mainly due to a higher working capital investment for this period and an increase in CapEx which responds to furnace repairs in both our business divisions, and partially compensated by a higher EBITDA figure. 9

10 Table 6: Cash Flow Analysis Table 6 Cash Flow from Operations Analysis (1) (Million) YoY% YoY% LTM YoY% 3Q'11 3Q'10 Change 9M'11 9M'10 Change 3Q'11 3Q'10 Change Pesos EBITDA 1, ,982 2, ,738 3, Working Capital (2) (282) (1,141) (582) 95.8 (746) (28) -- Cash Flow from Operations 745 1,088 (31.5) 1,841 2,014 (8.6) 2,992 3,447 (13.2) Net Interest Paid (3) (288) (228) 26.6 (654) (609) 7.4 (1,016) (927) 9.7 Cash Taxes (paid) recovered (4) 30 (26) -- (62) (155) (60.1) (78) (117) (33.3) Capex (5) (325) (200) 62.0 (919) (419) (1,463) (644) Dividends (2) (3) (32.6) (12) (5) Net Free Cash Flow (74.5) (75.3) 422 1,753 (75.9) Nominal Dollars EBITDA Working Capital (2) (22) (94) (45) (62) (3) -- Cash Flow from Operations (28.2) (3.0) (8.2) Net Interest Paid (3) (23) (18) 28.5 (54) (48) 12.3 (83) (72) 14.9 Cash Taxes (paid) recovered (4) 2 (2) -- (6) (12) (54.8) (7) (9) (26.4) Capex (5) (26) (16) 65.7 (76) (33) (120) (50) Dividends (0) (0) (26.9) (1) (0) Net Free Cash Flow (71.3) (72.3) (73.9) (1) This statement is a cash flow analysis and it does not represent a Cash Flow Statement according with Mexican FRS (2) Includes: Clients, inventories, suppliers, other current assets and liabilities including IVA (Value Added Tax) (3) Also includes interest income, derivative financial transactions and expenses related to debt restructuring (4) Includes PSW (Profit Sharing to Workers) (5) Includes advanced payments which under M exican FRS is now cosidered as other long term assets and not as fixed assets. 10

11 Key Developments FINANCIAL POSITION AND RESTRUCTURING PROCESS During the last two years, Vitro has worked diligently to resolve its financial situation by seeking to achieve a consensual restructuring on terms that would provide Vitro s creditors a fair recovery in light of the Company s financial capacity and permit the Company to regain its financial footing. To that end, Vitro has engaged in active negotiations with various groups of creditors, including an ad hoc group of holders of Old Notes (the Ad Hoc Bondholders Group ), as well as Fintech, the Company s largest creditor. Vitro s Voluntary Concurso Proceeding and Chapter 15 Case On April 11, 2011, Vitro announced that, in a resolution from the Judge for the Second Unitary Court of the Fourth Circuit in Monterrey, the appeal proceedings submitted by Vitro were resolved in favor of the Company. As part of such resolution, the Court declared Vitro in Concurso Mercantil. On April 14, 2011, after Vitro was declared in Concurso Mercantil, the Company commenced a Chapter 15 case in the U.S. Bankruptcy Court for the Southern District of New York. On May 13, 2011, at the request of the dissident bondholders, the judge granted the change of venue form NY to the Northern District of Texas, where on July 21, 2011, a Chapter 15 was issued in favor of Vitro SAB. As a result of such recognition, all actions against Vitro SAB s rights and property within the territorial jurisdiction of the United States are subject to an automatic stay pursuant to Chapter 15 of the U.S. Bankruptcy Code until the conclusion of the Chapter 15 Case. Regarding the Concurso proceedings in Mexico, during the month of June, 2011 a preliminary list of creditors was issued by the Conciliador. In August, 2011, a final list of creditors was issued by the Conciliador and submitted to the court and on August 15, 2011, the Court issued its Decision for the Acknowledgement, Value and Order of Credits ( Sentencia de Reconocimiento, Graduacion y Prelacion de Creditos ).This decision grants recognition of rank, amount and order of those creditors contained in the definitive list by the Conciliador. The following step in this process will be to conclude the conciliation stage, in which once the Conciliador considers that a favorable opinion to a restructuring plan of Vitro and the majority of its creditors exists, he will then submit it for said creditors approval, provided that he shall take into consideration the restructuring plan attached by the Company with the filing of it Concurso Mercantil petition. We expect the forgoing to occur anytime soon. New York State Litigation against Vitro and certain of its non-u.s. subsidiaries Pursuant the U.S. Bankruptcy Court s recognition of Vitro s Concurso Mercantil in Mexico as a foreign main proceeding and the entry of a Preliminary Injunction for Vitro Packaging de Mexico,the New York State Litigation continues to be stayed with respect to Vitro SAB and Vitro Packaging de Mexico, and U.S. customers of VPM were directed to continue remitting payments as they come due to VPM notwithstanding the Attachment Orders for so long as the VPM Preliminary Injunction remains in effect. Following the expiration on July 1, 2011 of the injunctive relief protecting Vitro SAB s 49 non-u.s. subsidiaries under Vitro TRO, on July 5, 2011 and July 15, 2011, respectively, Aurelius and/or Elliott commenced actions in New York State Court against certain customers who had received notice of the Attachement Orders, purportedly seeking turnover of funds held by such entities and owed to Vitro s subsidiaries subject to the litigation, which proceedings were filed to preserve their claims with respect to funds allegedly held by those entities. However, because the Attachment Order was not confirmed by the New York State Court, those proceedings did not go forward and Aurelius and Elliott could not seek a turnover of funds. Additionally, on September 21, Aurelius and Elliott had a status conference with the New York State Court in order to continue the prosecution of the New York State Litigation; in such conference the Court scheduled a Summary Judgment 11

12 hearing for October 14, 2011, where arguments from both parties were heard.. In such conference, the Judge said he will try to rule on whether the Summary Judgment will proceed or be dismissed within the next 60 to 90 days. Involuntary Proceedings On April 29, 2011, the Judge for the Second Unitary Court of the Fourth Circuit in Monterrey dismissed the involuntary petition against Vitro SAB, filed by some of the Ad Hoc committee members on December Between May 11, and May 17, 2011, such Judge dismissed the involuntary proceedings against all of Vitro s subsidiaries. This decision was appealed by creditors, and remain pending as the date hereof. Vitro Packaging de Mexico s Voluntary Concurso Proceeding and Chapter 15 Case On June 29, 2011, VPM filed a petition with the District Court of Nuevo Leon, commencing the VPM voluntary Concurso Proceeding, in order to obtain the protection of its operations and assets from any possible legal actions from creditors. On October 26, the Judge for the Fourth District in Labor and Civil Matters declared Vitro Packaging de Mexico in voluntary reorganization proceeding (Concurso Mercantil), thus VPM reorganization process continues to move forward. On June 30, 2011, VPM commenced the VPM Chapter 15 Case in the Bankruptcy Court by filing a petition for recognition of the VPM Concurso Proceeding pursuant to Chapter 15 of the U.S. Bankruptcy Code. On July 1, 2011, at the request of VPM, the Bankruptcy Court entered a temporary restraining order, enjoining VPM s creditors, including holders of the Notes issued by Vitro, from commencing or continuing any collection actions in any jurisdiction within the United States against VPM. Among other things, this restraining order had the effect of staying the enforcement of the Attachment Orders to garnish accounts receivable owing to VPM from certain of its U.S. customers. The VPM Temporary Restraining Order was extended by the Bankruptcy Court through July 15, On July 15, 2011, with the consent of the Ad Hoc Bondholder Group, the Bankruptcy Court entered an order extending the injunctive relief provided by the VPM TRO until the Bankruptcy Court enters an order granting or denying recognition of the VPM Concurso Proceeding. The hearing before the Bankruptcy Court to recognize the Concurso in México as a foreign main proceeding and to review the existing restraining scheduled for October 17, was continued until November 17. Involuntary Chapter 11 Cases against Vitro s U.S. subsidiaries Vitro SAB has continued to defend its fifteen U.S. subsidiaries that are subject to involuntary chapter 11 proceedings (the Alleged Debtors ) commenced by four members of the Ad Hoc Bondholder Group in November On April 6, 2011, Vitro America, and other three U.S. indirect subsidiaries of Vitro, consented to enter chapter 11 bankruptcy.on June 17, 2011, Vitro announced the sale of substantially all of the assets of Vitro America, and three other U.S. indirect subsidiaries of Vitro, to American Glass Enterprises, LLC, an affiliate of private equity firm Sun Capital Inc. The approved purchase price for the sale was US$55 million plus the assumption of certain liabilities. On April 11, 2011, the Bankruptcy Court issued an order denying the involuntary Chapter 11 petitions against the three remaining operating Alleged Debtors and (ii) on April 21, 2011, the Bankruptcy Court issued an order denying the involuntary chapter 11 petitions against all of the Former Alleged Debtors Subsequently, the petitioning Bondholders sought reconsideration of both orders, which the Bankruptcy Court denied on July 8, On July 21, 2011, the petitioning creditors filed notices of appeal, indicating they intend to ask an appellate court to reverse the decisions denying the involuntary chapter 11 petitions against the companies. On July 25, 2011, upon motion by the petitioning creditors, all these cases were dismissed and the Judge retained jurisdiction to hear the former Alleged Debtors' motion for reimbursement of costs and fees. 12

13 Vitro publishes its 2010 Sustainable Development Report On August 1, 2011, Vitro S.A.B. published its 2010 Sustainable Development Report, which provides information on the Company s contribution to achieve a viable environment, supported by sound human attitude and responsible corporate management. Among the key results presented in the report are those relating to Vitro s Glass Recycling Program, whereby the Company collected 181,438 tons of which 107,466 tons corresponded to glass containers while flat glass reported 73,972 tons. This means that 362,866 cubic meters of landfill space destined for final disposal were liberated. In addition to the environmental gains, Vitro s recycling efforts also translate into support for social causes. The compensation for collected material goes as in-kind donations that benefit 24,000 students, 54 civil associations and 21 municipalities. This is a result of the strategic social partnerships Vitro has established for the collection of such glass. The report also highlights that in 2010 the Company carried out 26 different projects for product redesign focused on reducing the weight of glass containers to achieve an estimated cutback of 2,905 tons of molten glass. This translates into direct energy savings and a consequent reduction of indirect emissions into the atmosphere. More information on Vitro s corporate performance is available in the full document for the 2010 Report Sustainable Development at the Company s website. 13

14 Sales Glass Containers (64 percent of LTM 3Q 11 Consolidated Sales) Sales for the quarter increased 9.9 percent YoY, from US$262 million in 3Q 10 to US$288 million. Domestic sales increased 17.4 percent, mainly as a result of a temporary increased demand from one of our beer producer client, which started last quarter and has extended into 3Q 11, as well as new orders placed by another one in this segment. Sales were also benefited by increase in CFT, Wine & Liquors segments and a peso appreciation. These factors more than offset a decline in volume for the food segment. Prices remained stable overall, YoY. Export sales remained stable, with increasing volumes in beer and CFT segments but offset by lower sale volumes in food and soft drinks segments. Sales from Glass Containers foreign subsidiaries decreased to US$3.7 million from US$4.4 million on a YoY basis. EBIT and EBITDA EBIT for the quarter increased 17 percent YoY, from US$41 million in 3Q 10 to US$48 million in 3Q 11. EBITDA for the same period increased 13.6 percent, from US$63 million to US$72 million. During this quarter, EBIT and EBITDA were benefited by higher sales volume and increased production levels which, aided to a better fix cost absorption a 1.8 peso appreciation as well as a 4 percent decrease in natural gas prices. EBITDA from Mexican glass containers operations, which is Glass Container s core business and represents approximately 82 percent of total EBITDA, increased 15 percent YoY due to the above mentioned factors. Table 7: Glass Containers Table 7 Glass Containers (Million) YoY% YoY% LTM YoY% 3Q'11 3Q'10 Change 9M'11 9M'10 Change 3Q'11 3Q'10 Change Pesos Consolidated Net sales 3,596 3, ,356 9, ,529 11, Net Sales Domestic Sales 2,238 1, ,337 5, ,301 7, Exports 1,312 1,341 (2.1) 3,895 3, ,039 4, Foreign Subsidiaries (18.8) EBIT ,456 1, ,889 1, EBITDA ,311 2, ,064 2, EBIT Margin 16.4% 15.6% 0.8 pp 14.1% 13.5% 0.6 pp 14.0% 14.0% 0 pp EBITDA Margin 24.9% 24.2% 0.7 pp 22.3% 22.7% -0.4 pp 22.6% 23.3% -0.7 pp Nominal Dollars Consolidated Net sales , Domestic Sales Export Sales Foreign Subsidiaries (16.5) EBIT EBITDA EBIT Margin 16.5% 15.5% 1 pp 14.1% 13.5% 0.6 pp 14.0% 14.0% 0 pp EBITDA Margin 25.0% 24.1% 0.9 pp 22.3% 22.7% -0.4 pp 22.6% 23.3% -0.7 pp Glass Containers Domestic (Millions of Units) 1, ,991 2, ,874 3, Exports (Millions of Units) (0.0) 1,127 1, ,476 1, Total 1,441 1, ,118 3, ,350 4, Installed capacity utilization (furnaces)* 92.1% 81.1% 11 pp Alcali (Thousands Tons sold)** * A ltho ugh pro ductio n increased by 16 percent, the installed capacity also increased by 17 percent resulting in a lesser capacity utilization. ** Includes sodium carbonate, sodium bicarbonate, sodium chlorine and calcium chlorine 14

15 Sales Flat Glass (34 percent of LTM 3Q 11 Consolidated Sales) Flat Glass sales for the quarter increased 8.7 percent YoY, from US$143 million in 3Q 10 to US$155 million in 3Q 11. Domestic sales increased 29.6 percent YoY, mainly as a result of recouped float glass product supply capacity once lost as a consequence of Hurricane Alex on 3Q 10 and increased market prices. Sales of automotive glass also benefited domestic sales overall, as well as a slightly better price mix YoY. Export sales remained stable YoY, increasing sales volume but with a weaker price mix as we recovered our capacity to serve this market which, as part of Hurricane Alex s effects last year, we had been forced to reduced its supply and focus on serving domestic market. Automotive sales increased 12.5 percent YoY driven by higher volumes and higher price mix in both markets. OEM (Original Equipment Manufacturer) market sales increased 8 percent, while AGR (Auto Glass Replacement) market sales increased 18 percent reflecting a recouped volume once lost in 3Q 10 due to product scarcity as an effect of Hurricane Alex. Sales from foreign subsidiaries decreased 23.8 percent YoY, from US$36 million in 3Q 10 to US$28 million, driven by continued weak demand in the construction market of Spain. EBIT & EBITDA EBIT for the quarter improved 51.2 percent to a loss of US$3 million from a loss of US$5 million YoY, while EBITDA increased to US$10 million from US$6 million YoY. During the same period, EBITDA margin increased 2.3 percentage points, from 4 percent in 3Q 10 to 6.3 percent in 3Q 11. On a YoY comparison, EBIT and EBITDA were benefited by higher volumes and a better price mix, coupled with a 1.8 percent peso appreciation and a 4 percent decline in energy prices. Also, during 3Q 11 our furnaces had a better capacity utilization, when compared to those levels in 3Q 10 that were affected as a result of hurricane Alex. This benefited a better fix cost absorption. Table 8: Flat Glass Table 8 Flat Glass (Million) YoY% YoY% LTM YoY% 3Q'11 3Q'10 Change 9M'11 9M'10 Change 3Q'11 3Q'10 Change Pesos Consolidated Net sales 1,939 1, ,717 5, ,504 7,541 (0.5) Net Sales Domestic Sales 1,144 1, ,395 3, ,457 4, Exports (1.6) 1,469 1,564 (6.1) 1,920 2,095 (8.4) Foreign Subsidiaries (0.8) 1,127 1,233 (8.6) EBIT (33) (64) (49.0) 175 (18) (71) -- EBITDA EBIT Margin -1.7% -3.5% 1.8 pp 3.1% -0.3% 3.4 pp 0.4% -0.9% 1.3 pp EBITDA Margin 6.4% 4.1% 2.3 pp 10.1% 7.2% 2.9 pp 7.9% 6.6% 1.3 pp Nominal Dollars Consolidated Net sales Domestic Sales Export Sales (0.9) (3.4) Foreign Subsidiaries (23.8) EBIT (3) (5) (2) -- 3 (6) -- EBITDA EBIT Margin -1.6% -3.7% 2.1 pp 3.2% -0.4% 3.6 pp 0.5% -0.9% 1.4 pp EBITDA Margin 6.3% 4.0% 2.3 pp 10.2% 7.1% 3.1 pp 7.9% 6.6% 1.3 pp Volumes Flat Glass (Thousands of m2r) (1) (2) 30,958 25, ,819 93, , ,052 (3.7) Capacity utilization Float Glass furnaces (3) 70.7% 42.7% 28 pp Flat Glass auto 79.7% 71.6% 8.1 pp (1) Flat Glass volumes only include float and automotive glass manufactured at our M exican subsidiaries (2) m2r = Reduced Squared M eters (3) Capacity utilization may sometimes be greater than 100 percent because pulling capacity is calculated based on a certain number of changes in glass color & thickness, determined by historical average and performance. 15