Grupo Simec: cost of its sales in Mexico is 79% as a percentage of its sales

Grupo Simec reported that the cost of its sales in Mexico was 79% as a percentage of its sales in that country in 2020.

If compared to the United States, this cost is proportionally lower. If it is compared to Brazil, it is higher.

The company is a diversified manufacturer, processor and distributor of SBQ steel and structural steel products with production and commercial operations in the United States, Mexico and Brazil.

From 2016 to date, Grupo Simec has stood out for being an important producer of SBQ products both in the United States and in Mexico.

It is also a major producer of structural and light structural steel products in Mexico in terms of volume shipped.

While in 2020, its cost of sales in the United States, as a percentage of sales in the United States, was 102%, that same indicator stood at 76 percent.

The higher cost of sales of the facilities is mainly due to the higher labor costs that prevail in its operations in the United States market and to the higher costs of raw materials that its operations in the United States use in the production of SBQ steel.

Grupo Simec

As in other companies, the prices of the raw materials necessary for the production of the company’s steel products have fluctuated significantly in the past and significant increases in the prices of raw materials could adversely affect its profit margins.

During periods in which the prices of scrap metal, iron ore, ferro-alloys, coking coal and other raw materials have increased, the industry in which Grupo Simec participates has historically sought to maintain profit margins, passing through the increase in costs of raw materials to customers through price increases.

For example, roughly, scrap prices increased 2% in 2016, 30.8% in 2017, 19.4% in 2018, decreased 20% in 2019, and increased 9% in 2020, and ferro-alloy prices decreased 13% in 2016, increased 22% in 2017, 9.7% in 2018, decreased 1% in 2019 and fell 20% in 2020.

The company purchases its raw material needs on the open market or from certain key suppliers. If any of your key suppliers do not meet or we do not renew their supply contracts, we could face limited access to some raw materials, or higher costs and delays as a result of the need to source your raw material requirements from other suppliers.

Scrap metal, electricity, ferro-alloys, electrodes and refractory products are the main materials used by Grupo Simec to manufacture its steel products.

How much did Grupo Simec sell? In 2020, its sales were 35,869 million pesos. This represents 4.7% less than in 2019 and 0.5% less than in 2019.