Annual Press 2013
Transcription
Annual Press 2013
Company Profile Sales by region 50% 21% Brakes Suspensions Division North America Division North America 29% Suspensions Division Brazil Sales by customer 3% Toyota 4% 7% 3% Mercedes-Benz Nissan 16% Others Fiat - Chrysler 9% VW Net sales / Ventas netas EBITDA / UAFIRDA Millons of Pesos / Millones de pesos EBITDA / Margen UAFIRDA Millions of Pesos / Millones de pesos Sales margin / Ventas 29% Ford 29% GM 12 13 9% 6% 07 08 503 06 13% 04 11 11% 10% 11% 14% 1,343 12 10% 1,058 13 13% 10 13% 09 11 852 05 434 719 698 08 1,203 12 666 07 1,178 9,392 11 7,621 9,353 06 6,958 05 % Millions of Pesos 5,459 6,707 7,846 6,723 6,547 04 EBITDA / Sales margin EBITDA (1) 10,362 Net sales Millions of Pesos 09 10 13 04 05 06 07 08 09 10 Financial Profile Financial highlights Sales EBITDA (1) EBITDA to Sales Net Operating Cash Flow (2) Average Used Capital Operating Profitability Operating Turnover Net Debt Gross Debt Cash Gross Debt / EBITDA Net Debt / EBITDA EBITDA / Net Interests Net Income (3) Net Worth SANLUIS (4) Mill. Pesos Mill. Pesos % Mill. Pesos Mill. Pesos % Times Mill. Pesos Mill. Pesos Mill. Pesos Times Times Times Mill. Pesos Mill. Pesos NET DEBT / DEUDA NETA 2012 2013 % change 12/13 9,392 1,203 13 1,213 5,388 22.3 1.7 2,627 3,126 499 2.6 2.2 3.5 444 7,660 10,362 1,343 13 1,512 4,821 27.9 2.1 2,241 2,866 625 2.1 1.7 4.4 601 9,166 10% 12% EBITDA (times) / UAFIRDA (veces) * Debt profile 37% 05 08 09 10 11 12 07 08 09 10 11 14 15 8% 4% 0% 13 4% 12 3% 2.7 1.7 06 2.2 05 4.0 4.9 04 3.9 6.2 13 5.0 2,241 07 44% 8.8 9.8 % 3,201 3,307 06 2,627 3,449 3,599 4,414 Times 4,238 Net debt / EBITDA 4,237 Net debt Millions of Pesos 4,128 04 24% 15% 8% 25% 19% 23% 26% 35% 20% DEBT PROFILE* (%) PERFIL DE DEUDA* (%) NET DEBT / DEUDA NETA Millons of Pesos / Millones de pesos 25% 11% 16 17 18 19 20 Globally Recognized Company North America Ohio, U.S.A. Coil springs Michigan, U.S.A. Sales, engineering, research and development Flint, Michigan, U.S.A. Brakes North America Coahuila, Mexico Leaf springs, coil springs and torsion bars Puebla, Mexico Rotors, drums and assemblies Mexico City, Mexico Corporate Headquarters Xalostoc, Mexico Leaf springs Queretaro, Mexico Elastomers and stampings South America São Paulo, Brazil Leaf springs and coil springs Rio de Janeiro, Brazil Leaf springs Resende, Brazil Distribution center RASSINI is a world class essential supplier to the automotive industry Asia Tokyo, Japan Liaison office 19 COMPOUNDED annual growth rate in sales during 25 years Consolidated sales in 2013 increased 10%, EBITDA improved 12% and net operating cash flow grew 25%, all compared to 2012 A growing company SANLUIS Corporación, S.A.B. de C.V., through the SANLUIS Rassini® brand, is a leading designer and producer of suspension and brake components used in light and heavy vehicles in the automotive industry, supplying leaf and coil springs, as well as brake discs and drums mainly for the Original Equipment Manufacturers (OEMs). SANLUIS Rassini is the world’s largest producer of suspension components for light vehicles and the leader in leaf spring design and manufacturing in the North and South American markets. Its products are used in 8 of the 10 top-selling light trucks in North America. The Brakes Division, a technology leader in North America, is recognized for designing and manufacturing discs and drums for braking systems used in light vehicles, from high-performance sports cars to light duty trucks, CUVs and SUVs. It is the only fully integrated brake rotor producer in the Americas, featuring foundry, machining, coating, stress relief and corrosion resistant (FNC, or Ferritic Nitro-Carburizing) processes in the same facility. 5-6 SANLUIS Rassini holds strong client relationships based in top quality, tailored technology and integrated services that include design, engineering, technical support, and close collaboration to meet evolving customer’s needs. As a solution provider for its customers, has been continuously recognized by them with several awards for top quality and sustained performance. SANLUIS Rassini supplies General Motors, Ford, Fiat-Chrysler, Volkswagen, MAN, Mercedes-Benz, Nissan, Toyota, Maserati, Scania and Mitsubishi, among others. SANLUIS Rassini employs more than 4,600 people in Mexico, the U.S. and Brazil and has eight manufacturing facilities as well as four technical centers strategically located in those countries. Report of the Board of Directors Dear Shareholders: I am pleased to inform you the results of SANLUIS Corporación S.A.B. DE C.V. and its subsidiary companies (SANLUIS Rassini) for the year 2013, a significant year because, as we celebrated the 25th anniversary of the acquisition of Rassini®, it was a record year for our company in terms of sales, EBITDA and net operating cash flow generation: • The year 2013 has been SANLUIS Rassini’s strongest as the company achieved record levels of sales, EBITDA and cash flow generation, amounting to $10,362 million Pesos, $1,343 million Pesos and $1,512 million Pesos, respectively. • Consolidated sales in 2013 increased 10% compared to 2012 and EBITDA grew 12% during the year. • Both, sales and EBITDA outpaced the growth of light vehicle production as we increased our market penetration in both markets where we operate (North America and Brazil). • Improvements in working capital contributed to a total net operating cash flow of $1,512 million Pesos, 25% higher than 2012. 7-8 • Consolidated income before taxes for the year reached $601 million Pesos, 35% higher than the previous year. • Consolidated Net Debt / EBITDA ratio was 1.7 times and EBITDA/Net Interest Expense was 4.4 times as of December 31, 2013. Consolidated sales in 2013 rose to the highest level in the history of the company for a total of $10,362 million Pesos, 10% higher than 2012 and 63 times the sales of Rassini in 1988, the acquisition year, a compounded annual growth rate of 19% during 25 years, well above the growth of the industry due to the major market penetration in all the regions where we operate. Sales in North America reached a total of $7,344 million Pesos an increase of 8% compared to the previous year. The sales of the Brakes Division increased 34% from 2012 to 2013, above the ongoing recovery of the automobile industry in North America based on new contracts that we started to supply during the year and the production ramp-up of ten new platforms launched at the end of 2012 and in the first half of 2013. Sales for the Suspensions Division Brazil increased 18% compared to 2012 in terms of Mexican Pesos (a 33% increase in local currency) as sales volume of commercial trucks in Brazil returned to normalized levels following the run-off sales of excess inventories of trucks based on old emission control technology in 2012. During 2013, SANLUIS Rassini was awarded new contracts that will secure additional sales for more than $6,600 million of Mexican Pesos during the next five years, maintaining growth rates well above the industry’s evolution. SANLUIS Rassini reached the highest level of consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) which totaled $1,343 million Pesos in 2013, an increase of 12% from 2012. The increase in North America was 8% while in Brazil it was 27% or 44% in local currency compared to the previous year. Consolidated net income before taxes and minority interest, rose to $601 million Pesos or $1.88 Pesos per share, which represents an increase of 35% in a year-overyear comparison. 9 - 10 The year 2013 was also a record regarding the consolidated net operating cash flow, which reached $1,512 million Pesos, an increase of 25% from 2012. The increase in the net operating cash flow was mainly used to reduce the debt in our Suspensions Division North America. In total, during the last four years, it decreased approximately 60% or $1,156 million Pesos, of which $374 million Pesos correspond to scheduled amortizations and $782 million Pesos (68% of the total reduction), to advanced payments. Our cash position at the end of 2013 reached $625 million Pesos while the consolidated net debt continued to shrink, closing the year at $2,241 million Pesos or 1.7 times consolidated EBITDA, decreasing 15% throughout 2013. The interest coverage ratio at the end of 2013 was 4.4 times consolidated EBITDA to interest expense. During 2014 we will continue to pay down our debt through cash flow generated from our ongoing operations thus, we will improve even more our overall financial position. These excellent financial improvements are a direct result of the reputation that SANLUIS Rassini has built with our customers by positioning ourselves as a solution provider, leader in technology and innovation. The integration of our technical centers in Plymouth, Michigan (U.S.A.), Piedras Negras, Coahuila (Mexico), San Martín Texmelucan, Puebla (Mexico), and Sao Paulo, Brazil has enabled us to develop a highly trained and first-class team of outstanding and talented individuals who work closely with our clients to develop new and improved products. Our mission is “Customer Satisfaction”, and we achieve this objective through technical advances optimizing products and production, top notch quality, service and competitiveness. Our banner customer service, high performance products, strategic locations, speed of response, continuous improvements at our manufacturing centers and our position as the world’s largest producer of suspension components as well as being the only fully-integrated supplier of brakes in North America, from foundry to finished product, have enabled us to become the leaders in the light duty and the commercial vehicle suspension markets in the Americas while increasing our share of the North American brakes market, reinforcing SANLUIS Rassini as a first-class 11 - 12 supplier to the automobile industry well positioned to supply the growing demand for vehicles in North America, Brazil and the rest of South America. All of this is reflected in the close working relationship that SANLUIS Rassini has developed with its customers, based on mutual trust and cooperation and which has led to new and important business opportunities and world class recognitions such as the GM’s “Supplier of the Year Award” which was recently granted to our Brakes Division for the second year in a row; the “100 Best Managed Companies for Zero Defects” from Ford for our Brakes Division as well; the “Certificate of Achievement” from Fiat-Chrysler to the Suspensions Division North America and Toyota’s Mercosur “Best Performance Supplier Award” for our Suspensions Division Brazil. SANLUIS Rassini is well positioned to take advantage of the market growth forecasts in the North American automotive industry, where Mexico has become a more important player as the 8th producer of light vehicles, the 5th producer of automotive components and the 4th exporter of vehicles in the world. Mexico is also the 3rd source of imports for the US automotive industry and will surpass Japan and Canada in the coming years. Consistent with this growth, during 2013 we installed a new facility in Flint, Michigan to machine brake rotors, a distribution center and sequencing line in Resende, Brazil, we started an expansion of our foundry plant for brakes products in Puebla, Mexico and the expansion of our leaf spring plant located in Rio de Janeiro, Brazil. All of these projects were initiated based on contracts on hand from our customers that support our growth plans and position us to better serve our current and future clients in the different markets that we serve. At SANLUIS Rassini, we have a strong conviction that keeping aligned our goals of creating value for customers, shareholders, employees and the communities where we operate, we will continue to succeed in all the aspects of our business in every market where we have a presence. Sincerely, Antonio Madero Chairman of the Board & CEO M e x i co C i t y, M a c h 1 3 , 2 0 14 13 - 14 During 2013, vehicle production increased in all the markets we serve Our Industry Production in all the markets we serve increased during 2013. Light vehicles production in North America reached its highest level in more than 10 years, totaling 16.2 million vehicles, an 89% improvement compared to the lowest level of 8.6 million vehicles produced in 2009 and an increase of 5% from 2012. In Brazil, the total vehicle production reached a record level of 3.7 million units, representing a recovery of 10% over a very difficult 2012 when the market was adversely affected due to new emissions regulations. Sales of light vehicles in the U.S., our core business segment, increased to 15.5 million vehicles during 2013, an increase of 8% compared to 2012 and 49% when compared to the 2009 level, the year with the lowest sales volume. Sales of trucks and buses, our core market in Brazil, increased 12% and 15% respectively compared to 2012, while production was 43% and 10% higher than the year before. 17 - 18 Recovery in housing construction in North and South America, the historical car scrappage rate and the need to replace aging vehicles which are still at the high level of 11 years old, better credit conditions and customers’ demand for higher quality products in North America, where automakers are devoting significant resources to research and new product development, result in healthy growth prospects for vehicles sales and production in 2014. Light vehicles produced in North America reached its highest level in 10 years Commercial Review Record year in revenues, reaching $10,312 mp In the 25 years following the integration of Rassini to the SANLUIS family, revenues within our automotive business have increased 63 times and had a record year in 2013 reaching a total of $10,362 million Pesos, this is a compounded annual growth rate of 19% during 25 years, well above the growth of the industry due to the major market penetration in all the regions where we operate. In the Suspensions Division North America we are the absolute leaders for light vehicles utilizing leaf springs. In the Brakes Division we have 15% of the accessible market and have secured contracts that will convert us in the main supplier of brakes components in North America. Our market participation in the Suspensions Division Brazil reached 63% of the leaf springs market. 19 - 20 The year 2013 brought exciting With outstanding performance as a challenges to SANLUIS Rassini. In solution provider, top quality, deli- North America we developed leaf very, commercial relations and advanced springs, coil springs and brake rotors engineering support, most of SANLUIS for Fiat-Chrysler’s all new product Rassini’s current portfolio is secured “Pro-Master” Van and the major through the following years. Busi- redesign on GM’s flagship pick-up ness awarded during 2013 alone truck K2XX (“Sierra”, “Silverado”, represents additional sales in excess “Suburban”, “Tahoe”, “Yukon” of $6,600 million Pesos for the next and Cadillac’s “Escalade”). We also five years in addition to the on-going developed brake rotors for the Dodge’s sales backlog. “Viper”, the Maserati’s “Quattroporte” and “Ghibli” as well as the Chevrolet’s “Corvette Stingray”, nominated Car of the Year in the Detroit Auto Show in 2013 and 2014. The Suspensions Division Brazil started supply to VW’s MAN heavy truck plant in Resende, the largest truck manufacturer in Latin America through a sequencing line located at MAN’s facility and launched the coil spring platforms of the “Etios” car for Toyota, the GM’s “Onix” and the redesigned Ford’s “EcoSport”. 6,600 MILLION PESOS in additional sales for the next 5 years Operations Summary Rassini achieved an EBITDA of $ 1,343 mp, the highest in its history The year 2013 was record in terms of facturing. During 2013 we merged EBITDA as SANLUIS Rassini reached our product and process engineering consolidated EBITDA of $1,343 million groups to strengthen the launching of Pesos, the highest in its history, an in- new programs and technologies. This crease of 12% from 2012 which out- added efficiency has allowed us to de- paced the growth of sales in the same velop more programs, faster and with period. The increase in North America less people than ever before. was 8% while in Brazil it was 27% or 44% in local currency compared to the previous year. The Suspensions Division North America executed more than 40 projects focused on productivity, high efficiency and new market requirements along with 22 Six Sigma projects across the areas of process, design and manu- 21 - 22 For the Brakes Division, 2013 was a challenging year as foundry and machining operations were running at full capacity, maintaining operating indicators as world class benchmarks at the same time that executed different expansion projects: we started in record time a machining facility in Flint, Michigan, with capacity to produce 2.5 million rotors per year, it will help us to better serve our customers in the Detroit area. Initiated the expansion of our foundry capacity by 40% in San Martin Texmelucan, Puebla (Mexico) which will be ready by the end of 2014 and we also increased the machining capacity at the same site by adding equipment and optimizing layouts. Our Suspensions Division Brazil reinforced the productivity project initiated in 2012 through the implementation of key initiatives in order to reduce energy consumption and labor. The return to normalized In summary, our operations continued production levels during the year improved with excellent performance while keep- the operating performance at the time that ing strict control over the cost structure the Brazilian team concluded the first part and the investment projects. Initiatives to of an expansion at its Rio de Janeiro plant improve productivity continue providing which further enhances our ability to supply good results as we maintain our low EBITDA suspension components for heavy trucks. breakeven point by thoroughly controlling The final leg of such expansion will be ready our costs. by the end of the first quarter of 2014. It was also completed the construction of the new logistics and sequencing center in Resende, in the state of Rio de Janeiro, which optimizes the delivery of suspension components to MAN Latin America’s assembly line. 23 - 24 ADDITIONAL CAPACITY OF 2.5 MILLION brake rotors in the Detroit area Our operations continue with excellent performance maintaining a strict control over costs and CapEx Financial Performance Best ever Net Operating Cash Flow, $1,512 mp The highest level of EBITDA in the history of SANLUIS Rassini was enhanced during 2013 by the significant improvement of working capital across all Divisions, resulting in a record level of consolidated net operating cash flow of $1,512 million Pesos, up 25% compared to 2012. Consolidated cash balance at the end of 2013 increased to $625 million Pesos. Net debt continued to decrease closing the year at $2,241 million Pesos or 1.7 times consolidated EBITDA. The interest coverage ratio at the end of 2013 was 4.4 times consolidated EBITDA to interest expense. The net operating cash flow was mainly used to reduce debt in our Suspensions Division North America as we paid off $687 million Pesos of which 26% were scheduled amortizations and 74% correspond to advanced payments. 25 - 26 625 MILLION PESOS cash balance at the end of 2013 The Brakes Division financed the expansion of the foundry capacity through a bank loan of $301 million Pesos which will be paid over 5 years with increasing amortizations. The leverage ratio of the Division ended 2013 at 1.0 times net debt to EBITDA. The cost controls, better management in working capital and improved sales During 2014, we will continue to pay volume in the Suspensions Division down our debt through cash flow Brazil, led also to a record year in cash generated from our ongoing opera- flow generation reaching BRL$86 tions, strengthening even more our million, the highest level in local cur- overall financial position. rency for this Division. Advances in product and process technology, as well as our commitment to improve our equipment have been recognized by our customers Technology Leadership and Customers’ Recognition We have invested in equipment with cutting edge technology SANLUIS Rassini has four technical centers is being developed in order to increase located in the U.S.A., Mexico and Brazil, material strength that will result in even equipped with state of the art testing equip- lighter products. Our proprietary RDDP ment, advanced analytical software, mate- (Rassini Digital Design Process) has been rials development labs and a highly trained implemented in our Suspension Business, team of talented engineers focused on the a seamless integration of several digital constant development of novel products analytical tools that reduce product de- that exceed customers’ needs. velopment cycle by 60%. In our Suspensions Division North America, our Advanced Product & Process Engineering groups successfully developed lighter suspension components using strengthened materials, already approved by our main customers. Alternative heat treatment process 29 - 30 Our group of Advanced Product & Process Engineering, has successfully developed new technologies In the manufacturing areas, we invested in new cutting edge technology equipment which will support production of the developed technologies at a competitive cost. During 2013, high tech equipment was installed to produce lighter coil springs with strengths of 1,350 megapascals and lighted leaf springs above 1,400 megapascals. We also tighted dimensional tolerances which improved significantly the product performance. In the Brakes Division, we continued to capitalize on the recently started anticorrosive process capabilities (FNC, Ferritic Nitro-Carburizing). As this process helps to avoid corrosion extending the life of the brake rotors, it is increasingly generating interest with our customers. We are now considering adding FNC capacity to support new contracts. We continue to increase our collaboration with several universities in order to develop intellectual property focused in technology advancements, setting new standards in the industry while developing the next generation of engineers and laying the foundations of the next growth stages of SANLUIS Rassini. 31 - 32 All the advances in product technology and commitment to improve our equipment to better serve our customers 2 nd CONSECUTIVE YEAR in which the Brakes Division received the “Supplier of the Year Award” from GM has been recognized by our customers which have granted SANLUIS Rassini world class accolades, including the GM’s “Supplier of the Year Award” which was recently given to our Brakes Division for the second year in a row; the “100 Best Managed Companies for Zero Defects” from Ford for our Brakes Division as well; the “Certificate of Achievement” from Fiat-Chrysler to the Suspensions Division North America and Toyota’s Mercosur “Best Performance Supplier Award” for our Suspensions Division Brazil. Human talent and corporate social responsibility SANLUIS Rassini employs more than 4,600 people in Mexico, U.S.A. and Brazil. We have an extraordinary team made up of competitive individuals with high values who are committed to the company and to the exceptional performance that translates into our RASSINI CULTURE OF EXCELLENCE (RCE). Corporate social responsibility The social purpose of SANLUIS Rassini is to promote joint collaboration with our customers, employees, suppliers and the community, in order to generate value for shareholders, sustainable development and higher quality of life. We are committed to our corporate culture, protecting the environment, community development, communication and transparency in everything we do. 33 - 34 Rassini has a labor force of over 4,600 employees Engaging the Global Compact Rassini has adopted international models of corporate social responsibility As a global company, SANLUIS Rassini Thus, SANLUIS Rassini has engaged the has adopted international models of Ten Principles of the Global Compact corporate social responsibility to ensure promoted by United Nations (UN) to that its positive impact on society, the align our strategies and operations with environment and the economy meets universally accepted principles in four the best practices worldwide. areas: human rights, labor principles, environment and anti-corruption. 34 - 36 Training and staff development We continue to strengthen our e-learning system, “My Training at Rassini”, which optimizes the training and development process of our employees, offering various training mechanisms aligned to personalized development plans for integral growth at SANLUIS Rassini. By focusing on the development of our employees and staff we will continue to have steady growth, transform our company, retain and improve our technological leadership for the benefit of our shareholders, customers, employees and communities. Training During the year, average training hours were above 2% of available working hours. Personnel employed at SANLUIS Rassini reached an average of 17 years of education, while unionized employees reached an average level of 12 years of education. These indicators position us within the standards set by the Mexican Government as the education rate target. Rassini’s staff has reached an average of 17 years of education 44 - 38 37 45 Domestic suppliers development SANLUIS Rassini has always pursued the development of more domestic companies in order to contribute to our country’s economic growth. As an example of this we have two domestic suppliers of special steel located in the central area of Mexico. In both cases we placed a resident metallurgical engineer at their facilities that on a collaborative manner developed materials that before would only be found overseas and today represent jobs for Mexican families. Committed to the community As part of the interaction between the company and its stakeholders, throughout the year we promote activities for SANLUIS Rassini’s personnel, their families and the community in the areas of culture, sports, health and safety. Computer donations SANLUIS Rassini continues to demonstrate its social commitment to promote and improve the education in our country. In the last years we have donated 782 computers and will continue doing so in order to help strengthen the foundation of our society’s education. Environment 20 REDUCTION IN CO2 emissions during the last years and Rassini will continue to invest in this matter Corporate Social Responsibility Distinction The execution of the Rassini System for Corporate Social Responsibility, where the close relationship with all stakeholders generates actions for the environment and society, led us to be certified by the Alliance for Corporate Social Responsibility (AliaRSE by its initials in Spanish), through the Mexican Center for Philanthropy (CEMEFI by its initials in Spanish), as a Socially Responsible Company (ESR by its initials in Spanish). Rassini aspires to become an example of Corporate Social Responsibility Board of Directors 2013 DIRECTORS Antonio Madero Bracho (Chairman and CEO) Carlos Autrey Maza (Independent) Javier Bours Castelo Enrique Bours Muñoz Everardo Elizondo Almaguer (Independent) James Robert Jones (Independent) Ernesto López de Nigris Antonio Madero Pinson Eugenio Madero Pinson Arturo Pérez Arredondo (Independent) Javier Pérez Rocha (Independent) Luis Rebollar Corona (Independent) Fernando Ruiz Sahagún (Independiente) Alberto Saavedra Olavarrieta (Independent) Guillermo Francisco Vogel Hinojosa (Independent) ALTERNATE DIRECTORS Fernando Del Castillo Elorza (Independent) Vicente Grau Alonso (Independent) Juan Pablo Sánchez Kanter Enrique Villaseñor Ezcurdia Sergio Visintini Freschi SECRETARY OF THE BOARD: Juan Pablo Rosas Pérez E X E C U T I V E C O M M I T T E E 2 0 1 3 PROPIETARIES Antonio Madero Bracho - President Javier Bours Castelo Eugenio Madero Pinson Fernando Ruiz Sahagún Javier Pérez Rocha ALTERNATES Antonio Madero Pinson Enrique Bours Muñoz Carlos Autrey Maza Alberto Saavedra Olavarrieta AUDIT COMMITTEE Fernando Ruiz Sahagún - President Alberto Saavedra Olavarrieta Enrique Bours Muñoz CORPORATE PRACTICES COMMITTEE Javier Pérez Rocha - President Javier Bours Castelo Everardo Elizondo Almaguer Antonio Madero Bracho Alberto Saavedra Olavarrieta SHARE REPURCHASE SUBCOMMITTEE Antonio Madero Bracho - President Javier Bours Castelo Javier Pérez Rocha COMPENSATION SUBCOMMITTEE Javier Pérez Rocha - President Javier Bours Castelo Everardo Elizondo Almaguer Antonio Madero Bracho INDEPENDENT AUDITORS: PricewaterhouseCoopers, S.C. Consolidated FINANCIAL STATEMENTS 2013 Independent Auditors’ Report Mexico, D.F. March 11, 2014 To the Stockholders of SANLUIS Corporación, S. A. B. de C. V. We have audited the accompanying consolidated financial statements of SANLUIS Corporación, S. A. B. de C. V., and subsidiaries, which comprise the consolidated balance sheets as at December 31, 2013 and 2012, and the consolidated comprehensive statements of income, of changes in stockholders’ equity and of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the consolidated financial statements The Company’s management and subsidiaries is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material 42 - 43 misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present’ fairly, in all material respects, the consolidated financial position of SANLUIS Corporación, S. A. B. de C. V. and subsidiaries at December 31, 2013 and 2012, and their financial performance and their cash flows for the years then ended, in accordance with International Financial Reporting Standards. PricewaterhouseCoopers, S. C. C. P. C. Raúl Téllez Audit Par t n er SANLUIS CORPORACION, S.A.B. DE C.V. and Subsidiaries Audit Committee Report Mexico City, March 11, 2014 To the Board of Directors of SANLUIS CORPORACION, S.A.B. de C.V. and Subsidiaries: In compliance with the provisions of the New Mexican Securities and Exchange Law (Nueva Ley del Mercado de Valores) and in my capability as President of the Audit Committee at SANLUIS Corporación, S.A.B. de C.V., (SANLUIS), we hereby present this report in order that, in due course, it may be submitted to the General Ordinary Shareholders´ Meeting for consideration. In order to analyze the operations of the 2013 fiscal period, the Audit Committee held five meetings on the following dates: April 17th, July 17th and October 16th, 2013 and February 20th and March 11th, 2014. In addition to the committee members, these sessions were attended by the Chairman of the Board and CEO, the external auditors, the Chief Financial Officer and the Internal Audit Director, as well as the SANLUIS officers whose presence was required by the Committee. The activities and adopted resolutions were approved in the corresponding minutes. The main issues raised in these meetings are as follows: I. Internal Control System Assessment: This Committee, taking into consideration the results of the Internal Control System operational assessments issued by the Internal Auditor, the External Auditor and the Company’s CEO, in compliance with the applicable legal provisions, considers that SANLUIS’ internal accounting control system satisfies the Management’s control objectives and offers reasonable security in all significant aspects to prevent or detect errors or irregularities in the normal course of operations. 44 - 45 II. Internal Audit Function Assessment: The Audit Committee has been aware of the Internal Audit area’s needs in order for this area to have the human and material resources required to correctly perform its function. In this regard, work programs and activities during the 2013 fiscal period were satisfactorily carried out and the Work Plan for the 2014 fiscal year was also approved. Furthermore, the committee members have met with the Internal Audit staff, in the absence of other corporate officers, to receive the information deemed necessary. III. External Audit’s Performance Assessment: The hiring terms for the external auditing services to review the financial statements for the fiscal year ended on December 31, 2013, were discussed and the fees were approved. The Audited Financial Statements as of December 31, 2013, were received from the External Auditor with a clean opinion and no observations. Additionally, the work of the External Auditors, PricewaterhouseCoopers, S.C. and Mr. Raúl Téllez González, C.P.A. in charge of such audit, were evaluated and deemed satisfactory. Moreover, the External Auditors confirmed their independence. The Committee members have met with the external auditor in the absence of corporate officers having received full collaboration to receive additional information regarding pertinent issues when such was requested. IV. Financial Information: The company’s financial statements were discussed with the executives in charge of their preparation and review; additionally, we were informed by the Internal Audit that there were no observations or differences with respect to the financial information corresponding to the quarters ended in March, June, September and December 2013; which were approved by the Committee and later delivered to the Mexican Stock Exchange. In order to prepare this report, we have heard the relevant corporate directors, without the existence of difference of opinion among them. V. CEO’s Report: The Report prepared by the Chairman and CEO of the Company on the activities for the 2013 fiscal year was received and approved. 46 - 47 VI. Legal Report: The legal reports prepared by SANLUIS’ Legal Department regarding the status of current matters and litigation were received. VII.PROPOSAL Based on the work performed, we hereby recommend that the Board of Directors submits the Financial Statements of SANLUIS for the fiscal year ended on December 31, 2013 to the Shareholders’ Meeting for approval. Finally, I hereby certify that during the abovementioned period none of the operations mentioned in article 28, section III, subsections (a), (b) and (c) of the New Mexican Securities and Exchange Law took place. Sincerely, FERNANDO RUIZ SAHAGÚN P r e sid ent , Audit Commit t e e Glossary of terms 1. Aftermarket: Service part components for the resale market. 2. Asian and European: Common auto industry nomenclature regarding the combined brands of Toyota, Nissan, Honda, BMW, Renault, Mercedes-Benz, and Volkswagen, mainly. 3. Coil springs: A steel rod wound in a spiral pattern or shape. It cushions and absorbs the shocks and bumps and provides easier control as the vehicle is driven. 4. CUVs (Crossover Utility Vehicle): Compact and mid-sized vehicles built on a “unibody” platform with a passenger car’s drive train and suspension but higher ground clearance. 5. Detroit Three: Common auto industry nomenclature for Chrysler, Ford and General Motors. 6. Drums: Cast iron housing bolted to the wheel that rotates around the brake shoes. When the shoes are expanded, they rub against the machined inner surface of the brake drum and exert a braking effect upon the wheel to slow or stop the vehicle. 7. Ductile Iron: This iron is obtained by adding magnesium to melted iron, carbon deposits as spheroids graphite and is more ductile, resistant and elastic than gray iron. 8. Elastomers: Rubber components or subcomponents used to reduce noise and vibration. 9. Foundry: Chemical process through which scrap steel and ferroalloys are casted to obtain a piece of iron cast. 10. Gray Iron: Ferrous material with carbon in flake graphite which foster hardness properties to resist high wear and vibration damping. Ideal for the friction area of a rotor. 11.Leaf spring: A suspension system component designed to cushion and absorb shocks and bumps and to keep a vehicle level on turns. There are two main types of leaf springs: a.Multi-leaf spring: Two or more flat spring steel plates bent in an arch, usually with curled ends to allow mounting to the frame. These springs are normally used in cargo truck suspensions and pickups because they have the unique capability of being designed to change rate as a function of suspension travel. b. Parabolic leaf spring: They get their name from the mid span change in thickness which is built into each plate. This changing cross section allows the material to maintain constant strength which is not possible in a flat plate multileaf design. The result is that a parabolic spring may be up to 30% lighter than an equivalent flat-plate leaf spring design. 12. Light Trucks: Automotive segment made up of SUVs, CUVs, vans and pick-ups. 13. Light Vehicles: Automotive segment that includes cars and light trucks. 14.Machining: The piece of grey iron cast is physically treated and refined. 15.Platform: Primary technical components (suspension, transmission, brake system) shared by a family of motor vehicles. 16.Rotor: A cast grey iron brake system component that operates in conjunction with the wheels. When the brake is applied, the caliper is actuated forcing the friction material against the spinning disc imparting a braking force. 17. SUV (Sport Utility Vehicle): A recreational vehicle, such as an all terrain 4x4. 18.Van: Light vehicle with rear-end leaf springs or coil springs for transporting cargo or passengers. Information for investors and media Headquarters Monte Pelvoux 220 - 8th Floor Lomas de Chapultepec 11000 Mexico City, Mexico P.: 52 (55) 5229-5800 Stock: Bolsa Mexicana de Valores (BMV) Symbol SANLUIS Shares Issued SANLUIS A 178,175,772 SANLUIS CPO 70,983,776 * * Each CPO represents one B share and one C share Auditors PricewaterhouseCoopers Mariano Escobedo 573 Rincón del Bosque 11580 México, D.F. T.: 52 (55) 5263-6047 F: 52 (55) 5263-6010 Legal Department Juan Pablo Rosas Pérez T.: 52 (55) 5229-5807 F: 52 (55) 5229-5895 ext. 5807 [email protected] 2013 Consolidated Financial Statements The attached USB contains the Corporate video clip, SANLUIS Corporación S.A.B. de C.V. 2013 Annual Report and its Financial Statements with accompanying notes. Annual Report 2013 PDF www.sanluisrassini.com/pdf/annualreport2013.pdf Consolidated Financial Statements 2013 PDF www.sanluisrassini.com/pdf/consolidatedfinancialstatements2013.pdf Notes Financial highlights (1) EBITDA = Operating profit plus depreciation, amortization, other expenses and income and workers’ profit sharing (2) EBITDA +/- Change in Working Capital minus taxes. (3) Income before taxes. (4) Net Worth SANLUIS Corporación, S.A.B. de C.V. EBITDA Millions of Pesos (1) Operating profit plus depreciation, amortization, other expenses and income and workers’ profit sharing Debt profile % * Does not include working capital financing Consistent with our commitment to care for our environment, only 200 copies in Spanish and 100 copies in English of this Annual Report were printed, complemented with electronic information. Design and Photography Consultants: DISEÑA Creatividad a... Tiempo! www.disenacat.com Image Bank: www.shutterstock.com Printing: PIXZ Impresores Monte Pelvoux 220, 8º floor Lomas de Chapultepec 11000 Mexico City P.: 52 (55) 5229 5800 @RASSINIauto w w w.sanluisrassini.com