Discussion and Analysis


In 2017, Grupo Carso’s total sales were $93,593 million, which represented a 1.7% decrease as compared to 2016. This reduction is due mainly to the completion of works by Carso Infraestructura y Construcción (CICSA), due to the lack of bids tendered for infrastructure and services to the oil industry and to the fact that several major contracts where CICSA participates are not consolidated. During 2017, decreased demand was observed for Telecom cables and Condumex transformers, division which represented 30.8% of total revenues. On the other hand, increased sales were observed in Grupo Sanborns, division which represented 53.2% of total sales, as well as in Carso Energy, business that began to record results on the extraction and sale of oil in Colombia.

During 2017 Grupo Carso recorded $1,641 million in Other Income, of which $1,246 million represented earnings on the dilution and sale of Grupo México Transportes, S.A. de C.V. shares.

Operating profit went from $13,726 million in 2016 to $12,941 million in 2017, which meant a 5.7% decrease. This decrease is explained mainly by lower margins in Grupo Sanborns –business affected by the earthquakes, inflation and uncollectible accounts– also by lower margins in the Condumex automotive division –which had shown record levels in 2016 from the Peso-Dollar devaluation– and lastly, by the completion of several projects in CICSA, which have been substituted to a great extent by non-consolidated projects, such as the Terminal building and Landing Strip 3 at the new Mexico International Airport Terminal (NAIM).

EBITDA amounted to $13,872 million, decreasing 4.8%. For purposes of computing this indicator, the extraordinary entries mentioned above were not considered, nor other non-cash items. EBITDA margin was 14.8%, decreasing 50 basis points, compared to the EBITDA margin for the preceding year.

As regards the financial results, comprehensive cost of financing was $669 million, which was impacted by increased net interest paid and by an exchange loss, mainly. This cost compared favorably against an overall positive financing result of $715 million recorded during 2016.

Despite the extraordinary effects mentioned, due to an increased participation in the profits of associated corporations, the net profits of the Grupo Carso holding company increased 5.3% in 2017, amounting to $10,034 million. This compared favorably against $9,525 million in 2016. The net margin increased from 10.0% in 2016 to 10.7% in 2017, as percentage of sales.

Total debt as at December 31, 2017, decreased 12.7%, it being $10,227 million. Net debt was $5,118 million, quite similar to the debt of $5,365 as at December 31, 2016. The 19.6% decrease in cash and equivalents was explained mainly by the construction of gas ducts by Carso Energy and payment of dividends, among other entries. The financial position of the Group is maintained healthy, recording a net debt to twelve-month EBITDA ratio of 0.37 times, while the interest coverage index measured as EBITDA/ Interest Paid, was 24.1 times.

Currently, Grupo Carso has been authorized a short- and long-term securitized notes program for market issuance up to $10,000 million or the equivalent thereof in UDIS (Spanish acronym for investment units). On March 16, 2018, an issuance of $3,000 million for a term of 3 years took place.