GRUPO TMM REPORTS FOURTH-QUARTER AND FULL-YEAR 2006 FINANCIAL RESULTS

 

(Mexico City, February 27, 2007) – Grupo TMM, S.A.B. (NYSE: TMM and BMV: TMM A; “TMM”) a Mexican multi-modal transportation and logistics company, reported today its financial results for the fourth-quarter and full-year periods of 2006.

Management Overview

Javier Segovia, president of Grupo TMM, said, “The year 2006 was one of transition, evolution and ultimately progress for Grupo TMM. Last year we focused our efforts to make TMM stronger and better positioned for the future. Constrained by high debt at the beginning of 2006, we paid our Bondholders in full in the third quarter of last year and adopted a new financial structure which gives us greater flexibility in managing our debt levels. This stronger balance sheet freed up capital to provide vital resources for growth and expansion for each of our business units, positioning Grupo TMM to increase market share organically, service our customers more efficiently, and improve profitability in 2007.

“At Maritime, we invested over $241.4 million in 2005 and 2006 to acquire new vessels and the minority interests held by our former partners in our offshore and tugboat operations, securing the financing for these investments through the contracted revenues generated by these assets. During the fourth quarter of 2006 and at the beginning of 2007, our product tanker group was awarded three time charter contracts, which will increase our annual revenues by approximately $13 million. In our parcel tanker segment we negotiated rate increases associated with current contracts, which will add approximately $5 million of incremental revenue for this year. These additions bring the Maritime division’s EBITDA to $55 million for 2007. Maritime is positioned for growth as Mexico’s new administration continues to make decisions concerning oil exploration, including further outsourcing of the government-owned fleet.

Segovia continued, “At Logistics, we begin 2007 with a clean slate and a renewed focus. This division lost $29 million in revenue in 2006 due to the cancellation of contracts by Kansas City Southern de Mexico. Fourth quarter results also reflect significant losses due to other terminated operations. However, in 2006, we began to invest in this division by ordering 80 new tractors and 82 new trailers, and securing leasing for an additional 271 new tractors and 390 trailers in September, which began to arrive in December. As of the end of February we have received 130 tractors and 200 trailers and believe we will have modernized much of our fleet by May or June of this year, taking the average age of our trucking fleet from 11 years in 2006 to four years in 2007. The modernization of our fleet will provide fuel efficiencies and lower our maintenance costs. The replacement and addition of assets to our trucking fleet will allow us to increase our operable tractors from 452 to 595 units by mid-Summer and our trailer fleet from 1,000 to 1,300 units. Additionally, in December 2006 we purchased ADEMSA, the fourth largest bonded warehouse system in Mexico, improved yards and terminal capabilities, and added software to link our supply chain process. The ADEMSA warehouse system provides an important part of the integrated supply chain, so that this division can quickly become a significant player in bonded and non-bonded warehousing facilities within Mexico. We believe that with the investments we are now making, Logistics will become a profitable and growth-oriented part of the company and project an annual EBITDA run rate of $17 million by mid-year.

“Finally, our Ports division remains stable, and we project 2007 EBITDA of $3 million for this division. “

Segovia concluded, “While Grupo TMM’s revenues in 2006 were lower than in 2005 due to cancelled contracts and terminated operations, we have reversed this downward trend. We are beginning 2007 with $30 million of additional revenue, providing a base of $278 million of revenue compared to $248 million at the end of 2006, which will afford us greater financial flexibility and a stronger foundation. We expect that 2007 will benefit from last year’s transition as our efforts in 2006 continue to gain traction. Overall, we expect improvements in financial results and believe that our performance in 2007 will lead to enhanced shareholder value.”

Financial Results

Comparing the fourth quarter of 2006 with the fourth quarter of 2005, TMM reported the following results:

Comparing the 2006 full year with the 2005 full year, TMM reported the following results:

Revenues in the fourth quarter and full year of 2006 compared to the same periods of 2005 were impacted by the sale of TMM’s port assets in Colombia in 2005, reducing fourth quarter 2006 revenues by $3.3 million and twelve months 2006 revenues by $19.5 million. Revenues in the 2006 periods were also impacted by the cancellation of service agreements by Kansas City Southern de Mexico, reducing revenues by $9.0 million in the fourth quarter and $29.0 million in the full year.

Consolidated operating profit in fourth quarter 2006 was $2.8 million and included $1.5 million of one-time costs and expenses.  Had these one-time charges not occurred, the consolidated operating profit run rate for the quarter would have been $4.3 million, as shown in the Divisional Results chart included below.

SG&A of $6.9 million in fourth quarter 2006 decreased 19.3 percent, or $1.6 million, over the same period of 2005, and SG&A of $31.8 million for full-year 2006 remained stable compared to the same period of 2005.

Net interest expense in fourth quarter 2006 was $9.8 million compared to $15.4 million in the same quarter last year. Net interest expense in the 2006 twelve-month period was $30.6 million compared to $68.2 million in the 2005 twelve-month period.

As of December 31, 2006, TMM’s total debt was $362.3 million, of which $195.2 million is related to the Company’s securitization facility, $1.0 million is related to debt in an acquired subsidiary, and $166.1 million is project finance debt and is related to the acquisition of maritime assets and supported by approximately $116.7 million of long-term contracted revenues, by the Mexican Navigation Law and by the total market value of these assets, which is estimated to exceed their book value by $42 million.

 

Total Debt Composition as of December 31, 2006
(Millions of dollars)

Securitization Facility	$195.2
Debt in acquired subsidiary	$1.0
*Two Product Tankers	$56.0
*Offshore Vessels	$110.1
Total Debt (1):	$362.3

*Project finance assets
(1) The Company’s total debt as presented in its balance sheet as of December 31, 2006, includes $3.6 million of accrued unpaid interest and is reduced by $7.6 million of related expenses to be amortized over time.

DIVISIONAL RESULTS (All numbers in thousands)

Fourth Quarter 2006	Maritime	Logistics	Ports	Corporate and Others	Total
Revenues	40,133	22,103	3,271	(65)	65,442
Costs	30,117	22,993	1,566	(81)	54,595
Gross Result	10,016	(890)	1,705	16	10,847
Gross Margin	25.0%	(4.0%)	52.1%	n/a	16.6%
SG & A	1,212	1,369	393	3,514	6,488
Operating Results	8,804	(2,259)	1,312	(3,498)	4,359
Operating Margin	21.9%	(10.2%)	40.1%	n/a	6.7%

*Fourth Quarter 2005	Maritime	Logistics	Ports	Corporate and Others	Total
Revenues	43,543	31,300	13,498	(32)	88,309
Costs	34,549	30,328	12,157	(52)	76,982
Gross Result	8,994	972	1,341	20	11,327
Gross Margin	20.7%	3.1%	9.9%	n/a	12.8%
SG & A	1,225	1,907	907	4,493	8,532
Operating Results	7,769	(935)	434	(4,473)	2,795
Operating Margin	17.8%	(3.0%)	3.2%	n/a	3.2%

Full-Year 2006	Maritime	Logistics	Ports	Corporate and Others	Total
Revenues	146,425	93,895	8,121	(288)	248,153
Costs	109,977	89,266	5,104	(401)	203,946
Gross Result	36,448	4,629	3,017	113	44,207
Gross Margin	24.9%	4.9%	37.2%	n/a	17.8%
SG & A	5,099	5,424	1,630	19,278	31,431
Operating Results	31,349	(795)	1,387	(19,165)	12,776
Operating Margin	21.4%	(0.8%)	17.1%	n/a	5.1%

*Full-Year 2005	Maritime	Logistics	Ports	Corporate and Others	Total
Revenues	159,575	108,402	38,853	(231)	306,599
Costs	133,028	103,479	33,574	(258)	269,823
Gross Result	26,547	4,923	5,279	27	36,776
Gross Margin	16.6%	4.5%	13.6%	n/a	12.0%
SG & A	4,382	5,867	4,027	17,385	31,661
Operating Results	22,165	(944)	1,252	(17,358)	5,115
Operating Margin	13.9%	(0.9%)	3.2%	n/a	1.7%