Business Context and Reporting Period
Company: GRUPO SIMEC, S.A.B. De C.V. (NYSE: SIM)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Twelve-month period ended December 31, 2025 (Audited)
Filing Date: February 19, 2026
Business Overview: Manufacture and sale of special bar quality (SBQ) and commercial long steel products for automotive and construction industries in Mexico, the U.S., and Canada.
Key Financial Metrics (Twelve Months Ended Dec 31, 2025)
| Metric | 2025 (Ps. Million) | 2024 (Ps. Million) | Change |
|---|---|---|---|
| Net Sales | 30,291 | 33,658 | (10)% |
| Cost of Sales | 22,657 | 26,033 | (13)% |
| Gross Profit | 7,634 | 7,625 | 0% |
| Gross Margin | 25% | 23% | +200 bps |
| Operating Profit | 5,365 | 5,301 | 1% |
| Operating Margin | 18% | 16% | +200 bps |
| EBITDA | 6,446 | 6,367 | 1% |
| Net Income (Controlling Interest) | 1,533 | 10,488 | (85)% |
| Net Cash from Operating Activities | 622 | 5,542 | (89)% |
| Cash and Equivalents (End of Period) | 28,545 | 29,158 | (2)% |
Debt: Total consolidated debt consists of U.S. $302,000 in 8 7/8% Medium-Term Notes (MTNs) due 1998. Accrued interest as of Dec 31, 2025, was U.S. $870,134 (Ps. 15.6 million).
Material Changes vs. Prior Period
- Revenue Decline: Net sales dropped 10% due to a 6% decrease in shipment volume (1.933 million tons vs. 2.056 million tons) and a 4% decrease in average sales price. International sales fell 14%, while domestic sales fell 7%.
- Cost Efficiency: Cost of sales decreased 13%, outpacing the revenue decline. The average cost per ton of finished steel dropped 7% primarily due to lower scrap costs.
- Profitability Resilience: Despite lower sales, Gross Profit remained flat (Ps. 7,634 million) and Operating Profit increased 1% due to improved margins (Gross margin expanded to 25% from 23%).
- Net Income Collapse: Net income plummeted 85% to Ps. 1,533 million. This was driven almost entirely by a reversal in foreign exchange results: a Ps. 5,556 million gain in 2024 turned into a Ps. 3,602 million loss in 2025.
- Financial Costs: Comprehensive financial results swung from a net income of Ps. 7,240 million in 2024 to a net expense of Ps. 2,494 million in 2025.
Outlook, Risks, and Management Commentary
- Quarterly Trend (4Q vs 3Q 2025): The fourth quarter showed improvement over the third quarter, with sales up 7% and operating profit up 36%. Gross margin expanded to 28% in 4Q 2025.
- Exchange Rate Risk: The company faces significant volatility from currency fluctuations. The functional currency is the Mexican Peso, but it has substantial U.S. dollar-denominated liabilities and operations. The 2025 results were heavily impacted by a net exchange loss of Ps. 3,602 million.
- Forward-Looking Statement: The filing includes a standard disclaimer that forward-looking information is subject to risks and uncertainties, and the company assumes no obligation to update such information.
- Liquidity: The company maintains a strong cash position (Ps. 28.5 billion) relative to its minimal debt load (Ps. 5.4 million principal on MTNs). Financial covenants on the MTNs are comfortably met (Current ratio at 5.49x vs. 1.0x required).
Investor Verification Checklist
- FX Exposure: Verify the specific hedging strategies used to mitigate the Ps. 3.6 billion exchange loss and assess sensitivity to future peso/dollar fluctuations.
- Volume vs. Price: Confirm if the 6% volume decline is a temporary market correction or a structural loss of market share, particularly in the U.S. market where sales dropped 14%.
- Scrap Cost Sustainability: Validate the sustainability of the 7% reduction in scrap costs, which was the primary driver for maintaining gross margins despite lower sales prices.
- Debt Maturity: Note the unique debt structure: the only significant debt is the 1998 MTN. Verify the terms of this legacy instrument and any potential refinancing or buyback plans.
- Cash Flow Quality: Investigate the 89% drop in operating cash flow (from Ps. 5.5B to Ps. 0.6B) to determine if it is due to working capital changes (e.g., inventory buildup or receivables) or a deterioration in core cash generation.