Profile: Grupo Simec SAB de CV (SIM.A)

SIM.A on American Stock Exchange

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22 Sep 2014
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Grupo Simec, S.A.B. de C.V., (Simec), incorporated in August 1990, is a diversified manufacturer, processor and distributor of special bar quality (SBQ) steel and structural steel products with production and commercial operations in the United States, Mexico and Canada. The Company’s SBQ products are used across a range of applications, including axles, hubs and crankshafts for automobiles and light trucks, machine tools and off-highway equipment. Its structural steel products are mainly used in the non-residential construction market and other construction applications. In the United States and Mexico, Simec owns and operates 12 steel making, processing and/or finishing facilities with a combined annual crude steel installed production capacity of 4.5 million tons and a combined annual installed rolling capacity of 3.5 million tons. The Company conducts business in two business segments, which are organized on a geographical basis. Mexican segment represents the results of its operations in Mexico including its plants in Mexicali, Guadalajara, Tlaxcala and San Luis Potosi. USA segment represents the results of its operations of Republic, including its seven plants of which six are located in the United States and one is located in Canada.

As of December 31, 2009, the Company owns and operates a non-flat structural steel mini-mill, located in Guadalajara, Jalisco; a mini-mill in Mexicali, Baja California Norte; a mini-mill in Apizaco, Tlaxcala; cold finishing facility in Cholula, Puebla; all of these facilities are owned through its indirect wholly-owned subsidiary, Simec International, S.A. de C.V. (SI); a mini mill in Canton, Ohio, an integrated facility in Lorain, Ohio and value-added rolling and finishing facilities in Canton, Lorain and Massillon, Ohio; Lackawanna, New York; Gary, Indiana; and Hamilton, Ontario, all of which it owns through its majority owned subsidiary, Republic, and two mini-mills in San Luis Potosi, San Luis Potosi, Mexico both of which Simec owns through its wholly owned subsidiary, Grupo San.

During the year ended December 31, 2009, the Company incorporated two wholly owned subsidiaries. Simec Acero, S.A. de C.V. distributes all Grupo Simec products in Mexico and Simec USA, Corp. is in charge of distribution of its products outside of Mexico. On May 12, 2009, Simec incorporated Pacific Steel Projects, Inc., a wholly owned subsidiary, whose purpose is to develop technology improvement projects for its Mexican facilities. On August 10, 2009, Simec International, S.A. de C.V. divested assets to four wholly owned Mexican subsidiaries: Siminsa A, S.A. de C.V., Siminsa B, S.A. de C.V., Siminsa C, S.A. de C.V. and Siminsa D, S.A. de C.V. After the divesture, Siminsa A was merged into Simec International 2, Siminsa B was merged into Simec International 3, Siminsa C was merged into Simec International 4 and Siminsa D was merged into Simec International 5. On November 10, 2009, Simec International 2, Simec International 3, Simec International 4 and Simec International 5 divested assets to Simec Steel, Inc., a wholly owned subsidiary whose purpose is to provide financing to the Mexican companies of the group and to seek new investment opportunities.

The Company produces a range of SBQ steel, long steel and medium-sized structural steel products. In its Mexican facilities, Simec produces I-beams, channels, structural and commercial angles, hot rolled bars (round, square and hexagonals), flat bars, rebars, cold finished bars and wire rods. In its United States facilities, Simec produces hot rolled bars, cold finished bars, semi-finished tube rounds and other semi-finished trade products. The Company produces I-beams in its Mexican facilities and they are mainly used by the industrial construction as structure supports. It produces channels in its Mexican facilities and they are mainly used by industrial construction as structure supports and for stocking systems. Simec produces angles in its Mexican facilities and they are used mainly by the construction and furniture industries as joist structures and framing systems. It produces the steel sections in its Mexican and United States facilities. Simec produce flat bars in its Mexican facilities. Rebar is reinforced, corrugated round steel bars with sections from 0.375 to 1.5 inches in diameter, and Simec produced rebar at its Mexican facilities. The Company produces cold-finished bars in its Mexican, United States and Canadian facilities, and mainly the auto part industry uses them. Semi-finished tube rounds are produced in its United States facilities.

At December 31, 2009, Simec’s crude steel production capacity was 4.5 million tons, of which 1.2 million tons were based on an integrated blast furnace technology, and 3.3 million were based on electric arc furnace, or mini-mill, technology. Its Mexican facilities have 1.9 million tons of crude steel production capacity, operating five mini-mill facilities. Its United States operations have 2.6 million tons of crude steel production capacity. In addition, it had 3.5 million tons of rolling and finishing capacity, of which 1.8 million are located in Mexico, and 1.7 million are located in the United States and Canada.

The Company operates six mini-mills, five in Mexico and one in the United States. The Mexican mini-mills are located in Guadalajara, Jalisco; Apizaco, Tlaxcala; Mexicali, Baja California; as well as two in San Luis Potosi, San Luis Potosi. Its mini-mill in the United States is located in Canton, Ohio. It also operates an integrated blast furnace in Lorain, Ohio. The Company operates rolling and finishing facility in each of its mill facilities in Cholula and in the United States and Canada.

Mexican Operations and Facilities

The Company’s Guadalajara mini-mill facility is located in central western Mexico in Guadalajara, Jalisco. Its Guadalajara facilities and equipment include one improved electric arc furnace utilizing water-cooled sidewalls and roof, one four-strand continuous caster, five reheating furnaces and three rolling mills. The Guadalajara mini-mill has an annual installed capacity of 350,000 tons of billet and an annual installed capacity of finished product of 480,000 tons. During 2009, the Guadalajara mini-mill produced 302,877 tons of steel billet and 360,750 tons of finished product operating at 87% capacity for billet production and 75% capacity for finished product production. The Guadalajara rolling facilities process billet production from its Mexicali and Apizaco mills.

The Mexicali facilities and equipment include one electric arc furnace utilizing water-cooled sidewalls and roof, one four-strand continuous caster, one walking beam reheating furnace, one SACK rolling mill, a Linde oxygen plant and a water treatment plant. This facility has an annual installed capacity of 430,000 tons of steel billet and an annual installed capacity of finished product of 250,000 tons. Excess billet produced at the Mexicali facility is used primarily by the Guadalajara facility. In 2009, 36% of the products produced at the Mexicali mini-mill were rebar, 33% were angles, 8% were hot rolled bars (round, square and hexagonal rods) and the remaining 23% were other products, principally channels and flat bars.

The Company operates the Apizaco mini-mill and Cholula facility. The mini-mill is located in central Mexico in Apizaco, Tlaxcala. Its Apizaco facilities and equipment include one EBT Danieli electric arc furnace utilizing water-cooled sidewalls and roof, two ladle stations (one Danieli and the other Daido), one Daido degasification station, one Danieli four-strand continuous caster, two walking beam reheating furnaces and two rolling mills (one Danieli and the other Pomini). This facility has an annual installed capacity of 400,000 tons of steel billet and an annual installed capacity of finished product of 480,000 tons. In 2009, the Apizaco mini-mill produced 396,849 and 353,127 tons of finished products.

The Company operates the San Luis facilities. The facilities are located in central Mexico in San Luis Potosi, in the state of San Luis Potosi. Its San Luis facilities and equipment include four electric arc furnaces, three continuous casters, three reheating furnaces, two rebar rolling mills and one wire rod rolling mill. As of December 31, 2009, these facilities had an annual installed capacity of 705,000 tons of billet and 620,000 tons of finished product. In 2009, the San Luis facilities produced 490,091 tons of steel billet and 484,848 tons of finished product operating at 70% capacity for billet production and 78% capacity for finished product production. Its San Luis facilities mainly produces rebar, light structurals and wire rod. In 2009, 75% of the products produced at the San Luis facilities were rebar, 12% wire rod, and the remaining 13% were other light structural.

U.S. and Canada Operations and Facilities

The Company operates the Republic facilities (in Ohio, New York, Indiana and Canada). As of December 31, 2009, these facilities had an annual installed capacity of 2,647,000 tons of billet and 1,692,000 tons of finished product. In 2009, the Republic facilities produced 643,658 tons of steel billet, of which 23,635 tons were sold as semi-finished The remainder went to the Lorain, Ohio and Lackawanna, New York facilities for further processing. For the same period, the Republic facilities produced 665,340 tons of hot-rolled bar, of which 102,514 tons were used by the cold finish facilities. The Republic facilities produced 103,421 tons of cold finish bars. During this period, 75% of the products shipped from the Republic facilities were hot-rolled bars, 14% were cold-finished bars, 8% were semi-finished, and 3% were other semi-finished trade products.

The Lorain facility mainly produces SBQ steel and operates an integrated steel mill. Its Lorain facility had, at December 31, 2009, an annual installed capacity of 1,264,000 tons of steel billet and 838,000 tons of finished product. The Canton facility mainly produces SBQ steel and includes two 200-ton top charge electric arc furnaces, a 5-strand bloom/billet caster, two ladle metallurgical furnaces, two vacuum degassers and two slag rakes. This facility also includes a combination Caster rolling facility that continuously casts blooms in a 4-strand caster, heats the blooms to rolling temperature in a walking beam furnace, then rolls billets through an 8-stand rolling mill in an inline operation. Other Canton equipment includes a Mecana billet inspection line, four stationary billet grinders, a saw line and a quality verification line (or QVL line). As of December 2009, the Canton facility had annual installed capacity of 1,383,000 tons of steel billet. In 2009, this facility produced 644,112 tons of blooms, billets and other semi-finished trade product and was operated at 46.5% capacity of steel billet.

The Lackawanna facility mainly produces SBQ steel and includes a three-zone walking beam billet reheat furnace, a upgraded 22 stand rolling mill capable of producing rounds, squares, and hexagons in both cut length and coils. Massillon facility mainly produces SBQ steel and contains a cold finishing facility which includes the machinery and equipment to clean, draw, turn, chamfer, anneal, grind, straighten and saw bars. Gary facility mainly produces SBQ steel and has a cold finishing facility which includes the machinery and equipment to clean, draw, turn, chamfer, anneal, grind, straighten and saw bars. Hamilton facility mainly produces SBQ steel and has a cold finishing facility, which includes the machinery and equipment to clean, draw, turn, chamfer, anneal, grind, straighten and saw bars.

The Company competes with Nucor Steel, Schnitzer Steel (Cascade), Oregon Steel, Tamco Steel, Grupo Villacero, Altos Hornos de Mexico, S.A. de C.V., Siderurgica del Golfo, S.A. de C.V., Aceros Corsa, S.A. de C.V., Gerdao, S.A., Ahmsa, Hylsamex, S.A. de C.V., Sicartsa, S.A. de C.V., Corsa, Aceros Tultitlan, S.A. de C.V., Commercial Metals Inc., Belgo Mineira Aceralia Perfiles Bergara, S.A., Chaparral Steel Company, Deacero, S.A. de C.V., Talleres y Acero, Nucor Corporation, Bayou Steel Corporation, Nucor Corporation, Niagara LaSalle, Arcelor Mittal, Charter Steel, Steel Dynamics, Inc., The Timken Company and Gerdau Macsteel.

Company Address

Grupo Simec SAB de CV

Edificio A Segundo Piso
Av. Lazaro Cardenas 601
Col. La Nogalera
GUADALAJARA     44470
P: +5233.37706700

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