Grupo Simec S.A.B. de C.V. tightens costs, lifts margins despite weaker demand

Simec tightens costs, lifts margins despite weaker demand

Grupo Simec S.A.B. de C.V. reports that tighter production costs are cushioning the impact of weaker demand, producing improved margins even as net sales fall. For the twelve months ended Dec. 31, 2025, the company records net sales of Ps. 30,291 million, down 10% from Ps. 33,658 million a year earlier, driven by 6% fewer shipments and a roughly 4% decline in average sales price. Despite the top-line contraction, cost of sales decreases 13% to Ps. 22,657 million and gross profit remains essentially flat at Ps. 7,634 million, lifting gross margin to 25% from 23%.

The primary driver of the margin recovery is a roughly 7% decline in the average cost of finished steel produced, which Simec attributes mainly to lower scrap costs. That reduction in raw material expense improves cost of sales as a percentage of net revenue to 75% from 77%, allowing the company to convert a smaller revenue base into similar gross profit. Operating income edges up 1% to Ps. 5,365 million while operating margin rises to 18% from 16%, and reported EBITDA also posts a modest 1% increase year-on-year.

The results illustrate Simec’s ability to respond to industry cyclicality by leaning on cost controls and input-price dynamics. Management’s focus on production efficiency and sourcing is helping offset the effect of lower volumes and prices, preserving operating profitability in an environment of softer steel demand and pricing pressure.

Shipments and regional demand soften

Finished-steel shipments fall to 1,933,000 tons from 2,056,000 tons, reflecting the 6% volume decline. Geographic sales weaken both inside and outside Mexico: international revenue drops 14% to Ps. 13,234 million, while domestic sales decline 7% to Ps. 17,057 million, underlining a broad-based slowdown in orders across markets.

Costs, SG&A and other operating items

Selling, general and administrative expenses rise 8% to Ps. 2,800 million, lifting SG&A to 9% of net sales from 8% a year earlier. Other net income improves to Ps. 531 million from Ps. 279 million, supporting operating results and partially offsetting the revenue contraction as Simec navigates the current market backdrop.