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Good morning, everyone, and welcome to the conference call to discuss the second quarter 2018 results of Grupo Carso.
Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially.
Hosting this conference today, we have Mr. Arturo SpĂnola, CFO of Condumex and Carso Infraestructura y ConstrucciĂłn; and Ms. AngĂ©lica Piña of investor relations.
I will now turn the call over to Ms. Angélica Piña. Please go ahead.
Thank you. Good morning, everyone, and thank you for your interest and your participation in this conference call.
I will take you briefly through the second quarter financial results, and then we will take your questions.
During the second quarter of the year, consolidated sales of Grupo Carso increased 4.8%, totaling MXN 23.2 billion. The retail division grew 2.8%, but the main driver of this result was the industrial division posting a 21.4% increase in sales. Operating income and EBITDA reduced 0.4% and 0.5%, respectively.
Grupo Condumex increased its profitability by 22%, thanks to the aforementioned increase in sales and better margins in harnesses and cables. This offset lower margins at retail and at construction and infrastructure.
Controlling net income increased 51.9% mainly due to ForEx variations.
By division, the sales of Grupo Sanborns reached MXN 11.8 billion. This result included greater technology share of Promotora Musical in the product mix; as well as higher sales of various categories of Sanborns; other formats; and big ticket items at Sears, which improved on a quarterly basis. Gross margin decreased 90 basis points to 39.8% due to the product mix, with a higher contribution of the technology and big ticket items mentioned. Operating income and EBITDA decreased 9.3% and 6.5%, including preoperating expenses for the new Sears store opened in the period, the closing costs of 6 units of old formats and provisions for nonperforming loans in the credit portfolio.
Grupo Condumex stood out reporting sales of MXN 8.1 billion, adding MXN 1.4 billion more, which represented an increase of 21.4%. This included better performance in all sectors due to higher volumes in telecom cables, harnesses and building wire; and to the exchange rate. Operating income and EBITDA increased 22% and 19.8%, respectively, showing higher margins mainly in the automotive sector which benefited from higher sales than the second quarter 2017, 100% in dollars.
On the infrastructure and construction division, CICSA posted MXN 3.8 billion in revenues, decreasing 13.2%. Civil Construction improved its sales. However, we recorded lower revenues in the Pipeline Installation sector due to lesser activity in the construction of the Chihuahua gas pipeline. We also recorded lower revenues in infrastructure and construction due to the lack of tenders, the completion of major projects and the fact that the new consortium projects such as the terminal building and Runway 3 of the new international airport of Mexico City and the highway projects in Panama do not consolidate and therefore are not reflected in sales. For the same reasons, operating income and EBITDA decreased 20% and 18.6%, respectively.
The backlog reached MXN 12.4 billion. And that's MXN 22.9 billion more when considering projects in which CICSA has a participation with other companies, to reach a backlog of MXN 35.3 billion.
Lastly, sales of Carso Energy totaled MXN 16 million related to the production and commercialization of oil in Colombia. The quarterly operating income was a loss of MXN 2 million, while the EBITDA totaled MXN 182,000, both improving from losses of MXN 12 billion and MXN 11 billion last year. These results reflect the expenses related to the oil rounds, where Carso Oil and Gas was awarded 2 contractual blocks for the exploration and production of hydrocarbons; as well as the startup costs of the exploration program in 2 geothermal fields. The Waha-Presidio and Waha-San Elizario gas pipelines, where we have a 51% [ participation ], are already receiving rents from [ indiscernible ] and transportation. However, the revenues are not reflected in consolidated sales. The Samalayuca-Sásabe gas pipeline in Chihuahua continued its construction.
With this, I finish my general comments, to proceed to the Q&A session. Thank you.
[Operator Instructions] And we have a question from Jose Vazquez of GBM.
Angélica and Arturo, my question is in Condumex. If you could break down the growth in margins from each of the segments, so telecom, auto parts and construction, please, to get out a -- more of a -- more detail on which 1 of those 3 had the best performance during the quarter given the strong results at this division.
The breakdown is: In the case of telecom, we are talking about around 16% of the sales; automotive 33%; and construction 51%. That is the -- I mean the second quarter revenue digits [indiscernible]. It's very similar than the second quarters of the last year...
The breakdown of the operating income was, for telecom, 55%; automotive, 99%...
No. [indiscernible] improvement...
No. It's telecom 23%, automotive 54% and construction 22%. That's the breakdown of sales and operating income. And in this quarter, I mean, all the divisions had increases in volume and in volume such as in copper cables, fiber optics, coaxial. That's in telecom. In automotive was harnesses and automotive cable. And in construction was energy cables, building wires mainly.
Okay, perfect. Just a quick follow-up, now turning it to Carso Energy. Do you have an estimated time line or where we could see income coming from the Mexican operations that will complement what we are seeing right now from Colombia?
Yes. The -- regarding the pipeline that we are constructing in Mexico, we have -- by the second semester of the next year, we are going to have income because in that case each project will sell [ ounce ] by Carso Energy. I mean the Samalayuca-Sásabe gas pipeline. And we are working in 2 geothermical blocks. Both, we expect around 18 months in order to begin to produce electrical energy, yes. And we are -- consolidate that 2 blocks. And I mean for the third, for the second quarter of the 2020.
[Operator Instructions] There are no further questions at this time. I will turn the call back to -- back over to Ms. Piña for closing remarks -- I'm sorry. We do have a question. Would you like to take it?
Yes, please.
Okay. The next question is from Miguel Ulloa of BBVA.
The first one would be regarding your position in Elementia and Grupo MĂ©xico Transportes. Are you planning to hold that position for long, or should we think as a short-term investment? Or how should we think about it?
Yes. And Miguel, in the case of Elementia, by now, our position is to hold that [ indiscernible ] in the short and middle term at least. In the case of with Grupo MĂ©xico, we are reviewing the consolidate different segments that make that company. Maybe we don't have an important synergy, but by now we are holding both of them maybe. But maybe our position in Elementia is then to be for a longer term than the Grupo MĂ©xico.
[Operator Instructions] There are no further questions at this time. I will turn the call back over to Ms. Piña for closing remarks.
Once again, many thanks for participating in this conference call. We look forward to speaking with you again.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Thank you.