Factor
(1) Overall
Accumulated net sales for 2006, compared to 2005, rose 3.7% to US $1,940. This increase was mainly due to higher sales at DESC Chemical, DESC Consumer Products and DESC AUTOMOTIVE.
In addition, exports increased 6.4% compared to the previous year, partially driven by DESC Consumer Products and DESC Chemical, reaching US $828 million, compared to the US $778 million reported in 2005.
Operating Income and EBITDA declined by 8.7% and 6.7%, respectively, compared to 2005. This was the result of higher prices of butadiene and styrene at DESC Chemical, decreased profitability of the Polystyrene due to strong price competition, the increase in the price of grain in the Pork Business, in addition to lower sales in DESC Real Estate mainly in the "Punta Mita" development as a result of the political uncertainty due to the presidential elections of 2006.

(2) Automotive 
In relation to 2005, 2006 sales increased 1.9% due to higher sales from businesses focused on the spare parts market and the association with CIE AUTOMOTIVE in the stamping business, which offset the decline in sales due to the divestiture of the Original Equipment segment of the Piston business.
EBITDA increased 6.8% due to new contracts in the stamping business and higher sales from businesses focused on the spare parts market, despite a decrease in market share from the "Big Three" (GM , Ford and DCX ) in the face of strong competition from Asian automakers. On the other hand, operating margin registered an increase of 1% from 2.2% in 2005 to 3.2% in 2006.

Significant Events of Automotive Segment in 2006
Dissolution of partnership
- On May 31, 2006, DESC and Dana executed a Share Purchase-Sale Master Contract to dissolve their joint venture. This contract was submitted to a U.S. federal judge to request approval from the bankruptcy court due to Dana's filing proceedings under Chapter 11 of the United States Bankruptcy Code. Accordingly, on July 6, 2006, the Court approved the dissolution of the joint venture maintained by DESC and Dana through Spicer, S.A. de C.V., thus enabling the parties to complete the transaction. Following this dissolution, DESC acquired the equity held by Dana in the light, medium and heavy drive shaft business and the coupling and seals business in the spare parts segment and received U.S. $ 19.5 million in cash. Dana assumed the equity held by DESC in the axle, shaft, forging and smelting businesses.

Joint venture between DESC and CIE Automotive, S.A. ("CIE")
- On February , 2006, DASA executed an agreement with CIE (a Spanish entity) to enter into a joint venture named CIE Desc Automotive, S.A. de C.V. ("CIE DESC Automotive"), which will be engaged in the manufacture of different automotive components. DESC and CIE will each own 50% of the capital outstanding represented by an initial joint investment of U.S. $ 97 million. DESC provided this amount by contributing its subsidiary Pintura Estampado y Montaje, S.A. de C.V. to the joint venture, while CIE invested cash and contributed its subsidiary CIE Celaya, S.A. de C.V.
- In November 2006, DESC Automotriz, S.A. de C.V. sold its entire shareholding in Stamping & Wheels, S.A. de C.V. ("SW") to CIE DESC Automotive for U.S. $ 4 million. Prior to the sale, SW recognized an impairment charge of $132.7 million resulting from the loss of certain customer contracts in 2006.

Sale of original equipment assets of Pistones Moresa, S.A. de C.V.
- On February , 2006, DESC's subsidiary Pistones Moresa, S.A. de C.V. sold all the assets used to manufacture pistons for original equipment to Kolbenschmidnt Pierburg AG for approximately U.S.$ 7.6 million. DESC continues to operate its spare parts pistons business and bolts used for original equipment and for spare parts.

CIE Contract
On August, 2006, one of the subsidiaries of CIE DESC Automotive was awarded a long-term contract for U.S.$ 360 million approximately, over a nine-year period to supply paint and accessories for DaimlerChrysler pickups. A state-of-the-art plant will be created for this purpose, which will require an investment of U.S.$ 52 million and is expected to begin operations at the beginning of 2008.