Arca Continental (AC) Q2 2024 earnings summary

Executive summary

• Q2 consolidated revenues rose 4.7% year-over-year to MXN 58.7 billion, with EBITDA up 7.5% and net income up 15.2%.

• Year-to-date revenues increased 2.5% to MXN 109.4 billion, EBITDA up 4.6%, and net income up 8.8%.

• Delivered record-high Q2 EBITDA margin of 20.7%, the highest in seven years.

• Net profit margin expanded by 80 basis points in Q2; net margin at 9.2%.

• CEO credits execution, price-pack strategy, and raw material management for strong results.

Financial highlights

• Q2 gross profit increased 7.1% to MXN 27.6 billion; gross margin improved by 110 basis points to 47.1%.

• Operating income rose 8.3% to MXN 9.9 billion; operating margin expanded by 60 basis points to 16.9%.

• Year-to-date EBITDA up 4.6% to MXN 21.8 billion; EBITDA margin at 19.9%.

• Dividend of MXN 3.8 per share distributed in April, with a payout ratio of 37%.

• 1H24 net operating cash flow was MXN 16.9 billion; CAPEX at MXN 5.86 billion.

Outlook and guidance

• Expect continued growth in total beverages, focusing on digital transformation and technology to drive efficiency and new revenue streams.

• Pricing strategy in Mexico to remain at least in line with consumer inflation for 2024.

• Maintain expectation of low single-digit growth for the rest of the year, prioritizing profitability.

• Cautious optimism for Argentina's potential recovery in 2H24.