Grupo Carso (GCARSOA1) Q4 2024 earnings summary

Executive summary

• Consolidated sales reached MXN 59.08 billion, up 6.6% year-over-year, driven by higher volumes, holiday season, and favorable exchange rates, with strong performance in Industrial, Construction Materials, and Energy divisions.

• Operating income rose to MXN 7.03 billion, up 9.6%, with improved profitability in most divisions, especially Grupo Sanborns and Elementia, due to better sales and absence of prior year extraordinary losses.

• Consolidated EBITDA increased to MXN 9.29 billion, up 7.9%, with a margin improvement to 15.7%.

• Controlling net income grew 27.1% to MXN 4.3 billion, reflecting better operating and financial results, including a significant exchange gain.

• Notable events include the US$600 million sale agreement of Giant Cement Holding and Zamajal's move to control 80% of Talos Mexico, owner of a stake in the Zama oil field.

Financial highlights

• Grupo Sanborns sales rose 2.2%, with operating income more than doubling to MXN 2.53 billion due to lower expenses and absence of last year's extraordinary credit provision.

• Grupo Condumex sales increased 23.2% to MXN 12.7 billion, mainly from construction and automotive cables; 60% of growth attributed to exchange rate, 40% to higher volumes.

• Elementia-Fortaleza sales up 12.3% to MXN 8.8 billion, with operating income up 344% and EBITDA up 24.6%, benefiting from higher volumes, peso appreciation, and better cement margins.

• Carso Energy sales improved 9.7% to MXN 959 million, with operating income up 10.2% and EBITDA up 12.5%, driven by higher tariffs and pipeline sales.

• Zamajal hydrocarbons contributed MXN 364 million in revenue; operating loss of MXN 313 million due to startup and acquisition costs.

Outlook and guidance

• Industrial division expects continued growth from new business in harnesses and cable exports, with confidence despite potential U.S. policy changes.

• CICSA anticipates a 9-10% sales decrease in 2025 due to fewer government projects, but remains optimistic for future years.

• Grupo Sanborns targets improved sales floor efficiency and expects double-digit growth in coming years.

• Elementia-Fortaleza aims for 5-6% sales growth, focusing on exports and capacity expansion.

• Carso Energy to boost sales by 80% upon completion of the Centauro del Norte pipeline in two years.

• Zamajal expects to double production in 2025, but significant profitability is projected for 2026-2027.

• Group-wide EBITDA margin guidance for 2025 is 15-16%.

• The sale of Giant Cement Holding is expected to close in 1Q25, pending post-closing adjustments.

• Zamajal's acquisition of additional Talos Mexico stake is subject to regulatory approval, after which it will control 80% of the company.