Grupo Pochteca (POCHTEC B ) Q2 2023 earnings summary

Executive summary

• Q2 sales and gross margin fell across regions amid lower product prices, local-currency appreciation vs. the U.S. dollar and weaker demand in Brazil.

• Net loss was MXN 50m vs. net income of MXN 43m in Q2’22; operating loss was MXN 26.4m.

Financial highlights

• Q2 revenue was MXN 2,181m, down 20.5% YoY; gross profit fell 24.9% to MXN 416m, and gross margin declined 110 bps to 19.1%.

• EBITDA fell 83.8% YoY to MXN 34m; EBITDA margin was 1.6% vs. 7.8% in Q2’22. Depreciation rose 23.5% to MXN 61m.

• H1 revenue declined 13.5% to MXN 4,564m; EBITDA fell 79.6% to MXN 89m, and net loss was MXN 53m vs. net income of MXN 169m in H1’22.

• Operating expenses excluding depreciation rose 12.0% YoY and reached 17.5% of sales vs. 12.4%, as lower sales amplified the expense ratio.

Outlook and guidance

• Management reported signs of stabilization in product and freight prices; replenishment at current prices is expected to ease inventory carrying losses as higher-cost stock sells through.

• A recently implemented expense-reduction program is intended to reset break-even levels to current prices and support a return toward historical profitability.