Grupo Pochteca (POCHTEC B ) Q3 2023 earnings summary

Executive summary

• Q3 2023 sales fell 22.0% YoY to MXN 2,136 million, while EBITDA declined 66.0% to MXN 64 million and net loss widened to MXN 82 million.

• Results reflected lower product prices, local-currency appreciation against the dollar, and losses from selling inventory acquired at higher prices.

Financial highlights

• Q3 gross profit declined 26.9% YoY to MXN 406 million; gross margin was 19.0%, down 130 bps from 20.3%.

• Operating income was MXN 3.9 million versus MXN 137.9 million in Q3 2022; EBITDA was MXN 64.4 million versus MXN 189.3 million, down 66.0%.

• Net loss was MXN 82.2 million versus MXN 6.9 million; nine-month net loss was MXN 135.5 million versus net income of MXN 162.0 million in 2022.

• Nine-month sales declined 16.4% YoY to MXN 6,700 million, and EBITDA fell 75.5% to MXN 153 million.

Outlook and guidance

• A slight dollar revaluation began late in Q3; management expected it to support sales value in Q4, though it did not benefit the full quarter.

• Higher-cost legacy inventory was expected to be sold through by year-end 2023; management expects margins to recover toward historical levels as older stock clears.

• Recent product-price stabilization is expected to reduce inventory carry losses and support margin recovery.