Grupo Pochteca (POCHTEC B ) Q4 2023 earnings summary

Executive summary

• FY2023 sales fell 18.3% to MXN 8,531 million; lower prices, currency revaluation and weaker demand pressured results.

• EBITDA declined 87.7% to MXN 92 million, and net income shifted to a MXN 282 million loss from MXN 233 million profit in 2022.

• Management expects margins to improve in 2024 as higher-cost inventory is cleared, with commercial initiatives supporting a return to positive results.

Financial highlights

• Gross profit fell 25.3% to MXN 1,552 million; gross margin declined 170 bps YoY to 18.2%.

• Operating loss was MXN 131 million versus MXN 533 million operating income in 2022; operating expenses excluding depreciation increased 9.9%.

• EBITDA margin was 1.1%, down 610 bps YoY; net financial expenses rose 2.7% to MXN 206 million.

• Net loss was MXN 282 million versus net income of MXN 233 million in 2022; interest expense also faced pressure from higher rates.

Outlook and guidance

• Higher-cost inventory was considered largely cleared; management expects margins to recover during 2024 and the decline in international product prices to moderate versus 2023.

• Commercial priorities include customer stratification, higher-value mixes, products and services, disciplined credit and collections, and tighter operating expense control.

• Digital transformation capability development began; management aims to use regional operations and portfolio diversification to develop tailored solutions and new business.