Kuo (KUO B) Q1 2023 earnings summary

Executive summary

• 1Q23 pro forma revenue was $14,400 million, down 3.5% YoY; EBITDA was $897 million, down 37.2%, amid weaker Chemical results, peso appreciation and cost pressures.

• Stronger sales in Consumer and Aftermarket partially offset pressure in Synthetic Rubber & Polymers and Transmissions; net majority income fell to $238 million from $577 million.

Financial highlights

• Revenue was $14,400 million versus $14,916 million YoY; operating profit was $254 million versus $752 million, and EBITDA was $897 million versus $1,429 million.

• Net majority income was $238 million, down 58.7% YoY; net financial revenue was $84 million, including an exchange gain from peso appreciation, while interest expense increased with rates.

• Pro forma gross profit was $2,302 million, down 2.2% YoY; gross margin was 16.0% versus 15.8%.

• Exports were $7,495 million, down 10.3% YoY, and represented 52% of revenue, led by Pork Meat and Transmissions.

Segment performance

• Consumer revenue rose 18.3% YoY to $7,158 million; EBITDA was $372 million, essentially flat, as Pork Meat volume and pricing and Herdez Del Fuerte pricing offset higher feedstock costs and FX pressure.

• Chemical revenue fell 30.7% YoY to $3,452 million and EBITDA fell 69.8% to $202 million; lower prices and volumes and a $154 million inventory devaluation effect weighed on results.

• Automotive revenue decreased 2.6% YoY to $3,725 million and EBITDA declined 12.3% to $363 million; Transmissions supply issues were partly offset by Aftermarket demand and improved absorption.