Kuo (KUO B) Q1 2024 earnings summary

Executive summary

• 1Q24 pro forma combined revenue fell 7.4% YoY to MXN 13,331m; EBITDA rose 26.4% to MXN 1,133m, supported by Pork Meat, Aftermarket and Chemical inventory valuation.

• Exports were 51% of sales; net majority income decreased 21.4% to MXN 187m, mainly reflecting the change in exchange-rate effects on financial expenses.

Financial highlights

• Operating profit increased 102.7% YoY to MXN 514m; operating margin expanded to 3.9% from 1.8%, while EBITDA margin rose to 8.5% from 6.2%.

• Pro forma combined revenue declined 7.4% to MXN 13,331m; exports fell 9.2% to MXN 6,807m.

• Net majority income decreased 21.4% YoY to MXN 187m from MXN 238m.

Segment performance

• Consumer revenue fell 6.7% to MXN 6,675m; EBITDA grew 41.5% to MXN 526m, led by lower Pork Meat corn and soy paste costs and operating efficiencies.

• Chemical revenue declined 15.1% to MXN 2,929m amid lower prices and FX effects; EBITDA rose 12.2% to MXN 226m on higher application volumes and positive inventory valuation.

• Automotive revenue decreased 2.0% to MXN 3,650m; EBITDA increased 6.6% to MXN 387m on Aftermarket volume and mix gains, partly offsetting Transmissions FX impact.

• Herdez Del Fuerte recorded higher domestic volume in tomato puree, ketchup and mole, but higher operating expenses and a less favorable mix weighed on Consumer results.