Kuo (KUO B) Q2 2023 earnings summary

Executive summary

• 2Q23 revenue was MXN 13,820 million, down 17.3% YoY, and EBITDA was MXN 1,137 million, down 39.7%; lower Chemical results and peso appreciation weighed on performance.

• Herdez Del Fuerte and Aftermarket showed stronger demand and operating performance, partly offsetting pressure in Chemical, Pork Meat, and Transmissions.

Financial highlights

• Revenue was MXN 13,820 million, down 17.3% YoY; exports were MXN 7,397 million, down 20.6%, and represented 54% of sales.

• Operating profit fell 67.6% to MXN 390 million; operating margin was 2.8%, down 4.4 pp YoY.

• EBITDA declined 39.7% to MXN 1,137 million; EBITDA margin was 8.2%, down 3.1 pp YoY.

• Net majority income fell 47.6% to MXN 411 million; net financial income was MXN 14 million, mainly reflecting an FX gain.

• H1 revenue was MXN 28,220 million, down 10.8%; operating profit was MXN 644 million, down 67.1%, and EBITDA was MXN 2,034 million, down 38.6%.

Segment performance

• Consumer revenue grew 3.3% to MXN 6,798 million, while EBITDA fell 38.6% to MXN 292 million; high corn and soy paste costs and less favorable Pork Meat mix weighed on results.

• Herdez Del Fuerte benefited from higher prices in key categories, lower avocado costs, and operating efficiencies; Pork Meat also raised selling prices.

• Chemical revenue fell 49.7% to MXN 3,019 million and EBITDA declined 64.9% to MXN 342 million, reflecting lower prices and volumes and inventory devaluation.

• Automotive revenue declined 3.3% to MXN 3,943 million and EBITDA fell 11.8% to MXN 371 million; Aftermarket growth partly offset weaker Transmissions mix and absorption.