Alsea SAB de CV ((MX:ALSEA)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Alsea SAB de CV’s recent earnings call conveyed a generally positive sentiment, highlighting robust sales growth driven by effective digital strategies and strong performances from Starbucks and Domino’s Pizza. Despite facing challenges such as a decline in Burger King’s sales and economic difficulties in South America, the company reported significant digital order growth and an improvement in EBITDA, underscoring a successful quarter overall.
Overall Sales Increase
In the second quarter, Alsea reported a 4.2% year-over-year increase in total sales, reaching MXN 20.4 billion. When accounting for foreign exchange effects, this increase rose to 8.9%. Same-store sales also saw a healthy growth of 4.9%, reflecting the company’s strong market presence and operational efficiency.
Digital Strategy Success
Alsea’s digital strategy proved to be a significant driver of growth, with nearly 35.3 million digital orders contributing MXN 7.7 billion, or 38.6% of total sales. The company’s focus on digital transformation was further highlighted by a 4.7% increase in loyalty sales, reaching MXN 5.4 billion.
Starbucks and Domino’s Performance
Both Starbucks and Domino’s Pizza under Alsea’s management showed impressive performance. Starbucks’ same-store sales increased by 4.4%, while Domino’s Pizza saw a 6% rise, with Mexico experiencing an even higher increase of 8.9%. These results underscore the strength of Alsea’s brand management and market strategy.
EBITDA Growth
The company reported a 10.5% increase in EBITDA for the second quarter, reaching MXN 3 billion. However, there was a slight contraction in the EBITDA margin by 40 basis points year-over-year, attributed to external economic factors.
Positive Net Income Growth
Alsea’s net income saw a remarkable increase of 552.7% year-over-year, reaching MXN 868 million. This substantial growth reflects the company’s effective cost management and revenue generation strategies.
European Sales Performance
Sales in Europe surged by 25.4% to MXN 6.4 billion, with a 5.2% increase in euro terms. This growth highlights Alsea’s successful expansion and adaptation strategies in the European market.
Full-Service Restaurants Growth
The Full-Service Restaurants segment reported a 5.9% growth in same-store sales, driven by strong value propositions and product innovation. Mexico and Spain were notable contributors, with growth rates of 6.1% and 5.9%, respectively.
Burger King Sales Decline
Burger King under Alsea faced challenges, with same-store sales excluding Argentina decreasing by 6.1%. In Mexico, the contraction was slightly higher at 6.8%, indicating areas that require strategic attention.
Challenges in South America
The economic environment in South America posed challenges, with adjusted EBITDA decreasing by 11.4% due to lower consumption, particularly in Argentina and Chile. This affected the company’s operating leverage in the region.
Margin Contraction
Alsea experienced a contraction in the EBITDA margin by 40 basis points year-over-year, primarily due to the depreciation of the Mexican peso and increased labor costs in Europe and South America.
Debt Increase
The company’s pre-IFRS 16 gross debt increased by MXN 5.5 billion year-over-year, reaching MXN 34.8 billion. This was largely due to bank loans for settling the minority stake in European operations and the impact of the Mexican peso’s depreciation.
Forward-Looking Guidance
Looking ahead, Alsea remains committed to strategic growth and optimizing its portfolio for sustainable opportunities. The company plans to continue its digital transformation, with loyalty sales expected to grow further. Alsea also aims to expand its store network, focusing on high-potential locations, while maintaining its emphasis on ESG initiatives.
In conclusion, Alsea SAB de CV’s earnings call reflected a positive outlook, with strong sales growth driven by digital strategies and successful brand management. Despite facing challenges in specific segments and regions, the company demonstrated resilience and strategic foresight, positioning itself well for future growth.