Arca Continental ((MX:AC)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Arca Continental’s recent earnings call presented a balanced sentiment, highlighting robust revenue and EBITDA growth, primarily driven by strong performance in South America, strategic pricing, and digital platform advancements. However, these positive outcomes were somewhat offset by volume declines in Mexico and the U.S., alongside external challenges in Ecuador and Peru.
Revenue and EBITDA Growth
The company reported a significant increase in total consolidated revenue, up 12.4% year-over-year to Ps.57 billion. Consolidated EBITDA also rose by 10.2% to Ps.10.6 billion, with a margin of 18.7%, underscoring the company’s strong financial performance.
Strong Performance in South America
South America emerged as a key growth driver, with revenue surging by 25.4% to Ps.12 billion. EBITDA in the region increased by 36%, with a margin expansion to 19.9%. Argentina notably contributed with a 19.8% growth in volume.
Successful Pricing and Cost Management
Arca Continental effectively navigated input cost inflation and currency volatility through proactive pricing and cost control measures, which helped sustain its financial health.
Digital Platform Adoption
The B2B digital platform, Tuali, played a crucial role in Mexico, accounting for over 68% of total orders from traditional channels. This led to a 1.6 percentage points increase in overall sales volume.
Sustainability Achievements
The company made significant strides in sustainability, with renewable energy usage reaching 43.3% of total consumption and a 32.6% reduction in scope 1 and 2 emissions from the 2019 baseline.
Volume Decline
Despite financial gains, total consolidated volume decreased by 3.1% during the quarter, with Mexico experiencing a 3.6% drop in volume, highlighting challenges in maintaining volume growth.
Challenges in the U.S. Market
The U.S. market faced a 5.6% decline in volume, attributed to economic factors, calendar effects, and strong prior year comparisons, indicating external pressures affecting performance.
Profitability Pressure in Mexico
Mexico’s EBITDA declined by 6.2% to Ps.4.9 billion, with a margin of 20.8%, impacted by volume decline and a temporary production pause at the Topo Chico plant.
Challenges in Ecuador
Ecuador’s beverage business saw a 7.4% volume decline due to economic slowdown, political uncertainty, and severe weather conditions, reflecting external challenges.
Peru Volume Decline
In Peru, a 4.6% decline in total volume was noted, driven by softer consumer demand and unfavorable weather conditions, further emphasizing regional challenges.
Forward-Looking Guidance
Looking ahead, Arca Continental remains optimistic about regaining momentum and achieving full-year targets. The company plans to leverage proactive pricing, disciplined cost control, and strategic investments in growth and sustainability initiatives to navigate current challenges.
In conclusion, Arca Continental’s earnings call painted a picture of resilience and strategic growth, despite facing several regional challenges. The company’s strong performance in South America, effective pricing strategies, and digital advancements were key highlights, while volume declines in Mexico and the U.S. posed challenges. The forward-looking guidance suggests a positive outlook, with a focus on strategic initiatives to drive future growth.