Arca Continental ((MX:AC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Arca Continental revealed a mixed sentiment, with notable revenue growth and profitability in the US and South America, contrasted by challenges in Mexico and Ecuador. Despite these hurdles, the company remains optimistic about its future, buoyed by sustainability initiatives and strategic investments.
Revenue Increase Despite Volume Decline
Arca Continental reported an 8% increase in total consolidated revenue for the quarter and a 10.1% rise year-to-date. This growth was achieved despite a decline in consolidated volume, attributed to effective pricing strategies and favorable foreign exchange effects.
Strong Performance in South America
South America emerged as a strong performer, with total revenue growing by 11.8% in the quarter and EBITDA increasing by 29.2%. Year-to-date figures showed an 18.8% rise in revenue and a 33% increase in EBITDA, with Argentina experiencing a notable volume improvement of 11.6%.
US Operations Delivering Record Results
In the US, Coca-Cola Southwest Beverages achieved record results, with net revenues rising by 3.9% and EBITDA increasing by 9.1%. This marked the 29th consecutive quarter of EBITDA growth and the most profitable second quarter since acquiring the US beverage franchise.
Sustainability Achievements
Arca Continental made significant strides in sustainability, partnering with Ecuador’s National Recyclers Network and expanding the PET collection center in Mexico, underscoring their commitment to environmental responsibility.
Volume Decline in Mexico
Mexico faced a 4.8% decline in unit case volume due to adverse weather conditions, leading to flat total net sales and a 3% decline in EBITDA for the quarter.
Challenges in Ecuador
Ecuador experienced a 3.1% decline in total volume for the quarter, impacted by rising security concerns affecting consumer mobility, although there are signs of easing economic contraction.
Margin Contraction
The quarter saw a modest 1.2% increase in net income, resulting in a 60 basis point contraction in the net profit margin, influenced by the comprehensive financing result and U.S. dollar cash position in Mexico.
Forward-Looking Guidance
Despite challenges such as softer consumer sentiment and adverse weather, Arca Continental provided robust guidance for the year. The company anticipates continued revenue growth, driven by strategic pricing and favorable FX effects. EBITDA is expected to rise, supported by disciplined cost management and investment in growth platforms, with significant contributions from South American operations.
In conclusion, Arca Continental’s earnings call highlighted a resilient performance amidst mixed challenges. The company’s strategic initiatives and sustainability efforts position it well for future growth, with strong performances in South America and the US offsetting difficulties in Mexico and Ecuador.