Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Becle SAB de CV (BCCLF, Financial) reported a 0.8% increase in consolidated net sales, reaching MXN11.1 billion, with a 3.1% increase on a constant currency basis.
- Gross margin improved by 350 basis points to 54.3%, driven by regional price increases, premiumization, and favorable product and geographic mix.
- The US and Canada regions reported solid growth, with a 12.1% increase in net sales value and a 16.6% increase in tequila sales.
- The company successfully maintained market leadership in Mexico through strategic premiumization and pricing initiatives, despite industry contractions.
- Becle SAB de CV (BCCLF) achieved a 20.2% year-over-year increase in EBITDA, with a margin expansion of 340 basis points to 20.7%.
Negative Points
- An accident at the La Rojeña factory resulted in a fire, leading to the suspension of operations in the affected area.
- The EMEA and APAC regions faced ongoing consumer demand pressures due to geopolitical and economic headwinds, affecting shipments.
- SG&A expenses increased by 17%, driven by investments in infrastructure and organizational capability, impacting margins.
- The net financial result for the second quarter was a negative MXN1.3 billion, primarily due to a non-cash foreign exchange loss.
- The company experienced a 62.4% decrease in consolidated net income, with the net margin dropping to 4.5% from 12% in the previous year.
Q & A Highlights
Q: Can you provide more details on the recent incident at the La Rojeña factory and its impact?
A: The incident was isolated to a single processing area, affecting one tank. Other areas, including distilling and warehousing, were not damaged. We are assessing the damages but do not expect significant issues in resuming operations or impacting supply. - Rodrigo de la Maza Serrato, CFO
Q: Could you break down the strong volume and pricing dynamics in the US, and comment on competitive pricing pressures?
A: The majority of gains came from a better mix, particularly in tequila. We took a price increase of less than 2% earlier this year. We are seeing aggressive pricing from competitors but are adapting with temporary pricing adjustments while maintaining our strategic pricing approach. - Luis Fernando Felix, Managing Director, US and Canada
Q: How much of the margin improvement is due to better agave prices, and how are lower inventory levels affecting the P&L?
A: Approximately 20-25% of the gross margin improvement is due to falling agave prices. We are starting to see benefits, which will continue to contribute positively in the coming quarters. - Rodrigo de la Maza Serrato, CFO
Q: What is the timeline for normalizing shipments and depletions in Mexico and the Rest of the World?
A: We are managing inventory levels closely and expect to adjust shipments according to depletions by year-end. In the Rest of the World, depletions are slightly ahead of shipments, and we anticipate a clearer position by the end of the third quarter. - Manuel Coulomb, Marketing Director - Mexico and Shane Hoyne
Q: How long will it take for lower agave prices to be fully reflected in your financials?
A: The favorable agave pricing will continue to improve our financials gradually over the next two to three quarters. - Rodrigo de la Maza Serrato, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
