EconomyFinancialDue to the rise in prices, companies on the...

Due to the rise in prices, companies on the BMV will increase their costs and limit their profits this quarter

The third quarter reporting season begins this week with the companies that make up the main indicator of the Mexican Stock Exchange (BMV), the IPC. The analysts consulted expect a season with modest growth, due to the rise in prices, which increases the costs of companies and limits their profits.

The consensus, made by Expansión between six brokerage houses and Bloomberg, showed that the growth in sales will be 5.3%, while the operating flow (EBITDA) will have a slight decrease of 2.4% and the net profit will increase 2.8%.

“We estimate that the increase in revenues was not enough to compensate for the pressures on the cost structure –despite the fact that most of the adjustments were probably in inputs of a variable nature–, such as energy, raw materials and food”, Banorte analysts indicated.

Specialists expect this corporate reporting season to be key in determining the impact of a potential recession, cost inflation and a more restrictive monetary policy on companies’ operations and results. They expect price movements and new expectations in almost all sectors.

“We will still see some favorable comparative bases in the corporate results of 3Q22, where a year ago with the economic reopening process, the number of coronavirus infections rebounded in August,” Vector analysts pointed out.

The results for the quarter could once again highlight the sustained growth in revenues, although at more moderate rates due to the upward effect implied by higher prices.

The companies that stood out in the category of income during the period from July to September of this year are Grupo Carso, with 43.7%; Infrastructure Promoter and Operator (Pinfra), with 39%; Southeast Airport Group (ASUR), with 24.1%; Alsea, with 22.8%; Grupo Aeroportuario del Pacífico, with 22.3% and Volaris, with 21%. In the opposite direction, the companies with the worst sales performance will be Televisa, with 21.3%; América Móvil at 14.9%; Grupo México will decrease 7.2% and Peñoles will drop 2.6%.

“The Aviation sector would reflect a more active economic and social opening. Volaris would record a recovery in revenues, mainly due to a solid increase in passenger traffic. Similarly, we see an increase in capacity and more services. While ASUR saw an increase in its passenger traffic of 28%, which represents a complete recovery of traffic to levels recorded before the pandemic, we expect to see margins recovering due to the updating of maximum rates in the face of rising inflation in the country.” Intercam analysts added.

Analysts agreed that the third quarter results came against a backdrop of growing global and local challenges. However, they indicated that the results were supported by economic activity in Mexico, which was more resilient than anticipated. On the downside, inflationary pressures prevailed; of the positive, minor disruptions in supply chains stood out.

A strong boost from Grupo Sanborns is expected for Grupo Carso’s results due to a favorable comparative base. While for Pinfra, Vector analysts pointed out that the strong growth in the concessions segment would again be diluted by a drop in the construction segment, which generates non-recurring income.

“We expect (for Alsea) a report with double-digit growth in each of its markets, driven by the reactivation of the economy and the promotional strategy of the brands, even managing to grow above pre-pandemic levels,” said Marisol Huerta, an analyst at Go for More.

The analyst consensus estimates that the companies that would be most affected in profits would be Volaris with a net loss of 245 million pesos; Elektra with 158 million pesos and Televisa with a drop in its net result of 80.2%.

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