COVID-19 triggered one of the biggest economic crises in recent times and led to a drastic increase in inequality. In business, there was no exception: some companies gained from the pandemic and others have not recovered.
Among ” stands out a group of ten companies that significantly increased their sales during the pandemic, with growth that ranged between 121% and 1,313% from 2019 to 2021: Prolec, Evraz NA México, Mercado Libre de México, Betterware de México, Compañía Mexicana de Exploraciones, Arcos Dorados de México, Goldman Sachs Casa de Bolsa, Aura Minerals, Agroasemex and Capstone México Mining.
Prolec GE was the company that increased its sales the most during said period, registering an increase of 1,312.9%. The company has become a key player in the market for electric power transmission and distribution transformers. In May 2020, it expanded its joint venture with General Electric to all of the Americas. With which it added the Shreveport plant in Louisiana, United States, and the Canoas plant in Rio Grande do Sul, Brazil.
Additionally, in June 2021, the company entered into a definitive agreement with SPX Corporation to acquire its SPX Transformer Solutions business for $645 million in cash, a transaction that is expected to strengthen its position as a key player in the transformer market.
Evraz NA Mexico, which participates in the steel and metallurgical sector, was another one that increased its sales considerably during the pandemic: 387% from 2019 to 2021. According to sector analysts, steel companies benefited from a rise in prices average and sales of its products, as well as higher sales abroad and a recovery in domestic sales. From the beginning of 2019 to the end of 2021, the average price of coiled steel sheets increased 144%, according to information from Bloomberg.
For its part, the Mercado Libre e-commerce platform registered a 348.8% growth in its income in the first two years of the pandemic, due to the change in people’s habits, who, unable to go out, became online shoppers for the first time, which was reflected in a higher volume of items sold by the company.
After its rapid growth, Mercado Libre plans to invest 1,475 million dollars during 2022 to develop its business in Mexico, in order to innovate its logistics operations and have more distribution centers to make faster shipments nationwide.
The companies most affected by the pandemic
However, as the pandemic progressed, it was also noted that many households and businesses were unprepared to withstand a disruption of such duration and scale to their income.
According to the World Development Report 2022, carried out by the World Bank, the cash reserves of an average company were enough to cover the expenses corresponding to less than 55 days. In addition, many households and companies in emerging economies, such as Mexico, were already burdened with unsustainable levels of debt before the crisis and had difficulty making payments when public health measures caused a sharp drop in their income.
Smaller companies, informal ones and those with limited access to formal credit were more affected by the income losses generated by the pandemic, according to said report. When the crisis began, the largest companies had the capacity to cover expenses for up to 65 days, while medium-sized companies could cover up to 59 days and small and micro-enterprises, 53 and 50 days, respectively.
Among ‘The 500 most important companies in Mexico’ there is a group of ten companies whose sales were affected and have not been able to recover their pre-pandemic level, registering a drop that fluctuated between 41.0% and 82.4% from 2019 to 2021: Grupo Famsa, CIE , Cinemex, Aleatica, Dana de México, Grupo Financiero Multiva, Bancomext, Codere México, Nacional Financiera and Cinépolis.
The strongest drop in sales was for Grupo Famsa, with 82.4%. Due to the problems it faced on several fronts: the measures imposed to prevent the spread of the pandemic, the revocation of its license to operate its subsidiary Banco Ahorro Famsa and its request for bankruptcy in Mexico and for bankruptcy in the United States.
In the first semester of 2022, the retailer’s accumulated sales registered a total of 1,120 million pesos, a drop of 40.2% compared to the same semester of the previous year, mainly caused by the decrease in sales in national territory, which represented 51% of your total earned income.
CIE was the second most affected, the COVID-19 pandemic had a negative impact on its operations, face-to-face events, as well as special and corporate events, were suspended and its revenues fell 61.3% from 2019 to 2021.
The company has not yet fully recovered and recently, CIE and Grupo Televisa finalized the sale to Live Nation of their joint 51% shareholding in the organizer of massive events Ocesa Entertainment, a transaction valued at just over 8,500 million pesos .
Ocesa includes the Ticketmaster ticket sales business in Mexico, as well as sponsorship, food and beverage, merchandise and mass concert venues. Ocesa, which made up the entertainment division of CIE, represented 78% of the company’s revenues in 2019.
Cinemex was another of the companies that were hit by the pandemic and have not been able to recover their income level, which fell 55.6% in the indicated period. The strict restrictions, the lack of content, and the debts threatened the definitive closure of the cinematographic centers that accumulated months without activity.
As time goes by, the recovery of the film industry is less tied to the evolution of the pandemic or the advancement of vaccination. Now it is the movie premieres that have once again become the trigger for the return of Mexicans to the complexes.
The report by the World Bank, cited above, suggests that the recovery from the crisis will be as uneven as its initial economic shocks: emerging economies and disadvantaged groups will need much longer to overcome the income and livelihood losses caused by the crisis. for the pandemic.
Despite this, the most recent financial data of the companies that at the same time are part of “The 500 largest companies in Mexico” and the Mexican Stock Exchange, indicate that their accumulated annual sales had an increase of 15.3% -when passing from 7.0 to 8.1 trillion pesos-, if the closing of the first quarter of 2020 and that of the second quarter of 2022 are compared (the data closest to the start of the pandemic in the country and the most recent figures from the companies).