Arca Continental ((MX:AC)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Arca Continental’s recent earnings call presented a balanced view of the company’s performance, highlighting both achievements and challenges. The sentiment was mixed, with positive developments in the U.S. and digital sectors, contrasted by volume and revenue difficulties in South America and Mexico. Despite these hurdles, the company showcased robust management skills, maintaining high EBITDA margins and executing strategic initiatives effectively.
U.S. Operations Excellence
The U.S. beverage business was a standout performer, achieving its 30th consecutive quarter of EBITDA growth. The EBITDA increased by 9.7%, with a margin of 17.2%. The U.S. team was also honored as the best Coca-Cola bottler globally, receiving the prestigious Candler Cup, underscoring their operational excellence.
Digital and E-commerce Success
Arca Continental’s digital and e-commerce ventures continued to thrive, driven by enhancements in eB2B capabilities and outstanding execution in the e-retailer space. This success highlights the company’s ability to adapt to digital trends and leverage technology for growth.
Positive Momentum in Peru
In Peru, the company experienced a 2% increase in total volume, supported by a stable economic environment and resilient consumer demand. Core brands such as Coca-Cola, Inca Kola, and Sprite showed strong growth, contributing to the positive momentum in the region.
Dividend Strategy
The company approved an additional dividend of MXN 1 per share, bringing the total dividend to MXN 8.62 per share. This reflects a payout ratio of 75% of retained earnings and a dividend yield of 4.3%, demonstrating a commitment to returning value to shareholders.
Record EBITDA Margin
Arca Continental achieved a consolidated EBITDA margin of 20.4%, the highest since acquiring the U.S. operation in 2017. This record margin underscores the company’s effective cost management and strategic focus.
Volume Decline in Key Markets
The earnings call highlighted a 1.8% decline in total consolidated volume for the quarter. Notably, Mexico saw a 2.9% decline in unit case volume, while Argentina experienced a 5.6% drop, reflecting challenges in these key markets.
Revenue Decline in South America
South America faced significant revenue challenges, with a 13.6% decline in total revenue for the quarter. EBITDA also decreased by 1%, with a margin of 18%, indicating economic pressures in the region.
Impact of Weather and Economic Conditions
Adverse weather conditions, including heavy rains and below-average temperatures in Mexico, along with a challenging macroeconomic environment, negatively impacted volumes, adding to the company’s challenges.
Challenges in Argentina
Economic adjustments in Argentina led to a 5.6% volume decline, affecting short-term performance despite the company gaining value share in NARTD categories. This highlights the ongoing economic difficulties in the region.
Forward-Looking Guidance
Looking ahead, Arca Continental reported a slight increase in consolidated revenue by 0.5% for the third quarter of 2025, despite a decline in total consolidated volume. The company remains focused on effective portfolio mix and revenue management. In Mexico, net sales grew by 2.8%, while the U.S. saw a 3.5% rise in net revenues. The company’s balance sheet remains strong, with cash and equivalents at MXN 32.3 billion and a net debt-to-EBITDA ratio of 0.62x.
In conclusion, Arca Continental’s earnings call reflected a mix of achievements and challenges. While the company excelled in the U.S. and digital sectors, it faced difficulties in South America and Mexico. Nevertheless, strong management and strategic initiatives helped maintain high EBITDA margins, showcasing the company’s resilience and adaptability in a challenging environment.