Becle Sab De Cv ((MX:CUERVO)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Becle Sab De Cv painted a picture of robust growth tempered by regional challenges. The company reported strong performance in its spirits portfolio, significant gross margin expansion, and impressive EBITDA growth. However, these positive outcomes were offset by declines in sales in the U.S. and Canada, competitive pricing pressures, and difficulties in the Ready-to-Serve segment.
Growth in Spirits Portfolio
The spirits portfolio was a standout performer, with consolidated volumes increasing by 3.7% and a notable 5.2% growth in this segment. The U.S. and Canada markets saw tequila as the primary growth driver, particularly in high-end tequilas, showcasing the brand’s strength in this category.
Gross Margin Expansion
Becle achieved a gross margin expansion of 300 basis points, reaching 56.1%. This improvement was attributed to lower input costs and enhanced operating efficiencies, reflecting the company’s strategic focus on cost management.
EBITDA Surge
The company reported a remarkable 63.3% year-over-year increase in EBITDA, reaching MXN 3.5 billion. This surge underscores both organic and inorganic growth, highlighting Becle’s effective operational strategies.
Strong Performance in Mexico
In Mexico, Becle experienced a 24.3% increase in net sales value, driven by an 18.3% rise in shipments and a favorable product mix. This growth indicates a strong domestic market presence and effective product positioning.
Positive Cash Flow and Debt Improvement
Becle generated MXN 3.3 billion in net cash from operating activities, with a significant improvement in its lease-adjusted net debt-to-EBITDA ratio, which decreased to 1.0x from 1.7x, reflecting improved financial health.
Decline in U.S. and Canada Sales
The company faced challenges in the U.S. and Canada, with net sales value declining by 10.3%. This was due to a 6.4% decrease in shipments and a 4.4% decline in depletions, indicating market headwinds in these regions.
Challenges in Ready-to-Serve Portfolio
The Ready-to-Serve segment faced softness, compounded by retail boycotts in Canada, resulting in approximately 120,000 fewer cases shipped. This highlights the segment’s vulnerability to external market factors.
Competitive Pricing Pressures in U.S.
The U.S. tequila market saw intensified pricing competition, with average tequila prices declining by 7.9% year-over-year. This competitive landscape presents a challenge for maintaining margins.
Macroeconomic Uncertainty in EMEA and APAC
Becle navigated a volatile trading environment in EMEA and APAC due to macroeconomic uncertainties and cost-of-living pressures, leading distributors to adopt cautious inventory management strategies.
Forward-Looking Guidance
Looking ahead, Becle anticipates continued growth and premiumization into 2026, maintaining a disciplined approach to pricing and promotional activities. The company expects sustained performance in its spirits portfolio and aims to capitalize on market opportunities despite regional challenges.
In conclusion, Becle Sab De Cv’s earnings call highlighted a strong overall performance with significant growth in key areas, despite facing regional challenges. The company’s strategic focus on cost management and market positioning is expected to support its growth trajectory into the future.