Grupo Carso SAB de CV Class A1 ((MX:GCARSOA1)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Grupo Carso’s latest earnings call revealed a challenging quarter marked by significant declines in key financial metrics. Despite some positive developments, such as modest revenue increases in certain segments and substantial backlog growth from new projects, the overall sentiment was overshadowed by negative financial performance and operational challenges.
Zamajal Hydrocarbons Growth
The Zamajal hydrocarbons operation stood out as a bright spot, contributing an additional MXN 546 million and growing by 27%. This growth highlights the division’s resilience and potential within the broader energy sector, despite facing depreciation costs.
Grupo Sanborns and Grupo Condumex Revenue Increase
Grupo Sanborns and Grupo Condumex reported revenue increases of 1.9% and 1.2%, respectively. These gains were attributed to summer promotional activities and higher volumes of industrial products, showcasing the effectiveness of targeted marketing strategies and demand for industrial goods.
Backlog Growth in Carso Infraestructura y Construcción
Carso Infraestructura y Construcción experienced a remarkable backlog growth of 267.9%, reaching MXN 70.4 billion. This surge was driven by new projects like the Saltillo-Nuevo Laredo passenger train and drilling services for Pemex, indicating strong future prospects for the division.
Decrease in Consolidated Sales
Grupo Carso faced a 5.8% decrease in consolidated sales, totaling MXN 45.5 billion for the quarter. This decline reflects broader economic challenges and highlights the need for strategic adjustments to counteract market pressures.
Significant Decline in Operating Income
Operating income saw a substantial drop of 39.7%, falling to MXN 3.1 billion from MXN 5.3 billion in the previous year. This decline underscores the operational challenges faced by the company amid a tough economic environment.
Drop in Consolidated EBITDA
Consolidated EBITDA decreased by 20.4%, reaching MXN 5.6 billion compared to MXN 7 billion a year ago. This reduction in earnings before interest, taxes, depreciation, and amortization indicates a contraction in the company’s profitability margins.
Major Decline in Net Income
The company reported a significant 78.4% decline in net income, totaling MXN 651 million, down from MXN 3 billion last year. This sharp decrease highlights the financial strain experienced by Grupo Carso during the quarter.
Carso Infraestructura y Construcción’s Operating Challenges
Carso Infraestructura y Construcción faced severe operational challenges, with operating income and EBITDA plummeting by 95.5% and 78.9%, respectively. The division reported a net result loss of MXN 629 million, compared to a net income of MXN 649 million a year ago, reflecting the impact of completed major projects.
Decrease in Elementia/Fortaleza Sales
Elementia/Fortaleza experienced a 1.1% decrease in sales, attributed to adverse weather conditions affecting construction and cement demand. This decline points to external factors impacting the division’s performance.
Carso Energy Revenue and Income Decrease
Carso Energy’s performance saw a reduction of 3.4% in sales, totaling MXN 867 million, with operating income and EBITDA decreasing by 5.5% and 3.3%, respectively. This decline reflects the challenges posed by exchange rate impacts on the energy sector.
Forward-Looking Guidance
Looking ahead, Grupo Carso anticipates continued challenges due to economic pressures such as lower exchange rates, increased salaries, and inflation. While Grupo Sanborns and Grupo Condumex are expected to maintain their growth trajectories, Carso Infraestructura y Construcción aims to leverage its expanded backlog for future projects. However, the company remains cautious about external factors affecting its diverse portfolio.
In summary, Grupo Carso’s earnings call painted a picture of a company navigating a difficult quarter, with significant declines in sales, operating income, and net income. Despite these challenges, certain segments showed resilience, and the substantial backlog growth offers a glimmer of hope for future performance. The company remains focused on addressing operational hurdles and adapting to economic conditions to improve its financial standing.