Mexico City — Quarterly reporting season for companies listed on the Mexican Stock Exchange (BMV) is upon us, and analysts agree that much attention will be placed on how the peso’s strength has affected revenues and profits.
“As we saw in the first quarter, companies’ financial results will be affected, in a mixed manner, by the strong depreciation of the US dollar against the Mexican peso during the year,” analysts at Vector wrote in a note.
The Mexican currency has appreciated 12.16% against the dollar in the first six months of the year, and 5.19% in second quarter, according to Bloomberg data.
A strong Mexican currency implies lower revenues for local companies that charge in dollars, but may also result in lower costs for companies that purchase raw materials in that currency.
Exporters, such as mining, automotive and petrochemical companies, may be more sensitive to a negative effect due to the strong peso, and includes companies with subsidiaries in the United States, or local companies that receive revenues in US dollars, such as real estate companies, wrote the Vector analysts.
Among the potential winners from the exchange rate effect could be producers of food, consumer goods, non-alcoholic beverages, supermarkets and retail stores, according to the Vector analysts.
The exchange rate has already become an issue for América Móvil, the leading telecommunications company in Latin America, which published its quarterly results on July 11.
The company, owned by Mexican billionaire Carlos Slim, recorded a 4.6% drop in revenues, largely explained by an exchange rate effect; but it also recorded an 89% growth in profits. América Móvil executives pointed out on the conference call with analysts and investors that the net effect of the ‘super peso’ was positive for the company in financial terms.
“América Móvil published second quarter 2023 results that were practically in line with our and consensus expectations; however, non-cash foreign exchange earnings were slightly above our projection,” wrote Actinver analyst Valentín Mendoza.
Another element to consider, according to Banorte analysts, is companies’ EBITDA, as a measure of operating profitability, given the effect that lower inflationary pressures could have on some companies’ costs.
Companies listed in Mexico have until July 31 to release their second-quarter results. Banorte analysts point to the likelihood that some companies will adjust their earnings guidance positively.
“In our view, the focus will be on companies that show a greater recovery in profitability and on the outlook for the coming quarters in a more optimistic local economic environment,” wrote Banorte’s group of stock analysts led by Marissa Garza.
Results calendar in Mexico
This week, results are expected from Grupo Bolsa Mexicana de Valores, Qualitas, Vesta, Kimberly Clark México and Arca Continental, among other companies.
Quarterly results reporting season was kicked off by América Móvil, which released its results on July 11, while Vista Energy, which saw a 22% fall in revenues, released its quarterly earnings report on July 13.