Sectorial Performance Overview for April-June Period
Experts predict that the second quarter earnings reports of companies listed on the Mexican Stock Exchange (BMV) will show less income growth, reduced operating cash flow (EBITDA), and profitability pressures compared to the previous year, according to analysts consulted.
General Outlook
The overall expectation is for a regular season with significant sectorial contrasts, hampered by the Mexican peso’s annual depreciation, trade uncertainty affecting private consumption, and economic slowdown.
Key Sectors and Their Performance
Alejandra Vargas, a bursátil analyst at Grupo Financiero Bx+, explains that cyclical sectors like cement, autos, and discretionary consumer goods will face volume and margin challenges due to the economic slowdown, challenging comparatives, and unfavorable conditions.
She highlights that the exchange rate and international trade, particularly for companies with US operations (Cemex, GCC, Nemak), play a crucial role due to the peso’s depreciation and the tariff environment.
Defensive sectors, such as telecommunications (Megacable), airports (GAP, OMA, ASUR), and Fibras, have shown resilience in maintaining strong margins and moderate growth despite the uncertain environment.
Impact of US Political and Economic Environment
Alejandra Vargas warns that the post-Trump return in the US has led to tariff threats, affecting some products’ demand and margins. Some industries have delayed projects or investments until more certainty is available.
Forecasted Performance
Alik García, subdirector of Bursátil Analysis for Valmex Casa de Bolsa, anticipates that companies in the BMV’s main index will see a 10.8% income increase and a 9.4% rise in operating cash flow during this period.
“With these results, we expect a season where revenues will still grow in double digits, but compared to previous seasons, the growth rate will be slower, and this quarter reflects profitability pressures,” García points out.
He attributes the slower results to a currency effect compared to the first quarter, which will translate into lower revenues.
Moreover, Mexico’s economic cycle has moderated, and consumer spending has lagged due to caution regarding tariffs. Consumers have also been cautious about inflation trends, according to the expert.
Negative Outlook Sectors
Analysts agree that the automotive, cement, food, and discretionary consumer goods sectors face negative prospects.
Ariel Méndez, bursátil analyst for Bx+, notes that the automotive industry will still face challenges in Q2, as US electric car incentives have dwindled, and expected volumes have been delayed. Tariff issues could lead to inventory restructuring and weaker demand, he adds.
Cement companies will be pressured due to low expected volumes caused by demand slowdown, interest rates, and climate effects.
Alik García points out that the beverage sector was unfavorable due to weather conditions, and consumers were cautious about migration-related exports in the US.
Mining companies are expected to report negatively, as although some metal prices like copre have increased annually by 3.4%, sales are projected to decrease, aligning with the previous quarter’s performance. EBITDA is also expected to decline.
Cement companies anticipate a sales decrease of around 6.7% annually, though analysts believe the report could be more pressured due to adverse factors and a high comparison base outweighing price benefits.
Resilient Sector Perspectives
Experts concur that sectors like airports, finance, and basic consumer goods will benefit from higher tariffs and the peso’s depreciation against the dollar.
Alik García believes that banking firms will remain resilient, with growth in their portfolios maintaining its momentum, supporting income and profit increases for companies.
Ariel Méndez predicts that airport groups will stabilize, as passenger traffic continues to improve, particularly national travel, counterbalancing the decline in international travel. The engine review issue seems to be under better control.
Experts anticipate a mixed report where companies show gradual sales improvements.
Freight costs might continue driving results and expanding margins due to uncertainty in the US. The tariff scenario is also favorable for industrial companies, as demand has remained resilient.