Challenging Environment for S&P BMV IPC Companies
Mexican consumer companies listed on the primary index of the Bolsa Mexicana de Valores (BMV), the S&P BMV IPC, faced a challenging environment during Q2 of this year due to increased labor costs, loss of operational leverage, and promotional events.
Valmex Casa de Bolsa Analysis
Experts from Valmex Casa de Bolsa highlighted in their analysis that bottlers experienced a contraction in sales volumes, excluding bulk sales, due to deepening consumption slowdown, adverse weather conditions (especially in Mexico and Brazil), and high comparable bases from pre-election campaigns in Mexico.
Banco Bx+ Analysts’ Report
Analysts from Banco Bx+ noted that the consumer sector presented weak results, though a tough scenario was already anticipated. They mentioned that results were affected by weather conditions, reduced exchange rate spread, operational pressures, and high utility bases.
Impact on Key Companies
- Arca Continental: Reported a 2.3% decrease in consolidated sales, with Mexico seeing a 4.8% drop and the US experiencing a 0.6% decline.
- Coca-Cola FEMSA (KOF): Showed a 5.1% decrease in consolidated sales.
- Autoservicio Segment: Demonstrated resilience in sales, supported by calendar effects that offset consumer caution and reduced traffic due to rain. However, there were high comparable bases and cost/labor pressures.
- La Comer, Walmart de México y Centroamérica, Chedraui: Experienced sales growth of 6.7%, 4.4%, and 3.7% respectively.
Mixed Results from Food Emissaries
Analysts agreed that food emissaries also presented mixed results, with moderate sales volume due to cautious consumers in Mexico and the US.
- Alfa: Faced a decline in volumes and increased raw material costs for cold cuts, mature meats, cheese, yogurt.
- Bimbo: Showed weakness in North America due to unfavorable consumption conditions.
- Gruma: The largest flour producer maintained volume declines in its Gimsa subsidiary and the US, due to weak consumption.
Key Questions and Answers
- What challenges did Mexican consumer companies face in Q2?
These companies encountered increased labor costs, loss of operational leverage, and promotional events that negatively impacted their performance.
- Which companies reported sales decreases?
Arca Continental (2.3%), Coca-Cola FEMSA (5.1%), and both experienced declines in Mexico and the US.
- How did the autoservicio segment perform?
Despite challenges, this segment showed resilience with calendar effects compensating for consumer caution and reduced traffic due to rain. However, there were high comparable bases and cost/labor pressures.
- What were the results for food emissaries?
Food emissaries, such as Alfa, Bimbo, and Gruma, reported mixed results due to cautious consumers in Mexico and the US.
