This post was originally published on this site
https://i-invdn-com.investing.com/trkd-images/LYNXNPEK1D0UZ_L.jpg
MEXICO CITY (Reuters) -Net profits for Walmart (NYSE:WMT)’s Mexico unit during the fourth quarter edged up about 1.2% year-on-year, as the company’s costs and the aftermath of Hurricane Otis hit its bottom line.
The essentially flat earnings for the quarter came in below the retailer’s profits in the last three quarters where income jumped over 5%.
The retailer’s cost of sales rose nearly 7% during the three-month period while “other expenses” surged 315%, according to a filing to Mexico’s stock exchange on Wednesday.
The company known as Walmex had to spend 1.5 billion Mexican pesos to offset damages by Hurricane Otis, according to a separate company statement. Otis slammed into the Mexican resort city of Acapulco in late October, leaving dozens dead and billions in damages.
Walmex, Mexico’s biggest retailer which also operates in Central America, reported profits of 14.99 billion pesos ($883 million) in the October-to-December period, as revenue jumped 6.6% to reach nearly 254 billion pesos, driven by solid same-store sales.
Analysts at Barclays, however, noted same-store sales came in 1.5% below estimates, mainly due to transport disruptions caused by protests in Guatemala and the fallout from Otis in Mexico.
Walmex opened 101 new stores during the final three months of last year, 93 in Mexico.
Last April, the company distributed a special, or extraordinary, dividend for shareholders, but will return to regular payments in 2024. The retailer cited lower capital expenditures in 2022 that allowed for last year’s disbursement.
Walmex will also propose a dividend of $2.17 per share at its next shareholders meeting, according to its filing.
In the statement, Walmex CEO Gui Loureiro explained that many customers embraced year-end sales events, citing slowing inflation and more disposable income.
Fourth-quarter earnings before interest, tax, depreciation and amortization (EBITDA) rose 5.4% to total 26.70 billion pesos.
Looking ahead to Walmex’s 2024 performance, some market watchers paint a rosy scenario.
An analyst note from J.P. Morgan released on Wednesday cited the expectation of strong remittances, spending from Mexican presidential campaigns, a low unemployment rate and solid consumer confidence as likely to drive positive results in the country’s retail food sector this year.
The company also expects Mexico’s antitrust regulator to resolve an investigation into alleged monopolistic practices in the second half of the year.
Last October, Walmex announced it would face an antitrust panel, with possible fines of around 8% of annual income, but it insists it has acted lawfully.
($1= 16.9666 Mexican pesos at the end of December)
