Mexico’s Alfa Q1 net profit jumps, hikes EBITDA guidance

MEXICO CITY, April 25 (Reuters) – Mexican conglomerate Alfa (ALFAA.MX) on Monday posted a first-quarter net profit of 4.3 billion pesos ($217 million), up 38% compared with the same period a year earlier, lifted by high industry margins at its chemicals subsidiary Alpek.

Earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter rose 21% to 13.2 billion pesos ($664 million). The company raised its EBITDA guidance for the year to $2.283 billion from $1.949 billion.

EBITDA for food unit Sigma and telecoms firm Axtel (AXTELCPO.MX) were lower than expected, Alfa said.

Sigma’s European operations were hit by rising energy prices and decreased meat exports to China.

Bottlenecks in supplies of semiconductor chips affected Axtel, as well as lower sales to the government sector and decreased income from wholesale deals.

Revenue at the Monterrey-based company increased 24.8% to 86.03 billion pesos during the first three months of 2022.

The company attributed its higher profits to increased margins from unit Alpek’s principal products of polyester, polypropylene and expandable polystyrene.

“(Alpek’s) figures reflect a significant recovery in the sector from the pandemic,” analysts at Mexico’s Monex said.

Alfa said it was actively working to reduce its “conglomerate discount,” in which the market views the worth of a diverse grouping of companies at less than their sum.

The company hopes to achieve independence in all of its subsidiaries, and was analyzing coupling “deleveraging” with “strategic alternatives,” it said.

“Although a transaction has not materialized, we continue to seek options that are in the best interest of our shareholders,” Chief Executive Alvaro Fernandez wrote in the report.

Alfa said Axtel, which it is trying to sell, was “maintaining active conversations with interested parties to evaluate potential associations in certain parts of the business to capitalize on attractive market opportunities.”

In the first quarter of last year, Alfa posted a 3.1 billion peso profit. ($1 = 19.8911 pesos at end-March)

Reporting by Kylie Madry and Noe Torres; Writing by Valentine Hilaire; Editing by Mark Porter

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