Tequila giant Becle sees costs easing after troubled year
Reuters
Published Feb 23, 2024 12:11PM ET
Updated Feb 23, 2024 12:21PM ET
MEXICO CITY (Reuters) -Mexican distiller Becle, the world's largest tequila maker, said on Friday it expected the lower input costs that helped it post a forecast-beating fourth quarter profit to continue in 2024.
On Thursday, Becle reported a 41% profit jump, despite declining sales and volumes after months of unfavorable exchange rates, which it attributed to lower costs as well as its strategy of selling more higher-priced premium liquors.
Executives told analysts in a call on Friday that 2024 should begin to reap rewards from a prior decline in prices for agave, the prickly plant used to make tequila, Becle's main product.
However, they warned that an economic slowdown, notably in the European region, was denting demand for expensive spirits.
"Although the company beat our estimates on the operational side, we wonder how sustainable these expense savings might be in the coming quarters," analysts at Itau BBA said in a note, warning of negative gross margin trends which could reverse the good momentum.
Becle reversed three straight quarters of decline with the strong jump in profit it posted in the fourth quarter. The company, which makes most of its revenues from sales in the United States and Canada, had suffered the prior three quarters from a stronger Mexican peso which diluted its foreign earnings as well as higher costs.
Shares were up around 5% in early trading.
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Written By: Reuters
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