America Movil 2nd-Quarter Sales Rise, But Net Hit By Currencies

Date : 07/26/2012 @ 6:48PM
Source : Dow Jones News
Stock : America Movil, S.A.B. de C.V. American Depository Receipt Series L (AMX)
Quote : 18.83  -0.41 (-2.13%) @ 12:05AM

America Movil 2nd-Quarter Sales Rise, But Net Hit By Currencies

America Movil (NYSE:AMX)
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--Revenue in line with expectations at MXN191.7 billion

--Net profit sinks on heavy forex losses from weaker Latin American currencies

--Company added 5.9 million wireless subscribers, ending quarter with 251.8 million

 
   By Anthony Harrup 
 

MEXICO CITY--Mexican telecommunications company America Movil SAB (AMX, AMX.MX, AMOV) said sales and operating cash flow rose in the second quarter as it continued to add wireless and fixed-line customers at a steady pace, while a weaker Mexican peso and other Latin American currencies ate into the bottom line, bringing about a sharp drop in net profit.

America Movil, controlled by billionaire Carlos Slim, said revenue rose 9.7% to 191.7 billion pesos ($14.2 billion), boosted by the addition of 5.9 million wireless subscribers and 1.7 million subscriptions to fixed-line services including pay television and broadband Internet. Wireless revenue outpaced fixed-line revenue, rising 14% on the year compared with a 1.7% increase in revenue for fixed line.

Currency volatility continued to wreak havoc on the company's bottom line, as hefty exchange losses of MXN16.1 billion in the quarter led to a 45% decline in net profit to MXN13.3 billion, equivalent to MXN0.17 per local share, or 26 U.S. cents per American depositary receipt. A strong Mexican peso had boosted net profit by 38% in the first quarter.

The company added 1.4 million subscribers each in Mexico and Brazil, and 1.2 million in the U.S., which included 1.1 million from the acquisition of Simple Mobile. America Movil, Latin America's largest wireless-service provider, ended the quarter with 251.8 million wireless subscribers and 61.2 million fixed-line accesses.

Cash flow measured by earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 3.1% from a year earlier to MXN65.5 billion.

"Equipment costs increased more than twice as fast as revenues reflecting in part the currency depreciations vs. the U.S. dollar and the increase in postpaid subsidies associated to the sale of smartphones," America Movil said.

Revenue was in line with expectations, while Ebitda and net profit came in below consensus. The median estimate of seven equities analysts polled by Dow Jones had called for revenue of MXN191.7 billion, Ebitda of MXN66.45 billion, and a net profit of MXN19.48 billion.

America Movil's net debt stood at MXN361 billion at the end of June, up MXN29.7 billion from the end of 2011 as the company increased its stake in Dutch phone company Royal KPN NV (KKPNY, KPN.AE) to 27.7% and bought 6.7% of Telekom Austria AG (TKA.VI, TKAGY) with plans to raise the stake to around 23%.

The minority stakes in the European companies are part of plans by Mr. Slim to test the waters in Europe after America Movil has exhausted possibilities for mergers and acquisitions in Latin America. Company officials have said Latin America will continue to be America Movil's main priority.

America Movil L shares traded on the Mexican stock exchange closed up 2.1% Thursday at MXN18.03 ahead of the report.

Write to Anthony Harrup at anthony.harrup@dowjones.com

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