América Móvil's Profit Jumps on Exchange Gains -- Update
April 25 2017 - 7:44PM
Dow Jones News
By Anthony Harrup
MEXICO CITY -- Telecommunications company América Móvil SAB
increased its net profit nearly eightfold in the first quarter on
solid revenue growth and a rebound in the Mexican peso against the
U.S. dollar that led to hefty foreign exchange gains.
Latin America's biggest telecommunications company, controlled
by billionaire Carlos Slim, on Tuesday reported a net profit of
35.9 billion Mexican pesos ($1.9 billion) for the January-March
period, compared with a 4.8 billion-peso profit a year earlier and
a 6 billion-peso net loss in the fourth quarter of last year.
Revenue rose 18.5% to 264.2 billion pesos, while earnings before
interest, taxes, depreciation and amortization, or Ebitda, a
measure of operating cash flow, rose 15.8% to 71.5 billion
pesos.
An apparent pickup in economic activity across most of Latin
America contributed to strong revenue, despite a still sluggish
Brazilian economy, the company said. Mexico resumed expansion after
a rocky start to the year and "by the end of the quarter retail
sales were surging and the peso versus the dollar had risen to its
best level since the U.S. election," it added.
Peso appreciation against the dollar and the euro led to an
exchange gain of 37.1 billion pesos in the quarter, contributing to
overall financial income of 30.4 billion pesos.
The company ended the quarter with about 280 million wireless
subscribers, practically unchanged from the end of 2016, and
fixed-line subscriptions were also stable at 82.8 million. Service
revenue rose 3.1% in local currency terms.
Service revenues in Mexico, where the company faces tough
competition from AT&T Inc. and Spain's Telefónica SA, slowed
their rate of decline, as did Ebitda, which was equivalent to 31.9%
of revenue compared with 28% in the preceding quarter. América
Móvil attributed the better margins to improving revenue and
cost-reduction measures in recent months.
The results beat the median expectations of analysts polled by
The Wall Street Journal, which called for net profit of 27.5
billion pesos on revenue of 261.5 billion pesos, and Ebitda of 68.1
billion pesos.
América Móvil shares closed up 1.2% on the Mexican stock
exchange ahead of the report.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
April 25, 2017 19:29 ET (23:29 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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