Arca Continental Q3 2024 Earnings Highlights

Arca Continental, the second-largest Coca-Cola bottler in Latin America, reported varied results in its third-quarter earnings call for 2024. The company experienced a 4.6% decline in total consolidated volume, marking a departure from previous growth trends. However, it managed to increase consolidated revenues by 10% to MXN62.6 billion and consolidated EBITDA by 10.2% to MXN12.7 billion.

This EBITDA figure represents the highest margin for a third quarter in eight years. The company's net income also saw a substantial increase of 13.1% to MXN5.1 billion. Arca Continental remains optimistic about its performance and strategic initiatives moving forward.

Key Takeaways

• Total consolidated volume fell by 4.6%, while consolidated revenues rose by 10% to MXN62.6 billion.
• Consolidated EBITDA increased by 10.2% to MXN12.7 billion, the highest margin for a third quarter in eight years.
• Net income for Q3 increased by 13.1% to MXN5.1 billion.
• The company paid an extraordinary dividend of MXN2.50 per share on August 29.
• Strategic priorities include commercial strategies, sustainability initiatives, and digital transformation.
• Optimism remains for performance and market share recovery in Argentina.

Company Outlook

• Arca Continental anticipates low single-digit growth in Mexico despite challenging conditions.
• In the U.S., strong EBITDA growth is expected due to effective pricing and operational efficiency.
• The company is optimistic about improved performance and market share recovery in Argentina.

Bearish Highlights

• South America experienced an 8.6% decline in total volume.
• The U.S. saw a 2.4% volume decline, though revenue increased by 5.1%.

Bullish Highlights

• Mexico's net sales grew by 4.8%.
• Coca-Cola No Sugar saw a 19.1% increase in Mexico.
• Revenue in South America rose by 8.7% despite volume decline.
• TUALI, a B2B digital platform, launched to enhance customer operations.

Misses

• The company reported a decrease in total consolidated volume for the quarter.

Q&A Highlights

• Digital initiatives such as TUALI and the myCoke.com platform are expected to increase customer engagement.
• The company is actively seeking M&A opportunities and is committed to dividend distribution.
• Monster beverage's 7% volume growth in the U.S. market was a standout performance.
• Currency depreciation of the Mexican peso resulted in exchange gains, positively impacting financial results.

Despite mixed performance across different markets, Arca Continental's strategic focus on pricing, operational efficiency, and digital transformation has helped sustain profitability. The company's effective hedging strategy and diversified product offerings in the U.S. and Latin America are contributing to its robust financial outlook. Management remains committed to enhancing shareholder value through consistent dividend payments and the exploration of M&A opportunities. Arca Continental's ability to navigate the dynamic beverage industry landscape while maintaining strong EBITDA margins positions it well for future growth.