MEXICO CITY ― Becle, the world’s largest tequila producer, posted a fourfold rise in second-quarter profit on Wednesday, bolstered by foreign currency exchange gains even as thirst for its spirits dipped in its largest market.
Net profit hit 2 billion pesos ($106.6 million), above the 1.8 billion pesos estimated by analysts polled by LSEG, while revenue edged 2.8 percent higher to 11.5 billion pesos, but came in below analysts’ forecast of 11.7 billion pesos.
Stripping out the impact of currency fluctuations, Becle’s profit rose 22 percent, while net sales declined 6 percent, as liquor sales volumes fell in all of its operating markets except Mexico, its home base.
Jose Cuervo maker Becle generates close to 60 percent of its net sales in the US and Canada ― where volumes dipped 7 percent in the three-month period ended June ― while a quarter comes from Mexico, where volumes increased 7 percent.
In the rest of the world, volumes shrank 11 percent.
Becle said the drop in sales in North America reflected Canadian retailers’ limiting US-related purchases while in the rest of the world inventories remained high.
Analysts at Santander predicted a positive market reaction, noting that the company’s earnings call on Thursday would likely focus on its outlook for the US market.
“We believe investors will continue to focus on volume trends, but the market should welcome the better-than-expected profitability trends,” Santander wrote in a note.
“We continue to operate in a volatile and competitive global environment,” Becle said in a statement. It said it was seeing early signs of improvement in some markets and working toward a better balance between shipments and depletions.
Becle makes the bulk of its income from tequilas but also produces a range of spirits such as Creyente mezcal, Stranahan’s whiskey, Kraken rum and Boodles gin.
Becle said its profit was boosted by 557 million pesos in foreign-exchange gains, as it reversed a more than 1.3-billion-peso net financial loss recorded a year earlier.
The Mexican peso weakened some 2.6 percent to the US dollar in the 12 months through the end of June, boosting peso-denominated earnings from the United States.
While the US has threatened fresh tariffs against Mexico, its top trade partner, from August 1, Commerce Secretary Howard Lutnick on Sunday signaled that goods covered by the United States-Mexico-Canada free trade pact ― such as tequila ― should remain exempt.
The United States imported $5.3 billion of tequila in 2024, according to the US Distilled Spirits Council, up more than 14 percent in a year and surpassing its whiskey, gin, rum, brandy and vodka imports combined.
Like French champagne or Italian parmesan cheese, products using the names tequila or mezcal are protected by origin, meaning they must be made in Mexico.
Be the first to comment