Tequila giant Becle’s profit jumps despite slowing demand

By Thomson Reuters Feb 22, 2024 | 6:13 PM

MEXICO CITY (Reuters) -Mexican distiller Becle, the world’s largest tequila producer, on Thursday posted a 41% rise in its net profit for the last three months of 2023 compared to a year earlier, even as sales slipped in key markets.

The Mexico City-based firm, which sells Jose Cuervo family tequilas as well as mezcal, whiskey and other liquors, posted a net profit of 1.96 billion pesos ($115 million) for the fourth quarter, even as revenues fell 5% to 13.16 billion pesos.

This landed above estimates from analysts polled by LSEG, who had forecast a quarterly profit of 1.28 billion pesos from revenues of 13.05 billion.

Earnings before interest, tax, depreciation and amortization (EBITDA) edged down 2% to 2.44 billion pesos, just above a forecast of 2.22 billion pesos. “Slowing consumer demand for spirits in several markets indicates trends are normalizing after two years of exponential growth,” Becle’s management said in a filing to Mexico’s main stock exchange.

“We anticipate cost benefits for this year,” it added, “stemming from reduced supply chain pressures and lower input costs, resulting in an opportunity for margins expansion.”

Becle’s stock is down nearly a quarter compared to this time last year, largely due to a 19% nosedive after its third-quarter earnings, when it suffered from a stronger Mexican peso battering foreign earnings as well as slower U.S. volumes.

Earlier this month spirits giant Diageo, which sells Don Julio brand tequila, replaced its Mexico chief after a buildup of unsold inventories in Latin America’s No. 2 economy forced a profit warning that sent shares tumbling.

(Reporting by Sarah Morland; Editing by Brendan O’Boyle)