MEXICO: Arca Continental feels pain of new tax, but H1 profits up
- H1 net profits up 4.4% to MXN3.1bn (US$239.8m)
- First-half net sales flat at MXN29.3bn
- H1 operating profits rise 6.5% to MXN6.5bn
- Beverage volumes slip 3.1% to 642m unit cases
Arca's volumes dipped slightly
Arca Continental, Latin America’s second largest Coca-Cola bottler, has seen its first-half volumes slip as a new sugary drinks tax in Mexico took its toll, but the group’s profits rose.
The Mexico-based bottler’s net profits in the six months to the end of June were up 4.4% to MXN3.1bn (US$239.8m), it said today (17 July). Sales in the period were flat however at MXN29.3bn, while volumes fell by 3.1% to 642m unit cases. Operating profits in the six months rose by 6.5% to MXN6.5bn.
In Q2, the group’s profits climbed by 3.1% to MXN1.9bn, while sales were flat at MXN16bn. Operating profits in the three months were up 5.9% to MXN3.8bn. The second quarter results mirrored those of Q1.
Mexico, Arca's core market, introduced a tax of MXN1 (US$0.08) per litre of “sugar-sweetened” beverage in January.
Francisco Garza Egloff, Arca’s CEO, flagged that the company had increased its EBITDA margin by 120 basis points, driven by “cost and expense efficiencies strategies in Mexico and South America”.
He added: “The constant market investment, as well as the targeted execution and actions that we have made in light of the new tax and low-consumption environment, have been key factors to continue strengthening our leadership position and deliver sound financial and operating results, despite the impact on our sales volumes in Mexico.”
Earlier today, The Coca-Cola Company announced it plans to invest US$8.2bn in Mexico over the next six years.
To read Arca's full statement, click here
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