Raw material costs hit the firms profits

Raw material costs hit the firm's profits

Embotelladoras Arca has booked a drop in first-quarter profits as a result of an increase in raw material costs.

For the three months to the end of March, net profits dropped by 14.2% year-on-year to MXN398.4m (US$32.5m), the Mexico-based Coca-Cola bottler reported today (30 April).

Net sales however, increased 2.9% to reach MXN5.48bn, while operating profit dropped 14.7% to MXN644.2m.

Cost of goods sold increased in the period by 5.8% as a result of rising sugar prices in both Mexico and Argentina. The price of sugar has remained at "historically high levels", the firm said.

Arca's CEO, Francisco Garza Egloff: “Within a challenging economic and consumer environment, coupled with a typically unfavourable climate in our territories, Arca responded quickly to reinforce its presence in the market and launch promotions tailored to its consumer base.”

Beverage sales volumes (excluding jug water) decreased 0.9% for the period reaching a total of 131.9m cases. Volumes of diet soft drinks also declined in the quarter, by 6.9% to 7.9m cases.

To read the official release, click here.