Mexico-based telecoms group America Movil on Tuesday said net profit for the fourth quarter rose by more than 300% year-on-year, as the company benefited from a marked decline in financing costs compared with the same period a year earlier.
For October through December, America Movil recorded a net profit of 19.13 billion Mexican pesos on total revenues of 244.9 billion pesos. The company provided U.S. dollar equivalents in its release, translating the results to roughly $1.1 billion in net profit and $14.2 billion in revenues, using the exchange rate it specified of $1 = 17.20 Mexican pesos.
Analysts surveyed by LSEG had been expecting smaller dollar-denominated revenues of $13.33 billion, making the reported dollar figure notably higher than that consensus projection.
America Movil did not disclose the exact amount it recorded for financing costs in the quarter, but said those costs were about half of what the company spent in the fourth quarter a year earlier. The firm singled out the reduction in financing costs as a contributing factor to the improvement in net profit.
On an earnings before interest, taxes, depreciation and amortization (EBITDA) basis, the company posted 94.93 billion pesos for the quarter, equivalent to approximately $5.52 billion, a figure that was marginally ahead of analysts' $5.17 billion forecast.
Customer growth also featured in the report. America Movil said it added 2.5 million mobile subscribers in the fourth quarter, a tally that the company said included 2.8 million postpaid additions. The company identified Brazil, Colombia and Mexico as the primary drivers of that subscriber growth during the period.
Context and implications
The company’s results show a combination of higher top-line revenue in dollar terms versus analyst expectations and improved profitability metrics driven, according to the company, by materially lower financing costs compared with the prior-year quarter. EBITDA outperformed the analyst estimate by a clear margin, underscoring operating cash generation in the period.
While management highlighted subscriber gains across several Latin American markets, the company provided limited detail on the composition of financing costs and on the apparent relationship between total mobile subscriber additions and the number of postpaid additions reported.
Key figures
- Net profit (Q4): 19.13 billion pesos (about $1.1 billion)
- Revenues (Q4): 244.9 billion pesos (about $14.2 billion)
- EBITDA (Q4): 94.93 billion pesos (about $5.52 billion)
- Mobile subscriber additions (Q4): 2.5 million (including 2.8 million postpaid additions)
- Exchange rate cited: $1 = 17.20 Mexican pesos
Note: The company did not provide a detailed breakdown of financing costs for the quarter beyond stating they were roughly half of those recorded in the same quarter a year earlier.