- America Movil, Mexico’s largest telecommunications company, announced disappointing second-quarter results on Tuesday, revealing a net loss of 1.09 billion pesos ($60 million). This marks a significant downturn from the previous year’s net profit of nearly 26 billion pesos. The company attributes this financial setback to the unexpected depreciation of the Mexican peso following the recent presidential election.
- America Movil’s unexpected financial loss and missed earnings expectations underscore the vulnerability of multinational corporations to currency fluctuations, especially in emerging markets. The sharp depreciation of the peso highlights the economic uncertainties following Mexico’s recent political developments, impacting investor confidence and financial forecasts.
OUR TAKE
America Movil taking a $60 million hit? That’s gotta sting, especially after last year’s windfall. But hey, they didn’t let the peso’s tumble bring them down completely. They still managed to boost their subscriber base and broadband access, which is no small feat. And talk about being proactive – scooping up ClaroVTR like that? It’s like they’re saying, “Sure, we lost some cash, but we’re still moving forward and investing in the future.” Still, can’t help but wonder if they could’ve hedged their bets better against currency fluctuations. It’s a reminder that even the biggest players can get caught off guard by political winds.
–Miurio huang, BTW reporter
What happened
America Movil, Mexico’s largest telecommunications company, announced disappointing second-quarter results on Tuesday, revealing a net loss of 1.09 billion pesos ($60 million). This marks a significant downturn from the previous year’s net profit of nearly 26 billion pesos. The company attributes this financial setback to the unexpected depreciation of the Mexican peso following the recent presidential election.
In their official statement to the Mexican stock exchange, America Movil cited the peso’s sharp decline in the wake of President-elect Claudia Sheinbaum’s victory on June 2nd. Despite previously stable exchange rates amidst fluctuating U.S. interest rates, the peso depreciated against major currencies, adversely affecting the company’s financial health.
Despite the loss, America Movil’s revenues saw a modest increase of 1.5%, reaching 205.52 billion pesos ($11.24 billion). The company’s core earnings before interest, taxes, depreciation, and amortization also rose by nearly 6%, totaling 83.1 billion pesos. The growth was driven by a substantial gain in subscribers, particularly in the post-paid segment, and an increase in broadband accesses in their fixed-line services.
Additionally, America Movil made strategic advancements in its market position by acquiring a controlling stake in ClaroVTR, a prominent cable and mobile operator in the region. This move is expected to consolidate their market presence, with plans to further enhance their service offerings and expand their infrastructure investments, including advancing their 5G network capabilities across their operational markets.
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Why it’s important
America Movil’s unexpected financial loss and missed earnings expectations underscore the vulnerability of multinational corporations to currency fluctuations, especially in emerging markets. The sharp depreciation of the peso highlights the economic uncertainties following Mexico’s recent political developments, impacting investor confidence and financial forecasts.
The company’s ability to partially offset these losses with revenue growth and operational improvements demonstrates resilience amidst external economic challenges. Their strategic acquisition of ClaroVTR further solidifies their competitive position in Latin America’s telecommunications sector, poised to capitalise on growing consumer demand for enhanced digital connectivity and services.
Moreover, America Movil’s ongoing investment in 5G technology reflects a proactive approach to remain competitive in an evolving digital landscape, despite short-term financial setbacks. This commitment not only positions them for future growth but also underscores their strategic vision to innovate and expand their service offerings across diverse markets.
America Movil’s second-quarter performance highlights the complex interplay between economic policy changes, currency volatility, and corporate financial outcomes. As the company navigates these challenges, its strategic initiatives and investment plans will be crucial in sustaining long-term growth and profitability amidst evolving market dynamics.
