Drop in profits as Grupo LALA issues 1Q 2020 results
Highlights include a 5.1% year-on-year constant currency branded sales increase, a 9.4% EBITDA margin, which was a 15% year-on-year decrease due to margin contraction in Mexico and Brazil, and +250 bps sequential EBITDA margin recovery in Mexico.
The company also saw a drop of 53.8% year-on-year in net income due to lower operating profit in Mexico and Brazil. Gross profit fell from 6,619m pesos ($269.6m) to 6,389 pesos ($260.2m).
There was a -270 bps working capital improvement to 0.3% of sales, driven by negative working capital in Mexico, and a leverage ratio of 3.2x.
On COVID-19, the company said all facilities continue uninterrupted production, and there has been an increased cash position of 4.4x to strengthen liquidity.
Arquímedes Celis, Grupo LALA's CEO, said, "LALA's resilience to today's COVID-19 challenges underscores the strength of our brands, business and market position as important competitive advantages.
“LALA benefits from a guaranteed milk supply, proprietary refrigerated distribution network and an extensive market-leading brand portfolio of the important nutritious food staples currently in demand, while also addressing all market segments, demographics and price-points.”
Celis said the current situation is also aligned with the company’s strategy of stabilizing operations and restoring profitability in Mexico, to serve its customers' increased needs and related opportunities in the market.
“Our balance sheet is solid and we have an experienced leadership team that will take action to help us not only weather this crisis, but continue to transform our business for the better."
