ICA Falls to Four-Month Low on Tax Law Change: Mexico City Mover

Empresas ICA SA (ICA*), Mexico’s biggest construction company, fell to a four-month low on concern profits will be hurt by rising tax expenses after lawmakers passed fiscal reforms sought by President Enrique Pena Nieto.

The shares declined 2.7 percent to 23.05 pesos at 2:36 p.m. in Mexico City. A close at that level would be the lowest since June 25. It was the second-worst performance among the 35 stocks on the country’s benchmark IPC index, which slipped 0.6 percent.

Mexico’s Congress voted Oct. 31 to eliminate some benefits that allowed companies with money-losing subsidiaries to defer tax payments. The legislation is part of reform measures Pena Nieto is pushing to reduce the country’s dependence on oil revenue and boost growth. ICA needs to see how the changes will affect its business and determine how to pay the tax, Chief Executive Officer Alonso Quintana said in an interview with Milenio published on Nov. 5.

“It can hurt them once they can’t consolidate all of their subsidiaries” for tax purposes, Jorge Lagunas, who oversees about $200 million in stocks at Grupo Financiero Interacciones SA, said in a telephone interview from Mexico City.

Ana Paulina Rubio, an investment relations official with ICA, said the recent declines in the stock were driven by concern the tax changes will negatively impact the company.

Bank of America Corp. last month lowered its recommendation on the shares to the equivalent of hold from buy, citing the possibility of higher taxes.

To contact the reporter on this story: Ben Bain in Mexico City at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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