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Alfa Drops Most Since 2011 After Annual Forecast Trail Estimates

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Feb. 12 (Bloomberg) -- Alfa SAB, which controls Mexico’s largest publicly traded petrochemical company, fell the most in more than a year after forecasting annual sales and earnings that missed analysts’ estimates

The shares declined 4.8 percent to 28.51 pesos at the close in Mexico City, the biggest drop since Sept. 22, 2011. They have risen 64 percent in the past 12 months, outpacing the Mexican IPC index’s 18 percent gain.

Alfa forecast 2013 revenue of $15.9 billion and earnings before interest, taxes, depreciation and amortization, or Ebitda, of $1.89 billion, according to a statement today on its website. The averages of estimates compiled by Bloomberg were for revenue of $16 billion and Ebitda of $2.02 billion.

“The guidance made the market cautious because it was a little weak,” Carlos Hermosillo, an analyst at Grupo Financiero Banorte SAB, said in a telephone interview from Mexico City.

Earlier today, the San Pedro Garza Garcia, Mexico-based company said fourth-quarter profit rose 60 percent as sales climbed at its auto-parts and food units. Net income and revenue fell at the Alpek SAB petrochemical division.

Hermosillo called the fourth-quarter results a “good performance.” He boosted his target price for Alfa to 29.50 pesos from 26.50 pesos and maintained his hold recommendation.

Profit Rises

Quarterly net income advanced to $115 million from $72 million a year earlier, Alfa said in a statement. Sales increased 4.2 percent to $3.69 billion.

Profit rose after Alfa’s auto-parts unit, Nemak, acquired J.L. French Automotive Castings Inc., an aluminum components producer based in Sheboygan, Wisconsin, in June. Sales climbed 15 percent at Nemak and 8.3 percent at the Sigma food division, which makes lunch meats, cheese and yogurt.

Ebitda for the quarter advanced 22 percent to $433 million, Alfa said. That compared with a forecast of $461 million in fourth-quarter Ebitda by Marcos Duran, an analyst at Scotiabank in Mexico City who rates the shares sector underperform.

Alpek today reported that fourth-quarter net income dropped 60 percent to $30 million as revenue fell 2.9 percent to $1.67 billion.

The San Pedro Garza Garcia-based company’s shares dropped 3.8 percent to 28.22 pesos in Mexico City, its lowest closing price since June 21.

Fernando Bolanos, an analyst at Monex Casa de Bolsa SA in Mexico City, cut his price target on Alpek by 19 percent to 34 pesos.

Bolanos said in a note to clients that the petrochemical company’s sales would probably fall 4.8 percent this year while Ebitda would tumble 13 percent. He previously forecast 7.5 percent sales growth and 6.3 percent Ebitda growth. He rates the shares buy, according to the note.

To contact the reporter on this story: Brendan Case in Mexico City at bcase4@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net