July 5 (Bloomberg) -- Shares of Mexichem SAB, Latin America’s biggest plastic-pipe maker, declined the most in more than a month following a second-quarter preliminary earnings report showing profit tumbled.
Mexichem fell 4.4 percent to 55.40 pesos at 1:41 p.m. Mexico City time, the biggest drop since May 20, after the company said earnings before interest, taxes depreciation and amortization probably fell 11 percent to $260 million from a year earlier. The shares have plunged 24 percent this year.
The company, based in Tlalnepantla, Mexico, said sales were about $1.36 billion, a 5-percent increase in dollar terms. Earnings were hurt by coolant gas prices, delays in Latin American infrastructure projects and an adverse macroeconomic environment in Europe, the company said in a statement to the Mexican stock exchange.
Fernando Perez, an analyst with Corporativo GBM SAB in Mexico City, said in an e-mailed research note that while the results didn’t meet his expectations, acquisitions should bolster earnings going forward.
“We believe that the company should manage to turn around the negative results through inorganic growth and synergies with its latest acquisitions,” Perez wrote. “These strategies have been proven positive in the past.”
He maintained Mexichem’s outperform rating. GBM has a 12-month price target of 71.54 pesos for the shares.
Mexichem will continue to restructure European operations and carry out “strategic investments” to accelerate growth, Chief Executive Officer Antonio Carrillo said in the statement.
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