Genomma Lab Advances in Mexico as Third-Quarter Profit Improves

Genomma Lab Internacional SAB, a Mexican producer of over-the-counter drugs, jumped the most in three weeks after a report showed profits and sales jumped in the third quarter and a measure of cash generation improved.

The shares rose 6 percent to 33.67 pesos at the close of trading in Mexico City, the most since Oct. 1 and the biggest advance on the country’s benchmark IPC index of 35 companies. The gauge rose 1.1 percent today.

Genomma Lab said yesterday that third-quarter profit rose 13 percent to 462.3 million pesos ($36 million) as sales grew 20 percent to 3.07 billion pesos. Earnings before interest, taxes, depreciation and amortization increased 21 percent 795.8 million pesos. Sales outside of Mexico grew 60 percent to 1.05 billion pesos.

The company has been “posting healthy growth rates amidst a weak consumption environment in Latam,” Credit Suisse Group AG analysts including Antonio Gonzalez and Armando Perez wrote in an e-mailed report today. The cash conversion cycle “keeps recovering, slowly.” Credit Suisse kept the equivalent of a sell rating on the shares.

The cash conversion cycle, a measure of liquidity that tracks how long it takes for the company to turn regular investments into cash, fell to 144 days from 153 days in the same period a year earlier.

Rodrigo Herrera, Genomma’s chief executive officer, said in the e-mailed report that improving the cash conversion cycle was “one of our top priorities.”

Grupo BTG Pactual said today in a research report that cash generation remains “concerning,” maintaining its sell recommendation.

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