MercadoLibre's fourth-quarter net profit beats forecast, shares jump
By Andre Romani
SAO PAULO (Reuters) -Latin American e-commerce giant MercadoLibre posted a better-than-expected quarterly net profit on Thursday, up nearly four-fold from the same period a year earlier and sending its shares up more than 12% in after-hours trading.
MercadoLibre, Latin America's largest company by market value, said net income for the October-to-December quarter came in at $639 million, up 287% year-on-year and well above the $401.5 million expected by analysts in an LSEG poll.
Chief Financial Officer Martin de los Santos told Reuters the results reflected lower funding costs and improved logistics efficiency, particularly in Mexico, as well as lower losses with currency, especially in Argentina.
MercadoLibre's net revenue came in at $6.1 billion, up 37% year-on-year and above estimates of $5.9 billion, with sales measured by gross merchandise volume rising 8% year-on-year, driven by 32% growth in its main market Brazil on a foreign exchange-neutral basis.
New York-listed shares of MercadoLibre jumped nearly 13% in post-market trade to about $2,380.
"A solid beat with higher top line and much better margins," Jefferies analysts wrote in a note to clients.
MercadoLibre's shares had fallen after a quarterly miss in November, with analysts citing higher logistic investments and credit ramp-up.
"Margins for a company that don't go in a straight line are sometimes hard to predict from the outside," de los Santos said on Thursday.
"We are trying to convey to the market that we will not shy away from investing in growth opportunities," he added, noting management believes this will make the company able to dilute fixed costs in the long term and continue being profitable.
Its earnings before interest and taxes came in at $820 million in the quarter ended in December, above analysts' expectations of $612 million and up 144% from a year earlier, when results were hurt by a tax hit in the fourth quarter.
MercadoLibre's credit portfolio also rose, reaching $6.6 billion from $6 billion in September, while its 90-day-plus default ratio fell to 17.5% from 17.9% in the period.
Osvaldo Gimenez, head of MercadoLibre's fintech arm, said in a call with analysts that the company has taken some measures, including reducing the issuance of some credit card segments in Brazil and Mexico, to reduce risk at the margin level.
"Essentially, we're being a little bit more cautious," Gimenez said, noting the decision in Brazil was based on a weaker macroeconomic outlook and a rise in interest rates.
"Management comments on credit performance remain reassuring, with limited measures to reduce risk in specific tiers," the Jefferies analysts said.
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