August 1, 2014 (www.investorideas.com newswire) 2Q14's revenues stood at COP 1,4 tn, +4,3% YoY, 15% below our estimates and the market's. This poor performance, if compared to 1Q14 figures (+26,7% YoY) was mainly explained by the adoption of the alternative scheme to access currencies in Venezuela known as Sicad II (49,9 VEF/USD), instead of the Cencoex rate (6,3 VEF/USD). By segment, cold cuts was the most affected by VEF's devaluation, showing a decrease of 40% YoY on its 2Q14 revenues (excluding this effect, cold cut's revenues would have grown 23% YoY). At Cencoex rate, consolidated revenues during 2Q14 would have been COP 1,7 tn, +25,8% YoY and 2% above our expectation. It is important to highlight that after this VEF/USD impact, Venezuela participated with only 1,4% of total sales (8,4% in 1Q14). As of June 2014, International sales represented 34.3% of Grupo Nutresa's total sales.
2Q14's EBITDA reached COP 199 bn, +1,3% YoY and 16% below our estimates (15% below market's expectation). Excluding the VEF/USD effect, EBITDA would had been COP 221 bn (+13% YoY). Cold Cuts' was the most affected by de VEF devaluation against USD, showing a decrease of 22% in EBITDA to COP 47 bn (COP 66 bn @6,3 VEFUSD). Consolidated EBITDA Margin stood at 13,9%, pretty in line with our estimates (14%) and in the upper range of the company guidance (12%-14%). We highlight the behavior of Tresmontes Lucchetti's (TMLUC's) EBITDA Margin (13,5%), which showed a recovery from 1Q14 numbers (8,8%).
Net Income during 2Q14 reached COP 83 bn, -14% YoY, 19% below our expectations and 12% below market consensus. The bottom line was affected by lower operating income, greater financial expenses generated by the debt to acquire TMLUC and non-recurring costs related to this operation. However, effective tax rate during 2Q14 (23,5%) was lower than 1Q14 (38,9%) and 2Q13 (31,2%)
Overall, we consider 2Q14 results were negative given the impact of VEF devaluation on international sales. Therefore, 2Q14 was characterize by a slowdown of revenues, EBITDA and Net Income growth vs 1Q14 figures. We expect VEF devaluation to impact financial results from now on, given that the company should have converted the Venezuela's revenues at Sicad II instead of Cencoex. However, we highlight the sustained profitability throughout the year (13,9%) given the company's hedging policy, which has mitigated the pressure on margins due to higher prices in certain raw materials, as well as the improvement in the mix of products sold.
The company will host a conference call to discuss the results next Monday August 04 at 8 AM
Source: Bloomberg, Nutresa, Corredores Asociados
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