3 Min Read
(Adds comments from CFO on possible bond issues, closing share price)
By Gabriela Lopez
MONTERREY, Mexico, July 18 (Reuters) - Mexican conglomerate Alfa posted a 70.9 percent drop in profits in the second quarter, dragged down by a depreciation in the peso currency, the company said on Monday.
Net profit at Monterrey-based Alfa was 817.3 million pesos ($44.8 million), sharply down from 2.81 billion pesos in the same quarter of last year, the company said in a statement.
Alvaro Fernandez, chief executive officer of Alfa, said the company's refrigerated food unit Sigma had suffered due to the peso's decline and that its Axtel telecoms business had also been affected by the currency's drop against the dollar.
All told, the peso's drop led to Alfa's total currency losses more than doubling from the same period in 2015 to $218 million, the company said.
"In general, our businesses and financial situation are still very solid and all the investment programs continue to support future growth," Fernandez said in the statement.
The company also lost $7 million in the market value of its stake in Canadian oil company Pacific Exploration & Production, which in April reached a deal to restructure its debt.
Total sales at the company rose by 13.2 percent in the second quarter to 73.1 billion pesos. However, in dollar terms, sales were down some 4 percent, to just over $4 billion.
The company is considering refinancing Axtel's debt in 2017 through a 10-year bond offer of up to $1 billion, chief financial officer Ramon Leal said on a conference call.
Leal added that Alfa hopes its car parts unit, Nemak, receives an investment-grade credit rating next year, which would allow it to access the European debt market and potentially offer a 300 million to 500 million euro bond.
Nemak currently has a BB+ rating from Standard & Poor's, one notch below an investment-grade rating.
Shares in Alfa closed down 0.25 percent.
Alfa is active in petrochemicals, food processing, the automotive industry and telecoms.
The company bought a majority stake in Axtel last year.
$1 = 18.2575 pesos at end June Reporting by Dave Graham and Gabriela Lopez; Editing by W Simon and James Dalgleish