- Betterware de México, S.A.P.I. de C.V. (BWMX, Financial) reported a 2.9% decrease in net revenue for Q1 2025, impacted by macroeconomic challenges in Mexico.
- Net income for the quarter declined by 48.7% compared to Q1 2024, primarily due to decreased sales and EBITDA.
- The company is focusing on international expansion, innovations in product offerings, and strategic responses to market conditions.
Betterware de México, S.A.P.I. de C.V. (BWMX) reported a 2.9% decline in net revenue for the first quarter of 2025, amounting to $3,499,151,000 MXN. This was primarily influenced by challenging macroeconomic conditions in Mexico, which included weakening consumption trends and decreased consumer confidence. Revenue dropped by 9.8% for Betterware Mexico but saw a slight 1.1% increase for Jafra Mexico.
The company's gross margin fell by 353 basis points year over year, reaching 66.2%, while EBITDA decreased by 29.1% to $535,265,000 MXN. The EBITDA margin also contracted by 567 basis points to 15.3%. These reductions were largely attributed to increased costs, such as those for imported products due to the depreciation of the Mexican peso, and the implementation of necessary price increases for certain stock-keeping units (SKUs).
Net income for the quarter plummeted 48.7% to $151,394,000 MXN, with EPS declining to $4.06 from $7.91 in Q1 2024. The company's free cash flow was negative at -$55,841,000 MXN, a significant drop from $359,655,000 MXN the previous year, due to extraordinary cash outflows and increased working capital needs primarily driven by product investments and higher inventory levels.
Despite these challenges, BeFra's management remains optimistic about the company's long-term growth strategy. They are focused on international expansion, with plans to launch in Ecuador and continuing growth signs in Guatemala. U.S. operations have been paused due to recent policy changes, but management remains confident in the potential for recovery in other markets.
The company's efforts include enhancements in Salesforce engagement and innovation strategies to adapt to current market conditions. Betterware aims to decrease excess inventory levels significantly by the end of the year, aligning with their asset-light business model that prioritizes financial flexibility and resilience.
Management has proposed a dividend of Ps. 200M for Q1 2025, pending approval, reflecting confidence in the normalization of free cash flow despite the recent temporary setbacks. The company is also focusing on strategic pricing, merchandising adjustments, and sourcing diversification to mitigate the effects of macroeconomic pressures.
Looking forward, BeFra aims for high single-digit growth in net revenue and EBITDA for 2025, although uncertainties in Mexico and the U.S. could influence these projections. The company will continue to assess market conditions and make strategic decisions to strengthen its position for future growth.
