Betterware de México (BWMX, Financial) reported first-quarter revenues of $3.5 billion, missing analysts' expectations of $3.78 billion. A challenging economic environment in Mexico significantly impacted the company's performance, contributing to a 2.9% decline in revenue compared to the same period last year.
The adverse conditions in Mexico, marked by dwindling consumption trends, decreasing consumer confidence, and lower discretionary spending by households, led to reduced sales volumes. These factors particularly affected Betterware Mexico, where revenue fell by 9.8%. On the other hand, Jafra Mexico showed a modest increase of 1.1% in its revenue.
Economic pressures not only dampened demand for products but also resulted in a contraction of Betterware de México's Associate and Distributor network, alongside decreased activity levels for both Betterware and Jafra brands.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 2 analysts, the average target price for Betterware de Mexico SAPI de CV (BWMX, Financial) is $20.26 with a high estimate of $21.46 and a low estimate of $19.07. The average target implies an upside of 93.18% from the current price of $10.49. More detailed estimate data can be found on the Betterware de Mexico SAPI de CV (BWMX) Forecast page.
Based on the consensus recommendation from 1 brokerage firms, Betterware de Mexico SAPI de CV's (BWMX, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
BWMX Key Business Developments
Release Date: February 27, 2025
- Q4 2024 Revenue Growth: 11.1% increase compared to Q4 2023.
- Jafra Mexico Revenue Growth: 22.2% increase in Q4 2024.
- Betterware Mexico Revenue Growth: 1.5% increase in Q4 2024.
- Full Year 2024 Revenue Growth: 8.4% increase compared to 2023.
- EBITDA: 2% increase to MXN 2.8 billion, slightly below guidance.
- Jafra Mexico EBITDA Growth: 15.4% increase.
- Gross Margin Q4 2024: Improved by 116 basis points to 67.3%.
- Full Year 2024 Gross Margin: Expanded by 70 basis points to 67.9%.
- Adjusted EBITDA Decline: 5.8% with a 367-basis points margin contraction.
- Cash Flow Decline: 21.6% decrease for the year.
- Adjusted Earnings Per Share Growth: 10.5% in Q4 and 17.3% for the full year.
- Net Debt to EBITDA Ratio: 1.76 times, with a target of 1.5 times for 2025.
- Proposed Dividend for Q4: MXN 250 million pesos.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Betterware de Mexico SAPI de CV (BWMX, Financial) achieved double-digit revenue growth of 11.1% in Q4 2024, driven by a 22.2% increase in Jafra Mexico's performance.
- The company demonstrated resilience with Betterware Mexico growing for the fifth consecutive quarter, exceeding last year's results by 1.5%.
- Jafra Mexico's EBITDA increased by 15.4%, contributing to the overall financial strength of the company.
- Betterware de Mexico SAPI de CV (BWMX) has a strong historical CAGR of 18% in revenue and 19% in EBITDA over the past 23 years.
- The company is strategically positioned for future growth with plans for international expansion into Latin America and a focus on sustainability and innovation.
Negative Points
- Consolidated EBITDA was slightly below the low end of the guidance range due to unexpected challenges in Mexico's international supply chain.
- The company faced headwinds from sharp Mexican peso depreciation, increased trade prices, and growing product import duties.
- Jafra US experienced a 17.6% revenue decrease in US dollars, mainly due to adoption difficulties with Shopify Plus.
- Consolidated adjusted EBITDA declined by 5.8% with a 367-basis points margin contraction, primarily due to Japan Mexico's EBITDA decline.
- Cash flow declined by 21.6% for the year, driven by an extraordinary cash inflow in 2023 that was not repeated in 2024.
