Grupo LALA Reports Second Quarter 2019 Results

25-Jul-2019 - Mexico

Grupo LALA, S.A.B. de C.V., a Mexican Company focused on healthy and nutritious foods, ("LALA") (BMV: LALA), today reported results for the second quarter 2019. The following information has been presented based on International Financial Reporting Standards (IFRS) and in nominal terms.

Quarter Highlights:

Comparable Net Sales increased 3.3% in constant currency and 1.5% in consolidated figures, driven by +3.9% from Mexico with flat sales in Brazil, and a 9.6% BRL depreciation

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Comparable EBITDA grew 14.4% YOY, to MXN $2,210m

+130bps EBITDA margin expansion; the highest margin in the last six quarters, having all regions increasing margins

Mexico reached a 13.6% EBITDA margin, a 10bps YOY and sequential improvement

Brazil with a 7.8% EBITDA margin, mitigating high raw milk cost by anticipating price increase vs. competitors

USA delivered highest EBITDA since business was acquired, with 2.8% margin

Controlling Net Income expanded +44.6% YOY to MXN $536m, due to the strengthened Operating Income and optimized tax rate

-290bps YOY Working Capital improvement, to 2.7% of sales

3.1x leverage ratio (pro forma of 2.9x including Itambé settlement paid on July 3, 2019)

The following chart provides an abridged Income Statement, in millions of pesos. The margin for each figure represents its ratio to net sales for the quarter ended on June 30, 2019 as compared to the same period in 2018. Net Sales and EBITDA information related to Q2'18 has been presented on "comparable" basis. Comparable Q2'18 figures will include the effect of IFRS 16 and the deconsolidation of Elopak.

MXN$ in millions	Q2´18	% Sales	Q2'19	% Sales	Var. %	Var. bps
Net Sales	18,596 ⁽¹⁾	100%	18,876	100%	1.5%
Gross Profit	6,611	35.0%	6,839	36.2%	3.4%	+120bps
Operating Income	1,311	6.9%	1,452	7.7%	10.8%	+80bps
EBITDA⁽²⁾	1,932 ⁽¹⁾	10.4%	2,210	11.7%	14.4%	´+130bps
Controlling Net Income	371	2.0%	536	2.8%	44.6%	+80bps

(1) Comparable figures, including IFRS 16 adjustments and the deconsolidation of Elopak JV
(2) EBITDA is defined as operating income before depreciation and amortization

MESSAGE FROM MANAGEMENT

Mauricio Leyva, Grupo LALA's CEO, commented:
"The virtuous cycle is in place and starting to deliver results, albeit lower than expected topline growth in Q2. Productivity initiatives are fueling resources for our premiumization and value-added growth strategies in Mexico, allowing us to invest more in innovation and categories like premium milk and plant-based beverages. We have started to see signs of profitability recovery, as well as a strengthened working capital, setting the path to deleverage the business and increase value for our shareholders."

https://www.yumda.com/en/news/1162112/grupo-lala-reports-second-quarter-2019-results.html