Mexico's Becle anticipates volatile but encouraging outlook, shares surge

Reuters

3 days ago

MEXICO CITY, July 24 (Reuters) - Executives at Becle (CUERVO.MX), opens new tab, the world's largest tequila producer, announced on Thursday that the company is seeing early signs of recovery in its main markets following declining demand.
The Jose Cuervo maker's profit rose fourfold in the second quarter, bolstered by foreign exchange gains. Its shares were up about 5% in morning trading.
"Encouraging early signs of recovery in key markets, alongside sustained demand for high-quality authentic brands, support a more constructive outlook ahead," CEO Juan Domingo Beckmann said during a conference call with analysts.
He added that in the year's second half, the company will focus on accelerating growth in the U.S. market.
Becle last year made nearly 60% of its net sales in the U.S. and Canada, and a further 25% in its home market of Mexico.
The U.S. has threatened fresh tariffs against Mexico, its top trade partner, from August 1, though Commerce Secretary Howard Lutnick on Sunday signaled that goods covered by the USMCA free trade pact - such as tequila - would remain exempt.
"To date, no significant material regulatory changes have occurred, and trade between the U.S. and Mexico remains stable under the current frameworks," Becle's Managing Director for the U.S. and Canada, Mauricio Vergara, said during the company's earnings call.
Looking ahead the tequila producer "expects near-term volatility to persist in the US and Canada as the industry adjusts to ongoing challenges," he added.
Excluding foreign exchange effects, liquor sales volumes fell in each of its operating markets except Mexico, dipping 7% in U.S. and Canada in the three-month period ending in June.
Becle attributed the drop in North America to Canadian retailers limiting their U.S.-related purchases, while noting that in the rest of the world inventories remained high.
($1 = 18.5733 Mexican pesos)