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Reuters
5 days ago
- Business
- Reuters
Becle's stock surges after world's top tequila maker profit jumps
MEXICO CITY, July 24 (Reuters) - Shares in Becle ( opens new tab, the world's largest tequila producer, surged over 7% on Thursday after it reported a quadrupling in its second-quarter profit despite shrinking demand, and as executives indicated signs of recovery in the company's main markets. Becle, which makes the bulk of its income from Jose Cuervo family tequilas as well as a range of mezcals, vodkas, gins and whiskeys, saw close to 900,000 shares change hands the day after it reported results, which surpassed analysts' forecasts. Analysts responded positively to better-than-expected profit margins as the company benefited from a weaker peso, which boosted its peso-denominated U.S. sales, lower input costs and a long-standing strategy to position itself in more upmarket brands. Becle's margin on earnings before interest, taxes, depreciation and amortization jumped to 23.4% from 20.7% a year ago, even as net sales dipped 6% as the Mexican distiller shipped less volumes in all its foreign markets. "For the longer term, we wonder if the 25% EBITDA margins of yesteryear are a desert mirage or not," analysts at Scotiabank said in a note, pointing out that industry data showed a fast-paced worldwide plunge in thirst for spirits, notably in the United States where trade association numbers "tell a dire story." Analysts have attributed slowing demand to de-stocking following pandemic stockpiling, customers tightening wallets amid higher costs, a shift to pre-mixed canned options and other trends such as legal cannabis and health concerns. Becle, which also sells canned cocktails and non-alcoholic drinks, remains "resilient amid industry plunge," Scotiabank said, noting the company was selling off aging spirits it distilled when prices for agave - the spiked plant whose kernels are used to make tequila and smokier mezcal - were higher. Speaking in a call with analysts, CEO Juan Domingo Beckmann said Becle would focus on speeding U.S. growth in the second half of 2025. Becle makes some 60% of its net sales in the U.S. and Canada, and 25% in Mexico. "Encouraging early signs of recovery in key markets, alongside sustained demand for high-quality authentic brands, support a more constructive outlook ahead," Beckmann said. Speaking on the latest U.S. tariff threats, Becle's U.S. and Canada managing director, Mauricio Vergara, said trade remained stable under the existing frameworks and "to date, no significant material regulatory changes have occurred." Vergara said he still expected "near-term volatility to persist" as the industry adjusts to ongoing challenges. U.S. Commerce Secretary Howard Lutnick on Sunday signaled that the latest tariff threats should exempt goods covered by the North American free trade pact - such as tequila. Products named tequila or mezcal are protected by origin, like French Champagne, and must be made in Mexico. The on-and-off tariff threats have hit small-scale distillers hardest, as potential tariff hikes in a key market threaten long-term hiring and re-stocking plans. Agave plants take up to 10 years to harvest and higher-end, deeper-flavored aged tequilas can spend years in the barrel. Though tariff threats battered Becle's stock earlier in 2025, it ended Thursday up 0.55% from January. ($1 = 18.5733 Mexican pesos)
Reuters
5 days ago
- Business
- Reuters
Mexico's Becle anticipates volatile but encouraging outlook, shares surge
MEXICO CITY, July 24 (Reuters) - Executives at Becle ( 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)
