The “super” peso benefits some companies that import inputs from the Mexican Stock Exchange (BMV) such as Walmart de México, Volaris, Kimberly Clark and Cementos Mexicanos (Cemex), but at the same time it affects exporters and companies with operations in the abroad, such as Industrias Peñoles, América Móvil, Alsea, among others.
So far in 2023, the Mexican currency has appreciated 10.36%, with the exchange rate going from 19.5089 to 17.4887 pesos per dollar, according to data from the Bank of Mexico (Banxico). Of the 20 most traded currencies in the world, it is the one that appreciates the most in the year.
Just on Monday, the interbank dollar closed at its lowest level in more than seven years, at 17.4260 units, a minimum not seen since April 2016.
“Global investors have been reducing their perception of risk, which with the interest rate differential offered by Mexico, has represented an attractive short-term investment option for positions in pesos,” said Mario Correa, independent economic advisor .
The beneficiaries
Valentín Mendoza, Director of Stock Market Research at Actinver, explained that the companies that benefited most from the strength of the peso are those with a cost structure and dollarized inputs, but with their income (or most of it) in pesos.
Carlos González, Director of Analysis at Monex Casa de Bolsa, mentioned that this is the case of companies like Liverpool and Walmex, which import many goods in dollars, which they later sell in pesos.
Liverpool informed the BMV that of all the merchandise purchases it made at the end of 2022, 16% were in currencies other than the peso, while 100% of its sales are made in national currency.
Walmart de México reported an increase of 30 base points in its gross margin in the first quarter of 2023, from 23.2 to 23.5%, due to, among other factors, “lower import costs,” he explained in his last quarterly report sent to the BMV.
Valentín Mendoza affirmed that in addition, the low-cost airline Volaris also benefits from a positive effect on jet fuel costs, which are dollarized.
Volaris reported that while the price of jet fuel increased 12% year-on-year in the first quarter of 2023, to $3.46 per gallon, its operating expenses in terms of available seat miles (CASM) only rose 8.2%, to 8.03 cents. of dollar.
“The foreign exchange influence of the super peso could have contained the impact of 12% in the increase in the price of jet fuel,” said Alain Jaimes, a stock analyst at Signum Research.
Valentín Mendoza clarified that the positive effect of the exchange rate on the airline’s costs is offset by an impact on the dollarized income it receives from the international routes it has.
Another company that benefited was the Monterrey-based Cementos Mexicanos, which reduced its debt in dollars and foreign currency by 7.2%, thanks to the strength of the “super” peso, according to the Monex analyst.
The costs of sales of Kimberly Clark de México fell 0.1%, due to a favorable effect due to the appreciation of the peso in its supplies (resins and superabsorbent materials) that are mostly imported, according to a note from Actinver.
those affected
Carlos Hermosillo, an independent analyst, said that the companies that are affected by the “super” peso are those whose results (or a part of them) are dollarized or denominated in some other foreign currency, as is the case of exporters or companies with operations abroad.
Alain Jaimes said that in the face of a strong peso, the income generated by companies from exports or outside of Mexico, “is less when converting to pesos.”
“In addition, the costs in Mexico are higher, since if you have a cost of 100 pesos, with the exchange rate at 20, it is 5 dollars, but with the exchange rate at 17.4 pesos, you have to pay more dollars in costs”, explained Valentín Mendoza.
Industrias Peñoles said that the appreciation of the peso against the dollar “had a negative impact on the production costs incurred” in the Mexican currency. About 50% of the company’s costs originate in pesos.
For its part, América Móvil reported a 0.1% year-on-year drop in its net income for the first quarter of the year, due to the reduction in foreign exchange gains, according to the company’s finance director, Carlos García Moreno Elizondo.
For its part, Alsea, the restaurant operator, reported an impact on the exchange rate. It had a year-on-year rise in its sales of 16% in January-March, but in its report it assured that excluding the exchange rate, said item would have grown 25.7 percent.
While Bimbo had net sales of 99,565 million pesos, an interannual increase of 9.9% in the first quarter of the year. However, the company assured that without considering the effects of the appreciation of the peso, sales would have grown 18.4 percent.
The Coca-Cola FEMSA and Arca Continental bottlers highlighted to investors at the BMV that their sales would also have rebounded more, if it were not for the strength of the peso.
América Móvil, Alsea, Bimbo and the bottling companies have operations abroad, so their sales suffer a decrease due to the “super” peso.
Carlos González added that another sector that is suffering from the appreciation of the peso is that of real estate trusts (Fibras), since many collect rents in dollars, so they receive less pesos.
