Mexico restaurant chain operator Alsea posts sharp drop in third-quarter profit

(Reuters) -Mexico-based restaurant chain operator Alsea posted on Tuesday a worse-than-expected 98% tumble in its third-quarter net profit, due in part to a weaker Mexican peso against the U.S. dollar that also drove up financing losses.

Alsea, which operates chain restaurants and cafes including Starbucks (NASDAQ:SBUX ), Burger King and Domino's Pizza (NYSE:DPZ ), also cited "ongoing macroeconomic challenges," and a 90 million euro ($97.15 million) payment related to the acquisition of a European business earlier in the year.

The slim net profit of about 12 million pesos ($604,000) included the performance of Alsea's business in Argentina, where inflation is in the triple digits, and stripped out so-called IFRS 16 accounting effects, the company said in a statement.

Controlling for those variables, Alsea's net profit for the quarter would have totaled 186 million pesos, or down around 66% from the same quarter a year earlier.

Alsea reported that its quarterly revenues rose 6.5% from a year earlier to total 20.74 billion pesos.

The profit was far below the average forecast of analysts polled by LSEG, who predicted a quarterly net profit of just over 600 million pesos from expected revenues of 20.9 billion pesos.

"Although we are facing a difficult base of comparison, same-store sales rose by a high-single-digit (7.7%) from last year," Chief Executive Armando Torres said in a statement.

Alsea reported that its net sales during the three-month period rose by 11.7% excluding the exchange rate effect, while sales in Mexico, its main market, were up by 7.9%.

The company's total financing loss during the July-to-September period rose by about 80% to reach 1.48 billion pesos, an increase of 658 million pesos compared to the year-ago period, which it said was mainly due to a weaker Mexican peso.

($1 = 19.6921 Mexican pesos at end-September)

($1 = 0.9264 euros)

Source: Investing.com