Grupo Mexico’s earnings beat forecasts, fueled by freight

Mining and transport conglomerate Grupo Mexico on Wednesday posted an 8% jump in its first-quarter net profit, beating estimates thanks to its transport subsidiary even as its mining segment lost ground, hit by lower copper prices.

Grupo Mexico’s net profit came in at $1.1 billion, ahead of the $873.4 million estimated by analysts polled by Refinitiv, which the firm attributed to “record” results in its transport arm and strong earnings in its infrastructure division.

Grupo Mexico, one of the world’s largest copper miners with freight railroads across Mexico, United States, Peru and Spain, also reported revenue for January to March up 2.6% from a year earlier at $3.86 billion.

The transport division saw growth across the board, shipping record volumes, primarily in the agricultural sector, which boosted the segment’s revenue 18.3%.

However, Grupo Mexico’s mining division saw revenue slip 1.1% compared to the same period a year earlier, which the firm attributed primarily to lower copper prices even as operations in Peru helped boost output 3.6% over the quarter.

Peru has seen months of deadly protests amid an extended political crisis, but a Peruvian minister told Reuters in March that mines were starting to transport copper concentrate to ports for export once again.

Grupo Mexico, which owns Southern Copper – one of the world’s biggest copper producers – said that despite the higher output, prices for the red metal had dipped nearly 10% from a year earlier.

The company also trimmed its 2023 investment plan to $1.76 billion, down from the $1.83 billion it had previously planned.

Grupo Mexico’s earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter came in at $2.11 billion, down 4.5% but beating the $2.04 billion forecast by analysts in polled by Refinitiv.

The conglomerate is controlled by billionaire German Larrea, one of Mexico’s richest entrepreneurs, and is reportedly one of the bidders to acquire Banamex, the local retail banking arm of US lender Citigroup.

(By Kylie Madry, Carolina Pulice and Valentine Hilaire; Editing by Sarah Morland and Stephen Coates)