Bread king paces Mexico’s biggest profit surprise in two years

Bloomberg

Mexican corporate profits are exceeding analyst estimates by the most in at least two years as consumer spending buoys Latin America’s second-biggest economy.
Grupo Bimbo SAB, the world’s largest bread maker, and Wal-Mart de Mexico SAB, the nation’s biggest retailer, were among the companies that posted first-quarter earnings that beat forecasts as local shoppers boost revenue. Companies in the IPC stock benchmark that have already reported results for that span exceeded profit projections by an average 14 percent, according to data compiled by Bloomberg.
Consumer spending in Mexico, fueled by job creation and interest rates near an all-time low, is helping support local growth amid weakness in sales of manufactured goods to the U.S. and tumbling oil exports. A report this week showed the economy expanded at the fastest pace in almost three years in February, and analysts see gross domestic product increasing 2.4 percent in 2016, countering the recession predicted for Latin America.
“On a macro level, it’s been been many good months, and now you’re starting to feel it,” said Jorge Unda, who oversees about $35 billion of assets as the chief Latin America investment officer at for Banco Bilbao Vizcaya Argentaria SA in Mexico City and is overweight in the consumer, infrastructure, industrial and financial industries.
Walmex’s sales in Mexico jumped 9.3 percent in the first quarter at stores open at least a year, followed by a 5 percent increase in Central America, Chief Executive Officer Guilherme Loureiro told analysts Tuesday. Meanwhile, Bimbo reported a 58 percent surge in net income from a year earlier, beating analysts’ estimates by 15 percent.
The surprising results helped spur a rally in stocks of both companies on Wednesday, with the IPC extending this year’s advance to 6.6 percent. The benchmark has trailed the 23 percent surge in the MSCI Emerging Markets Latin America Index in 2016.