Betterware De Mexico, S.A. De C.V ((BWMX)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Betterware De Mexico, S.A. De C.V. painted a generally positive picture, highlighting significant revenue growth driven by Jafra Mexico and the resilience of Betterware Mexico. While challenges such as Jafra U.S.’s performance and supply chain issues in Mexico were acknowledged, the company’s strategic initiatives and milestones suggest a confident outlook for sustainable growth.
Double-Digit Revenue Growth
BeFra reported an impressive double-digit revenue growth of 11.1% in Q4 2024 compared to the same period last year. This growth was primarily fueled by Jafra Mexico’s remarkable 22.2% increase, showcasing the strength and potential of the company’s operations in Mexico.
Jafra Mexico’s Performance
Jafra Mexico continued to perform strongly, achieving a 13% increase in revenue for the full year 2024. Its EBITDA also saw a significant rise of 15.4%, with margins expanding to 20.7%, reflecting the company’s operational efficiency and market strength.
Betterware Mexico’s Resilience
Despite broader challenges, Betterware Mexico demonstrated resilience with a 1.5% revenue growth in Q4 and a 4.6% increase for the full year 2024. This consistent performance underscores the company’s ability to navigate a challenging economic environment.
Notable Milestones
In 2025, Betterware Mexico will celebrate its 30th anniversary, and BeFra will mark the fifth year since its U.S. IPO. These milestones are accompanied by significant growth achievements, highlighting the company’s long-term vision and strategic success.
Gross Margin Improvement
The company’s consolidated gross margin improved by 116 basis points to 67.3% in Q4 and expanded by 70 basis points to 67.9% for the full year 2024. This improvement indicates effective cost management and operational efficiencies.
Dividend and Financial Position
A dividend of MXN250 million was proposed for Q4 2024, marking the 20th consecutive dividend since the 2020 IPO. This commitment to long-term shareholder value underscores the company’s strong financial position.
Challenges in Jafra U.S.
Jafra U.S. faced a 17.6% revenue decline in Q4 due to difficulties with the Shopify Plus implementation, contributing to a 2.7% decrease for the full year. This highlights the operational challenges faced in the U.S. market.
Supply Chain and Cost Challenges
Unexpected challenges in Mexico’s international supply chain led to a shortfall in EBITDA, with headwinds from Mexican peso depreciation and increased import duties. These factors underscore the external pressures impacting financial performance.
Free Cash Flow Decline
Free cash flow declined by 21.6% for the year, primarily due to an extraordinary cash inflow in 2023. Despite this decline, it remains within the normal historical range, indicating manageable financial health.
Jafra Mexico Margin Contraction
Jafra Mexico’s gross margin contracted by 460 basis points in Q4 due to prior year synergies and cost reductions not affecting 2024. This contraction highlights the challenges in maintaining margin levels.
Forward-Looking Guidance
Looking ahead to 2025, BeFra anticipates mid to high single-digit growth in both net revenues and EBITDA, ranging from 6% to 9%. This outlook is supported by strategic initiatives and a solid financial position, with a net debt to EBITDA ratio of 1.76. The company plans to celebrate milestones, expand market share, and pursue new growth opportunities across international and domestic markets.
In summary, the earnings call for Betterware De Mexico, S.A. De C.V. reflected a positive sentiment with significant revenue growth and strategic milestones. Despite challenges in Jafra U.S. and supply chain issues, the company’s resilience and forward-looking strategies provide a confident outlook for sustainable growth.