MercadoLibre Inc., the largest e-commerce company in Latin Americaposted better-than-expected first-quarter earnings, buoyed by growth in its largest market after the collapse of Brazilian retailer Americanas SA.
Net income more than tripled from the prior year to a total of US$201 million, above the US$154.4 million forecast by Wall Street, as it gained even more market share in Brazil’s e-commerce sector and posted double-digit growth in its fintech arm in Mexico and Argentina. The company’s operating margin increased to 11.2%, also exceeding expectations.
“Brazil had a pretty good quarter in trade and we are gaining very strong market share, above our expectations”said André Chaves, Senior Vice President of the firm, In an interview. The company’s volume growth in Brazil recorded “marked acceleration in a market that has slowed overall.”
MercadoLibre contemplates expanding its investments in the credit business
Gross sales volume was US$9.4 billion during the periodhelping push total revenue to $3 billion.
After the retailer Americans, based in Rio de Janeiro, filed for bankruptcy in January, investors began to look at the potential for rivals like MercadoLibre to expand their market share. The Americanas debacle, which occurred after the disclosure of tax inconsistencies, led other companies to improve their bargaining power with suppliers.
MercadoLibre’s loan portfolio grew modestly to US$3 billion, and the company “is not eager” to speed up the pace of lending, especially in Brazil, Chaves said. Latin America’s largest economy has been facing a substantial deterioration in credit conditions amid high rates and corporate dramas in recent months.
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Meanwhile, the company benefits from increased adoption of its savings solutions in Argentinawhile expanding its offer of credit cards in Mexico, he added.
Last month, MercadoLibre announced plans to boost hiring across the region, challenging layoffs in the technology sector and bringing its total workforce to 53,000 this year.
Other key points:
- Volume of payments US$37,000 million, estimated US$34,800 million
- Net income US$201 million, estimated US$154.4 million
- The loan portfolio increased 11% from the prior quarter to $3 billion
- Loans more than 90 days past due fell to 28.2% from 29.6% in the fourth quarter
- The company is in a comfortable cash position. Not watching the bond market right now
- More than 20 million people save in MercadoPago throughout the region
- Mexico will absorb most of the new logistics capacity added to the region
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