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01/11 16:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with revenue and EBITDA growth, improved margins, and consistent dividend history, indicating a positive outlook. Despite some concerns about macroeconomic uncertainties and unclear management responses on the Chinese market, the company's strategic initiatives and optimistic guidance outweigh these issues. The stock is likely to experience a positive movement, driven by revenue growth, improved financial metrics, and shareholder returns.
Consolidated Revenue Grew 5.1% year-over-year and 1.8% quarter-on-quarter. The growth was driven by all business units.
Betterware Mexico Revenue Increased 4% quarter-over-quarter, recovering from a 9.8% year-over-year decline in Q1 to a negative 1.1% year-over-year in Q2. The improvement was due to aggressive pricing strategies, product investments, and a modest consumption rebound in Mexico.
Betterware Mexico EBITDA Margin Achieved 19.9%, supported by higher SG&A efficiencies and improved supply chain management.
Jafra Mexico Revenue Increased 10.9% year-over-year. The growth was driven by rebranding efforts, sales force productivity, and pricing adjustments.
Jafra Mexico EBITDA Margin Expanded to 21.2%, supported by revenue growth and disciplined expense control.
Jafra US Revenue Decreased 8.9% year-over-year but rebounded 15.6% quarter-over-quarter. The improvement was driven by a new incentive plan and increased associate engagement.
Consolidated Gross Margin Was 67.1%, mainly in line with last year, reflecting commercial investments in proactive pricing strategies.
Betterware Mexico Gross Margin Was 55.2%, down 127 basis points year-over-year due to proactive pricing strategies.
Jafra Mexico Gross Margin Was 75.3%, down 167 basis points year-over-year due to pricing changes to support underweighted categories like skin care and cosmetics.
Jafra US Gross Margin Improved to 76%, supported by a favorable mix of higher-margin products and procurement savings.
Consolidated EBITDA Increased 3.5% year-over-year to MXN 679 million with a margin of 19.1%. This was a rebound after temporary effects in Q1 2025.
Free Cash Flow Rose to MXN 592 million in Q2, with a year-to-date conversion of 44.2% of EBITDA and 87% conversion for the quarter.
Consolidated EPS Grew 7.7% year-over-year, supported by revenue and EBITDA increases, lower financial costs in Mexico, and a MXN 45 million decrease in income tax.
Debt Leverage Net debt-to-EBITDA ratio improved to 1.97x, down from 2.08x in Q1 2025 but higher than 1.8x in Q2 2024. The increase was due to incremental short-term debt in Q1.
New product launches in home solutions and kitchen categories: Betterware sales growth driven by seasonality concepts such as heat, insect, and rain control outperforming the previous year.
Rebranding efforts in Beauty and Personal Care: Fragrance rebranding led growth with success of Navigo and Double Nature; revitalization of Royal Jelly in skin care.
Upcoming product launches: Launch of a new spot remover under the BioLab skin care brand and Around the World fragrance collection targeting the U.S. market.
Geographic expansion: Launched Betterware Ecuador in May, surpassing Q2 goal with 2,500 active associates. Positive growth in Betterware Guatemala. Assessing Colombian market for entry in 2026.
U.S. market-specific innovations: Launching Around the World fragrance collection and new catalog design in Q3 2025.
Associate and distributor growth: Betterware Mexico achieved 3.3% associate growth and 3.5% distributor growth quarter-on-quarter. Jafra Mexico's associate base increased 2.3%.
Technology improvements: Improved sales app functionality, enhancing back order process and digital payments.
Operational efficiencies: Higher SG&A efficiencies and improved supply chain management contributed to profitability.
Pricing strategies: Revised pricing to improve affordability and competitiveness without heavy reliance on promotions.
Compensation plan revamp: New incentive and loyalty programs rolled out in Jafra US to foster growth and activity.
Economic Uncertainty: The company highlighted the challenging economic conditions in Q1 2025, which required agility and resilience to navigate. This indicates ongoing risks related to economic uncertainties that could impact performance.
Pricing Strategies: Aggressive pricing strategies were implemented to boost sales and competitiveness, but these have led to reduced gross margins in some segments, such as Betterware Mexico and Jafra Mexico. This poses a risk to profitability if not managed carefully.
Supply Chain Management: While supply chain efficiencies were mentioned as a positive, any disruptions or inefficiencies in the future could adversely impact operations and profitability.
Debt Leverage: The net debt-to-EBITDA ratio remains higher than the previous year, indicating financial leverage risks. Although it has improved from Q1 2025, it still poses a challenge to financial stability.
Market Entry Risks: The company is assessing entry into the Colombian market for 2026. Geographic expansion carries inherent risks, including market acceptance, regulatory challenges, and operational execution.
Jafra US Performance: Jafra US experienced an 8.9% year-on-year revenue decline, although there was a quarter-on-quarter rebound. The ongoing losses and the need to reach breakeven by year-end highlight operational and market challenges in the U.S. segment.
Regulatory and Tax Adjustments: The company benefited from a positive tax adjustment related to a 2024 audit. However, regulatory and tax compliance remains a potential risk area that could impact financials if not managed effectively.
Revenue Growth: Betterware Mexico expects a continuation of the shift in consumer purchases towards a higher mix of line items and fewer promotional ones, which is projected to further improve margins in the second half of the year. Jafra US is expected to achieve breakeven by year-end 2025 through continued improvement in the top line and disciplined cost controls.
Market Expansion: BeFra is assessing the Colombian market for entry in 2026, with a focus on Central America and the Andean region of Latin America as important growth markets. Betterware Ecuador surpassed its Q2 2025 goal with 2,500 active associates, and Betterware Guatemala returned to positive sales growth in Q2 2025.
Product Launches and Innovations: Jafra Mexico plans to rebrand its Royal body brand in Q3 2025 and launch a new spot remover under the BioLab skin care brand. Jafra US will launch the Around the World fragrance collection in Q3 2025 and introduce a new catalog design in September 2025.
Financial Guidance: BeFra aims to reach its historical free cash flow conversion level of around 60% of EBITDA for the total year 2025. The Board of Directors is proposing a MXN 200 million dividend for Q2 2025, subject to ratification.
Dividend Proposal: The Board of Directors is proposing a MXN 200 million dividend from Q2 2025, subject to ratification at the Ordinary General Shareholders' Meeting on July 31.
Dividend History: This would mark the 22nd consecutive dividend since the company's IPO in 2024, highlighting a consistent commitment to shareholder returns.
The earnings call reflects a positive sentiment overall, with strong financial performance, including significant EBITDA growth and improved margins. The company is making strategic expansions and product innovations, and has a solid financial health with reduced debt. The Q&A highlights effective cost management and strategic initiatives in technology and market expansion. The dividend resumption and positive guidance further enhance the outlook. Despite some concerns about consumer trends and unsustainable margins, the overall sentiment leans towards a positive stock price movement.
The earnings call reveals strong financial performance with revenue and EBITDA growth, improved margins, and consistent dividend history, indicating a positive outlook. Despite some concerns about macroeconomic uncertainties and unclear management responses on the Chinese market, the company's strategic initiatives and optimistic guidance outweigh these issues. The stock is likely to experience a positive movement, driven by revenue growth, improved financial metrics, and shareholder returns.
The earnings call reveals several negative factors: a decline in revenues and EBITDA, increased net debt, and negative free cash flow. The Q&A session highlighted management's uncertainty about inventory and returns, and their vague responses failed to instill confidence. Despite a proposed dividend, the economic and competitive pressures, along with profitability risks, outweigh positive aspects. The market is likely to react negatively to the weak financial performance and cautious outlook, leading to a predicted stock price decline of -2% to -8% over the next two weeks.
The earnings call highlights several negative factors: revenue and EBITDA declines, gross margin compression, negative free cash flow, and a high net debt to EBITDA ratio. Economic volatility, consumer trend softening, and currency depreciation are significant concerns. The Q&A reveals management's uncertainty about improving returns and vague responses about deceleration timing. Despite a proposed dividend, the overall sentiment is negative, especially with weak financial results and economic challenges, suggesting a stock price decline of -2% to -8%.
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