MercadoLibre net profit surges, driven by Brazil, Mexico
SAO PAULO, May 2 (Reuters) -Latin America e-commerce giant MercadoLibre MELI.O said on Thursday its first-quarter net profit surged 71% from a year earlier, beating analysts' estimates as its performance in Brazil and Mexico offset some negative effects in Argentina.
MercadoLibre, which operates a marketplace in 18 countries and also owns the fintech Mercado Pago, posted a $344 million net profit in the three months, while analysts polled by LSEG had expected a $314 million net profit.
The firm disclosed some changes in reporting, including reclassification of Mercado Pago interest income and expense lines, with a $99 million positive impact on net revenue but no impact on net income. The changes also include a swap in the terms and conditions of Mercado Envios, which had a negative impact of $10 million on net income.
MercadoLibre reported a $4.3 billion net revenue, up 36% from a year earlier and above the $3.9 billion estimated by analysts.
Sales from its main marketplace business rose 36% in Brazil, its top market, and 42% in Mexico, as measured by Gross Merchandise Value (GMV).
Operational margins, which analysts had negatively highlighted last quarter after higher logistics costs during the year-end peak, came in at 12.4%, up from the 11.2% a year earlier, without including the reporting changes.
CFO Martin de los Santos told Reuters that Argentina's macroeconomic situation had hurt margins, as a sharp currency devaluation late last year weighed on logistic costs and shrank its business there. Still, Brazil's and Mexico's performance have enabled a expansion year-on-year.
"We obviously continue to run a profitable business in Argentina. It's just that is not as profitable as it used to be", Santos said.
Argentina, where MercadoLibre was founded, represented 15% of its earnings before interest and taxes (Ebit) in the first quarter, from over 50% a year earlier.
MercadoLibre posted a total $528 million Ebit for the quarter, rising 29% from a year earlier, beating analysts' forecasts of $488 million.
For its fintech unit, MercadoLibre increased its credit portfolio by more than $600 million from the previous quarter, the most since early 2022, to $4.4 billion. The lower-term delinquency rate rose to 9.3% from 8.2% in December, but over-90 days rate fell to 17.9% from 18.7%.
"The fact that we have better delinquency rates and better profitability enable us to be more confident in growing our origination in consumer and merchant grades," Santos said..
Reporting by Andre Romani; Editing by Brendan O'Boyle
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