E-commerce giant MercadoLibre's 4th-quarter profit stable after tax hit

MercadoLibre

22/02/2024 21:05

SAO PAULO, Feb 22 (Reuters) - Latin American e-commerce
giant MercadoLibre  MELI.O  on Thursday reported a $165 million
fourth-quarter net profit, as higher sales were offset by a tax
hit, with results flat versus the year-ago period.
    The net profit was dented by two one-off taxes provisions in
Brazil totaling $351 million, and came in below the $356 million
net profit forecast by analysts polled by LSEG.
    MercadoLibre said the provisions should not have a material
cash impact going forward.
    Senior vice president of strategy and corporate development
Andre Chaves told Reuters that the market had been prepared for
the tax provisions, following local court rulings linked to
differential Brazilian rates and payments to Argentina.
    Excluding the one-offs, MercadoLibre's net profit would have
been $383 million.
    MercadoLibre posted a 42% year-on-year increase in quarterly
net revenues to $4.26 billion, bringing income from operations -
excluding one-offs - to $572 million from $322 million a year
earlier. Sales in Brazil, its largest market, rose 35% as
measured by gross merchandise volume.
    Analysts had expected net revenues of $4.12 billion.
    MercadoLibre, nicknamed the Amazon  AMZN.O  of Latin
America, has reported strong growth over the last quarters, but
analysts have questioned its ability to maintain its pace of
growth with profitability.
    The firm said its quarterly operating margin without
one-offs stood at 13.4%, compared with 18.2% in the third
quarter, but due to adjustments it was unclear how comparable
the numbers were.
    "Seasonally, we always have margin compression in the fourth
quarter," Chaves said, adding that MercadoLibre was impacted by
factors such as more promotional spending, notably for Black
Friday in Brazil and Buen Fin in Mexico.
    Brazil brings in more than half the company's net revenues,
while Argentina and Mexico each contribute around a fifth.     
    At the company's fintech arm, Mercado Pago, net revenues
grew 34%.

 (Reporting by Andre Romani; Editing by Leslie Adler)
 ((sarah.morland@thomsonreuters.com;))