July 25, 2013 / 9:30 PM / 4 years ago

UPDATE 2-Mexico's America Movil core profit, revenue beat expectations

By Elinor Comlay

MEXICO CITY, July 25 (Reuters) - Latin America’s biggest phone company America Movil on Thursday reported better-than-expected second-quarter core profit and revenue, as more customers made mobile calls in Mexico and South America.

The company, controlled by billionaire businessman Carlos Slim and his family, had been struggling in recent quarters against tougher competition and slowing economic growth in some markets such as Brazil.

But customers in Brazil, Chile and Mexico helped drive a pickup in voice traffic in the quarter after two quarters of weakness, the company said.

Revenue rose 1.6 percent to 194.8 billion pesos in the quarter.

The improved revenue may go some way to assuage analysts’ concerns over growth potential in the region, which last year prompted America Movil to make its first investments in Europe.

Those investments have come under scrutiny as America Movil has accumulated deep paper losses. However, a deal announced by Telefonica this week to buy the German unit of Dutch telecoms group KPN - in which Slim has an almost 30 percent stake - could help pare the losses.

Shares of Slim’s flagship company have also taken a pounding in recent months on concerns he could be forced to sell assets under a wide-reaching overhaul of the telecom sector in Mexico. The stock is down 11 percent year-to-date, underperforming Mexico’s benchmark stock index, which is down 7 percent.

Several analysts contacted by Reuters said it was too soon to comment on the earnings statement. Company officials are due to hold a conference call with analysts on Friday.

Core profit, or earnings before interest, taxes, depreciation and amortization (EBITDA), came in at 65 billion pesos, slightly below the year-earlier quarter but ahead of analysts’ expectations of 61.88 billion pesos, according to a Reuters survey of six analysts.

Still, as the Mexican peso weakened against the U.S. dollar in the second quarter, the company paid more interest on its dollar-denominated debt.

America Movil reported a profit of 14.193 billion pesos (US$1.09 billion), up 8 percent from 13.157 billion pesos a year ago.

Net profit missed expectations, which was hurt by currency movements in the quarter as Mexico’s peso gained against some regional currencies but it weakened against the U.S. dollar.

The shares closed down 0.45 percent at 13.21 pesos before the results were announced.

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