In-Depth Analysis of America Movil Financial Results

Telecommunications giant America Movil $AMX has recently reported a significant drop in net income for the fourth quarter, despite overall revenue growth. This outcome was largely influenced by currency losses, as explained by the company, which is controlled by the family of Mexican billionaire Carlos Slim.

Impact of Currency Fluctuations

America Movil attributed a substantial part of its reduced earnings to a higher overall cost of financing, with nearly half stemming from currency losses. This was particularly noticeable in Mexico, where the domestic market accounts for about 35% of total revenue. The Mexican peso depreciated by over 20% against the US dollar in 2024, heavily impacting the company's financial performance.

Financial Performance Dynamics

1. Drop in Net Income. In the fourth quarter, America Movil's net income was 9.48 billion pesos ($453 million), significantly below analysts' expectations. According to LSEG surveys, the average forecast was over double that amount, suggesting a net income of $1.15 billion.

2. Revenue Growth. The company's revenue for the reported period was 236.94 billion pesos ($11.35 billion), an increase of 18% from the previous year. However, it slightly missed the LSEG forecast of $11.41 billion.

Operational Activities Amid High Inflation

America Movil highlighted its revenue growth as largely supported by a new accounting methodology in Argentina. The country experienced inflation of 118% last year, presenting additional challenges for the company’s business in the region.

- The new methodology enabled adjustments to operational results in an unstable economic environment.

- Enhanced cost management and exploration of new opportunities in European and Latin American markets provide additional growth prospects.

Conclusion

Despite challenging economic conditions and currency fluctuations, America Movil continues to display resilience in its operational activities. The company has actively worked on increasing its revenue across various countries, indicating its strategy for adapting to rapidly changing market environments.