(Adds CFO’s comments on selling assets, participating in Mexico oil auctions)
By Anthony Esposito
MEXICO CITY, July 26 (Reuters) - Mexican conglomerate Alfa on Wednesday posted a 68 percent year-on-year surge in net profit for the second quarter, citing increased sales and a more favorable exchange rate.
The company, which manufactures car parts, petrochemicals and other products, said in a report to Mexico’s bourse that it earned 1.37 billion pesos ($75.6 million) in net profit over the three-month period.
In recent quarters, Alfa’s results have been undercut by the peso currency’s volatility.
Alfa’s food unit Sigma, for example, was hit by currency fluctuations on both sides of the ledger in the first quarter as it paid more for materials purchased in dollars, while its earnings suffered as it sells goods in pesos.
In the second quarter, consolidated sales increased 8 percent to 78.7 billion pesos ($4.3 billion).
“We saw strong performance at Sigma mainly driven by its Mexican and European operations. In addition, solid results and the first phase of tower sales at Axtel also contributed positively to overall results,” Alfa President Alvaro Fernandez said in a statement, referring to Alfa’s information and communications technology unit.
But lower volumes in North America impacted results of Alfa’s auto parts maker Nemak, while lower oil prices and lower polyester margins hit results at its petrochemicals unit Alpek, Fernandez added.
Alfa said it was still moving forward with plans to sell its energy projects in the Eagle Ford shale formation in Texas, as well as its energy assets in Peru.
“There will be some 500 oil blocks auctioned in 2017 and 2018 in Mexico and that’s obviously of great interest to us and in order to participate we need financial resources and that prompted us to explore the possibility of monetizing some assets abroad,” Alfa’s Chief Financial Officer Ramon Leal said on a conference call.
Leal said they had no timeline for when they would sell part of all of those assets, but would do so when market conditions were favorable.
“We’re interested in exploring on-shore blocks,” Leal said.
A consortium of Newpek, a unit of Alfa, and Verdad Exploration Mexico, won the second onshore oil and gas area auctioned in the so-called 2.3 Round of Mexico’s oil and gas tenders earlier this month.
$1 = 18.143 Mexican pesos on June 30 Reporting by Anthony Esposito, editing by G Crosse and Bernard Orr