Mexico Companies Struggle as Taxes Hit Consumers Nacha Cattan - Bloomberg News
go to original August 6, 2014

MEXICO CITY – Mexican companies are struggling to shake off the effects of new taxes that hit consumers and sluggish economic growth, posting results in the second quarter that mostly missed analysts’ estimates.

Of the 35 companies listed on the IPC index, 34 so far reported total second-quarter net income of 5 billion pesos ($380 million), 4 percent less than analysts had projected, according to data compiled by Bloomberg.

That compares with companies listed on the emerging markets MSCI index whose members’ profits were 3 percent more than estimated.

President Enrique Peña Nieto introduced higher taxes on soft drinks, junk food, and most goods in border regions on Jan. 1, discouraging shoppers. Analysts had anticipated companies would rebound quickly amid increased government spending and economic overhauls.

Such measures were implemented after earnings missed estimates in each quarter since at least June 2012 as the nation’s growth ground to its slowest pace last year since the 2009 recession.

“The quarter has been very gray,” said Miguel Mayorga, a Latin America food analyst at Corporativo GBM. “There haven’t been many signs of recovery or anything that signals a change in trend.”

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