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By Aida Pelaez-Fernandez, Natalia Siniawski
(Reuters) -Mexican bottler Arca Continental on Thursday posted a rise in third-quarter core profit, citing an effective pricing strategy and momentum in the United States, despite challenges in South America.
Arca, which sells bottled water, soft drinks and snacks across the Americas, reported earnings before interest, taxes, depreciation and amortization (EBITDA) of 12.68 billion pesos ($644.12 million), up 10.2% from the year-ago quarter and compared to a forecast of 12.49 billion pesos by analysts polled by LSEG.
"Arca Continental reported a solid set of third-quarter results, slightly ahead of our and consensus estimates, while continuing to underscore the favorable operating momentum for the company, particularly in the U.S.," Banco Santander analysts said in a note.
In the U.S., the company's EBITDA jumped 24% year-over-year, while the core profit in South America grew only 1%.
"In South America, the region was challenged once again by the volatile macroeconomic environment and weakening consumer demand," company CEO Arturo Gutierrez said in an earnings call.
In Mexico, the company's biggest market, net sales rose, driven by selective price increases. Arca expects volumes to grow by low single digits in 2024 compared with the previous year, Gutierrez said.
Speaking about sugar prices in Mexico, one of the key raw materials in soft drinks, Arca's CFO, Emilio Marcos, said there is a stabilizing trend in the fourth quarter with prices going lower than the previous quarter.
The company's net profit increased 13% year-over-year to 5.13 billion pesos, while net sales were up 10% at 62.61 billion pesos. However, both were slightly below the forecast of 5.57 billion pesos and 61.51 billion pesos, respectively.
"We cannot assure the future political environment in Mexico and the United States, over which we have no control, will not have a material adverse effect on our business, results of operations, financial condition or prospects," the Mexican company said in a statement.
However, according to Gutierrez, the bottling company is currently on track to achieve full-year results in line with its projected outlook.
($1 = 19.6921 Mexican pesos at end-Sept)
(Reporting by Aida Pelaez-Fernandez and Natalia Siniawski; Editing Pelaez-Fernandez and Leslie Adler)