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By Lorraine Orlandi
MEXICO CITY, July 24 (Reuters) - Mexican conglomerate Grupo Carso posted weak second quarter earnings on Thursday, as a sluggish economy and weak global industrial environment again dragged on results.
Carso, a retail and industrial conglomerate that belongs to the business empire of Latin America's richest man, Carlos Slim, reported earnings before interest, taxes, depreciation and amortization (EBITDA) down 11.3 percent from last year's quarter, to 2.038 billion pesos ($193 million), worse than expectations.
Analysts had forecast a 7 percent drop in EBITDA to 2.138 billion pesos in an earlier Reuters survey.
Carso said its net for the quarter was 746 million pesos, above analysts' forecasts and up 44 percent from April-June 2002, due mainly to foreign exchange gains as the peso currency strengthened and improvements on other nonoperational items.
EBITDA is often considered a more reliable indicator of profitability in Mexico, where noncash items can cause the bottom line to fluctuate wildly.
Carso's Condumex unit, which produces cables for the construction, auto and telecommunications sectors and represents about a quarter of sales for the conglomerate, again suffered from low prices and weak demand though it showed signs of improvement amid reactivated capital spending on telecable by Telefonos de Mexico (Telmex), another Slim venture.
"Though the market continues to present difficult conditions, Condumex in the second quarter reported better results than the previous quarter," Carso said in a report to the Mexican bourse.
Consolidated sales were up 1.2 percent to 13.134 billion pesos in the quarter, in line with analysts' expectations.
Retail operations, representing 33 percent of consolidated sales, fared better than the industrial units, with sales up 5.4 percent for retailer Grupo Sanborns .
Carso's future could brighten somewhat alongside the recovering economy expected for this year, though its industrial units will continue to lag overall, analysts said.
"The next quarter will be helped by Condumex, but the industrial areas are going to continue to be very depressed," said Banorte analyst Marcela Martinez. "It's still going to be difficult for Carso to get ahead ... until 2004."
On the retail side, Carso must focus on competing in a price war among major retailers to be profitable, Martinez added.
Carso shares closed up 0.73 percent on Thursday at 33 pesos per share. The stock has gained 29 percent since last year's close, compared with a gain of around 15 percent for Mexico's IPC index of leading shares . ($1=10.535 pesos)