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By Lorraine Orlandi
MEXICO CITY, April 29 (Reuters) - Mexican retail and industrial conglomerate Grupo Carso posted a 46-percent drop in first-quarter net profit on Tuesday as a cloudy industrial environment again dampened operating results.
Carso -- part of the business empire of Latin America's richest man, Carlos Slim -- said its first-quarter net profit was 459 million pesos ($45 million based on Tuesday's exchange rate), compared with 849 million pesos in the first quarter of 2002.
The result was below expectations as the average forecast in a Reuters poll of analysts saw Carso's net profit dropping 40 percent to 507 million pesos.
"The quarter was in line with expectations, a weak report as expected," said Luis Miranda, an analyst at Santander brokerage in Mexico City.
Net profit was hit mainly by exchange rate losses. Mexico's currency depreciated 16 percent in the 12 months to March 31, making companies' dollar-denominated debt more costly to finance. The peso weakened 3.39 percent against the greenback in the first quarter.
Carso's earnings before interest, taxes, depreciation and amortization (EBITDA) fell 3.5 percent to 2.078 billion pesos. The Reuters poll expected EBITDA to come in almost flat at 2.150 billion pesos.
As in the past several quarters, sluggishness in global industrial activity and the Mexican economy dragged on Carso's first quarter, flattening sales and earnings, though the retail operations fared better than the industrial side.
LOW SALES, WEAK DEMAND
Its Condumex unit, which produces cables for the construction, auto and telecommunications sectors and represents the largest chunk of EBITDA for the conglomerate, again suffered from low prices and weak demand, with sales dropping 6 percent from the same period a year ago, Carso said.
The unit was hard hit by limited capital expenditures by its major client Telefonos de Mexico (Telmex) , which is another piece of the Slim business empire, analysts said.
On the retail side, Grupo Sanborns restaurants and stores and the Sears department stores in Mexico saw sales grow 4.1 percent, despite consumer doldrums, boosted by successful advertising and increased long-term credit programs for shoppers.
Analysts have said Carso's future would brighten alongside the recovering economy this year, based on its solid position in the market and healthy balance sheet.
But Condumex in particular will continue to suffer from falling capital expenditures on the part of telecommunications companies, analyst Miguel Aguayo of Interacciones in Mexico City said.
"We don't expect great growth...stable numbers (and) nothing more," he said, predicting some recovery for the conglomerate toward the end of the year.
Carso shares closed down 1.43 percent in Tuesday trade at 29.04 pesos per share before the results were announced. The stock has gained 13 percent since last year's close, compared with a 6-percent gain for Mexico's IPC index of leading shares.
($1 = 10.3050 pesos)