Mexican distiller Becle, the world's largest tequila producer, has reported an 88% slide in third-quarter profit from last year amid slowing demand in some areas and a stronger peso, which diluted foreign earnings.
The Mexico City-based firm, which sells the Jose Cuervo family of tequilas as well as mezcal, whiskey and other liquors, reported net profit at 203.5 million pesos (€11.1 million), marking another consecutive quarter of slimmed down earnings.
On a currency-neutral basis, overall sales were up 4.3% and up 12.5% in the U.S and Canada, but this did little to quell the impact of the strong appreciation of the Mexican peso against the dollar in the period.
Volumes in Mexico were particularly affected, down 23.5% year-on-year, while sale volumes in the nonalcoholic drinks category also slumped 21.9%.
Revenues slipped 8.5% from July to September, landing at 10.5 billion pesos.
'Challenging Business Environment'
Becle's management said in a filing to Mexico's main stock exchange it had been hit by 'a challenging business environment, characterised by exchange rate appreciation and complex macroeconomic conditions.'
Financing costs were also up significantly, as were 'other costs'.
After reporting a net profit drop across several consecutive quarters, the company in July had forecast stronger results for later in the year, putting hope in improved agave prices, the prickly plant used to make tequila.
Becle's earnings before interest, tax, depreciation and amortization (EBITDA) also fell nearly 60% in the quarter, the company said.
'Our core business has shown resilience and adaptability in the midst of evolving challenges,' the company said.
Shares in Becle closed up 1.3% ahead of the report's publication Wednesday afternoon.