SAO PAULO: Latin American e-commerce giant MercadoLibre on Thursday reported fourth-quarter net profit of $165 million, with results flat year over year as sales growth was offset by the impact of taxes. .
Net income was weighed down by two one-time tax provisions totaling $351 million in Brazil, and fell short of the $356 million net profit expected by analysts compiled by LSEG.
MercadoLibre said the provision will not have a material impact on cash going forward.
Andre Chaves, senior vice president for strategy and corporate development, told Reuters the market was ready for tax provisions following a district court ruling related to Brazil's differential tax rate and payments to Argentina. Ta.
Excluding one-time items, MercadoLibre's net income would have been $383 million.
MercadoLibre's quarterly net revenue increased 42% year over year to $4.26 billion, and operating income excluding one-time gains was $572 million, up from $322 million a year earlier. Sales in Brazil, its largest market, increased by 35% based on total product volume.
Analysts had expected net sales to be $4.12 billion.
MercadoLibre, also known as the Amazon of Latin America, has reported strong growth in recent quarters, but analysts have questioned the company's ability to maintain the pace of growth with profitability.
The company said its operating margin for the quarter, excluding one-time items, was 13.4%, compared with 18.2% in the third quarter, but it is unclear how comparable that number is due to adjustments.
“Seasonally, there is always margin compression in the fourth quarter,” Chavez said, adding that factors such as increased promotional spending, particularly on Black Friday in Brazil and Buenfin in Mexico, impacted MercadoLibre. Ta.
Brazil brings in more than half of the company's net revenue, with Argentina and Mexico each accounting for about a fifth.
The company's fintech arm, Mercado Pago, saw a 34% increase in net revenue.
