Earnings Report /
Mexico

Grupo GICSA SAB de CV: GICSA, Quarterly Report 1Q21: Double-digit declines at the beginning of the year

  • GICSA's figures reflected double-digit declines, impacted by temporary closures of some of its shopping centers

  • NOI declined 20.4% y/y. However, cost efficiencies slightly improved profitability

  • Collections sequentially deteriorated 16pp to 64%, which led to a 19.7% q/q increase in accounts receivable

Valentin III Mendoza Balderas
Valentin III Mendoza Balderas

Senior Equity Research Analyst, Consumer & Telecoms

Follow
Juan Barbier
Juan Barbier

Equity Research Analyst

Follow
Banorte
5 May 2021
Published byBanorte
  • GICSA's figures reflected double-digit declines, impacted by temporary closures of some of its shopping centers. However, cost efficiencies slightly improved  profitability

  • Collections sequentially deteriorated 16pp to 64%, which led to a 19.7% q/q increase in accounts receivable. As a result, cash generation and leverage remain under pressure

2021 started with impacts due to the epidemiological indicator measures. GICSA's report was weak, as temporary closures in most of its shopping centers affected results. GLA grew 5.9% year-over-year to 965,360m2, driven by the recent opening of La Explanada Culiacán. Meanwhile, occupancy declined 400 bps y/y to 85%, and average rent declined 3.6%, reflecting a higher contribution from the Explanadas, which have slightly lower rents per m2 than the rest of the commercial portfolio. The company granted additional support to its tenants for MXN 75 million, due to the new closings. As a result, revenues fell 20.7% y/y to MXN 919 million, mainly impacted by an 18% drop in fixed rents (from concessions granted), coupled with decreases in all additional sources of income. Meanwhile, NOI declined 20.4% y/y to MXN 760 million, while efficiencies in real estate operating expenses led to a 30 bps expansion in the respective margin to 82.7%. As for EBITDA, it fell at a slower pace (-14.7% y/y) to MXN 747 million, due to lower activity in the service companies and a 35% reduction in corporate expenses. Finally, a net loss of MXN 194 million was recorded, reflecting operating weakness and a higher effective tax rate.

The economic environment has continued to increase the already high leverage. In the quarter, ND/EBITDA ratio rose further to 9.7x from 8.7x in 4Q20, due to cash generation pressure, as collections deteriorated for the pandemic.