|
|

Message from the chairman of the board

Our first-quarter 2024 results met the expectations set at the year's start, notwithstanding a persistently challenging period for the company. We have continued to prioritize protecting asset quality and strictly controlling expenses to sustain profitability. Additionally, we are focused on preserving liquidity, meeting debt obligations, and maintaining a strong balance sheet. We are actively exploring refinancing opportunities and hope to provide updates on our progress soon.

In the quarter, our loan book decreased by 8.9% compared to 1Q24, to reach Ps.15,560 million. This reflects our intentional strategy of restricting the growth of our leasing portfolio while prioritizing the generation of cash flow. Originations for the quarter totaled Ps.831 million, a 13.2% expansion, mainly driven by an increase in Credit operations. We prudently allocated our resources, focusing on maintaining a high-quality portfolio while preserving liquidity.

Regarding asset quality, the Non-Performing Loan (NPL) ratio remained at reasonable levels, ending the quarter at 3.9%. Meanwhile, our solid cash flow generation helped reduce our net debt by 12.3% YoY, reaching Ps. 12,032 million. As a result, our debt leverage ratio improved from 5.5x in 1Q23, to 5.2x at the end of 1Q24.

Total revenue for the quarter slightly declined by 0.3% YoY to Ps.745 million, due to a contraction in the commercial margin from fewer leasing operations, which offset a 1.1% YoY increase in interest income. We maintained strict control over administrative expenses and recorded a Ps.12 million tax benefit compared to the amount payable last year. However, the reduced commercial margin led to a decline of 59.0% in net income to Ps.15 million. As previously noted, this was driven by a strategic decision to downsize our business. Our individual loans remain profitable, and the company is generating free cash flow, as shown by debt reductions.

Regarding sustainability, we are continuing to make meaningful progress. We are currently working on our second sustainable bond report, slated for publication in May, and our third sustainability report. Additionally, we carried out a comprehensive analysis of our portfolio to assess the indirect environmental and social impact of our investments. We continued to work with the JIM Model to measure the greenhouse gas emissions count in our portfolio and detect in which sectors we can reduce our carbon footprint.

We remain firmly committed to meeting all our financial obligations. The reduction in our loan book reflects this commitment and strengthens our ability to navigate the sector's current challenges. Our underlying business, loan by loan, remains very profitable, andas the results show, the Company continues to generate positive cash flow. We are also expanding profitable business lines that diversify our risk profile and provide additional revenue flows. Looking ahead, we commit to upholding transparency and fostering open communication with our bondholders and other stakeholders.

 

Guillermo Romo
Executive Chairman

Operadora de Servicios Mega, SA de CV, SOFOM ER