Throughout the first nine months of the year, oil prices trended higher, climbing an accumulated 21% as of September. However, after peaking in mid October, oil prices had fallen 41% by year’s end. Such significantly drop in so short time devalued our inventory, reducing margins during the final quarter of 2018.
Despite difficulties experienced in the oil markets of Mexico and Brazil, we have managed to consolidate our sales and profitability growth.
During 2018, oil prices decreased 24.8% from USD 60.42 at the end of 2017 to USD 45.41 per barrel at December 31, 2018, as the following graph indicates.
Diversification: An important risk mitigation factor
Diversification of our customer and product portfolios constitutes a key part of our commercial strategy. It has allowed us to grow sales and margins despite the loss of an important part of the business we previously maintained in the oil, gas and mining sectors, in which activity remains greatly diminished. At present, the Company manages more than 7,100 products and more than 301,000 orders, delivering 313,000 tons to more than 20,500 customers per year. Our 5 main clients account for 6% of sales, our 5 leading products represent less than 5%, and no product or customer accounts for 3% of revenues.
2018 results reaffirmed the Company’s strengthening and profitability growth.
- Sales grew +2.1% during 2018 compared to 2017.
- Gross income increased +4.9%, gross margin in Mexico and Brazil (+50 bp), operating profit +14.5%, and EBITDA results Ps 385 million equal to +6.6%.
- We have yet to see signs of a recovery in mining nor in oil exploration and drilling in Mexico. However, diversification toward other sectors has compensated for the contraction in these segments, which until recently were Pochteca’s two main ones.