Consorcio Ara SAB de CV (ARA) Q1 2025 earnings summary

Executive summary

• First quarter 2025 revenue reached MXN 1.85 billion, up 15.9% year-over-year, with net income of MXN 179.5 million, a 25% increase.

• 1,442 homes sold, 6.7% more than 1Q24, with average price up 9.1% to MXN 1,235,700, driven by a higher mix of middle-income and residential units.

• Revenue mix shifted toward middle-income and residential segments, while affordable entry-level homes declined due to project completion.

• Shopping center division posted revenues of MXN 125.9 million, up 6.9%, with a 93.5% occupancy rate and net operating income up 3.5%.

• Dividend of MXN 200 million (MXN 0.60428/share, 5.13% yield) approved, representing 29.1% of 2024 net income, to be paid from retained earnings and not subject to tax withholding.

Financial highlights

• Operating income reached MXN 181.8 million, up 11.8% year-over-year; EBITDA was MXN 245.4 million, up 4.3%, with margins of 9.8% and 13.3% respectively.

• Gross profit increased 19.7% to MXN 502.7 million, with a gross margin of 27.2%.

• Free cash flow was negative MXN 59 million, mainly due to inventory investments for new projects.

• EPS for the last twelve months was MXN 0.573, up 8.7% year-over-year.

Outlook and guidance

• Expectation of positive free cash flow by year-end despite ongoing inventory investments for 11 new phases and 5 new projects.

• Management maintains 2025 targets, monitoring for factors that may require strategic adjustments.

• Anticipate continued strong participation from middle-income and residential segments for the remainder of 2025.

• Operational margin expected to recover in coming quarters as extraordinary expenses subside.

• Positive industry fundamentals expected to support sustained demand and mortgage lending.