Despite Argentine crisis, Mercado Libre reports positive numbers thanks to operations in Mexico and Brazil

The devaluation of the Argentine peso is one of the main causes of the 3.7 million dollars in exchange losses suffered by the company during the last three months.
The devaluation of the Argentine peso is one of the main causes of the 3.7 million dollars in exchange losses suffered by the company during the last three months.

The devaluation of the Argentine peso is one of the main causes of the 3.7 million dollars in exchange losses suffered by Mercado Libre during the last three months.

For the third consecutive month, MercadoLibre reported a drop in its net income in dollars due to its operation in Argentina. This contrasts with the solid increase that the e-commerce platform registers in the Mexican market. In turn, the marketplace begins to lose prominence with respect to the off business (outside of sales) that in Argentina went on to process a higher volume of payments during the last quarter.

The company founded by Marcos Galperín presented its results for the period January-March 2019 and reported a net profit of 473.8 million dollars, with an increase of 47.6% against the first quarter of 2018. Of this number, 63% corresponds to the Brazilian market that registered income for 302.4 million dollars. Globally, marketplace revenues increased 79.8% year-on-year, while those outside the platform rose 22.4%.

Meanwhile, in Argentina, it had a net income of 93.8 million dollars, which implies a year-on-year fall of 8%, slightly more than 8 million dollars less. The country had already reported a drop in net profit, measured in dollars, during the third and fourth quarters of last year, 8% and 16%, respectively. In contrast, the Mexican operation increased its net income by 220% with 54.5 million dollars.

Mercado Pago reached 5 billion 600 million dollars processed in the first quarter of the year, a 35.1% increase over the same period of 2018; and totaled 143.9 million transactions, 93.7% more than in the first quarter of 2018. Of these figures, 45% belong to the off-platform business -posnet, virtual wallet, among others-, which grew 118.8%. In the Argentine market, the company's results report stands out, for the first time, this unit surpassed that of the marketplace in the volume of payments processed.

Within the e-commerce business, the company sold a gross volume of 3 billion 100 million dollars in products, 1.7% less than in the previous period. Although this figure implies an improvement over the performance of the first quarter of 2018 in which had reported a fall of 10.6 percent. In the first quarter of the year, it sold 82.8 million items, a growth of 3.3% that slowed down due to changes in the business strategy in Brazil. In that market, Mercado Libre eliminated all products under 6 reals and imposed a 5 reals quota for those that did not exceed 120 reals in value. This plan seeks to increase the sale of premium items and caused a 15% drop in the number of items sold in Brazil during the last quarter.

In the Argentine market, unit sales grew 40%; however, this increase was slightly lower than that registered during the first quarter of 2018 (44%), although it was higher than the one of the last quarter of last year (30%).

Likewise, the logistics unit of the firm was also strengthened in Argentina. According to its financial statements, Mercado Envíos reached a 56% penetration in Argentine territory, after increasing 19% during the period January-March 2018. In turn, it mentions, the Flex system implemented in November last year, which allows sellers make shipments in 24 hours, achieved a share of 5% of the total items shipped in Argentina, and in Buenos Aires already accounts for half of the operations. In total, Mercado Envíos moved 62.9 million items, an increase of 18.6%, which in the Argentine market was 110.8%, the most important when compared with the other operations.

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Mercado Libre announces an investment of 300 million dollars in Mexico

The Mercado Libre e-commerce platform announced that it will invest 300 million dollars in Mexico to promote financial inclusion, develop the country's economy and create jobs.

In that sense, the CEO and founder of the company, Marcos Galperin, explained through a statement that the company is convinced of the transformative power that technology has to equalize opportunities.

The executive explained that with this investment, Mercado Libre reiterates the commitment with Mexico to contribute to the achievement of objectives such as financial inclusion, economic growth, and employment generation, in order to support the economic and social well-being of Mexican families.

In addition, he indicated that this investment announcement comes a few days after the creation of the Council for the Promotion of Investment, Employment and Economic Growth, which will boost the strengthening of the domestic market.

On the other hand, the platform explained that it will continue with the development of technological solutions such as the digital wallet of Mercado de Pago, the payments through QR Code, prepaid cards to generate greater financial inclusion in Mexico.

Also, the expansion of the supply of loans to consumers through Mercado Crédito, which has placed more than 600 million pesos to sellers, thus boosting more than eight thousand entrepreneurs in the country.

A crucial element in this objective, he explained, are the two distribution and storage centers in the State of Mexico, to reduce costs to users and sellers, where the goal is to achieve increasingly faster shipments, at a lower cost and even free.

Finally, the CEO of the company added that, although there is still a long way to go, with this new investment, progress is made in leaps and bounds in the democratization of commerce, logistics, and money in the country.

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