MercadoLibre says it manages to offset costs through pricing

AM hair salon owner Andrea Manoli is pictured using the Mercado Pago app, at her store in Buenos Aires, Argentina October 15, 2020. REUTERS/Agustin Marcarian

May 5 (Reuters) – MercadoLibre Inc (MELI.O) said it was so far managing to recoup higher costs by raising prices as the South American e-commerce giant reversed its loss a while ago a year, helped by the growth of its financial services unit.

Chief Financial Officer Pedro Arnt said in a call with analysts that MercadoLibre was trying to “pass on” costs due to rising transport, labor and oil prices.

“I think we’ve done a good job of trying to offset that pressure through pricing,” he said.

The Nasdaq-listed Argentine company posted a quarterly profit of $65 million after a loss of $34 million a year ago, although the profit figure missed analysts’ forecasts at Refinitiv.

The company’s net revenue increased 67.4% in local currency to $2.2 billion, as strong growth at its fintech unit Mercado Pago helped offset a post-pandemic slowdown in the number of new customers in Mercadolibre’s core e-commerce business.

“Market growth has remained consistent, primarily due to the behavior and growth of the buyer base,” Chief Financial Officer Pedro Arnt said in a statement.

The company, which operates in 18 countries including Brazil, Mexico and Colombia, said active users rose 15.7% from a year ago to 80.7 million, although that was a slight drop compared to the end of December.

Its gross merchandise volume (GMV), a widely watched figure for the performance of the e-commerce industry, rose 26.5% year-on-year to $7.7 billion.

Mercado Pago reported a 72% increase in total payment volume to $25.3 billion. The unit, which operates in credit, insurance and investments, now represents 45% of the group’s revenues in Brazil, its main market.

Mercado Pago’s loan portfolio reached $2.4 billion in the quarter, more than four times higher than the same period from 2021.

The executives said on the conference call with analysts that they were looking to “significantly expand” their buy-it-now and pay-later service, called Mercado Credito, in the future.

Reporting by Aluisio Alves and Kylie Madry; Written by Carolina Pulice; Editing by Leslie Adler and Diane Craft

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