(Updates with company comment in fourth paragraph.)
Feb. 8 (Bloomberg) -- Alfa SAB, the world’s largest producer of aluminum engine heads, said fourth-quarter profit declined 51 percent on a weaker Mexican peso and costs to expand its auto-parts business.
Net income fell to 1.1 billion pesos ($87.5 million) from 2.3 billion pesos a year earlier, the San Pedro Garza Garcia, Mexico-based company said in a filing today to the nation’s stock exchange. Sales rose 33 percent to 48.3 billion pesos.
Alfa, which got 55 percent of its revenue outside of Mexico in 2010, was affected as the peso weakened last year and fell 11 percent against the dollar. The company also said it invested $197 million to boost auto-parts production. Alfa’s other businesses include petrochemicals, processed foods and telecommunications.
The company attributed its revenue increase to “organic growth, improvements in operations and acquisitions in the petrochemical business.” Chief Executive Officer Alvaro Fernandez said in the filing that “we continue serving high- demand markets and we are developing the new business of natural gas and hydrocarbons.”
Alfa rose 1.6 percent to 173.89 pesos at 1:52 p.m. in Mexico City. The shares gained 13 percent this year through yesterday.
The company made acquisitions valued at least $1.36 billion since September 2010 in South Carolina, Arizona and Mississippi to expand production of plastics and processed meat.
The Alpek SA petrochemical and fiber unit is expanding through acquisitions to take advantage of demand for materials such as polyethylene terephthalate, known as PET and used in plastic bottles. Alfa last year bought three plants from Eastman Chemical Co. and one from Wellman Inc. to boost production.
Alpek may offer shares to the public in Mexico and abroad, according to a Jan. 13 filing with the Mexican stock exchange.
Net debt was $3.6 billion at the end of the fourth quarter, rising from 27 percent from the end of 2010, and was 2.1 times cash flow, Alfa said.
--Editors: John Lear, James Callan
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