World growth in 2022 marked the second consecutive year of economic recovery after the beginning of the COVID-19 pandemic in 2020. According to the FMI the world economy had a growth of 3.4%.
In 2022 the United States had an expansion of 2.1%, driven by the personal consumer services sector, which rose by 4.5%, offsetting the -0.4% and -0.5% drop in the acquisition of durable and non-durable goods, respectively. Gross fixed investment grew by 4.0%, despite the steep drop of 10.6% in the investment in homes.
In Mexico, the GDP rose 3.1%. Non-core activities had the greatest growth – 3.3% –, while the manufacturing industry grew by 5.2%. The services sector rose by 2.8% and commerce by 5.5%.
The Mexican peso closed at $19.50 against the dollar, for a 5.0% increase in value. The difference in the Mexico/United States federal interest rate increased steadily throughout the year due to the fact that the Bank of Mexico raised its reference rate 8 times, bringing it from 5.50% at the end of 2021 to 10.50% at the end of 2022, while the United States went from 0.25% to 4.50% during the same period.
Due to the pandemic, the cost of transportation of marine containers at the end of 2021 went up five-fold, the average price of Steel tripled, and there was a shortage of semiconductors, all of which caused a rise in the price of automobiles. At the beginning of 2022, as a result of Russia’s invasion of Ukraine the prices of food, fertilizers, energy and other commodities also rose, which, added to other factors caused an increase in worldwide inflation to levels not seen since the 1980’s. In Mexico, inflation in 2022 closed at 7.8%, reaching its highest point in September, at 8.70%. Underlying inflation, which includes merchandise and services, grew by 8.35%, and non-underlying inflation, composed of agriculture, animal husbandry and energy, rose by 6.27%.
In 2022 Mexico’s commercial balance showed a deficit of 26,421 million dollars, compared to -10,929 million dollars for the previous year. In exportations, manufacturing rose 16.6% and importations increased for all ítems, with consumption items leading all others with an increase of 29.4%. The price of the Mexican mix of oil products went from an average price of $64.60 USD per barrel in 2021 to $89.26 USD per barrel in 2022.
National public finances are in a stable condition, thanks to higher tax collections and restraint in expenditures. The national balance sheet showed a deficit of 978,534 million pesos, equivalent to 3.4% of the GDP, slightly greater than the 2.9% of 2021 due to the higher interest rates that affected financial costs in 2022. The public debt as a percentage of the GDP decreased from 50.8% to 49.4%.
An economic slowdown is expected for 2023, caused by the restrictive policies of the Central Banks on a worldwide level, which are seeking to reduce inflation to levels closer to their long-term objectives. Nevertheless, our country is economically prepared and we must take advantage of the situation in the commercial relationship between the United States and China to promote national and international investment, relocate our supply chains, orient the production of goods towards the United States instead of Asia, and further reinforce our commercial relationship with the United States.
During 2022 the consolidated sales of the Group totaled 181,539 million pesos, which is an increase of 45.7% in respect to the previous year. This increase is partly due to the incorporation of Elementia and Fortaleza into the results. If that business is not included, Grupo Carso’s business grew by 26.4%. In regard to profitability, the operating income and EBITDA were 25,965 and 27,478 million pesos for an increase of 102.0% and 74.8%. These results reflect a solid performance by all the divisions of the Group, in addition to the incorporation of Elementia in the month of May, which, if it is not taken into consideration, would mean that the growth factors would be 84.7% and 49.8%, respectively.
The freedom of movement, the standardization of inventories and the confidence of the consumers after the pandemic were factors that had a positive effect on the results of the commercial division, in which Grupo Sanborns had a growth of 22.4%. Double digit growths were observed in all the commercial formats of Sears, Sanborns and iShop/MixUp, in which the participation of the financial business was of great relevance, with a greater distribution of their own credit cards. An increase in the categories of “softlines” was also observed, especially towards the end of the year, specifically in fashion, footwear and cosmetics. During 2022 we began to open Dax stores in the metropolitan zone as an innovative self-service option, which will surely become very attractive to customers because of their stock of beauty items and accessories. Additionally, in Grupo Sanborns ever since the pandemic we have been working to develop our online business, with an emphasis on reducing the average delivery time and increasing the number of Marketplace providers as well as the number of users of the Sears and Sanborns applications.
GRUPO CONDUMEX INCREASED ITS SALES 12.1% AND 13.7% ITS EBITDA.”
Grupo Condumex increased its sales by 12.1% and its EBITDA by 13.7%. This business is very sensitive to the variations in the Exchange rate. However, greater volumes of telecommunications cables in the national and exportation market, as well as of harnesses and cables for the automotive market compensated for this effect. During 2022 the automotive parts plants of San Felipe, Silao and Ocampo were nominees for the “Supplier Excellence award 2022” that is awarded every year to the providers with the best performance and that meet a series of strict quality criteria. During the year we carried out cable certifications with automotive communication protocols to meet the demands of hybrid automobiles and we continued to position ourselves in a way to take advantage of the opportunities that the transference of supply chains to Mexico, or “nearshoring”, could provide.
Carso Infraestructura y Construcción recorded a growth of 52.4% in sales. This growth was mainly due to a greater volume of the various projects in which it is presently engaged, such as well drilling and well workover projects and a greater volume of pipeline assignments for Telecom. As for infrastructure projects, we continue with the layout of the Mitla-Tehuantepec and the Varas Vallarta highways, and more revenue was generated from the progress in the construction of the Tren Maya platform and railway in the Escárcega-Calkiní stretch. We also began the construction of various other projects, such as the Star Medica hospitals and other private building projects, from which significant earnings are expected next year
Carso Energy increased its contribution to results to a significant degree with the two pipelines we have in Waha, Texas, U.S.A., with a participation of 51.0%, but not consolidated, and the Samalayuca-Sásabe pipeline between Chihuahua and Sonora, which is 100% owned by the Group. These three gas pipelines increased their revenue from the transmission of gas for the CFE and it is expected that the compression station for the Samalayuca-Sasabe pipeline, whose installation was begun this year will increase its capacity, adding to the revenue from the two hydroelectric plants acquired in Panama in 2021. This business division contributed $4,115 million pesos, increasing its sales by 37.4% over the previous year. In clean energy, specifically geothermal energy, GRUPO CONDUMEX INCREASED ITS “ SALES 12.1% AND 13.7% ITS EBITDA.” 18 • ANNUAL REPORT 2022 ANNUAL REPORT 2022 • 19 Sincerely, Lic. Carlos Slim Domit Chairman of the Board of Directors we continue to carry out the procedures necessary to obtain the concessions in two fields, in which we have made significant progress in the exploration phase.
The situation of Grupo Carso continues to be solid. The net cash flow from operating activities was $16,532 million pesos and the 12-month net debt to EBITDA ratio was 1.11. The investments in fixed assets went from $1,432 to $5,236 million pesos in 2022. The payment of a $1.00 peso per share dividend was decreed and the price of the GCARSO series A-1 share increased by 23.5% from $66.2 to $81.8 pesos on December 31 with a high liquidity value and forming a part of the IPC/S&P Bid and Offer Index of the Mexican Stock Exchange.
In respect to sustainability, Grupo Carso carried out a materiality study, soon to be published in a report in which the opinions of the various stakeholders will be made known. Although this is not the first step we have taken in this respect, it is very important in terms of the standardization of metrics in regard to the alignment of environmental, social and corporate governance matters with the Group’s forward-looking strategy.
Finally, in the name of the Board of Directors, I thank the shareholders, clients and suppliers for the confidence they have shown in us. Besides extending my thanks to all our employees, I invite them to join us in our commitment to our objectives, making it possible for Grupo Carso to surpass our goals and continue to contribute to the development of our country.
Chairman of the Board of Directors
