The profit margin before payment of interest, taxes, depreciation and amortization of the state company sank to 21% of its total sales, which meant a drop of 10 points compared to 2022, while its operating expenses doubled in two years.
Despite the historic fiscal effort of the Mexican State to give it financial oxygen, Petróleos Mexicanos (Pemex) had its worst decline in profitability in at least a decade in 2023, which coincided with a notable increase in its operating expenses.
The profit margin before payment of interest, taxes, depreciation and amortization of the state company was 21% of its total sales, which meant a drop of 10 percentage points compared to 2022 and the lowest level since 2020, when it was 19%, in the middle of the COVID pandemic.
Earnings before interest, taxes, depreciation and amortization, known as EBITDA, is the most widely used measure of a company's profitability.
In absolute terms, for Pemex it was 355,000 million pesos (US$ 20,863 million) in 2023, an amount 51.6% lower than the 734,000 million pesos (US$ 43,136 million) in 2022.
The reduction is partly explained by the 27.8% drop in the company's income (related to the 20.5% drop in the price of crude oil and even greater falls in the prices of its derivative products), but it also coincides with a significant increase in expenses.
Last year, Pemex's operating expenses grew 35.7% to a record level of 228.22 billion pesos (US$ 13,412), which is equivalent to 13.3% of the oil company's sales.
The increase draws attention to the poor performance in the state company's most important operating indicators. Its production of petroleum products, for example, fell 2% to 896,546 barrels per day, while crude oil and condensate production rose just 5.1%.
In the bigger picture, the data is more worrying.
Between 2021 and 2023 – a period in which state support for Pemex has intensified – operating expenses, in fact, doubled, from a level of 113,546 million pesos (US$ 6,672 million). In that period, oil production rose just 11.2% and crude oil production rose 6.8%.
In both cases, the levels were below the goals set, both at the beginning of the six-year term and in the company's subsequent business plans, which indicated that the crude oil process for the production of gasoline, diesel and other petroleum products would exceed the 1.3 million barrels in 2023.
Meanwhile, it was expected that the extraction of crude oil and condensate would be around two million barrels per day.
In the same direction as Pemex's operating expenses, its administrative expenses behaved: although their increase was smaller, from 11.8% to 172,088 million pesos (US$ 10,113), they also contributed to the erosion of the company's operating margin. .
Not even in 2020 did Pemex have such a sharp drop in its margin. That year the decrease was only five points, from 24% to 19% and a year before, in 2019, it contracted 9 points, from 33 to 24%.
BELOW THE INDUSTRY
The EBITDA margin of 21% obtained by Pemex during 2023 (during the fourth quarter it even sank to 14%) was also lower than the industry average of 26%, according to the company itself in its fourth quarter results presentation. to the investing public.
The Mexican company was ranked below firms such as Petrobras (54%), Equinor (41%), Chevron (24%), Eni (23%) or Total Energies (22 percent). While it was on par with BP (21%) and above Exxon (20%), Shell (20%) or Repsol (14 percent).
In 2021, when it reached its last peak in profitability, with an EBITDA margin of 33%, Pemex was only surpassed by Equinor (50%) and Petrobras (53%).
Also in its latest quarterly report, Pemex counted the support received by the Mexican government between 2019 and 2023 at practically 1.6 trillion pesos (more than US$ 94 billion).
Only for capital contributions the sum amounts to 869,000 million pesos (US$ 51 billion), while due to the decrease in the Shared Profit Right (DUC) rate from 65% in 2019 to 58% in 2020, 54 % in 2021 and 40% in 2022 and 2023, estimated savings of 500,000 million pesos (US$ 29,384 million) from 2020 to 2023.
Finally, it received additional tax benefits in 2020 and 2021 for more than 138,000 million pesos (US$ 8,110 million) and in 2023, for 91,000 million pesos (US$ 5,347).
