Mexico-Wal-Mart very popular for low prices.

MEXICA-WAL-MART.

Retailer Wal-Mart de Mexico SAB reported modest net profit growth in the fourth quarter as higher operating expenses pressured margins.

Walmex, as the unit of Wal-Mart Stores Inc. (WMT) is called, reported net profit of 4.92 billion pesos ($356 million) in the October-December period, up from MXN4.72 billion in the like 2007 quarter.

Earnings per share were equivalent to MXN0.583, compared with MXN0.555 a year ago.

Walmex said sales rose 8% to MXN72.67 billion, while operating profit rose 6% to MXN6.69 billion. Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 6% to MXN7.75 billion.

The company described 2008 as a challenging year marked by a drop in disposable income and consumer confidence, in which it lowered prices to keep and attract customers. Walmex said its number of customers grew 12.1% last year.

Chief Financial Officer Rafael Matute said in a conference call that Walmex had record earnings in 2008, despite the effects of a contraction in credit and remittances, inflationary pressures, and a rise in unemployment toward the end of the year.

Operating expenses in the fourth quarter, meanwhile, rose to 13.2% of sales from 12.7% a year ago.

Matute said the three items that led expenses to grow more than sales were costs related to bank unit Banco Wal-Mart, the decision to continue store remodeling with a medium- and long-term view, and a 32% increase in utility costs, particularly electricity.

Net profit was slightly above the MXN4.8 billion median estimate of four retail analysts, while Ebitda beat the estimate of MXN7.69 billion.

For the full year, Walmex had revenue of MXN244.92 billion, Ebitda of MXN23.89 billion, and net profit of MXN14.67 billion.

Walmex also said the board is proposing dividends of MXN0.61 per share, to be submitted to a shareholders meeting in March.

The Actinver brokerage said it considered the weak numbers to be priced in to the company’s current valuation.

"We believe its solid expansion program, negotiating capacity with suppliers, and solid debt-free balance sheet will allow the company to differentiate itself from its main competition," Actinver said.