MercadoLibre expects to maintain 2020 planned investments

Latin America’s e-commerce giant MercadoLibre expects to maintain its planned investments unchanged this year despite the effects of the COVID-19 pandemic.

“We remain optimistic that, despite everything that has been occurring, we will still be able to make progress toward our annual objectives without having to delay or materially modify our investments or strategic initiatives,” CFO Pedro Anrt said in the company’s results call.

MercadoLibre plans to invest 4bn reais (US$701mn) in Brazil alone this year. In 2019, the firm had 3bn reais in allocated capex, which was 50% more than in 2018 and three times more than in 2017.

Previously, the company said it also planned to invest US$420mn in Mexico in 2020 and US$100mn in Chile by 2021.

According to a Reuters report, the MercadoLibre also plans to open a fourth distribution center this year in Brazil's northeastern region, as well as expand financial services unit MercadoPago.

“We recognize that in these times, the services rendered by both our commerce and payment platforms are essential for many people across the region and we will do our best to not let them down. We also remain attentive to any change in demand or supply patterns that might again modify our capital allocation strategy,” Arnt said in the call.

Boosted by the pandemic, the company's net revenue grew by 37.6% year-over-year in Q1, to US$652mn. However, MercadoLibre reported a net loss of US$21.1mn after taxes, compared with a loss of US$54mn in the fourth quarter.

“We've sought to maintain a sustainable balance between growth and investments, which for the quarter led to a net loss of US$21.1mn," explained the CFO.

In the call, Arnt explained that the company went through a strong start in Q1 that got derailed during the back half of March and rebounded by April. 

Impacts on merchants' businesses varied regionally. 

According to the executive, Argentine merchants were initially more impacted than Brazilian ones, but they also rebounded more rapidly. 

Meanwhile in Mexico, Colombia, Chile and Uruguay, merchants faced less disruption in March and saw increased activity during April

MercadoLibre’s Q1 results can be seen here.