Economics: Recurring incidents at installations, ratings downgrades underscore the continuing deterioration of Pemex

MEXICO - Report 08 Aug 2023 by Mauricio Gonzalez and Francisco González

Pemex has been the subject of considerable attention from national and international analysts and the news media due to a series of accidents and other events at its facilities and to decisions by Fitch to downgrade Pemex's debt and Moody's to lower its outlook on the company’s securities from stable to negative. Those downgrades summarize and acknowledge the company’s deterioration in recent years that we have analyzed each quarter, and which includes mounting financial problems (debt and accounts payable to vendors and suppliers), operational and administrative problems, as well as the utter lack of feasibility of its business and development plan.

Pemex's financial situation continued to deteriorate sharply during the first six months of 2023. A marginal increase in production of crude oil and derivatives failed to offset a 32.7% drop in revenues as a result of the contraction in hydrocarbon prices, while the cost of sales only decreased 20.8%. After stripping out forex effects, the bottom line went from a 166.2 billion peso profit a year earlier to a 148.5 billion loss. In short, Pemex continues to lose money and to generate an increasingly limited free cash flow.

In this week’s Outlook section, we analyze Pemex’s operating and financial results for the first half of 2023 and discuss related risks and perspectives.

Now read on...

Register to sample a report

Register