Monday, May 29 2023 Sign In   |    Register

News Quick Search



Front Page
Power News
Gas News
Today's News
Yesterday's News
Week of May 22
Week of May 15
Week of May 08
Week of May 01
Week of Apr 24
By Topic
By News Partner
News Customization


Pro Plus(+)

Add on products to your professional subscription.
  • Energy Archive News

    Home > News > Gas News > News Article

    Share by Email E-mail Printer Friendly Print

    Argentina’s 100 percent inflation is wearing down its top companies

    March 21, 2023 -


      Inflation of more than 100 percent in Argentina is erasing the advantage the country's top companies used to have by booking revenue in US dollars.

      For the latest headlines, follow our Google News channel online or via the app.


      Investor darlings in the energy sector -- natural gas and power producer Pampa Energia SA, pipeline operator TGS SA, and state-run oil driller and refiner YPF SA -- are struggling with costs that are coming under pressure from rising prices, which surpassed 100 percent on an annual basis last month.

      In the past, Argentine energy companies could compensate for inflation on their balance sheets through revenues linked to the US dollar. But with the national peso currency strongly controlled by the government, these days depreciation of the exchange rate is no match for the pace of price increases affecting everything from machinery to wages.

      "We do see dollar inflation in our costs and there's not much that we can do against these movements of the macro environment," Pampa CEO Gustavo Mariani said on a March 13 earnings call. The company's adjusted earnings in the fourth quarter were $183 million, down 26 percent from the previous quarter, in part because of the inflation trend.

      Investor relations officer Lida Wang said on the call that the company was especially grappling with the need to increase wages to retain talent.

      TGS's biggest business line -- selling natural gas liquids whose prices are tied to dollars -- is suffering.

      Earnings from its liquids segment were negatively impacted in the fourth quarter as inflation last year outstripped peso depreciation by 23 percentage points, CFO Alejandro Basso told analysts.

      YPF, which is leading development of Argentina's shale riches, has been combating a similar problem exacerbated by global inflation in oil services.

      The company's operating expenses throughout 2022 in dollar terms grew by nearly a third, "mainly explained by the continued overall accelerated inflationary environment and a slower-than-expected pace of the currency depreciation," according to an earnings report. Adjusted earnings fell 38 percent in the fourth quarter from the prior three-month period.

      While new power contracts and natural gas sales have an automatic correlation with the exchange rate, it's an uphill battle for state-run YPF to ensure gasoline and diesel prices do likewise, especially in an election year. That can hurt its shale-drilling investments.

      "That's the million-dollar question," CFO Alejandro Lew said at a March 10 earnings event at the New York Stock Exchange. "How we are going to tackle price adjustments."

      Outside of the energy industry, food producer Arcor SAIC is struggling to make revenue match inflation because of concerns about stifling demand and the risk of government regulation, according to a March 16 note by Esteban Arrieta and Ezequiel Fernandez of Balanz Capital Valores.

      Arcor's price increases lagged 2022's inflation by about 28 percentage points, Arrieta and Fernandez estimated.

      Argentine media conglomerate Grupo Clarin blamed the mismatch between inflation and the exchange rate for a 27 percent decline in adjusted earnings in the fourth quarter from a year prior.

      "Argentina enters 2023 with no tailwind," Samantha Lee Olivieri, investor relations officer at Grupo Clarin, said on a March 15 earnings call. Inflation "acceleration took place with no correlation to the official exchange rate parity."

      Football star Lionel Messi to visit Saudi Arabia for latest tourism ambassador trip

      Earthquake of magnitude 5.6 strikes Argentina region

      Macron warns EU-South America deal hinges on environment


    Other Articles - International


       Home  -  Feedback  -  Contact Us  -  Safe Sender  -  About Energy Central   
    Copyright © 1996-2023 by CyberTech, Inc. All rights reserved.
    Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.