BETTERWARE DE MEXICO, S.A.P.I. DE C.V Annual Report: A Simple Guide

I’ve put together this guide to help you understand how Betterware performed this year. Instead of digging through dense financial filings, I’ve broken down the key takeaways so you can decide if this company fits your investment goals.

1. What does this company do?

Betterware is a direct-selling company based in Mexico. It runs two main businesses:

• Betterware: A home brand selling kitchen, laundry, and bathroom organization products.
• JAFRA: A beauty brand focusing on fragrances, cosmetics, and skincare.

They use a "person-to-person" sales model where independent sellers earn commissions by selling products and recruiting their own teams. The company manages its own logistics network to ship products across Mexico and parts of Central America.

2. Financial Performance: A Tale of Two Brands

Total revenue grew by a modest 1% to 14.2 billion pesos. However, the two brands had very different years:

• JAFRA (The Growth Engine): Revenue grew by 5.5% as customers spent more per order and consultants became more productive.
• Betterware (The Struggle): Revenue dropped by 5.1% due to a challenging economic environment and a shrinking number of active sellers.

3. Financial Health and Debt

• Profitability: Core operating profit dropped by 4.6%. This was driven by lower sales, higher operating costs, and losses from currency hedging—financial tools used to protect against exchange rate swings.
• Debt: The company successfully reduced its total debt from 7.0 billion pesos in 2023 to 5.0 billion pesos in 2025. While they have 982 million pesos in unused credit lines, their financing is concentrated among five local banks.
• Currency Risk: Because they buy inventory in U.S. dollars but earn revenue in Mexican pesos, they are sensitive to exchange rate fluctuations.

4. Important Updates for U.S. Investors

• New Listing: The stock has been listed on the NYSE since June 2024.
• Tax Considerations: Dividends may be subject to a 10% Mexican withholding tax. Additionally, the company does not issue PFIC statements, which can simplify tax reporting for U.S. investors. It is recommended that you consult with a tax advisor regarding your specific situation.

5. Accounting and Internal Controls

The company identified "material weaknesses" in its internal financial reporting, specifically regarding IT systems, manual accounting processes, and oversight of asset values. These gaps necessitated manual adjustments to ensure financial accuracy. Management is currently hiring additional staff and upgrading software to automate these processes by 2026. Until these upgrades are complete, there remains a higher risk of reporting errors or delays.

6. Key Risks

• The "Mexico" Factor: Over 90% of revenue is generated in Mexico. The company’s performance is closely tied to the local economy, inflation, and political stability.
• Direct Selling Model: The business model relies on the consistent recruitment and retention of independent sellers. If the commission structure becomes less attractive, the company’s ability to grow will be hindered.

Final Thought for Investors: When considering this investment, weigh the company's success in deleveraging its balance sheet and the growth of the JAFRA brand against the operational risks of their current accounting systems and their heavy reliance on the Mexican consumer market. If you are comfortable with the current transition period as they modernize their IT infrastructure, this may be a company to watch as they work toward their 2026 goals.