MercadoLibre to change Venezuelan forex accounting, record charge

|By:, SA News Editor

Going forward, MercadoLibre (MELI) won't use Venezuela's SICAD 1 floating exchange rate (currently 10 bolivars per U.S. dollar) to account for local transactions, and will instead rely on the SICAD 2 rate (currently 50 bolivars per dollar).

Mercado notes it's unable to access the SICAD 1 rate, and is more likely to settle transactions at the SICAD 2 rate. The company's Venezuelan forex accounting has frequently come under heavy criticism.

A $47M-$57M re-measurement charge will be recorded in Q2, as will  a $14.5M-$21.5M forex loss and a $6.5M-$9.5M deferred income tax gain. Venezuelan revenue is expected to be impacted by $12M-$18M.

The announcement comes a day after eBay launched Spanish/Portuguese-language sites for Latin American shoppers.

MELI -0.5% AH.