SAO PAULO, Aug 4 (Reuters) - Latin American e-commerce

giant MercadoLibre ( MELI ) on Monday posted a 1.5% dip in its

second-quarter net profit from a year earlier, missing analysts'

estimates, as increased free shipping in Brazil drove sales up

but also hit margins.

MercadoLibre ( MELI ), Latin America's largest company by market

value, reported net income of $523 million for the quarter

through the end of June, below the $596 million expected by

analysts in an LSEG poll.

MercadoLibre ( MELI ), based in Uruguay, operates an e-commerce

platform and the fintech Mercado Pago, selling in nearly 20

countries throughout Latin America.

Net revenue of $6.8 billion was up 34% year-on-year, beating

the estimate of $6.7 billion, with sales measured by gross

merchandise value rising 37% on a forex-neutral basis.

In early June, MercadoLibre ( MELI )

cut the threshold

for purchases eligible for free shipping in Brazil, after

also lowering shipping costs for companies and users selling on

its platform in May, amid fierce competition in the country's

e-commerce segment.

Brazil, the firm's main market, together with Mexico helped

MercadoLibre ( MELI ) to increase total items sold by 31% in the quarter,

the fastest pace year-on-year since mid-2021.

However, that also hurt margins, said Chief Financial

Officer Martin de los Santos.

"We don't want to miss the growth opportunities ahead of

us," he said in an interview. "That might generate some

structural margin pressure, but we are very optimistic about the

long-term trajectory of our profitability."

Earnings before interest and taxes (EBIT) reached a

record high of $825 million, but also missed the $869 million

forecast. The EBIT margin stood at 12.2%, down from 14.3% a year

earlier.

The CFO said that among the main impacts on margins were

investments in free shipping and related marketing, and growth

in its so-called 1P business, which sells directly to customers.

MercadoLibre's ( MELI ) fintech arm grew its credit portfolio by 91%

to $9.3 billion, while the 15-to-90-day default ratio fell 1.5

percentage points to 6.7%, the lowest since it started to

release the figure seven years ago, the CFO said.