Press

Take advantage of the benefits of the center for journalists FEMSA

28 Oct 2011

2011 Third-Quarter and First Nine Months Results

  • Total revenues reached Ps. 30,332 million in the third quarter of 2011, an increase of 18.1% compared to the third quarter of 2010 as a result of double-digit total revenue growth in each división.
  • Consolidated operating income grew 10.0% to Ps. 4,673 million for the third quarter of 2011, driven by double-digit operating income growth in our South America division and high single-digit operating income growth recorded in our Mexico & Central Am
  • Our operating margin was 15.4% in the third quarter of 2011.</div></li><li><div align="justify">Consolidated net income grew 10.4%, reaching Ps. 2,484 million in the third quarter of 2011.

Mexico City (October 27, 2011), Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFL, NYSE: KOF) (“Coca-Cola FEMSA” or the “Company”), the largest public Coca-Cola bottler in the world in terms of sales volume, announces results for the third quarter of 2011.

“Despite increased global volatility, our Company delivered strong results for the quarter.  Our operators' refined execution to serve and satisfy our consumers' preferences generated solid volume growth. This, combined with our strategy to selectively increase prices across our territories, produced double-digit top-line growth.  As our Company continues to grow, so does our team of professionals—not only in their capabilities, but also in the number of consumers they serve—as exemplified by the successful merger with Grupo Tampico's beverage division and the upcoming merger with Grupo CIMSA. These transactions will greatly contribute to our business going forward and consolidate our leadership in the Mexican market. Together, we will leverage our mutual strengths to deliver increased value for our shareholders.  As we enter the final part of the year, in the face of global economic challenges, we feel even stronger, with greater flexibility, to transform these challenges into opportunities in every operation; to capitalize on the defensive strength of our industry; and to extend our track record of profitable growth." said Carlos Salazar Lomelin, Chief Executive Officer of the Company.
 
CONSOLIDATED RESULTS

Our consolidated total revenues increased 18.1% to Ps. 30,332 million in the third quarter of 2011, compared to the third quarter of 2010 as a result of double-digit total revenue growth in each division. On a currency neutral basis, total revenues grew approximately 16%, driven by average price per unit case growth in most of our operations, in combination with volume growth mainly in Mexico, Colombia and Argentina.

Total sales volume increased 4.8% to reach 645.9 million unit cases in the third quarter of 2011 as compared to the same period in 2010. The sparkling beverage category grew 6% mainly supported by strong volume growth of the Coca-Cola brand in Mexico and Colombia, contributing more than 90% of incremental volumes. The still beverage category grew 10%, mainly driven by the Jugos del Valle line of business in Mexico and Brazil and the Cepita juice brand in Argentina. These increases compensated for a 1% decrease in our bottled water portfolio, including bulk water.
 
Our gross profit increased 15.7% to Ps. 14,032 million in the third quarter of 2011, compared to the third quarter of 2010. Cost of goods sold increased 20.3%, mainly as a result of higher PET and sweetener costs across our territories, which were partially compensated by the appreciation of the average exchange rate of the Brazilian real,(1) the Mexican peso(1) and the Colombian peso(1) as applied to our U.S. dollar-denominated raw material costs. Gross margin reached 46.3%, as compared to 47.2% in the third quarter of 2010.

Our consolidated operating income increased 10.0% to Ps. 4,673 million in the third quarter of 2011, driven by double-digit operating income growth in our South America division and high single-digit operating income growth recorded in our Mexico & Central America division. Operating expenses increased 18.8% in the third quarter of 2011 mainly as a result of higher labor costs in Venezuela, in combination with higher labor and freight costs in Argentina. Our operating margin was 15.4% in the third quarter of 2011, as compared with 16.5% in the same period of 2010.

During the third quarter of 2011, we recorded Ps. 503 million in the other expenses, net line. These expenses mainly reflect the recording of employee profit sharing and the loss on sale of certain fixed assets.

Our comprehensive financing result in the third quarter of 2011 recorded an expense of Ps. 333 million as compared to an expense of Ps. 512 million in the same period of 2010. This difference was mainly driven by lower net interest expenses as a result of the recording of a financial cost related to the sale of bonds in one of our South America subsidiaries during the third quarter of 2010.

During the third quarter of 2011, income tax, as a percentage of income before taxes, was 35.3% compared to 31.7% in the same period of 2010. This difference was mainly driven by an increase in the tax on shareholder’s equity in one of our subsidiaries in the South America division.

Our consolidated net controlling interest income grew 7.1% reaching Ps. 2,278 million in the third quarter of 2011 as compared to the third quarter of 2010. Earnings per share (EPS) in the third quarter of 2011 were Ps. 1.23 (Ps. 12.34 per ADS) computed on the basis of 1,846.5 million shares outstanding as of September 30, 2011(each ADS represents 10 local shares).

(1) See page 12 for average and end of period exchange rates for the third quarter and first nine months. 

BALANCE SHEET

As of September 30, 2011, we had a cash balance of Ps. 18,650 million, including US$ 503 million denominated in U.S. dollars, an increase of Ps. 6,116 million compared to December 31, 2010, mainly as a result of the issuance of Ps. 5,000 million of Certificados Bursátiles in April 2011 and cash generated by our operations, net of the dividend payment made during the second quarter.

As of September 30, 2011, total short-term debt was Ps. 4,900 million and long-term debt was Ps. 17,407 million. Total debt increased by Ps. 4,956 million, compared to year end 2010. Net debt decreased Ps. 1,160 million compared to year end 2010. The Company’s total debt balance includes U.S. dollar-denominated debt in the amount of US$ 658 million.

MEXICO & CENTRAL AMERICA DIVISION OPERATING RESULTS (Mexico, Guatemala, Nicaragua, Costa Rica and Panama)

Revenues
Total revenues from our Mexico and Central America division increased 10.2% to Ps. 12,612 million in the third quarter of 2011, as compared to the same period in 2010. Volume growth accounted for approximately 55% of incremental revenues during the quarter, and increased average price per unit case represented the balance. Average price per unit case reached Ps. 34.27, an increase of 4.6%, as compared to the third quarter of 2010, mainly reflecting selective price increases across our product portfolio implemented in Mexico over the past several months. On a currency neutral basis, total revenues increased approximately 10%.

Total sales volume increased 5.4% to 366.7 million unit cases in the third quarter of 2011, as compared to the third quarter of 2010. Sparkling beverage volume increased 6%, driven by a 7% growth of the Coca-Cola brand and a 3% increase in flavored sparkling beverages, accounting for approximately 85% of incremental volumes. Still beverages grew 8% mainly driven by the Jugos del Valle line of products, Nestea and PowerAde, representing close to 10% of incremental volumes. Our bottled water portfolio, including bulk water, grew 2% contributing the balance.
 
Operating Income
Our gross profit increased 7.6% to Ps. 6,020 million in the third quarter of 2011 as compared to the same period in 2010. Cost of goods sold increased 12.6% as a result of higher sweetener and PET costs across the division which were partially offset by the appreciation of the average exchange rate of the Mexican peso(1) as applied to our U.S. dollar-denominated raw material costs. Gross margin reached 47.7% in the third quarter of 2011, as compared with 48.9% in the same period of the previous year.

Operating income increased 7.7% to Ps. 2,052 million in the third quarter of 2011, compared to Ps. 1,905 million in the same period of 2010. Operating leverage achieved through higher revenues, in combination with controlled operating expenses in Mexico, resulted in an operating margin of 16.3% in the third quarter of 2011, as compared with 16.6% in the same period of 2010.

(1) See page 12 for average and end of period exchange rates for the third quarter and first nine months.
 
SOUTH AMERICA DIVISION OPERATING RESULTS (Colombia, Venezuela, Brazil and Argentina)

Volume and average price per unit case exclude beer results.

Revenues
Total revenues were Ps. 17,720 million in the third quarter of 2011, an increase of 24.5% as compared to the same period of 2010 as a result of double-digit total revenue growth in every territory. Excluding beer, which accounted for Ps. 942 million during the quarter, revenues increased 25.1% to Ps. 16,778 million. Higher average prices per unit case across our operations in combination with volume growth in Argentina, Colombia and Brazil, were partially offset by lower volumes in Venezuela. On a currency neutral basis, total revenues increased approximately 21%.

Total sales volume in our South America division increased 3.9% to 279.2 million unit cases in the third quarter of 2011 as compared to the same period of 2010. Volumes in Argentina, Colombia and Brazil, which increased 13%, 9% and 1%, respectively, compensated for a 3% volume decline in Venezuela. Our sparkling beverage portfolio grew 5%, driven by the strong performance of the Coca-Cola brand in Colombia and Argentina, which grew 17% and 8%, respectively and a 10% growth in flavored sparkling beverages. The still beverage category grew 14%, mainly driven by the Cepita juice brand in Argentina, and the Jugos del Valle line of business and the Matte Leao brand in Brazil. These increases compensated for a 9% decline in the bottled water portfolio, including bulk water.

Operating Income
Gross profit reached Ps. 8,012 million, an increase of 22.6% in the third quarter of 2011, as compared to the same period of 2010. Cost of goods sold increased 26.2% mainly driven by higher year-over-year sweetener and PET costs across the division, which were partially offset by the appreciation of the Brazilian real(1) and the Colombian peso(1) as applied to our U.S. dollar-denominated raw material costs. Gross profit reached 45.2% in the third quarter of 2011 as compared to 45.9% in the same period of 2010.

Our operating income increased 11.8% to Ps. 2,621 million in the third quarter of 2011, compared to the same period of 2010. Operating expenses increased 28.6%, mainly as a result of higher labor costs in Venezuela, in combination with higher labor and freight costs in Argentina. Our operating margin was 14.8% in the third quarter of 2011, as compared to 16.5% in the same period of 2010.

(1) See page 12 for average and end of period exchange rates for the third quarter and first nine months.

SUMMARY OF NINE-MONTH RESULTS

Our consolidated total revenues increased 15.7% to Ps. 86,878 million in the first nine months of 2011, as compared to the same period of 2010, driven by double-digit total revenue growth in our South America and Mexico & Central America divisions. On a currency neutral basis, total revenues increased approximately 14% in the first nine months of 2011 as compared to the same period of 2010.

Total sales volume increased 4.2% to 1,916.4 million unit cases in the first nine months of 2011, as compared to the same period in 2010. The sparkling beverage category grew 4% mainly driven by the Coca-Cola brand. The still beverage category grew 11%, mainly driven by the performance of the Jugos del Valle line of business in Mexico and Brazil, and the Cepita juice brand in Argentina. Our bottled water portfolio, including bulk water, grew 2%.

Our gross profit increased 14.9% to Ps. 39,958 million in the first nine months of 2011, as compared to the same period of 2010. Cost of goods sold increased 16.4% mainly as a result of higher sweetener and PET costs across our operations, which were partially offset by the appreciation of the Brazilian real,(1) the Mexican peso(1) and the Colombian peso(1) as applied to our U.S. dollar-denominated raw material costs. Gross margin reached 46.0% for the first nine months of 2011 as compared to 46.3% in the same period of 2010.

Our consolidated operating income increased 12.5% to Ps. 13,441 million in the first nine months of 2011, as compared to the same period of 2010. Our Mexico & Central America division accounted for approximately 55% of this growth. Our operating margin was 15.5% for the first nine months of 2011, as compared to 15.9% in the same period of 2010.

Our consolidated net controlling interest income increased 8.0% to Ps. 7,302 million in the first nine months of 2011 as compared to the same period of 2010. Earnings per share (EPS) in the first nine months of 2011 were Ps. 3.95 (Ps. 39.55 per ADS) computed on the basis of 1,846.5 million shares outstanding as of September 30, 2011 (each ADS represents 10 local shares).

(1) See page 12 for average and end of period exchange rates for the third quarter and first nine months.

RECENT DEVELOPMENTS

During the third quarter of 2011, Coca-Cola FEMSA announced a new business structure and organizational changes. In accordance with this new business structure, the Company’s new reporting segments are Mexico & Central America and South America, as reported on this 3rd quarter 2011 earnings release. On October 11, 2011, the Company released restated unaudited quarterly financial information for the years 2009, 2010 and 2011.This information is available on the Company’s website.

On September 19, 2011, Coca-Cola FEMSA and Corporación de los Ángeles, S.A. de C.V. and its shareholders (“Grupo CIMSA”) agreed to merge their beverage businesses. The merger agreement has been approved by Coca-Cola FEMSA’s Board of Directors and is subject to the completion of confirmatory legal, financial and operating due diligence and to customary regulatory and corporate approvals.

On October 11, 2011, Coca-Cola FEMSA and Grupo Tampico S.A. de C.V. and its shareholders announced the successful merger of Grupo Tampico’s beverage division with Coca-Cola FEMSA. Coca-Cola FEMSA held an ordinary and extraordinary shareholders meeting on October 10, 2011, at which the Company’s shareholders approved this merger, amended the Company’s by-laws to increase the number of board members from 18 to 21 and elected Mr. Herman Fleishman and Mr. Robert Fleishman, President and Vice President of Grupo Tampico, respectively as director and alternate director of the Company’s Board. Coca-Cola FEMSA started integrating the results of Grupo Tampico’s beverage division as of October 2011.

In connection with the merger of Grupo Tampico’s beverage division, Coca-Cola FEMSA issued 63.5 million new KOF series L shares. The total number of outstanding shares is 1,910.0 million of which FEMSA owns 52.0%, The Coca-Cola Company 30.6% and the Public 17.4%.

CONFERENCE CALL INFORMATION
Our third-quarter 2011 Conference Call will be held on October 27, 2011, at 11:00 A.M. Eastern Time (10:00 A.M. Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 866-318-8612 or International: 617-399-5131. We invite investors to listen to the live audiocast of the conference call on the Company’s website, www.coca-colafemsa.com
If you are unable to participate live, an instant replay of the conference call will be available through November 2, 2011. To listen to the replay, please dial: Domestic U.S.: 888-286-8010 or International: 617-801-6888. Pass code: 44850092.

Coca-Cola FEMSA, S.A.B. de C.V. produces and distributes Coca-Cola, Fanta, Sprite, Del Valle, and other trademark beverages of The Coca-Cola Company in Mexico (a substantial part of central Mexico, including Mexico City, as well as parts of southeast and northeast Mexico), Guatemala (Guatemala City and surrounding areas), Nicaragua (nationwide), Costa Rica (nationwide), Panama (nationwide), Colombia (most of the country), Venezuela (nationwide), Brazil (greater São Paulo, Campiñas, Santos, the state of Mato Grosso do Sul, part of the state of Goias, and part of the state of Minas Gerais), and Argentina (federal capital of Buenos Aires and surrounding areas), along with bottled water, juices, teas, isotonics, beer, and other beverages in some of these territories. The Company has 34 bottling facilities in Latin America and serves more than to 1,600,000 retailers in the region.

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance, which should be considered as good faith estimates by Coca-Cola FEMSA. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, many of which are outside Coca-Cola FEMSA’s control, which could materially impact the Company’s actual performance.
References herein to “US$” are to United States dollars. This news release contains translations of certain Mexican peso amounts into U.S. dollars for the convenience of the reader. These translations should not be construed as representations that Mexican peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.

 

back to top

Calendar

M T W T F S S
 
 
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
8
 
9
 
10
 
11
 
12
 
13
 
14
 
15
 
16
 
17
 
18
 
19
 
20
 
21
 
22
 
23
 
24
 
25
 
26
 
27
 
28
 
29
 
30
 
 
 

Calendario

Actions with value

Press

Events

At the moment there are no related events.

Visit our calendar to find out about our upcoming events.