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Coca-Cola FEMSA Announces 2009 Third Quarter and First Nine Months Results
Tuesday, 10/27/2009, 10:34:09 am
Mexico City (October 27, 2009), Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFL, NYSE: KOF) (“Coca-Cola FEMSA” or the “Company”), the largest Coca-Cola bottler in Latin America and the second-largest Coca-Cola bottler in the world in terms of sales volume, announces results for the third quarter of 2009.
“Our company achieved another quarter of strong top- and bottom-line results, with our revenues up more than 30% and our operating income and EBITDA up 24%. Along with price increases implemented across our territories, our results reflected the strong growth of sparkling beverages in
CONSOLIDATED RESULTS
Our consolidated total revenues increased 31.5% to Ps. 26,007 million in the third quarter of 2009, compared to the third quarter of 2008, as a result of double-digit revenue increases in all of our divisions. Revenue growth was driven by (i) organic growth, in both pricing and volumes, accounting for more than 55% of incremental revenues, (ii) a positive exchange rate translation effect, resulting from the depreciation of the Mexican peso against our operation’s local currencies(1), contributing more than 40% of incremental revenues, and (iii) the consolidation of Brisa in Colombia providing less than 5%. On a currency neutral basis and excluding the acquisition of Brisa, our consolidated total revenues would have increased approximately 17%.
Total sales volume increased 7.5% to reach 615.6 million unit cases in the third quarter of 2009 as compared to the same period in 2008 driven by (i) increases in sparkling beverages in our Mexico division, accounting for approximately 40% of incremental volumes, (ii) still beverages sales volume, mainly driven by the Jugos del Valle line of business in our Mexico and Latincentro divisions, accounting for more than 30% of incremental sales volume, and (iii) our bottled water business, driven by the acquisition of Brisa in Colombia, representing the balance. Excluding Brisa, total sales volume increased 5.3%.
Our gross profit increased 28.4% to Ps. 12,064 million in the third quarter of 2009, compared to the third quarter of 2008. Cost of goods sold increased 34.4% driven by (i) the devaluation of the local currencies in our main operations as applied to our U.S. dollar-denominated raw material cost, (ii) higher year-over-year sweetener costs and (iii) the third and final stage of the scheduled Coca-Cola Company increase in concentrate prices in Mexico; which were partially offset by lower resin costs. Gross margin reached 46.4% in the third quarter of 2009 as compared to 47.5% in the same period in 2008.
Our consolidated operating income increased 24.0% to Ps. 3,959 million in the third quarter of 2009, mainly driven by double-digit operating income growth in our Latincentro and Mercosur divisions. Our operating margin was 15.2% in the third quarter of
During the third quarter of 2009, we recorded Ps. 341 million in other expenses. These expenses mainly reflected the loss on sale of certain fixed assets and the recording of employee profit sharing in the other expenses line, in accordance with Mexican Financial Reporting Standards.
Our comprehensive financing result in the third quarter of 2009 recorded an expense of Ps. 378 million as compared to an expense of Ps. 514 million in the same period of 2008, mainly due to a lower foreign exchange loss driven by a lower U.S. dollar-denominated net debt position.
During the third quarter of 2009, income tax, as a percentage of income before taxes, was 30.9% compared to 38.3% in the same period of 2008. This difference was mainly driven by additional tax provisions recorded during the third quarter 2008.
Our consolidated net controlling income(2) increased by 70.4% to Ps. 2,134 million in the third quarter of 2009 as compared to the third quarter of 2008, mainly as a result of higher operating income. Earnings per share (EPS) were Ps. 1.16 (Ps. 11.56 per ADR) computed on the basis of 1,846.5 million shares outstanding (each ADR represents 10 local shares).
BALANCE SHEET
As of September 30, 2009, we had a cash balance of Ps. 8,946 million, including US$ 174 million denominated in U.S. dollars, an increase of Ps. 2,754 million compared to December 31, 2008, as a result of cash generated by our operations and financing during the first nine months of the year.
Total short-term debt was Ps. 5,151 million and long-term debt was Ps. 10,528 million. Total debt decreased Ps. 2,895 million compared with year-end 2008 mainly due to the maturity of the outstanding balance of the Yankee Bond inherited through the acquisition of Panamco in the amount of US$ 265 million and the maturity of a Certificado Bursátil in the amount of Ps. 500 million in July,
The weighted average cost of debt for the quarter was 6.5%. The following charts set forth the Company’s debt profile by currency and interest rate type and by maturity date as of September 30, 2009:
|
Currency |
% Total Debt(1) |
% Interest Rate Floating(1)(2) |
|
Mexican pesos |
55.1% |
46.1% |
|
U.S. dollars Colombian pesos Venezuelan bolivars |
31.6% 4.3% 1.1% |
43.0% 100.0% 0.0% |
|
Argentine pesos |
7.9% |
15.7% |
(1) After giving effect to cross-currency swaps and interest rate swaps.
(2) Calculated by weighting each year’s outstanding debt balance mix.
Debt Maturity Profile
|
Maturity Date |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 + |
|
% of Total Debt |
4.2% |
28.6% |
0.0% |
25.2% |
15.1% |
26.9% |
MEXICO DIVISION OPERATING RESULTS
Revenues
Total revenues from our
Total sales volume increased 9.6% to 321.4 million unit cases in the third quarter of 2009, as compared to the third quarter of 2008, mainly driven by (i) an 8% volume growth in sparkling beverages supported by incremental volumes from the Coca-Cola brand in multi-serve and single-serve presentations that compensated for a low single-digit decline in flavored sparkling beverages, (ii) incremental volumes in the still beverage category, growing more than 80%, due to the Jugos del Valle product line and (iii) a 5% volume growth in our bottled water business.
Operating Income
Our gross profit increased 6.6% to Ps. 4,707 million in the third quarter of 2009 as compared to the same period in 2008. Cost of goods sold increased 18.3% as a result of the devaluation of the Mexican peso as applied to our U.S. dollar-denominated raw material costs and the third and final stage of the scheduled Coca-Cola Company concentrate price increase announced in 2006, which were partially offset by lower year-over-year resin costs. Gross margin decreased from 51.7% in the third quarter of 2008 to 49.1% in the same period of 2009.
Operating income remained flat at Ps. 1,699 million in the third quarter of 2009, compared to Ps. 1,696 million in the same period of 2008. Our operating margin was 17.7% in the third quarter of
LATINCENTRO DIVISION OPERATING RESULTS (
As of June 1, 2009, Coca-Cola FEMSA started to distribute the Brisa portfolio in
Revenues
Total revenues reached Ps. 9,844 million in the third quarter of 2009, an increase of 70.7% as compared to the same period of 2008. Higher average price per unit case and volume growth accounted for approximately 50% of incremental revenues. A positive currency translation effect, resulting from the depreciation of the Mexican peso against our operation’s local currencies(1), represented approximately 45% of incremental revenues and the integration of Brisa contributed the balance. On a currency neutral basis and excluding the acquisition of Brisa, our Latincentro division’s revenues would have increased approximately 35%.
Total sales volume in our Latincentro division increased 10.3% to 151.8 million unit cases in the third quarter of 2009 as compared to the same period of 2008. Volume growth was mainly driven by (i) the consolidation of the Brisa water brand in
Operating Income
Gross profit reached Ps. 4,471 million, an increase of 72.0% in the third quarter of 2009, as compared to the same period of 2008. Cost of goods sold increased 69.5% mainly driven by higher year-over-year sweetener costs across the division, which were partially compensated by lower resin costs. Gross margin increased 30 basis points to 45.4% in the third quarter of 2009.
Our operating income increased 73.2% to Ps. 1,301 million in the third quarter of 2009, compared to the third quarter of 2008, as a result of operating leverage achieved by higher revenues that more than compensated for higher labor costs in Venezuela, and increased marketing expenses in the division, as a result of the integration of the Brisa portfolio in Colombia and the continued expansion of the Jugos del Valle line of business in Colombia and Central America. Our operating margin reached 13.2% in the third quarter of 2009, resulting in a 20 basis points increase as compared to the same period of 2008.
MERCOSUR DIVISION OPERATING RESULTS (
Volume and average price per unit case exclude beer results.
Revenues
Total revenues increased 20.4% to Ps. 6,582 million in the third quarter of 2009, as compared to the same period of 2008. Excluding beer, which accounted for Ps. 642 million during the quarter, revenues increased 20.3% to Ps. 5,940 million, compared to the same period of
Sales volume, excluding beer, increased 0.6% to 142.4 million unit cases in the third quarter of 2009, as compared to the third quarter of 2008, driven by the still beverage portfolio in
Operating Income
In the third quarter of 2009, our gross profit increased 21.1% to Ps. 2,886 million, as compared to the same period in 2008. Cost of goods sold increased 19.8% driven by higher cost of sweetener in Brazil and the devaluation of local currencies as applied to our U.S. dollar-denominated raw material costs, which were partially offset by lower resin costs. Gross margin in the Mercosur division increased 20 basis points to 43.8% in the third quarter of 2009.
Operating income increased 28.4%, reaching Ps. 959 million in the third quarter of 2009, as compared to Ps. 747 million in the same period of 2008. Operating leverage achieved by higher revenues more than compensated for higher labor and freight costs in
SUMMARY OF NINE-MONTH RESULTS
Our consolidated total revenues increased 30.4% to Ps. 73,358 million in the first nine months of 2009, as compared to the same period of 2008, as a result of revenue growth in all of our divisions. Organic growth across our operations contributed approximately 55% of incremental revenues; a positive exchange rate translation effect, resulting from the depreciation of the Mexican peso against our operation’s local currencies(1), accounted for more than 30%; and the acquisitions of Refrigerantes Minas Gerais, Ltda. (REMIL)(2) in Brazil and Brisa(3) in Colombia together contributed less than 15%, representing the balance. On a currency neutral basis and excluding the acquisitions of REMIL(2) and Brisa(3), our consolidated revenues for the first nine months would have increased approximately 17%.
Total sales volume increased 8.1% to 1,776.8 million unit cases in the first nine months of 2009, as compared to the same period in 2008. Excluding the acquisitions of REMIL(2) and Brisa(3), total sales volume increased 4.6% to reach 1,718.5 million unit cases. The still beverage category, mainly driven by the performance of the Jugos del Valle line of business across our territories, contributed close to 60% of incremental volumes; the sparkling beverage category, driven by the Coca-Cola brand, contributed more than 25% of volume growth and water, including bulk water, represented the balance.
Our gross profit increased 27.3% to Ps. 34,230 million in the first nine months of 2009, as compared to the same period of 2008, driven by gross profit growth across all of our divisions. Cost of goods sold increased 33.3% as a result of (i) the devaluation of local currencies in our main operations as applied to our U.S. dollar-denominated raw material costs, (ii) the higher cost of sweetener across our operations, (iii) the integration of REMIL and (iv) the third and final stage of the scheduled Coca-Cola Company concentrate price increase announced in
Our consolidated operating income increased 18.7% to Ps. 10,979 million in the first nine months of 2009, as compared to 2008. Our Mercosur and Latincentro divisions accounted for more than 95% of this growth. Our operating margin was 15.0% for the first nine months of
Our consolidated net controlling income(4) was Ps. 5,679 million in the first nine months of 2009, an increase of 19.6% compared to the same period in 2008, mainly reflecting higher operating income. EPS was Ps. 3.08 (Ps. 30.76 per ADR) in the first nine months of 2009, computed on the basis of 1,846.5 million shares outstanding (each ADR represents 10 local shares).
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Coca-Cola FEMSA, S.A.B. de C.V. produces and distributes Coca-Cola, Sprite, Fanta, Lift and other trademark beverages of The Coca-Cola Company in Mexico (a substantial part of central Mexico, including Mexico City and southeast 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, beer and other beverages in some of these territories. The Company has 31 bottling facilities in
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This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance and 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 that could materially impact the Company’s actual performance.
References herein to “US$” are to
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