Mexico City, February 26, 2020, Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFUBL, NYSE: KOF) (“Coca-Cola FEMSA,” “KOF” or the “Company”), the largest Coca-Cola franchise bottler in the world by sales volume, announces results for the fourth quarter and the full year of 2019.
FOURTH QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS
Volumes increased in Brazil, Central America, and Colombia, while remaining stable in Mexico; transactions outperformed volumes in Mexico, Brazil, and Argentina.
Revenues increased 3.1%, while comparable revenues grew 10.0%. Solid pricing, revenue management initiatives across our operations, and volume growth were partially offset by unfavorable currency translation effects into Mexican Pesos.
Operating income decreased 13.2%, while comparable operating income decreased 5.1%. A favorable price mix, stable sweetener prices, and declining PET prices were mainly offset by higher concentrate costs, higher operating expenses, and the depreciation of the Brazilian Real, the Argentine Peso and Colombian Peso as applied to our U.S. dollar-denominated raw material costs.
FULL YEAR OPERATIONAL AND FINANCIAL HIGHLIGHTS
For the full year, volumes increased in Brazil and Central America; transactions outperformed volumes in Brazil and Argentina.
Revenues increased 6.7%, while comparable revenues grew 10.8%, driven by solid pricing, revenue management initiatives, and volume growth. These factors were partially offset by unfavorable currency translation effects into Mexican Pesos.
Operating income increased 3.0%, while comparable operating income increased 9.5%, driven mainly by a favorable price mix, stable sweetener prices, declining PET prices, and operating expense efficiencies. These factors were partially offset by higher concentrate costs, restructuring severance payments related to our efficiency program, and the depreciation of all of our operating currencies as applied to our U.S. dollar-denominated raw material costs.
Majority net income decreased 13.0%, facing a demanding comparable result for 2018, driven by the results of discontinued operations related to the sale of our operation in the Philippines. Earnings per share(1) were Ps. 0.72 (Earnings per unit were Ps. 5.76 and per ADS were Ps. 57.60.).
John Santa Maria, Coca-Cola FEMSA’s CEO, commented:
“Our 2019 results reflect a year of transformation and capability building: Initiatives that position us for future growth. Our fullyear comparable revenues grew 10.8%, while our comparable operating income grew 9.5%. These results reflect continuous growth in Mexico and Brazil—encouraging underlying operating performance from our two largest markets—in the face of challenging environments and profound restructuring costs throughout the year. Importantly, we continued revamping our portfolio across territories, through innovation, affordability, and revenue management initiatives, to ensure that our customers are offered the highest value at the best possible price point. Moreover, we functionalized our operations while installing bestin-class practices to create a more agile organization. Finally, our development and rollout of cutting-edge comercial cabilities is far from over, as our omnichannel initiatives will begin deployment during 2020.
I am confident that the strides we took during 2019 to put together the right set of capabilities and talent will position our organization to generate increased value for all of our stakeholders for many years to come.”
RECENT DEVELOPMENTS
On November 1, 2019, Coca-Cola FEMSA paid the second installment of the 2018 dividend in the amount of Ps. 0.4425 per share (equivalent to Ps. 3.54 per unit).
In January 2020, Coca-Cola FEMSA issued US$1.25 billion aggregate principal amount of senior notes due 2030. The notes priced at US Treasury +100 basis points and a coupon of 2.750%. The transaction received broad participation from investment grade dedicated investors, confirming Coca-Cola FEMSA’s financial discipline and strong credit profile. The net proceeds from the sale of the 2030 notes were used to repurchase and redeem its 3.875% senior notes due 2023 and for general corporate purposes.
On January 30, 2020, recognizing our commitment to environmental, social, and governance (“ESG”) practices, Coca-Cola FEMSA was included in the FTSE4Good BIVA Index. The new sustainability Index by BIVA (“Bolsa Institucional de Valores”) and FSTE Russell aims to align the Mexican market with best international ESG standards.
In February 2020, Coca-Cola FEMSA announced the successful placement of two tranches of Mexican Pesodenominated bonds or certificados bursátiles in the Mexican market for an aggregate amount of Ps. 3,000 million for 8 years bearing an annual fixed interest rate of 7.35% and certificados bursátiles for an aggregate amount of Ps. 1,727 million for 5.5 years bearing a variable interest rate of TIIE + 0.08%. This transaction received broad participation from investors and was over-subscribed by almost four times.
Coca-Cola FEMSA is proud to be a member of the Bloomberg 2020 Gender-Equality Index (“GEI”). This Index recognizes Coca-Cola FEMSA for the second consecutive year for its commitment to both workplace equality and transparency.
On February 25, 2020, Coca-Cola FEMSA’s Board of Directors agreed to propose for approval at the annual Shareholders meeting, held on March 17, 2020, an ordinary dividend of Ps. 4.86 per unit (Ps. 0.6075 per share) to be paid in two installments in May and November of 2020. This dividend represents an increase of 37% versus the previous year’s dividend, underscoring our commitment to total shareholder return.
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ABOUT THE Coca Cola FEMSA
Coca-Cola FEMSA, S.A.B. de C.V. is the largest Coca-Cola franchise bottler in the world by sales volume. The Company produces and distributes trademark beverages of The Coca-Cola Company, offering a wide portfolio of 131 brands to a population of more than 257 million. With over 83 thousand employees, the Company markets and sells approximately 3.3 billion unit cases through close to 2 million points of sale a year. Operating 49 manufacturing plants and 269 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain. The Company is a member of the Dow Jones Sustainability Emerging Markets Index, Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the Mexican Stock Exchange’s IPC and Social Responsibility and Sustainability Indices, among others. Its operations encompass franchise territories in Mexico, Brazil, Guatemala, Colombia, and Argentina, and, nationwide, in Costa Rica, Nicaragua, Panama, Uruguay, and Venezuela through its investment in KOF Venezuela. For further information, please visit www.coca-colafemsa.com
