Mexico City, October 25, 2024, 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 third quarter of 2024.
THIRD QUARTER HIGHLIGHTS
- Volume growth 0.8%
- Revenue growth 10.7%
- Operating income growth 13.9%
- Majority net income growth 8.9%
- Earnings per share were Ps. 0.35. (Earnings per unit were Ps. 2.79 and per ADS were Ps. 27.89.)
- Initiated pilot of a new salesforce automation tool, Juntos+ Advisor, with encouraging results in Brazil.
FIRST NINE MONTHS HIGHLIGHTS
- Volume growth 5.1%
- Revenue growth 12.4%
- Operating income growth 13.4%
- Majority net income growth 15.7%
- Earnings per share were Ps. 0.98. (Earnings per unit were Ps. 7.83 and per ADS were Ps. 78.28.)x
Ian Craig, Coca-Cola FEMSA’s CEO, commented:
“Our third-quarter results underscore the resilience of our business and the strategic execution that drives Coca-Cola FEMSA forward. Despite unfavorable weather conditions in Mexico, our consolidated volumes remained resilient, driven mainly by the solid growth achieved in Brazil and Guatemala. At the same time, our team’s focus on growing the core business and driving cost and expense efficiencies enabled our revenues and operating income to grow by double digits.
On the B2B front, we continued deploying Juntos+, which now reaches 1.2 million monthly active buyers across Latin America. Additionally, we initiated the pilot of our new salesforce automation tool, Juntos+ Advisor, with encouraging results. Juntos + Advisor leverages advanced AI models, empowering our salesforce to help our clients reach their full potential and significantly improving our customer’s omnichannel experience. Finally, we are progressively adding the necessary production and distribution capacity across key markets to enable future growth and deliver long-term value for all our stakeholders.
Moreover, we express our sincere support to all the people impacted by Hurricane John in the state of Guerrero during the quarter. Our team has worked tirelessly in providing support to our employees, their families, and the affected communities. We are also encouraged that the reopening of our plant in Porto Alegre is progressing according to plan; we resumed operations in our distribution center, while bottling operations will gradually begin as of the fourth quarter.”
RECENT DEVELOPMENTS
- On September 5, the Company announced that it achieved the sustainability performance target contemplated in its sustainability-linked bonds by achieving a water use efficiency ratio of 1.36 liters per liter of beverage produced, and that such compliance has been confirmed by an external and independent verifier. As a result, Coca-Cola FEMSA confirms that the calculation of the interest rate applicable to the sustainability-linked bonds as of the interest period beginning on September 19, 2024, will not incur any modifications.
- Coca-Cola FEMSA mobilized efforts to support the communities affected by Hurricane John in the state of Guerrero, Mexico. As part of its commitment to aid in the recovery of the region, the Company coordinated with local authorities to provide humanitarian relief, including donations of water, food, and essential supplies to the most impacted areas. Coca-Cola FEMSA also deployed two water purification trucks, which have delivered almost 50 thousand liters of drinkable water, equivalent to 2.4 thousand water jugs, ensuring access to clean water for those in need. These efforts underscore the Company’s dedication to supporting both its employees and the broader community in this challenging time.
- After the announcement of the temporary closure of its facility in Porto Alegre due to the flooding that affected Rio Grande do Sul, Brazil last May, Coca-Cola FEMSA announced that plans to reopen the facility continue progressing according to expectations. The distribution center resumed operations as of October, initially at partial capacity. Production facilities are expected to gradually restart during the fourth quarter. Furthermore, the Company continues to offer support to its employees, their families, its customers, and the community.
- On October 15, 2024, Coca-Cola FEMSA paid the third installment of the ordinary dividend approved for Ps. 0.19 per share, for a total cash distribution of Ps. 3,193.26 million. On December 9, 2024, Coca-Cola FEMSA will pay the fourth and final installment of this dividend.
CONSOLIDATED THIRD QUARTER RESULTS
Volume increased 0.8% to 1,041.1 million unit cases, driven by volume growth in our Brazil, Guatemala, and Central America South territories, coupled with stable volume performance in Argentina. This increase was partially offset by volume declines in Mexico, Colombia, and Uruguay.
Total revenues increased 10.7% to Ps. 69,601 million. This increase was driven mainly by our revenue management initiatives and favorable mix effects. Excluding currency translation effects, total revenues increased 11.3%.
Gross profit increased 11.3% to Ps. 32,094 million, and gross margin increased 20 basis points to 46.1%. This expansion was driven mainly by our top-line growth, coupled with easing raw material costs and favorable hedging initiatives. These effects were partially offset by an increase in purchases of finished product in Brazil, higher fixed costs and the depreciation of the Argentine Peso. Excluding currency translation effects, gross profit increased 11.5%.
Operating income increased 13.9% to Ps. 9,638 million, and operating margin increased 30 basis points to 13.8%. This margin expansion was driven mainly by operating expense efficiencies and favorable mix effects that mitigated margin pressures related to higher operating expenses such as labor, marketing, freight, and maintenance. In addition, we recognized one-time income of Ps. 339 million for the quarter related to insurance claims from Hurricane Otis’ impact on Mexico in October 2023. Excluding currency translation effects, operating income increased 13.6%.
Comprehensive financing result recorded an expense of Ps. 823 million, compared to an expense of Ps. 552 million in the previous year. This increase was driven mainly by a lower foreign exchange gain of Ps. 49 million in the third quarter of 2024 as compared to a gain of Ps. 322 million in the same period of the previous year. In addition, we recognized higher interest expense, net, of Ps. 1,059 million as compared to Ps. 986 million in the same period of the previous year, mainly because of new debt in Argentina and an increase in interest rates in our floating debt.
These effects were partially offset by a higher gain in monetary positions in inflationary subsidiaries as compared to the same period of the previous year.
Income tax as a percentage of income before taxes was 31.5% as compared to 29.6% during the same period of 2023. This increase was driven mainly by deferred taxes.
Net income attributable to equity holders of the company was Ps. 5,858 million as compared to Ps. 5,380 million during the same period of the previous year. This increase was driven mainly by operating income growth, partially offset by an increase in our comprehensive financing result and in income taxes. Earnings per share were Ps. 0.35 (Earnings per unit were Ps. 2.79 and per ADS were Ps. 27.89.).
CONSOLIDATED FIRST NINE MONTHS RESULTS
Volume increased 5.1% to 3,145.6 million unit cases, driven by volume growth in most of our territories, including Mexico, Brazil, Guatemala, Colombia, and our Central America South territories, partially offset by a decrease in Argentina and Uruguay.
Total revenues increased 12.4% to Ps. 203,873 million. This increase was driven mainly by our solid volume growth and revenue management initiatives. These effects were partially offset by unfavorable currency translation effects of most of our operating currencies into Mexican Pesos. Excluding currency translation effects, total revenues increased 15.7%.
Gross profit increased 14.0% to Ps. 92,886 million, and gross margin expanded 70 basis points to 45.6%. This gross profit increase was driven mainly by our top-line growth, coupled with favorable packaging costs and hedging initiatives. These effects were partially offset by higher sweetener costs across our territories and the depreciation of the Argentine Peso. Excluding currency translation effects, gross profit increased 17.2%.
Operating income increased 13.4% to Ps. 28,037 million, and operating margin increased 20 basis points to 13.8%. This increase was driven by top-line growth and operating expense efficiencies. These effects were partially offset by increases in operating expenses such as labor, freight, and maintenance, coupled with a tough comparison base that included a non-cash operating foreign exchange gain in Mexico, as compared to a loss this year. Excluding currency translation effects, operating income increased 16.3%.
Comprehensive financing result recorded an expense of Ps. 2,918 million, compared to an expense of Ps. 3,329 million in the previous year. This decrease is explained mainly by a foreign exchange gain of Ps. 249 million as compared to a loss of Ps. 739 million, as our net cash exposure in U.S. dollars was positively impacted by the depreciation of the Mexican Peso and the Brazilian Real during the first nine months of 2024.
These effects were partially offset by an increase in our interest expense, net, of Ps. 3,415 million as compared to an expense of Ps. 2,804 million in the same period of the previous year, mainly because of an increase in our debt in Argentina partially offset by a reduction in our interest income and the maturity of a Mexican peso denominated bond.
Income tax as a percentage of income before taxes was 32.5% as compared to 29.6% during the same period of 2023. This increase was driven mainly by deferred taxes.
Net income attributable to equity holders of the company increased 15.7% to reach Ps. 16,445 million during the first nine months of 2024, as compared to Ps. 14,213 million during the same period of the previous year. This increase was driven mainly by operating income growth, coupled with a decrease in our comprehensive financing result. These effects were partially offset by higher income taxes. Earnings per share were Ps. 0.98 (Earnings per unit were Ps. 7.83 and per ADS were Ps. 78.28.).
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ABOUT THE COMPANY
Stock listing information: Mexican Stock Exchange, Ticker: KOFUBL | NYSE (ADS), Ticker: KOF | Ratio of KOFUBL to KOF = 10:1
Coca-Cola FEMSA, S.A.B. de C.V. is the largest franchise bottler in the world by sales volume. The Company produces and distributes trademark beverages of The Coca-Cola Company, offering a wide portfolio to more than 272 million consumers. With over 104,000 employees, the Company markets and sells approximately 4 billion unit cases through more than 2.1 million points of sale a year. Operating 56 manufacturing plants and 252 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all its stakeholders across the value chain. The Company is a member of the Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the S&P/BMV Total Mexico ESG Index, among others. Its operations encompass certain territories in Mexico, Brazil, Guatemala, Colombia, and Argentina and, nationwide, in Costa Rica, Nicaragua, Panama, Uruguay and, in Venezuela, through an investment in KOF Venezuela. For further information, please visit www.coca-colafemsa.com