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01/11 03:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with high single-digit revenue growth, stable operating margins, and significant shareholder returns. Despite a 10% volume decline due to weather and demand challenges, management's strategies in digital, store expansion, and cost initiatives show promise. The Q&A highlights optimism for the second half of the year, with positive traffic data from loyalty programs and strategic partnerships. While some uncertainties remain, the overall sentiment is positive, suggesting a 2% to 8% stock price increase over the next two weeks.
Total Revenue Growth 6.3% year-over-year. This was achieved despite a challenging environment in Mexico, offset by solid top-line trends outside Mexico, currency tailwinds, and the consolidation of the OXXO USA operation.
Operating Income Increased by 1.2% year-over-year. The challenging consumer environment in Mexico and inflationary effects on costs and expenses impacted profitability.
Net Consolidated Income Decreased by 64.3% to MXN 5.6 billion. This was driven by a non-cash foreign exchange loss of MXN 4.1 billion and lower interest income of MXN 2.1 billion compared to MXN 4.1 billion the previous year.
Proximity Americas Division Revenue Growth 6.9% year-over-year or 2% on an organic and currency-neutral basis. This was driven by network expansion, strong performance in Latam markets, and favorable exchange rates.
Same-Store Sales in Proximity Americas Declined by 0.4%. Average ticket grew 6.6%, but traffic contracted by 6.6% due to a weak consumer environment in Mexico and adverse weather conditions.
Valora Revenue Growth 31.4% in pesos or 5.9% on a currency-neutral basis. This was driven by strong performance in Switzerland's retail business, offset by lower sales in B2B and B2C food services.
Health Division Revenue Growth 15.6% in pesos with same-store sales growing 13.1%. Growth was driven by strong performance in Colombia and Ecuador, supported by favorable FX dynamics.
OXXO Gas Same-Station Sales Increased by 4.9%. Total revenues grew by 0.6%, reflecting growth in retail volume offset by a decline in the wholesale business.
Coca-Cola FEMSA Revenue Growth 5% year-over-year. Adverse weather conditions and a tougher demand environment in Mexico and Central America led to a nearly 10% volume decline.
Spin by OXXO accounts: Created more than 14.5 million accounts, with 9.4 million active in the last 56 days.
Spin Premia Rewards Program: Over 58 million accounts, with 26.6 million having transaction activity in the last 90 days. 20 million OXXO customers benefit monthly.
Spin Negocios: Reaches almost 20,000 merchants and processes nearly MXN 12 billion monthly.
OXXO USA expansion: Converted 40 DK stores into OXXOs in West Texas, with promising early sales results.
Bara store expansion: Opened 23 new stores, targeting 30%-40% growth in 2025.
Valora expansion: Continued converting stores into the avec banner, showing strong results in Switzerland and other regions.
Cost reduction in Spin: Reduced cash burn from MXN 4 billion to MXN 3 billion annually through renegotiations and direct connections to SPEI, cutting costs by 48%.
Proximity Americas operational efficiency: Selling expenses grew in line with store expansion, reflecting efficiency improvements through data analytics and flexible shift policies.
Health division restructuring: Closed 432 underperforming stores in Mexico and reduced overhead costs.
Digital and physical integration: Spin aims to integrate digital and physical ecosystems, enhancing OXXO's value proposition and financial inclusion.
Financial services development: Plans to offer savings and credit products tailored to underserved segments, with cautious testing and rollout.
Capital allocation: Deployed $1.6 billion in extraordinary returns, with a commitment of $3.2 billion by March 2026.
Challenging Consumer Environment in Mexico: The company faced a persistently weak consumer environment in Mexico, which negatively impacted traffic and sales in core convenience categories such as soft drinks, beer, and tobacco. This was further exacerbated by adverse weather conditions.
Inflationary Effects on Costs and Expenses: Operating income growth was limited due to inflationary pressures on costs and expenses, which the company was unable to fully absorb due to the challenging consumer environment.
Foreign Exchange Losses: The company experienced a non-cash foreign exchange loss of MXN 4.1 billion, driven by the appreciation of the Mexican peso, which negatively impacted its U.S. dollar-denominated cash position.
Decline in Net Consolidated Income: Net consolidated income decreased by 64.3%, primarily due to foreign exchange losses and lower interest income compared to the previous year.
Traffic Decline in OXXO Stores: Same-store sales in Mexico declined due to a 6.6% drop in traffic, attributed to weak consumer sentiment and adverse weather conditions. This is a key area of concern for the company.
Underperforming Health Division in Mexico: The health division in Mexico faced challenges, including same-store sales declines and the closure of 432 underperforming stores, which impacted profitability.
Cash Burn in Spin Digital Business: Spin's cash burn remains significant, although it has improved. The company is still incurring approximately MXN 3 billion per year in cash burn for its core Spin businesses.
Adverse Weather Conditions: Unfavorable weather conditions in Mexico negatively impacted consumer traffic and sales in key categories.
Operational Expenses Outpacing Revenue Growth: Operating expenses grew faster than revenues in some divisions, leading to margin pressures.
Macroeconomic Volatility: The company acknowledged potential volatility in the macroeconomic environment, which could impact its operations and financial performance in the near term.
Future of Spin by OXXO: Spin by OXXO aims to expand its omnichannel ecosystem centered on payments and rewards, leveraging OXXO's physical and digital assets. Plans include enhancing customer convenience through integrated digital experiences, expanding financial services such as savings and credit products, and improving financial inclusion in Mexico. The company is also working on upgrading its license and establishing partnerships to improve its risk-reward profile.
Spin's Financial Sustainability: Spin's cash burn has been reduced from MXN 4 billion to MXN 3 billion per year through cost-saving initiatives. The company is focused on achieving financial sustainability while scaling its operations.
Proximity Americas Division: The division plans to address weak traffic in Mexico by focusing on commercial initiatives and expanding its store network. The company is also converting DK stores into OXXOs in the U.S. and testing new food concepts.
Bara Expansion: Bara aims to achieve a 30%-40% growth rate in 2025 by optimizing its discount value proposition and scaling its private label strategy.
Valora's Growth in Europe: Valora is focusing on converting stores into the avec banner and sees this format as an opportunity for organic growth across borders.
Health Division Restructuring: The division is undergoing restructuring, including closing underperforming stores and reducing overhead costs, to improve profitability.
Capital Allocation and Shareholder Returns: FEMSA plans to deploy MXN 66 billion ($3.2 billion) between March 2025 and March 2026 through dividends and share repurchases. The company has already executed $374 million in share buybacks and paid $1.2 billion in dividends.
Coca-Cola FEMSA Strategy: Coca-Cola FEMSA is focusing on increasing production and distribution capacity and maintaining a diverse brand portfolio to meet consumer demands.
Outlook for Second Half of 2025: FEMSA expects stable full-year operating margins for Proximity Americas and Coca-Cola FEMSA. The company remains cautiously optimistic despite potential macroeconomic volatility.
Commitment to Shareholder Remuneration: FEMSA has committed to deploy MXN 66 billion (approximately $3.2 billion) between March 2025 and March 2026 through a combination of ordinary and extraordinary dividends as well as share repurchases.
Dividend Payments: As of July 2025, FEMSA has paid two out of four installments of ordinary and extraordinary dividends for the year, totaling nearly $1.2 billion.
Share Buybacks: FEMSA has executed approximately $374 million in share buybacks, including repurchases in the local market and a $250 million accelerated share repurchase program (ASR), which concluded in July 2025.
The earnings call highlights a strong performance in South America, particularly Chile and Colombia, and positive trends in OXXO's market share and traffic. Despite challenges in Mexico, the optimistic outlook for the fourth quarter and strategic initiatives in Brazil and Bara are promising. The Q&A section supports this with positive sentiment towards growth prospects and margin improvements, despite some uncertainties in restructuring details. Overall, the positive elements outweigh the negatives, suggesting a positive stock reaction.
The earnings call indicates strong financial performance with high single-digit revenue growth, stable operating margins, and significant shareholder returns. Despite a 10% volume decline due to weather and demand challenges, management's strategies in digital, store expansion, and cost initiatives show promise. The Q&A highlights optimism for the second half of the year, with positive traffic data from loyalty programs and strategic partnerships. While some uncertainties remain, the overall sentiment is positive, suggesting a 2% to 8% stock price increase over the next two weeks.
The earnings call shows strong financial performance with a 56.7% increase in EPS and an 11.1% increase in total revenues. Despite some traffic challenges, management remains optimistic about growth opportunities and store expansion. The Q&A section reveals positive sentiment towards financial services and commercial income growth, and strategic initiatives for cost savings and margin expansion. The shareholder return plan, including increased dividends and share repurchases, adds to the positive outlook. However, some concerns about traffic and management's unclear responses slightly temper the overall sentiment.
The earnings call reflects positive sentiment with strong financial performance, including an 11.1% revenue increase and a significant net income rise. Despite some challenges, such as traffic slowdown and operating income decline in Proximity Americas, management remains optimistic about growth opportunities, particularly in digital capabilities and store expansion. The shareholder return plan, with significant dividends and buybacks, further boosts sentiment. Concerns about market share and traffic are acknowledged but not seen as major deterrents. Overall, the positive elements outweigh the negatives, suggesting a likely stock price increase in the short term.
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