Fomento Económico Mexicano, S.A.B. de C.V. (FMX) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook. While there are positive elements like strong expansion plans in Latin America, improved margins, and strategic initiatives in OXXO Mexico, these are offset by challenges such as declining operating income in key segments and vague management responses on critical issues. The Q&A highlights concerns about traffic impact and tax-driven growth, and with no clear guidance or new partnerships, the sentiment remains balanced, suggesting a neutral stock price movement.
Key Financial Performance
Total Revenues Increased 6.1% year-over-year, reflecting recovery in OXXO Mexico, contributions from international operations, and cost restructuring benefits, but offset by currency headwinds and softer performance in Health and Coca-Cola.
Operating Income Grew 5.5% year-over-year. On a comparable and currency-neutral basis, it grew 12.1%, driven by recovery in OXXO Mexico and cost restructuring benefits.
Net Consolidated Income Amounted to 17.6 billion pesos, up 97.3% year-over-year due to a one-time non-cash accounting gain. Excluding this gain, it would have been 5.7 billion pesos, a decline of 36.4%, mainly due to higher net financing expenses and lower interest income.
OXXO Mexico Revenue Grew 8.3%, driven by 6% same-store sales growth and 158 net new store additions. Gross margin expanded 140 basis points to 46.2%, supported by supplier income and financial services.
Americas & Mobility Revenue Increased 12.9% year-over-year (10.5% on a comparable basis). Same-store sales growth in LatAm ex Brazil exceeded 20% in local currency, while Brazil posted 6.9% growth and the U.S. achieved 1.7% growth.
Europe Revenue Stable in peso terms, up 1.5% on a currency-neutral basis. Operating income increased 7.4% year-over-year, driven by cost containment despite weak top-line growth.
Health Division Revenue Grew 0.9% year-over-year (6.5% on a currency-neutral basis). Operating income declined 14.9% due to soft margins in Chile and continued losses in Mexico.
Coca-Cola FEMSA Revenue Grew 1.1% year-over-year (6.3% on a comparable basis). Operating income declined 2.3% but grew 2.1% on a comparable basis, supported by international operations offsetting challenges in Mexico.
CapEx Deployment Deployed 6.2 billion pesos, 29.5% lower than last year, reflecting a slower start in OXXO Mexico store openings and conservative capacity investments.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Spin by OXXO: Achieved 11 million active users and over 100 million monthly transactions. Focused on becoming an omnichannel platform to enhance convenience for Mexican consumers.
OXXO Mexico: Reported 8.3% revenue growth driven by same-store sales growth of 6%. Gained market share against traditional trade and maintained stable performance against bigger box retailers.
Americas & Mobility: Strong growth in LatAm with same-store sales growth of over 20% in local currency (excluding Brazil). Brazil posted 6.9% same-store sales growth, and the U.S. achieved 1.7% growth.
Bara: Achieved double-digit same-store sales growth, driven by traffic and ticket increases. Opened 38 net new stores.
OXXO Mexico Operational Efficiency: Achieved gross margin expansion through supplier cooperation, distribution income, and warehouse cost savings. Selling expense growth aligned with expansion and inflation.
Cost Restructuring Initiatives: Early benefits observed, contributing to operating income growth of 5.5% year-over-year.
Organizational Changes: Completed combination of FEMSA Corporate and Proximity & Health divisions, including headcount reductions. Renewed senior leadership team at OXXO Mexico and Spin.
Colombian Health Business Strategy: Reduced exposure to institutional segment due to funding gaps and credit risks. Prioritized retail drugstore business for stronger profitability and long-term returns.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
OXXO Mexico: Disruptions in late February led to many store closures, some of which remain closed. Average traffic remained slightly negative during the quarter, reflecting challenges in recovering traffic despite improvements.
Americas & Mobility: Expansion in Colombia was moderate due to prioritizing operational improvements. In Brazil, expansion was impacted by the focus on unwinding a joint venture. Profitability challenges remain as the segment gains scale and matures.
Health Operations: Soft margins in Chile due to an unfavorable product mix shift towards lower-margin pharma products. Continued losses in Mexico. Institutional business in Colombia faces funding gaps, creating credit risks due to the insolvency of certain EPS and growing outstanding receivables.
Coca-Cola FEMSA: Softer consumer demand in Mexico, further pressured by excise tax increases, impacting revenue growth.
Europe Operations: Soft traffic trends outside the core Swiss retail and foodservice business. Weak B2B segment in Germany due to strong competition.
Financial Performance: Higher net financing expenses due to foreign exchange losses, unfavorable valuation of financial instruments, and lower interest income. Decline in net consolidated income (excluding one-time gains) by 36.4% year-over-year.
Capital Allocation: Slower start in CapEx deployment, reflecting cautious investment decisions linked to demand trends and cash generation. Potential challenges in maintaining typical CapEx to sales ratio.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
OXXO Mexico: The company aspires to restore sustained growth and relevance through a focus on recovering traffic and improving same-store sales by sharpening the value proposition and enhancing customer experience. Operational execution will remain a priority.
Americas & Mobility: The segment is expected to gradually improve profitability as it gains scale, strengthens operating leverage, and matures across markets. Store expansion in Colombia is expected to accelerate this year after prioritizing operational improvements.
Bara: Continued growth is anticipated, with double-digit same-store sales growth driven by traffic and ticket. Private label revenue mix is expected to remain strong.
Spin by OXXO: The platform aims to become a structurally omnichannel platform, amplifying OXXO's ability to serve daily consumption needs and enhancing convenience for Mexican consumers.
Capital Expenditures (CapEx): CapEx deployment is expected to accelerate through the remainder of the year, trending towards a CapEx to sales ratio of approximately 5% to 6%.
Shareholder Returns: The company plans to distribute 41 billion pesos in total capital distributions between March 2026 and March 2027, including ordinary and extraordinary dividends and a share repurchase program.
Coca-Cola FEMSA: The company will continue to focus on affordability, expanding refillable options, and deploying digital tools and revenue growth management initiatives, particularly in Mexico.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Ordinary Dividends: 15.2 billion pesos to be deployed between March 2026 and March 2027, representing a 4.5% increase per share compared to last year.
Extraordinary Dividends: An additional extraordinary dividend equivalent to 25.8 billion pesos was approved for the year.
Share Repurchase Program: A 300 million share repurchase program is being executed, expected to be completed during the second quarter of 2026. This program is part of the 2025 returns and is incremental to the 41 billion pesos in dividends.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Why did the 'Others' segment EBITDA decline materially relative to last year?
A:The decline in losses in Spin and efforts at cost containment were major drivers. Improvements are expected over the next three quarters as Spin losses are managed more efficiently from a tax shield perspective.
Q:How did security issues in the Pacific area impact traffic throughout the quarter?
A:Traffic was relatively strong despite disruptions in Jalisco and other regions. Better-than-average traffic growth was observed in the North of Mexico, likely due to weather and economic momentum, while the South faced challenges due to reduced remittances and infrastructure projects.
Q:Are you seeing a contribution from commercial income in anticipation of the World Cup yet?
A:Not significantly yet, but more contributions are expected in the second quarter. Efforts like retail media expansion and partnerships with Panini are expected to drive traffic and revenues.
Q:What are the flagship strategies for OXXO to accelerate traffic trends beyond the World Cup?
A:Strategies include improving affordability in impulse categories, expanding coffee and breakfast options, and focusing on daily replenishment needs. Pilot programs in Chihuahua and Veracruz are testing these strategies.
Q:How are new OXXO stores performing, and what is the plan for store openings?
A:New cohorts of stores are performing well, with a focus on improving ROIC. The company plans to open 900-1,100 net new stores annually, though net openings may be impacted by closures of underperforming stores.
Q:How does FEMSA view its portfolio of businesses and potential simplification?
A:FEMSA is always evaluating its portfolio for value maximization. While some pharma operations underperform, others like Colombia show strong growth potential. Simplification remains a focus, but decisions are made cautiously.
Q:How is the productivity of new OXXO stores in Mexico compared to same-store sales?
A:New stores, especially niche ones, tend to sell less but have higher ROIC. The company is also closing underperforming stores, which impacts same-store sales comparisons.
Q:How much of the ticket growth in Mexico was driven by new taxes versus organic pricing or mix?
A:A significant portion of ticket growth was driven by new taxes, particularly in the tobacco section, which showed inelastic consumer behavior.
Q:What is the outlook for FEMSA's leverage and capital allocation?
A:Leverage is expected to be slightly below 2x net debt to EBITDA by year-end. Decisions on dividends, buybacks, or M&A opportunities will be made based on performance and opportunities.
Q:How is the expansion of Bara in Northern Mexico progressing?
A:Bara is showing strong same-store sales growth and is accelerating store expansion, with plans to open close to a store per day in 2026.
Q:What drove the merchandise margin expansion in the Americas?
A:The expansion was driven by improved supplier relationships, distribution income, and growth in commercial income, particularly in Colombia and Brazil.
Q:How is Spin contributing to OXXO's performance and what are its future plans?
A:Spin is growing rapidly, with over 11 million active users and increasing transactions. It aims to drive store traffic through promotions and gamification, with a long-term goal of achieving 66% tender penetration.
Q:What contributed to the 140 basis points gross margin expansion in OXXO Mexico?
A:The expansion was driven by commercial income, new supplier agreements, and distribution income. Some of the margin expansion may be reinvested in affordability initiatives.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear breakdown of how much of the ticket growth in Mexico was driven by new taxes versus organic pricing or mix, offering only a general estimate. Additionally, discussions about potential portfolio simplifications and M&A opportunities were vague, citing confidentiality and the need for cautious communication.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Americas Mobility
Brazil column
Brazil currency
Brazil expansion
Chile Peru
Chile product
Colombia decision
Colombia health
Colombia segment
Colombia year
Corporate Proximity
Ecuador currency
Europe Health
FEMSA playbook
GLP treatment
Health Coca
Health set
LatAm ex
Mexico United
Mexico development
Mexico expense
Mexico fuel
Mexico trajectory
Mexico trend
Mexico user
Mobility Mexico
Mobility income
OXXO ground
Peru Brazil
Sanitas counterparty
States segment
affordability
excise tax
health care
peer
receivables exposure
reporting
sale currency
structure
FMX Transcript
Fomento Económico Mexicano, S.A.B. de C.V. (FMX) Q1 2026 Earnings Call Transcript
Unknown4-30
The earnings call presents a mixed outlook. While there are positive elements like strong expansion plans in Latin America, improved margins, and strategic initiatives in OXXO Mexico, these are offset by challenges such as declining operating income in key segments and vague management responses on critical issues. The Q&A highlights concerns about traffic impact and tax-driven growth, and with no clear guidance or new partnerships, the sentiment remains balanced, suggesting a neutral stock price movement.
Fomento Económico Mexicano, S.A.B. de C.V. (FMX) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call summary indicates solid financial performance with increased revenues and operating income. The strategic plans, including retail expansion and digital ecosystem development, are promising. The Q&A section reveals a focus on long-term growth, cost efficiency, and shareholder returns, with a substantial distribution plan. Despite some vagueness in management responses, the overall sentiment is positive, driven by growth opportunities in Brazil and the U.S., and operational improvements. The absence of market cap data suggests a moderate reaction, hence a positive rating of 2% to 8%.
Fomento Económico Mexicano, S.A.B. de C.V. (FMX) Q3 2025 Earnings Call Transcript
Positive10-28
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.
Fomento Económico Mexicano, S.A.B. de C.V. (FMX) Q2 2025 Earnings Call Transcript
Positive7-28
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.
FMX Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
