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01/11 03:36
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Total Revenues Total revenues increased 11.1% year-over-year, with a comparable growth of 5.6%. This growth was driven by a challenging macroeconomic backdrop and softer consumer demand in key markets.
Operating Income Operating income grew 4.9% year-over-year, with a comparable increase of 1.7%. The growth reflects mixed results from business units facing a challenging environment.
Net Consolidated Income Net consolidated income increased 54.3% to MXN8.9 billion, driven by a MXN630 million increase in income from operations, a MXN3 billion increase in other financial income from foreign exchange gains, and a MXN2.4 billion increase in net income from discontinued operations.
Proximity Americas Total Revenues Proximity Americas delivered a 6.8% increase in total revenues, or 1.4% on a comparable basis, despite a decline in income from operations.
Proximity Americas Income from Operations Income from operations declined by 11.8%, or 11% on a comparable basis, due to soft top line growth and higher operating expenses.
Health Division Revenue Growth Health division revenue grew 21% in pesos, or 7% on a comparable basis, with strong performance in Colombia, Ecuador, and Chile.
Health Division Operating Income Operating income rose 27.4% or 11.7% on a comparable basis, with a margin expansion of 20 basis points to 3.5%.
Capex Capex for the first quarter was MXN8.8 billion, representing approximately 4.5% of total revenues, focused on expanding retail footprint and supply chain infrastructure.
Shareholder Returns In the first quarter, MXN1.3 billion was repurchased in FEMSA BD units, and MXN6.1 billion was paid in dividends. The total amount allocated for shareholder returns from March 2024 to March 2025 is MXN44.8 billion.
Store Openings OXXO Mexico opened 361 net new stores during the first quarter, with additional openings in Colombia and Brazil.
New Product Offerings: Launched targeted plans to reactivate the andatti coffee offering and to support the beer and soft drink categories, including returnable multi-serves.
Expansion of Financial Services: Increased breadth of financial services and correspondent partnerships with banks and fintechs.
US Market Expansion: Converted 15 DK stores into OXXO units in the Midland Odesa Metro area in West Texas.
Brazil Expansion: Plans to open approximately 100 new OXXO stores in the state of Sao Paulo.
Colombia Expansion: Added 31 net new stores in Colombia.
Store Base Expansion: Opened 361 net new OXXO stores in Mexico during Q1.
Operational Efficiencies: Reduced FTE per store, generating real efficiencies at scale and reducing overheads.
Cost Containment Initiatives: Implemented cost containment initiatives to ensure a lean organization.
Strategic Shift in Mexico: Focus on increasing affordability across categories and expanding assortment to include more affordable brands.
Operational Turnaround in Health Division: Mexico is in full operational turnaround mode, resizing and rationalizing the store base.
Consumer Environment: The company is facing a persistently soft consumer environment in Mexico, which has negatively impacted same-store traffic and sales.
Regulatory Issues: There is ongoing uncertainty around trade with the US, which has led to postponed investment decisions.
Supply Chain Challenges: The company is experiencing increased labor costs and operational pressures due to a low double-digit increase in the minimum wage.
Economic Factors: The overall economic activity and consumer sentiment in Mexico are expected to gradually improve, but the current environment remains challenging.
Competitive Pressures: The traditional trade is gradually recovering market share lost to modern channels during the COVID pandemic, impacting OXXO's traffic.
Weather Impact: A colder January negatively affected high traffic categories, contributing to reduced consumer movement and sales.
Operational Efficiency: The company is implementing cost containment initiatives to offset rising expenses and maintain a lean organization.
Top Line Initiatives: FEMSA has launched several commercial and cost initiatives aimed at driving traffic and top line growth, maintaining gross margin expansion, and implementing cost containment measures.
Store Expansion: OXXO Mexico opened 361 net new stores during Q1 2025, with plans for approximately 100 new OXXOs in Brazil and 235 net new stores in total for 2025.
Spin by OXXO Growth: The Spin by OXXO loyalty program has shown double-digit growth year-over-year, reaching 8.9 million active users.
Operational Turnaround in Health Division: FEMSA Health is undergoing a turnaround in Mexico, including resizing and rationalizing the store base.
Rebranding Efforts: FEMSA is converting DK stores into OXXO in the US, with 15 units already converted and positive consumer reactions.
Revenue Expectations: FEMSA expects a high single-digit increase in revenues for the full year 2025.
Operating Margins: Operating margins are expected to remain stable relative to 2024.
Capex: FEMSA deployed MXN8.8 billion (approximately $440 million) in capex during Q1 2025, focusing on retail expansion and supply chain infrastructure.
Shareholder Returns: FEMSA plans to return MXN66 billion (approximately $3.2 billion) to shareholders from March 2025 to March 2026.
Future Outlook: FEMSA anticipates sequential improvement in top line dynamics beginning in Q2 2025, with expectations for a better second half of the year.
Total Dividends Paid: In January, FEMSA paid the last installment of last year's declared ordinary and extraordinary dividends for a total amount of MXN6.1 billion (approximately $300 million).
First Quarterly Dividend for 2025: In April, FEMSA distributed the first quarterly installment for both the ordinary and extraordinary dividends for 2025 for a total amount of nearly MXN12 billion (approximately $610 million).
Total Shareholder Returns (March 2024 - March 2025): The total amount allocated for shareholder returns from March 2024 to March 2025, including both extraordinary and external distribution amounts, is MXN44.8 billion (around $2.5 billion).
Future Shareholder Returns Commitment (March 2025 - March 2026): For the period from March 2025 to March 2026, FEMSA has committed to returning MXN66 billion (nearly $3.2 billion).
Share Repurchase: In the first quarter, FEMSA repurchased approximately MXN1.3 billion pesos of FEMSA BD units in the local market.
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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