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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 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.
EPS $0.815, an increase of 56.7% year-over-year from $0.52, driven by a significant increase in net consolidated income.
Total Revenues Increased by 11.1% year-over-year, reflecting mixed results from business units, with a comparable growth of 5.6% due to currency tailwinds.
Operating Income Grew by 4.9% year-over-year, with a comparable increase of 1.7%, impacted by a challenging macroeconomic backdrop and higher operating expenses.
Net Consolidated Income Increased by 54.3% to MXN8.9 billion, driven by a MXN630 million increase in income from operations and a MXN3 billion increase in other financial income.
Proximity Americas Total Revenues Increased by 6.8% or 1.4% on a comparable basis, with a decline in income from operations by 11.8% or 11% on a comparable basis.
Health Division Revenue Growth 21% in pesos or 7% on a comparable basis, with strong performance in Colombia, Ecuador, and Chile.
Capex MXN8.8 billion, approximately 4.5% of total revenues, focused on expanding retail footprint and strengthening supply chain.
Shareholder Returns Total of MXN44.8 billion or around $2.5 billion allocated for shareholder returns from March 2024 to March 2025.
Dividends Total of MXN6.1 billion paid in January for last year’s declared dividends, and nearly MXN12 billion distributed for the first quarterly installment for 2025.
New Product Launches: We have 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: We continue to increase the breadth of our financial services and correspondent partnerships with banks and fintechs.
Store Expansion in Mexico: OXXO Mexico opened 361 net new stores during the first quarter.
Store Expansion in Brazil: Expansion plans for this year are unchanged with approximately 100 new OXXOs in the state of Sao Paulo.
Store Expansion in Colombia: Net additions reached 31 in Colombia.
Operational Efficiencies: We have made great strides reducing the FTE or full time equivalent per store, generating real efficiencies at scale as well as a reduction in overheads.
Cost Containment Initiatives: We are implementing a series of top line growth and cost containment initiatives.
Strategic Shift in US Market: We have already started the first conversion of some of the DK stores into OXXO, reaching 15 OXXO units in the Midland Odesa Metro area in West Texas.
Focus on Consumer Preferences: We continue to see the traditional trade gradually recover some of the market share it lost to modern channels during the COVID pandemic.
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 remain uncertain.
Competitive Pressures: Traditional trade is gradually recovering market share lost to modern channels during the COVID pandemic, impacting OXXO's traffic.
Weather Impact: A particularly colder January affected high traffic categories, leading to reduced consumer movement and sales.
Operational Efficiency: The company is facing pressure from reduced operating leverage due to soft traffic trends and increased expenses.
Store Expansion: OXXO Mexico opened 361 net new stores during the first quarter, with plans to add approximately 100 new OXXOs in Brazil and 235 net new stores in 2025.
Cost Containment Initiatives: FEMSA is implementing several commercial and cost initiatives aimed at driving traffic, maintaining gross margin expansion, and ensuring a lean organization.
Spin Premia Loyalty Program: The Spin Premia loyalty program is linked to 42.5% of OXXO Mexico sales, with 25.2 million active users, showing a 16.1% increase compared to last year.
Operational Turnaround in Health Division: FEMSA Health is undergoing a turnaround in Mexico, including closing underperforming stores, with expectations to close over 400 by the end of the year.
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: During the first quarter, FEMSA deployed MXN8.8 billion in capex, approximately 4.5% of total revenues, focusing on retail expansion and supply chain infrastructure.
Shareholder Returns: FEMSA has committed to returning MXN66 billion (approximately $3.2 billion) to shareholders from March 2025 to March 2026.
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 Installment for 2025: 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 Amount Allocated for Shareholder Returns (March 2024 - March 2025): The total amount allocated for shareholder returns from March 2024 to March 2025 is MXN44.8 billion (around $2.5 billion).
Total Amount Committed for Shareholder Returns (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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