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01/11 03:42
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with revenue and profit growth, margin expansion, and effective cost management. Despite some regional challenges, overall growth is robust, particularly in South America. Management's proactive strategies to address market uncertainties and maintain competitiveness are promising. The Q&A session highlights management's adaptability and strategic focus, although some responses were vague. The positive financial metrics and optimistic guidance suggest a positive stock price movement over the next two weeks.
Consolidated Volume 986.5 million unit cases, a decline of 2.2% year-on-year, driven mainly by declines in Mexico and Colombia, partially offset by growth in Brazil, Argentina, Uruguay, and Guatemala.
Total Revenues MXN70.2 billion, an increase of 10% year-on-year, driven by revenue management initiatives and favorable currency translation effects. On a currency neutral basis, revenues increased 5.9%.
Gross Profit MXN31.8 billion, an increase of 12% year-on-year, leading to a margin expansion of 80 basis points to 45.4%, driven mainly by lower sweetener costs, top line growth, and raw material hedging initiatives.
Operating Income MXN9.2 billion, an increase of 7.3% year-on-year, with operating margin contracting 30 basis points to 13.2%, driven mainly by lower operating leverage and higher operating expenses.
Adjusted EBITDA MXN13.3 billion, an increase of 11% year-on-year, with EBITDA margin expanding 20 basis points to 18.9%.
Majority Net Income MXN5.1 billion, an increase of 2.7% year-on-year, driven by operating income growth and a decrease in comprehensive financial results, partially offset by a higher effective tax rate.
Mexico and Central America Revenues MXN39.7 billion, an increase of 4.8% year-on-year, driven mainly by revenue management initiatives and favorable currency translation.
South America Revenues MXN30.5 billion, an increase of 17.4% year-on-year, driven mainly by revenue management initiatives, favorable mix, and favorable currency translation effects.
Gross Profit in South America Increased 22.8% year-on-year, leading to a margin expansion of 190 basis points to 42.5%, driven mainly by top line growth and operating leverage.
Operating Income in South America MXN3.8 billion, an increase of 31.1% year-on-year, with operating margin expanding by 130 basis points to 12.6%, driven mainly by operating leverage and cost controls.
Adjusted EBITDA in South America MXN5.3 billion, an increase of 27.3% year-on-year, with margin expansion of 130 basis points to 17.5%.
Comprehensive Financial Results Expense of MXN1.1 billion, a reduction of 5.2% year-on-year, driven mainly by a gain in financial instruments, partially offset by a foreign exchange loss.
Interest Expense Net Increased 9.7% year-on-year, driven by higher interest expense due to new financing in Argentina and higher interest rates in Brazil.
Coca-Cola Zero Sugar Growth: Coca-Cola Zero Sugar maintained an impressive pace, growing 65% year-on-year.
Powerade Growth: Powerade grew 36% year-on-year.
Monster Growth: Monster grew 17.6% year-on-year.
Juntos+ App Growth: Juntos+ in Brazil added another 10,000 monthly active buyers with a 17% higher average ticket than the prior year.
Juntos+ Version 4.0 Rollout: Rollout of Juntos+ version 4.0 in Argentina, anticipated to be an enabler for continued business growth.
Volume Growth in Brazil: In Brazil, a resilient consumer environment drove 2.5% volume growth year-on-year.
Volume Growth in Argentina: In Argentina, volumes increased 9.1%.
Volume Growth in Uruguay: In Uruguay, volumes increased 6%.
Volume Growth in Guatemala: In Guatemala, volumes increased 1.9%.
Order Fulfillment Improvement: Improved order fulfillment by 1.4 percentage points.
Geo Efficiency Improvement: Increased geo efficiency by 2.1 percentage points.
Cost Savings Initiatives: Identified potential savings mainly from supply chain procurement and IT.
Customer Service Metrics Improvement: Commercial and distribution service metrics improved by 1% and 1.3% respectively in Uruguay.
Strategic Focus for 2025: The strategic playbook for 2025 remains focused on three key pillars: growing core business, taking Juntos+ to the next level, and fostering a customer-centric culture.
Sustainability Initiatives: Increased renewable energy use to 84% and diverted 99% of operational waste from landfills.
Macroeconomic Challenges: The company is facing increased uncertainty and a soft macroeconomic backdrop in key markets, which has led to a 2.2% year-on-year decline in consolidated volume.
Geopolitical Tensions: Geopolitical tensions have affected consumer sentiment, particularly in Mexico, contributing to a 5.4% decline in volumes.
Inflation Impact: High inflation in the food basket is affecting consumer sentiment in Guatemala, leading to a higher propensity to save rather than consume.
Supply Chain Issues: The company has identified potential savings from supply chain procurement and IT, indicating challenges in these areas.
Operating Costs: Higher fixed costs, including maintenance and depreciation, are impacting operating margins, which contracted by 30 basis points.
Currency Depreciation: The depreciation of operating currencies against the U.S. dollar is affecting raw material costs and overall financial performance.
Interest Rate Increases: Higher interest expenses due to new financing in Argentina and increased rates in Brazil are impacting financial results.
Consumer Confidence: Deteriorating consumer confidence in Colombia has led to an 8.1% decline in volumes, highlighting the impact of sociopolitical factors.
Strategic Initiatives: The strategic playbook for 2025 focuses on three key pillars: growing the core business, advancing the Juntos+ program, and fostering a customer-centric and psychologically safe culture.
Operational Adjustments: Initiatives implemented include tactical calendar adjustments, targeted promotional activities, and improvements in point-of-sale exhibitions to adapt to the current macroeconomic environment.
Sustainability Efforts: Coca-Cola FEMSA published its 2024 Integrated Annual Report, highlighting progress in sustainability, including increased renewable energy use to 84% and achieving water efficiency targets.
Revenue Expectations: Total revenues for Q1 2025 grew 10% year-on-year, reaching MXN70.2 billion, with a currency-neutral increase of 5.9%.
Gross Profit and Margins: Gross profit increased 12% to MXN31.8 billion, leading to a margin expansion of 80 basis points to 45.4%.
Operating Income: Operating income increased 7.3% to MXN9.2 billion, with an operating margin of 13.2%.
Adjusted EBITDA: Adjusted EBITDA for Q1 2025 increased 11% to MXN13.3 billion, with an EBITDA margin of 18.9%.
Future Projections: In Argentina, gradual recovery is anticipated, with disposable income improving by 15% year-on-year, supporting long-term growth.
Cost Management: Identified potential savings from supply chain procurement and IT to navigate the softer macro backdrop.
Share Buyback Program: None
Dividend Program: None
The earnings call presents a mixed picture: positive elements like new production lines and strategic growth in South America are offset by challenges such as tax impacts in Mexico and cautious outlooks in Brazil and Argentina. The Q&A reveals a lack of clarity on key issues like excise tax impacts and non-caloric beverage targets. Although there are growth opportunities, the market's cautious response to uncertainties and macroeconomic factors suggests a neutral impact on stock price.
The earnings call summary presents a mixed picture. Financial performance shows stability with a 6% increase in housing orders and positive revenue guidance. However, there are concerns about market conditions in Mexico and Brazil, and management avoided specifics on future growth. The Q&A section highlights challenges like declining EBITDA margins and competitive pressures. Despite some positive aspects like Coke Zero's growth, the lack of clarity on future revenue and cautious guidance temper enthusiasm. The overall sentiment remains neutral, reflecting a balanced outlook with both positive and negative elements.
The earnings report showed strong financial performance with a 10% revenue growth and increased EPS. Despite a decline in volume, strategic initiatives and a share buyback program indicate a positive outlook. The Q&A highlighted effective cost-saving measures and margin improvements, particularly in Brazil and Argentina. Although there were concerns about market share and unclear guidance in Mexico, overall sentiment remains positive with robust financial metrics and strategic focus.
The earnings call reveals strong financial performance with revenue and profit growth, margin expansion, and effective cost management. Despite some regional challenges, overall growth is robust, particularly in South America. Management's proactive strategies to address market uncertainties and maintain competitiveness are promising. The Q&A session highlights management's adaptability and strategic focus, although some responses were vague. The positive financial metrics and optimistic guidance suggest a positive stock price movement over the next two weeks.
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