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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 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.
Consolidated Volume Declined 0.6% to 1.04 billion unit cases. Sequential improvement versus the second quarter due to a softer comparison base in Mexico. Decline driven by contractions in Mexico and Panama, partially offset by growth in other territories.
Total Revenues Grew 3.3% to MXN 71.9 billion. Growth led by revenue management initiatives, offset by volume decline, promotional activity, and unfavorable currency translation effects from the depreciation of the Argentine peso and Central American currencies. On a currency-neutral basis, revenues increased 4.7%.
Gross Profit Increased 0.9% to MXN 32.4 billion. Margin contracted by 100 basis points to 45.1%. Driven by unfavorable mix, increased promotional activity, and fixed costs such as labor and depreciation. Partially offset by better sweetener and PET costs.
Operating Income Increased 6.8% to MXN 10.3 billion. Operating margin expanded by 50 basis points to 14.3%. Expansion driven by expense efficiencies in freight and marketing, coupled with an operating foreign exchange gain. Partially offset by higher depreciation, labor, and IT expenses. Includes a one-time income of MXN 218 million from insurance claims recovered in Brazil.
Adjusted EBITDA Increased 3.2% to MXN 14.4 billion. EBITDA margin remained flat at 20.1%.
Majority Net Income Increased slightly to MXN 5.9 billion. Driven by operating income growth, partially offset by an increase in comprehensive financial results.
Mexico and Central America Volumes Declined 2.7% to 612.1 million unit cases. Decline driven by Mexico and Panama, partially offset by growth in Guatemala, Nicaragua, and Costa Rica.
Mexico and Central America Revenues Decreased 0.2% to MXN 42.5 billion. Decline driven by volume decline, unfavorable mix effects, and promotional activity. Partially offset by revenue management initiatives. On a currency-neutral basis, revenues remained flat.
Mexico and Central America Gross Profit Decreased 2.6% to MXN 20.2 billion. Gross margin contracted by 110 basis points to 47.5%. Driven by unfavorable mix effects, promotional activity, and higher fixed costs such as labor. Partially offset by lower sweetener costs and the appreciation of the Mexican peso.
South America Volumes Increased 2.6% to 423 million unit cases. Growth driven by positive volumes across the division.
South America Revenues Increased 8.7% to MXN 29.4 billion. Growth driven by revenue management initiatives and favorable mix. Partially offset by unfavorable currency translation effects. On a currency-neutral basis, revenues increased 12.5%.
South America Gross Profit Increased 7.2%. Gross margin contracted by 50 basis points to 41.6%. Driven by labor, restructuring, and maintenance costs. On a currency-neutral basis, gross profit increased 10.4%.
South America Operating Income Increased 19.7% to MXN 3.5 billion. Operating margin expanded by 110 basis points to 11.9%. Driven by expense efficiencies in freight and marketing, and a one-time income of MXN 218 million from insurance claims in Brazil.
South America Adjusted EBITDA Increased 12.6% to MXN 5.1 billion. Margin expanded by 60 basis points to 17.6%.
Coca-Cola Zero: Continued delivering positive results, growing 23% year-on-year in Mexico and more than 40% compared to 2022. In Brazil, Coca-Cola Zero volumes grew 38%, supported by the Star Wars campaign.
Monster Rio Punch: Launched a new flavor with a local Brazilian appeal, underscoring continuous innovation in the energy drink portfolio.
Quatro: Became the #1 flavored sparkling beverage in Colombia for the first time in the franchise's history.
Mexico: Volumes declined 3.7% due to a soft macroeconomic backdrop. However, share recovery was achieved in the modern channel, surpassing previous year's levels by more than 6 percentage points.
Guatemala: Volumes increased 3.2%, with share gains in sparkling beverages, water, and energy categories. Coca-Cola Zero Sugar grew 16.9% year-on-year.
Brazil: Volumes increased 2.6%, driven by share gains in sparkling beverages and nonalcoholic ready-to-drink segments. Recovery in Rio Grande do Sul after reopening the Porto Alegre plant.
Colombia: Volumes grew 2.9%, supported by share gains in brand Coca-Cola, flavors, and water. Quatro became the leading flavored sparkling beverage.
Argentina: Volumes increased 2.9% despite a complex macroeconomic environment, supported by affordability initiatives and digital adoption.
Cost control and productivity: Implemented initiatives leading to sequential improvement in consolidated results despite challenging conditions. Generated $90 million in supply chain savings year-to-date.
Digital tools: Rolled out Juntos+ Advisor in Mexico and expanded its adoption in Brazil, supporting share improvements and service levels.
Revenue management: Revenue grew 3.3% to MXN 71.9 billion, driven by revenue management initiatives despite volume declines and unfavorable currency effects.
Excise tax in Mexico: Engaged with the government regarding a proposed 87% increase in excise tax on soft drinks, reaffirming commitment to low and noncaloric products.
Sustainable growth model: Focused on long-term growth while addressing short-term headwinds with RGM initiatives, productivity measures, and revised CapEx investments.
Macroeconomic Challenges in Mexico: Mexico is facing a soft macroeconomic backdrop, with declining consumption drivers such as remittances and formal job creation. This has impacted consumer preferences and demand, leading to a 3.7% decline in volumes.
Excise Tax Increase in Mexico: The federal revenue law proposes an 87% increase in the excise tax on soft drinks, effective January 2026. This is expected to create challenges for volume performance and consumer affordability.
Currency Depreciation: Unfavorable currency translation effects, particularly the depreciation of the Argentine peso and other Central American currencies, have negatively impacted revenues.
Fixed Costs and Margin Pressures: Increased fixed costs such as labor and depreciation, along with an unfavorable mix and promotional activity, have led to margin contractions in several regions.
Supply Chain and Cost Volatility: Ongoing volatility in commodity prices, especially aluminum, poses risks to cost management. Although sweeteners and PET prices are more stable, aluminum remains a concern.
Natural Disasters in Mexico: Tropical Storm Raymond caused disruptions in Central and Northeast Mexico, impacting operations and necessitating community relief efforts.
Regulatory and Economic Uncertainty in Argentina: Argentina's complex economic environment continues to pose challenges, requiring a lean and flexible cost structure to navigate.
Future Volume Performance in Mexico: The company expects another challenging year for volume performance in Mexico in 2026 due to the excise tax increase and a modest economic growth forecast of 1.5%. However, they anticipate a positive impact on brand equity due to the World Cup.
Sustainable Growth Model: The company plans to focus on its sustainable long-term growth model while addressing short-term headwinds with Revenue Growth Management (RGM) initiatives, productivity measures, and revised CapEx investments.
Digital Initiatives in Mexico: The rollout of the Juntos+ Advisor digital tool in Mexico is expected to positively impact share improvements and service levels in the upcoming quarters.
Guatemala Market Strategy: The company plans to optimize its portfolio, capture white spaces in key categories, and execute rigorous cost control and productivity initiatives to grow sustainably and profitably.
Brazil Market Strategy: The company aims to outperform the industry by leveraging digital initiatives, customer-centric culture, and productivity measures to improve profitability. They also plan to continue expanding the Juntos+ Advisor tool and focus on supply chain improvements.
Colombia Market Strategy: The company will leverage affordability initiatives, manage price gaps, and enhance digital adoption to drive growth. They also plan to continue improving cost-to-serve through supply chain investments.
Argentina Market Strategy: The company will focus on affordability plans, accelerating single-serve mix, leveraging digital tools, and maintaining a lean cost structure to navigate the complex economic environment.
Commodity Hedging for 2026: The company has hedged more than 90% of sweeteners, 40% of PET, and 70% of currency needs in Colombia, 40% in Mexico, and 20% in Brazil for 2026 to manage cost volatility effectively.
The selected topic was not discussed during the call.
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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