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Mexico’s FEMSA posts 28% profit drop, hurt by peso strength
Mexico’s FEMSA posts 28% profit drop, hurt by peso strength By Reuters
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Stock Markets 11 minutes ago (Feb 24, 2023 11:56AM ET)
(C) Reuters. FILE PHOTO: The logo of Mexico’s Coca-Cola FEMSA, the world’s biggest Coke bottler, is pictured at its headquarters in Monterrey, Mexico, August 19, 2018. Picture taken August 19, 2018. REUTERS/Daniel Becerril/File Photo
By Kylie Madry
MEXICO CITY (Reuters) -Mexico’s FEMSA posted a 28% fall in fourth-quarter net profit on Friday to 4.82 billion pesos ($247 million) as the dollar-dominated bottler and retailer was hurt by appreciation of the peso.
It posted a 23% rise in revenue to 186.47 billion pesos, topping the 178.10-billion-peso Refinitiv estimate.
FEMSA said it saw revenue growth in all its business units.
Earnings before interest, tax, depreciation and amortization (EBITDA), or core earnings, rose to 26.56 billion pesos, in line with the 26.48 billion pesos expected by analysts, Refinitiv Eikon data showed.
Shares in the firm were down around 2% mid-morning.
The company’s subsidiary, Coca-Cola (NYSE:KO) FEMSA, reported a 15% jump in quarterly revenue on Thursday on higher volumes in almost all of its markets. Last week, FEMSA announced plans to focus on its core operations, opting to divest its stake in Dutch beer giant Heineken (OTC:HEINY).
It is also analyzing options for its smaller operations, executives said last Friday.
The firm plans to invest around $1.7 billion in 2023 in its core businesses, Chief Financial Officer Eugenio Garza said on a call with analysts.
Some $750 million will go to its “proximity” division, which is largely comprised of Oxxo convenience stores, as FEMSA continues opening locations, executives said.
Last week, Chief Executive Daniel Rodriguez said FEMSA would continue at its current rate of opening 800 to 1,000 Oxxo stores a year in Mexico.
“It will be important to measure the proximity division’s progress in 2023 considering the high inflationary environment,” analysts at Monex said.
Coca-Cola FEMSA will also see a “pick-up” in spending, Garza said, without specifying a total.
“For (Coca-Cola FEMSA), it will be important to consider volumes in the context of raw material price increases in 2023,” Monex analysts added.
Another $100 million will go to the health division and some $120 million will go to smaller businesses, executives said.
($1 = 19.5089 pesos at end-December)
Mexico’s FEMSA posts 28% profit drop, hurt by peso strength
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