Coca-Cola FEMSA(KOF) - 2025 Q2 - Quarterly Report

Financial Performance - Total revenues for Q2 2025 increased by 5.0% to Ps. 72,917 million, with a currency-neutral growth of 2.4%[19] - Majority net income decreased by 5.3% to Ps. 5,312 million, compared to Ps. 5,608 million in the same period last year[28] - Earnings per share (EPS) were Ps. 0.32, with earnings per unit at Ps. 2.53 and per ADS at Ps. 25.29[28] - Operating income remained flat at Ps. 9,767 million, with a currency-neutral decrease of 2.6%[22] - Gross profit increased by 3.4% to Ps. 33,042 million, while gross margin contracted by 70 basis points to 45.3%[21] - For the first six months of 2025, total revenues increased by 6.7% to Ps. 142,703 million, with a currency-neutral growth of 5.4%[32] - Total revenues increased by 0.5% to Ps. 45,306 million, driven mainly by revenue management initiatives and favorable currency translation effects, but offset by a volume decline of 8.4%[46][45] - Gross profit decreased by 2.5% to Ps. 21,404 million, with a gross margin contraction of 150 basis points to 47.2%, primarily due to unfavorable mix effects and higher fixed costs[47] - Operating income decreased by 6.3% to Ps. 6,829 million, resulting in an operating margin contraction of 110 basis points to 15.1%[48] - Net income attributable to equity holders was Ps. 10,450 million, a decrease from Ps. 10,598 million in the previous year, influenced by higher financing costs and income taxes[41] - Earnings per share (EPS) were Ps. 0.62, calculated using 16,806.7 million shares outstanding[42] Regional Performance - South America division total revenues increased by 13.2% to Ps. 27,611 million, driven by revenue management initiatives and favorable currency translation effects[52] - South America division gross profit increased by 16.2% to Ps. 11,639 million, with a gross margin expansion of 110 basis points to 42.2%[53] - Operating income in the South America division increased by 19.6% to Ps. 2,937 million, resulting in an operating margin expansion of 50 basis points to 10.6%[54] - In Mexico, revenues decreased by 2.3% to 36,629 million Mexican Pesos compared to 37,474 million Mexican Pesos in the previous year[92] - Guatemala saw a revenue increase of 15.9%, reaching 4,458 million Mexican Pesos, up from 3,846 million Mexican Pesos[92] - Brazil's revenues increased by 11.7% to 18,359 million Mexican Pesos, compared to 16,443 million Mexican Pesos in the same period last year[92] - In Colombia, revenues increased by 11.2% to 10,748 million Mexican Pesos, up from 9,668 million Mexican Pesos[92] - Argentina's revenues grew by 20.8% to 5,716 million Mexican Pesos, compared to 4,730 million Mexican Pesos in YTD 2024[92] Operational Metrics - Volume declined by 5.5% to 1,035.3 million unit cases, primarily due to decreases in Mexico, Brazil, Colombia, and Panama[19] - Average price per unit case rose by 10.9% to Ps. 68.65 in Q2 2025, compared to Ps. 61.89 in Q2 2024[67] - Total volume for YTD 2025 was 9,401.2 million unit cases, a decrease of 2.2% from 9,658.3 million unit cases in YTD 2024[92] - The overall volume in Mexico and Central America decreased by 6.1% to 4,901.0 million unit cases in YTD 2025[92] - Transactions decreased by 3.8% to 6,131.9 million in Q2 2025, compared to 6,372.8 million in Q2 2024[67] - The total volume of transactions in Q2 2025 was 2,852.1 million, a 1.6% increase from 2,807.5 million in Q2 2024[74] Cost and Expenses - Cost of goods sold increased by 6.3% to Ps. 39,875 million in Q2 2025, compared to Ps. 37,495 million in Q2 2024[67] - Operating expenses rose by 9.5% to Ps. 23,679 million in Q2 2025 from Ps. 21,621 million in Q2 2024[67] - Interest expense increased by 14.5% to Ps. 2,101 million in Q2 2025, compared to Ps. 1,836 million in Q2 2024[67] Financial Position - Total current assets increased by 5% to 78,531 million Pesos as of June 2025, compared to 75,132 million Pesos in December 2024[78] - Total liabilities rose by 7% to 169,116 million Pesos in June 2025, up from 157,445 million Pesos in December 2024[78] - Net debt including the effect of hedges increased by 16.9% to 44,824 million Pesos in Q2 2025, compared to 38,329 million Pesos in FY 2024[80] - The company reported a 10% increase in cash and cash equivalents to 37,139 million Pesos as of June 2025, from 32,779 million Pesos in December 2024[78] Exchange Rates - In 2Q25, Coca-Cola FEMSA reported an average exchange rate of 19.55 MXN per USD, a 13.6% increase compared to 2Q24[99] - The end-of-period exchange rate for Mexico was 18.89 MXN per USD, reflecting a 2.8% increase from June 2024[99] - The average exchange rate for Argentina rose to 1,151.04 ARS per USD, marking a significant 29.8% increase year-over-year[99] - The closing exchange rate for Argentina in June 2025 was 1,205.00 ARS per USD, a 32.1% increase from June 2024[99] - The average exchange rate for Brazil in 2Q25 was 5.67 BRL per USD, an 8.6% increase compared to the previous year[99] - The closing exchange rate for Brazil was 5.46 BRL per USD in June 2025, a decrease of 1.8% from June 2024[99] - The average exchange rate for Colombia increased by 6.8% to 4,197.35 COP per USD in 2Q25[99] - The closing exchange rate for Colombia was 4,069.67 COP per USD in June 2025, a decrease of 1.9% from the previous year[99] - The average exchange rate for Uruguay was 41.61 UYU per USD in 2Q25, a 7.4% increase year-over-year[99] - The closing exchange rate for Uruguay was 39.55 UYU per USD in June 2025, a decrease of 1.1% from June 2024[99] Sustainability and Investment - The company issued senior notes totaling US$500 million due in 2035, reflecting strong investor demand and confirming its financial discipline[13] - Coca-Cola FEMSA was included in the FTSE4Good sustainability indices for the tenth consecutive year, achieving a score of 3.9 out of 5.0[16] - The company plans to continue investing in capacity and capabilities to support future growth despite a challenging operating environment[11]