Coca-Cola FEMSA(KOF) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenues for Q3 2025 increased by 3.3% to Ps. 71,884 million, with a currency-neutral growth of 4.7%[22] - Operating income rose by 6.8% to Ps. 10,291 million, with a margin expansion of 50 basis points to 14.3%[25] - Majority net income increased by 0.7% to Ps. 5,898 million, with earnings per share at Ps. 0.35[31] - For the first nine months of 2025, total revenues increased by 5.0% to Ps. 213,984 million, with a currency-neutral growth of 5.7%[38] - Gross profit for Q3 2025 was Ps. 32,391 million, reflecting a 0.9% increase, while gross margin contracted to 45.1%[24] - Gross profit increased by 4.3% to Ps. 96,850 million, with a gross margin contraction of 30 basis points to 45.3% due to higher fixed costs and currency depreciation[39] - Operating income rose by 4.3% to Ps. 29,234 million, while the operating margin contracted by 10 basis points to 13.7% primarily due to increased expenses[40] - Earnings per share were Ps. 0.97, with earnings per unit at Ps. 7.78 and per ADS at Ps. 77.80, calculated using 16,806.7 million shares outstanding[46][47] - Adjusted EBITDA for Q3 2025 was 14,449 million Pesos, a 3.2% increase from 14,001 million Pesos in Q3 2024[80] - Adjusted EBITDA for Q3 2025 was 5,169 million Pesos, representing a 12.6% increase compared to the same quarter last year[83] Volume and Transactions - Volume declined by 0.6% to 1,035.0 million unit cases, primarily due to decreases in Mexico and Panama[22] - Total volume for 3Q 2025 decreased by 0.6% to 1,035.0 million unit cases compared to 3Q 2024[90] - Total transactions in Q3 2025 totaled 6,192.7 million, a slight increase of 0.6% from 6,153.2 million in Q3 2024[75] - Total transactions for 3Q 2025 were 6,192.8 million, a slight increase of 0.6% from 6,153.2 million in 3Q 2024[90] Regional Performance - Total revenues in the Mexico & Central America division decreased by 0.2% to Ps. 42,467 million, impacted by volume decline and promotional activities[52] - Gross profit in the Mexico & Central America division decreased by 2.6% to Ps. 20,163 million, with a gross margin contraction of 110 basis points to 47.5%[53] - Total revenues in the South America division increased by 8.7% to Ps. 29,416 million, driven by revenue management initiatives[60] - Operating income in the South America division increased by 19.7% to Ps. 3,505 million, resulting in an operating margin expansion of 110 basis points to 11.9%[62] - In Colombia, revenues grew by 11.9% year-over-year to 5,798 million Mexican Pesos in 3Q 2025[90] - Brazil's revenues increased by 11.5% year-over-year to 19,792 million Mexican Pesos in 3Q 2025[90] - In Mexico, year-to-date revenues for 2025 slightly decreased by 0.5% to 102,320 million Mexican Pesos[96] - In Argentina, revenues decreased by 10.9% year-over-year to 2,542 million Mexican Pesos in 3Q 2025[90] Costs and Expenses - The company reported a comprehensive financing expense of Ps. 1,290 million, up from Ps. 823 million in the previous year, mainly due to higher interest expenses[27] - Comprehensive financing result recorded an expense of Ps. 3,588 million, up from Ps. 2,918 million in the previous year, driven by higher interest expenses[42] - Cost of goods sold in Q3 2025 was 39,493 million Pesos, representing 54.9% of total revenues, compared to 37,507 million Pesos or 53.9% in Q3 2024[75] - Operating expenses decreased slightly to 22,356 million Pesos, accounting for 31.1% of total revenues in Q3 2025, down from 32.2% in Q3 2024[75] Market Conditions and Strategic Initiatives - The Mexican House of Representatives approved an increase in the excise tax on sugar-sweetened beverages from Ps. 1.64 to Ps. 3.08 per liter[15] - The company achieved a score of 79/100 in S&P Global's 2025 Corporate Sustainability Assessment, an increase of 9 points from the previous year[15] - More than 60% of the company's total client base are now digital monthly active buyers[13] - Coca-Cola FEMSA reported significant performance metrics in 3Q25, reflecting resilience in challenging economic conditions[103] - The company continues to focus on market expansion and innovation in product offerings to drive future growth[103] - Strategic initiatives are in place to enhance operational efficiency and adapt to fluctuating market dynamics[103] - The company is committed to leveraging new technologies to improve customer engagement and streamline operations[103] - Future guidance indicates a cautious but optimistic outlook, with expectations for gradual recovery in key markets[103] - Ongoing monitoring of inflation and exchange rate fluctuations will inform strategic decision-making moving forward[101][102] Exchange Rates and Inflation - Inflation rates in key markets for 3Q25: Argentina at 31.34%, Colombia at 5.00%, and Mexico at 3.74%[101] - Average exchange rate for USD in 3Q25: Argentina at 1,333.04 ARS, a 41.4% increase from 3Q24; Mexico at 18.65 MXN, a 1.5% decrease from 3Q24[102] - Year-to-date exchange rate for 2025 shows a 6.8% increase for Mexico, with an average of 19.54 MXN per USD[102] - End-of-period exchange rate for September 2025: Argentina at 1,380.00 ARS, a 42.2% increase from September 2024; Colombia at 3,901.29 COP, a 6.3% decrease[102]