FEMSA Q4 Earnings Miss, Revenues Top Estimates on Segment Strength

Core Insights - FEMSA reported fourth-quarter 2025 adjusted net majority earnings per ADS of 92 cents, an increase from 46 cents in the previous year, but fell short of the Zacks Consensus Estimate of $1.50 [1] - The company achieved net consolidated income of Ps. 12,709 million (US$705.8 million), reflecting a growth of 33.6% year over year [1] Revenue Performance - Total revenues reached US$12.22 billion (Ps. 220,091 million), marking a year-over-year increase of 5.7% in local currency and surpassing the Zacks Consensus Estimate of $12.14 billion [2] - Revenue growth was driven by gains across all business units, with comparable revenues growing 5.2% year over year when excluding currency effects and M&A [2] Margin Analysis - FEMSA's gross profit rose 0.5% year over year to Ps. 91,422 million (US$5.08 billion), while the consolidated gross margin contracted by 220 basis points to 41.5% [3] - The operating income improved 8.5% year over year to Ps. 24,546 million (US$1.36 billion), with a consolidated operating margin expanding 30 basis points to 11.2% [7] Segment Performance - Proximity Americas: Revenues increased by 5.3% year over year to Ps. 85,257 million (US$4.7 billion), with same-store sales growth of 4.4% [8] - Proximity Europe: Revenues grew 10.8% year over year to Ps. 14,217 million (US$789.6 million), benefiting from retail sales improvements in Switzerland [10] - Health Division: Reported revenues of Ps. 22,824 million (US$1.27 billion), up 4.6% year over year, but operating income declined by 52.3% [11] - Fuel Division: Revenues rose 3.6% year over year to Ps. 16,924 million (US$939.9 million), with operating income increasing by 8.4% [12] - Coca-Cola FEMSA: Revenues advanced 2.9% year over year to Ps. 77,750 million (US$4.3 billion), with an operating margin expansion of 160 basis points to 17.6% [13] Financial Position - As of December 31, 2025, FEMSA had cash and cash equivalents of Ps. 107,980 million (US$6 billion) and long-term debt of Ps. 126,992 million (US$7.05 billion) [14] - Capital expenditure for the fourth quarter totaled Ps. 14,200 million (US$788.6 million), reflecting a 31.4% decline from the prior year [15]