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]

Financial Data and Key Metrics Changes - Total revenue growth for the third quarter of 2025 was 9.1%, driven by solid trends outside Mexico and the consolidation of OXXO USA [29] - Operating income increased by 4.3% year over year, reflecting inflationary effects on costs and expenses, partially offset by efficiency efforts [29] - Net consolidated income decreased by 36.8% to 5.8 billion pesos, primarily due to a non-cash foreign exchange loss of 1.3 billion pesos [29][30] Business Line Data and Key Metrics Changes - Proximity Americas reported same-store sales growth of 1.7%, with average ticket rising 4.9% and average traffic declining 3.1% [19][33] - Total revenues for Proximity Americas grew 9.2%, driven by the expansion of the store network by 1,370 stores year on year [34] - OXXO Mexico continues to show strong performance with a decade of continuous store growth and world-class returns on capital [9] Market Data and Key Metrics Changes - In Europe, Valora's total revenues increased by 10.1% in pesos, driven by higher Swiss retail sales [37] - Coca-Cola FEMSA experienced a slight decline in total volume, primarily due to a challenging environment in Mexico, while South America showed resilient performance with volume growth [40] Company Strategy and Development Direction - The company is focused on maximizing long-term value creation through its FEMSA Forward strategy, which includes divesting nearly $11 billion of assets and a capital allocation framework targeting $7.8 billion in capital distribution by 2027 [6][7] - There is a strong emphasis on expanding the OXXO platform in Brazil, Colombia, and the U.S., with significant growth opportunities identified [25][57] - The company aims to enhance its value proposition in food and coffee categories, with ongoing experimentation to launch new offerings [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of business units despite a sluggish year in Mexico, highlighting improvements in competitive positions in key categories [8][20] - The company anticipates a better operating environment in Mexico, aided by the FIFA World Cup and improvements in consumption trends [41] - Management acknowledged challenges from a recent tax increase in Mexico but believes adjustments can be made to maintain return on investment [11] Other Important Information - The company distributed a total of 11.8 billion pesos in dividends during the quarter, with no share buybacks executed [40] - The effective tax rate for the quarter was 29.3%, showing improvement from earlier in the year [30] Q&A Session Summary Question: Insights on same-store sales performance and traffic dynamics at OXXO - Management noted a sequential improvement in traffic and market share gains in key categories, with optimism for the fourth quarter [44][46] Question: Details on gross margin performance at OXXO Mexico - Management indicated that gross margin improvements were driven by service mix and pricing strategies, with expectations for continued gains [51][54] Question: Update on health business performance in Mexico and Chile - Management reported strong growth in Chile despite a competitive environment, while acknowledging challenges in Mexico that require operational fixes [61][63] Question: Corporate restructuring and SG&A reduction plans - Management outlined plans for fit-for-purpose initiatives to streamline corporate overhead and achieve significant cost savings [68][70] Question: Increase in interest expense and its drivers - Management explained that the increase in interest expense was primarily due to lease accounting under IFRS and the consolidation of U.S. operations [85]