FEMSA(US:FMX)2021-05-01 18:41Financial Data and Key Metrics Changes - Total revenues for Q1 2021 increased by 1.8%, while income from operations remained flat. On an organic basis, total revenues decreased by 3% and income from operations decreased by 2.4% [9] - Net income decreased by 31.3%, reflecting a demanding comparison base from Q1 2020, which benefited from a non-cash foreign exchange gain [10] - Consolidated net debt decreased by 5% to MXN 72 billion, reflecting high cash generation at Coca-Cola FEMSA [10] Business Line Data and Key Metrics Changes - FEMSA Comercio's Proximity division opened 140 new OXXO stores, with same-store sales down 6.5% due to an 18% decline in store traffic but a 14.4% increase in average customer ticket [11][12] - FEMSA Comercio's Health division expanded its drugstore count by 37, with revenues increasing by 16% and same-store sales up by 15.5% [13] - In the Fuel division, same-station sales decreased by 22%, with gross margin at 12.7% and operating margin at 2.7% [14] Market Data and Key Metrics Changes - Coca-Cola FEMSA in Mexico and Central America delivered double-digit operating income growth, while currency headwinds in Brazil tempered benefits from solid volume trends [16] Company Strategy and Development Direction - The company is focusing on growth in identified attractive business verticals and aims to drive incremental returns [7] - A €1.2 billion sustainability-linked bond was issued, aimed at refinancing existing Eurobonds and improving the maturity profile while committing to ambitious ESG targets [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism, noting that the pandemic has forced the company to become more flexible and agile, with expectations for recovery and growth in 2021 [17] - The company is using 2019 numbers as a reference to measure progress, given the high comparison basis from 2020 [6] Other Important Information - The logistics and distribution segment was presented for the first time, with good progress in integrating acquired entities into a single platform [15] - The company is optimistic about the growth potential of its logistics business, particularly in e-commerce [38] Q&A Session Summary Question: Update on Spain and San Luis Potosi rollout and labor law changes - Management confirmed that the rollout in San Luis Potosi is on track for national expansion by year-end and that labor law changes will not significantly impact profitability or cash flow [19] Question: OXXO same-store sales evolution and margin commentary - Management noted that same-store sales improved in March, becoming flat compared to the previous year, and attributed margin maintenance to strong performance in the payments business [25][26] Question: Cultural aspects of financial services business and digital platform strategy - Management highlighted the importance of attracting talent for the spin unit and emphasized a consumer-centric approach to financial services [30] Question: Use of proceeds from sustainability bond and logistics business growth - The sustainability bond is tied to long-term ESG commitments rather than specific projects, and logistics is expected to be a key growth driver, particularly in e-commerce [36][38] Question: OXXO rollout in Brazil and performance expectations - Management reported positive initial performance from OXXO stores in Brazil and expressed satisfaction with the partnership with local operators [62] Question: Refillable targets and green financing - Management stated that sustainability targets include waste reduction but do not currently encompass refillable targets, which are under consideration for future inclusion [66][68]