Coca-Cola FEMSA(US:KOF)2020-07-23 20:16Financial Data and Key Metrics Changes - Consolidated volumes declined 7.2% for the quarter, primarily due to mobility restrictions across territories [9] - Total revenues decreased by 10.2%, impacted by price/mix headwinds and unfavorable currency translation effects [11] - Operating income declined 19.1%, with a comparable decrease of 17.6% when excluding currency translation effects [13] - Controlling net income decreased by 39.4% year-over-year, primarily due to impairments in joint ventures [16] Business Line Data and Key Metrics Changes - In Mexico, top line decreased by 8.1%, driven by a 5.8% volume decline [35] - Central America saw a volume decline of 7.4%, with Guatemala showing growth [36] - South America experienced a 9.5% volume decline, with Brazil and Uruguay posting positive volumes in June [38][40] Market Data and Key Metrics Changes - The Mexican market showed a 5.8% volume decline, while Central America had a 7.4% decline, with Guatemala partially offsetting losses [35][36] - South America faced a 9.5% decline, with Argentina remaining complex due to macroeconomic challenges [38] Company Strategy and Development Direction - The company is focusing on five key areas: collaborators, clients, consumers, communities, and cash flow [18] - Emphasis on health and safety protocols for employees and clients, alongside support for community initiatives [19][24] - Accelerating the development of omni-channel capabilities to enhance customer experience and sales [27][28] Management's Comments on Operating Environment and Future Outlook - Management expects the second quarter to be the most impacted quarter of the year, with ongoing uncertainty in the operating environment [17] - Positive trends are emerging, with gradual recovery in volumes and client reopenings [60] - The company remains committed to long-term goals while navigating short-term disruptions [18][49] Other Important Information - Cash position at the end of the quarter was over MXN 43 billion, with a commitment to return cash to shareholders [26][47] - The company is focused on increasing the use of returnable packaging and recycled materials as part of its sustainability initiatives [121][123] Q&A Session Summary Question: July volume performance and channel insights - Management noted that July volumes are improving, with stabilization in most markets and growth in traditional trade channels [60][62] Question: Beer performance in Brazil - The company reported strong share gains in Brazil's beer market, consistent with Heineken's announcements [66] Question: Future capital allocation strategies - Management indicated a focus on maintaining dividends while exploring internal investment opportunities, particularly in returnable packaging [67][69] Question: Traditional channel long-term consequences - Management anticipates that a small percentage of traditional accounts may not reopen, but expects new smaller businesses to emerge [112] Question: Packaging development and environmental initiatives - The company is committed to increasing the use of recycled resin and expanding returnable packaging as part of its environmental strategy [121][123]