Coca-Cola FEMSA(US:KOF)2019-04-29 15:19Financial Data and Key Metrics Changes - The company reported a 4.8% increase in revenues, while comparable revenues grew by 10% [33] - Operating income declined by less than 1%, while comparable operating income increased by 9.2% [33] - Controlling net income increased by more than 7%, resulting in earnings per share of MXN0.15 [11][49] Business Line Data and Key Metrics Changes - The South America division saw a 9.1% volume growth in Brazil, contributing to overall topline growth of close to 5% for Q1 2019 [7][8] - In Mexico, revenue growth was close to 8%, but volume performance softened with a contraction of 1.9% due to price increases and the Easter holiday shift [35] - Central America reported a 25% volume growth driven by Costa Rica and the consolidation of new acquisitions in Guatemala [37] Market Data and Key Metrics Changes - The company faced unfavorable currency translation effects, which represented the largest headwind to financial performance [9][32] - Argentina's volumes fell by 32% due to economic recession and declining disposable income, while Brazil's market showed optimism with improved consumption [44][95] Company Strategy and Development Direction - The company aims to become a total global beverage leader while focusing on sustainable and profitable growth [52] - There is a strong emphasis on innovation, with new product launches such as Coca-Cola Coffee and Coca-Cola Sin Azúcar driving growth [12][60] - The company is implementing affordability initiatives and restructuring operations to adapt to challenging macroeconomic environments [17][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Brazil's consumption outlook and the positive impact of improved execution at points of sale [59] - The company is cautious about Argentina's economic conditions but is taking measures to mitigate risks through pricing and operational adjustments [44][111] - Overall, management remains confident in the company's ability to navigate challenges and capitalize on growth opportunities [51][52] Other Important Information - The company completed a stock split and listing of shares in the form of units, which is expected to enhance capital allocation and growth opportunities [24][26] - The adoption of IFRS 16 leases has impacted financial reporting, with lease arrangements recognized as rights of use and liabilities [30][31] Q&A Session Summary Question: Outlook on consumption in Brazil and volume outlook for the year - Management remains encouraged by Brazil's performance, driven by point-of-sale execution and a strong portfolio, expecting continued growth [57][59] Question: Expectations for innovation and its impact on sales - The company is optimistic about innovation, with new product launches expected to contribute significantly to sales in the coming years [60][62] Question: Impact of concentrate taxes in Brazil on financials - Management confirmed that the impact of concentrate taxes remains within expectations and is continuously assessed [70][71] Question: Performance of Coca-Cola Sin Azúcar and its profitability - Coca-Cola Sin Azúcar is growing rapidly but still represents a small portion of the portfolio, with profitability varying by geography [84][88] Question: Competitive environment in Brazil - The competitive landscape is stable, with management focusing on execution and maintaining volume growth despite new entrants [95][98] Question: Reasons for faster growth in beer compared to soft drinks - The beer segment is experiencing strong consumer trends, particularly in premium brands, contributing to faster growth compared to soft drinks [123][126]