FEMSA(FMX) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue growth for the second quarter of 2025 was 6.3%, despite a challenging environment in Mexico, offset by solid trends outside Mexico and currency tailwinds [19][20] - Operating income increased by only 0.2% year-over-year, impacted by inflationary effects on costs and expenses [19] - Net consolidated income decreased by 64.3% to COP 5,600,000,000, primarily due to a noncash foreign exchange loss and lower interest income [20] Business Line Data and Key Metrics Changes - Proximity Americas division saw same store sales decline by 0.4%, with a solid average ticket growth of 6.6% but weaker traffic, which contracted by 6.6% [21][22] - OXXO LATAM experienced same store sales growth in the high teens, indicating better performance compared to Mexico [22] - The Health division reported total revenue growth of 15.6% in pesos, with same store sales growing 13.1%, driven by strong performance in Colombia and Ecuador [28] Market Data and Key Metrics Changes - Coca Cola FEMSA's revenues increased by 5%, despite nearly a 10% decline in volumes in Mexico and Central America due to adverse weather conditions [31] - The company noted a loss of competitiveness in convenience categories relative to other channels, impacting sales [23][60] Company Strategy and Development Direction - The company is focused on leveraging data from the Spin Premier Rewards program to enhance retail media efforts and drive higher commercial income [39] - There is a strategic imperative to evolve OXXO's convenience value proposition into digital, with plans to explore financial services including savings and credit products [52] - The company aims to maintain strong operational discipline and strategic investments to navigate the evolving consumer environment [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging consumer environment in Mexico and the need for commercial initiatives to address traffic declines [22][34] - The company remains cautiously optimistic for the second half of the year, despite potential volatility amid a soft macroeconomic environment [34] - Management emphasized the importance of operational discipline and rigorous capital allocation to deliver sustainable growth [34] Other Important Information - The company has successfully completed the divestiture of its logistics business and is focused on investing in core operations [33] - Shareholder remuneration plans include deploying COP 66,000,000,000 through dividends and share repurchases [33] Q&A Session Summary Question: What are the missing pieces to maximize Spin and Spin Premier's potential? - Management highlighted the importance of leveraging data from the Premier Rewards program to improve personalization and drive higher commercial income [39][40] Question: Are there signs of better traffic data for Spin users compared to non-users? - Management confirmed that users of the Spin program tend to show increased loyalty and engagement, leading to more frequent store visits [43] Question: How does FEMSA Digital fit within OXXO to leverage its physical footprint? - Management expressed excitement about the collaboration between SPIN and OXXO, emphasizing the need for a digital value proposition that complements the physical presence [50][51] Question: What is driving the volatility in net income and equity income? - Management attributed the decline in net income primarily to foreign exchange losses on U.S. Dollar cash balances [88] Question: What initiatives are being taken to improve traffic and same store sales? - Management mentioned various initiatives, including adjustments in product assortment and promotional activities, to address traffic challenges [61][86]