FEMSA(US:FMX)2025-10-28 15:32Financial Data and Key Metrics Changes - Total revenue growth for the third quarter of 2025 was 9.1%, driven by solid trends outside Mexico and currency tailwinds, particularly in Europe [30] - Operating income increased by 4.3% year over year, reflecting inflationary effects on costs and expenses, partially offset by efficiency efforts [30] - 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 [31][32] 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 contracting 3.1% [19][34] - Total revenues for Proximity Americas grew 9.2%, driven by the expansion of the store network and strong performance in LATAM markets [35] - Operating income for the health division declined by 4%, with same-store sales growing 0.8%, primarily due to strong performance in Chile and Colombia [39][40] Market Data and Key Metrics Changes - In Mexico, OXXO continues to experience a decade of continuous store growth, with a leadership transition to Carlos Arroyo [10] - Coca-Cola FEMSA showed gradual improvement in volume, particularly in South America, despite a slight decline in Mexico [41] - Valora in Europe reported total revenues increased by 10.1% in pesos, driven by higher Swiss retail sales [38] Company Strategy and Development Direction - The FEMSA Forward strategy focuses on maximizing long-term value creation by concentrating on core verticals: retail and beverages, supported by digital initiatives [8] - The company plans to distribute approximately $7.8 billion in capital through dividends and share buybacks between March 2024 and March 2027 [8] - Future growth opportunities are seen in OXXO Brazil, OXXO Colombia, and Bara, with significant potential for value creation [11][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of business units despite a sluggish year in Mexico, with positive signs of recovery in traffic and market share gains [9][20] - The company is cautiously optimistic about the upcoming year, anticipating improvements in the operating environment and benefiting from the FIFA World Cup [42] - Management acknowledged challenges from a recent tax increase in Mexico but believes adjustments can be made to maintain return on investment [12] Other Important Information - The company distributed a total of 11.8 billion pesos in dividends during the quarter, with no share buybacks executed [41] - The effective tax rate for the quarter improved to 29.3%, following a spike in the first half of the year [32][33] Q&A Session Summary Question: Insights on same-store sales performance and traffic dynamics at OXXO - Management noted a reversal of trends in OXXO Mexico, with improved traffic performance compared to the first half of the year, and expressed optimism for the fourth quarter [46][49] Question: Details on gross margin performance at OXXO Mexico - Management indicated that gross margin improvements were driven by commercial income growth and a favorable service mix, with expectations for continued gains [54][57] Question: Update on the health business in Mexico and Chile - Management reported strong growth in Chile despite a competitive environment, while acknowledging challenges in Mexico and the need for operational improvements [70][71] Question: Corporate restructuring and SG&A reduction plans - Management discussed ongoing efforts to streamline corporate overhead and indicated potential for significant savings, with further details expected in future calls [78][79] Question: Interest expense increase 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 [95][96]