Coca-Cola FEMSA(US:KOF)2026-02-24 16:02Financial Data and Key Metrics Changes - The consolidated volume increased by 1.3% in Q4 2025, reaching 1.09 billion unit cases, with total revenues growing by 2.9% to MXN 77.7 billion [9][10] - Gross profit rose by 1.8% to MXN 36.3 billion, leading to a margin contraction of 60 basis points to 46.7% [10] - Operating income increased by 13.3% to MXN 13.7 billion, with operating margin expanding by 160 basis points to 17.6% [10][11] - Adjusted EBITDA for the quarter increased by 12.8% to MXN 18.2 billion, with an EBITDA margin expansion of 210 basis points to 23.4% [11] - Majority net income increased by 3% to MXN 7.5 billion, driven by operating income growth [12] Business Line Data and Key Metrics Changes - In Mexico, volumes improved sequentially, resulting in a 0.9% contraction year-on-year, with Coke Zero achieving 14% volume growth [12][13] - The stills portfolio in Mexico grew by 7.4% year-over-year, driven by strong performances from Monster, Fuze Tea, and Santa Clara [13] - In Guatemala, volumes increased by 3.5% to 48.9 million unit cases, despite a decelerating macro environment [16] - Brazil's quarterly volumes increased by 2.6%, with significant growth in Coca-Cola Zero and Sprite Zero, achieving 44% and 93% growth respectively [19] - Colombia's volumes grew by 4.5%, with Coke Zero also showing double-digit growth [23] Market Data and Key Metrics Changes - South America saw a volume increase of 3% to 504.1 million unit cases, with revenues increasing by 4.6% to MXN 35.4 billion [31] - Brazil's market execution improvements and favorable weather conditions contributed to the highest fourth-quarter volume on record [18] - In Argentina, volumes increased by 3%, with a focus on affordability plans and a single-serve mix reaching 26.3% [25] Company Strategy and Development Direction - The company aims to continue growing its core business by leveraging key products like Coke Zero and improving its competitive position in flavors [8][51] - The strategic focus includes capitalizing on Juntos+ AI capabilities and fostering a customer-centric culture [8][51] - The company plans to navigate challenges related to the excise tax increase in Mexico while maintaining a sustainable growth model [8][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the challenges of 2026, emphasizing the importance of adhering to a sustainable growth model [8] - The company anticipates that the excise tax increase in Mexico will impact consumers and customers, necessitating a cautious approach [8][41] - Management highlighted the resilience of the core business and the successful implementation of cost control measures in response to market conditions [5][50] Other Important Information - The company achieved a record score in sustainability assessments, reflecting strong performance in climate action and supplier management [36][37] - Recent financing activities included a bond issuance in the Mexican market, strengthening the company's financial position [35] Q&A Session All Questions and Answers Question: Performance in Mexico during Q4 and early signs of sensitivities due to taxes - Management noted a sequential improvement in Mexico, with a decline of 0.9% in Q4, and confirmed that the volume declines are as expected [40][42] Question: Strategic views for 2026 and shareholder remuneration update - Management emphasized the importance of continuing to grow the core business and adjusting CapEx in response to market conditions, with a cautious approach to shareholder distributions [50][55] Question: Drivers behind strong category growth in Brazil - Management attributed Brazil's performance to consistent investment, digital enablers, and a strong portfolio, leading to improved competitive positioning [64] Question: Working capital normalization and cash flow expectations - Management confirmed that working capital disruptions were due to accounts payable and expect normalization starting Q1 2026 [67][68] Question: Affordability in Mexico and CapEx levels for 2026 - Management acknowledged a potential longer period of affordability in Mexico while maintaining a focus on sustainable growth, with CapEx expected to decrease in 2026 [95][96]