FEMSA(FMX) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues increased by 5.7% year-over-year in Q4 2025, reflecting improved trends in Proximity Americas and continued growth outside of Mexico, particularly in Coca-Cola FEMSA and Valora [26] - Operating income rose by 8.5%, driven by cost containment initiatives that offset gross margin pressure [26] - Net consolidated income for the quarter reached MXN 12.7 billion, a 33.6% increase compared to Q4 of the previous year, primarily due to an increase in income from operations and a significant reduction in non-operating expenses [27] Business Line Data and Key Metrics Changes - Proximity Americas saw total revenues increase by 5.3%, or 6.3% on a comparable basis, mainly due to same-store sales growth in Mexico and top-line growth in OXXO Colombia and Peru [28] - OXXO Mexico's same-store sales for Proximity Americas approached mid-single-digit growth at 4.4%, with traffic improving to a decline of only 0.6% [5] - OXXO Colombia generated positive EBITDA for the first time for the full year, with nearly break-even EBIT in Q4 [12] Market Data and Key Metrics Changes - The consumer environment in Mexico remained soft, with macro sentiment around investment and economic activity stabilizing but not improving significantly [8] - OXXO USA ended the year with 50 converted stores under the OXXO banner, focusing on expanding food service offerings [29] - Valora in Europe delivered revenue growth of 2.5% in pesos in Q4, with operating income increasing by 10.8% [30] Company Strategy and Development Direction - The company aims to regain OXXO Mexico's growth and relevance by focusing on recovering traffic and same-store sales through a sharper value proposition and improved customer experience [9] - A leaner organizational structure has been implemented to increase efficiency and effectiveness, consolidating leadership teams across divisions [22] - The company plans to increase its store base by more than one-third over the next decade, capturing a broader share of consumer spending [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in traffic and same-store sales, emphasizing the importance of profitable growth and market share expansion [44] - The company acknowledged challenges in the Health Division, particularly in the Colombian institutional business, but is implementing initiatives focused on cash flow generation and returns [15] - Management highlighted the need for a disciplined approach to capital allocation, linking expansion decisions to traffic recovery and margin sustainability [38] Other Important Information - The company deployed over $1 billion in CapEx for organic growth in Mexico for the third consecutive year, despite a reduction at the consolidated level compared to 2024 [12] - The restructuring efforts are expected to generate a positive impact on the bottom line of approximately MXN 1 billion on an annualized basis, primarily at the corporate level [25] Q&A Session Summary Question: Balance between growth and profitability in OXXO Mexico - Management acknowledged the need for profitable traffic growth and emphasized ongoing initiatives to improve the value proposition and assortment in Mexico [42][44] Question: Magnitude of restructuring initiatives - Management indicated that efficiency opportunities are being explored, with a focus on reducing unnecessary expenses and optimizing operations [46][48] Question: Financial services strategy and remittances - Management highlighted the growth potential in financial services and remittances, emphasizing the integration of Spin within the OXXO ecosystem to enhance customer engagement [60][62] Question: Coca-Cola FEMSA's fit within the new structure - Management clarified that Coca-Cola FEMSA and Proximity are seen as core businesses, with no plans for separation, focusing instead on maximizing value within the current structure [78][80] Question: Security incidents affecting stores - Management recognized the heroic efforts of employees during recent security incidents, confirming that no customers were injured and only minor injuries were reported among employees [81]