FEMSA(US:FMX)2024-02-23 20:59Financial Data and Key Metrics Changes - Total revenues increased by 4.6% in Q4 2023, with EBITDA rising by 3.6% compared to Q4 2022 [31] - Net consolidated income decreased by 20.7% to MXN 6.3 billion, impacted by a non-cash foreign exchange loss of MXN 6.3 billion and a MXN 3.2 billion net loss from discontinued operations [173] Business Line Data and Key Metrics Changes - Proximity Americas added 514 stores in Q4 2023, totaling 1,408 new stores for the year, with a gross margin growth of 17.2% [11][12] - Coca-Cola FEMSA reported a total volume increase of 6.1% and total revenues grew by 8.1%, with an operating margin of 14.6% [15] - The Health division expanded by 127 net new drug store additions, reaching a total of 4,474 units [187] Market Data and Key Metrics Changes - In Mexico, same-store sales grew by 8.5%, driven by strong consumer demand [167] - In Colombia, the company is shifting towards more retail and less institutional exposure due to challenges in the institutional health industry [207] Company Strategy and Development Direction - The company is focused on three strategic priorities: accelerating growth, increasing digital capabilities, and balancing risk/return profiles [4] - The long-range plan includes strengthening the core, developing new growth avenues, and expanding the footprint beyond Mexico [28] - The company aims to achieve a net debt-to-EBITDA ratio of two times within two to three years [166] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges and opportunities in the market, emphasizing a commitment to creating value for stakeholders [18] - The company is optimistic about the performance in 2024, despite some expected headwinds [125] Other Important Information - Significant leadership changes were announced, with the CFO and Chief Corporate Officer set to leave by the end of April [5] - The company is poised to begin deploying its capital allocation strategy, which includes share buybacks and extraordinary dividends [148] Q&A Session All Questions and Answers Question: What is the outlook for same-store sales and the impact of competitive pressures? - Management noted that the current mix of sales is more normalized and expects future performance to align with recent results rather than previous higher growth rates [37] Question: Can you elaborate on the management changes and their impact on the company's strategy? - Management confirmed that the outgoing executives will assist until the end of April, ensuring a smooth transition while maintaining strategic focus [39][40] Question: How will the company achieve its target leverage and manage excess cash? - The company plans to reach a two times net debt-to-EBITDA ratio through a combination of share repurchases, special dividends, and organic/inorganic investments [46][61] Question: What are the drivers of margin pressure in the Proximity Americas segment? - Management indicated that labor costs and regulatory changes are significant factors contributing to margin pressure, alongside the need for operational efficiencies [115][203] Question: How is the company addressing competitive pressures in the health sector? - The company is adapting its strategy to focus more on retail and less on institutional operations in response to competitive dynamics [126]