Coca-Cola FEMSA(KOF)2024-02-22 22:10Financial Data and Key Metrics Changes - Total revenues for the quarter grew 8% to MXN 66.1 billion, driven mainly by solid volume growth that offset unfavorable currency translation headwinds [34] - Full year top line reached MXN 245.1 billion, operating income of MXN 34.2 billion, and adjusted EBITDA of MXN 46.4 billion, representing new benchmarks for the company [35] - Majority net income declined 24.5% to MXN 5.4 billion, primarily due to a base effect of a lower effective tax rate during the same period of the previous year [50] Business Line Data and Key Metrics Changes - Sparkling beverage volumes grew 4.6%, with brand Coca-Cola achieving 6.2% growth, while still beverages grew 7.8% and bottled water grew 10.3% [34] - In Mexico, volumes increased 8.7%, reaching 2.05 billion unit cases, a historic record for the operation [51] - In South America, volumes for the quarter increased 6.2% to 475 million unit cases, with Brazil and Colombia showing strong performance [59] Market Data and Key Metrics Changes - The modern channel in Mexico is experiencing aggressive growth, while the traditional channel also grew 5.3% year-on-year [3] - In Brazil, Coca-Cola Zero Sugar grew 28% versus the previous year, and energy drinks grew 19% [28] - The macroeconomic backdrop in Mexico remains favorable, with a record of 22.1 million jobs and a 10.4% increase in average base salary [51] Company Strategy and Development Direction - The company is focusing on a sustainable growth model, moving away from aggressive pricing strategies and aiming for reasonable pricing dynamics [2] - Investments in digital platforms like Juntos+ are part of a broader strategy to enhance customer experience and operational efficiency [17] - The company plans to increase manufacturing capacity by 15% and distribution capacity by around 30% over the next three years [98] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about short-term momentum across markets, particularly in Mexico, with expectations for mid-single-digit volume growth [72] - The company is navigating a dynamic environment in Colombia, achieving record volume growth while expanding its customer base [45] - Management acknowledged challenges in Argentina but remains confident in the team's ability to execute the strategy [55] Other Important Information - The company invested a record CapEx of MXN 21.4 billion, representing 8.7% of revenues, to support growth ambitions [35] - Adjusted EBITDA for the quarter increased 10% to reach MXN 13.1 billion, with EBITDA margin expanding 40 basis points to reach 19.9% [49] - The rollout of Juntos+ version 4.0 is expected to enhance customer experience with advanced AI capabilities [47] Q&A Session Summary Question: What is the outlook on volume mainly in markets like Mexico and Brazil? - Management expressed optimism about the outlook in both Mexico and Brazil, citing strong demand and favorable weather conditions [5] Question: Can you comment on the pricing discipline and pressure across markets? - Management stated that they are focusing on sustainable growth and have not faced issues with pricing dynamics [2] Question: How is the digital platform Juntos+ performing? - The digital platform has seen impressive growth, with more than 512,000 monthly active purchasers, and the rollout of version 4.0 is expected to improve customer experience [27][47] Question: What are the expectations for CapEx in 2024? - Management indicated that CapEx as a percentage of sales is expected to remain between 8% to 9% until 2026, supporting growth and addressing capacity limitations [21] Question: How is the competitive landscape in Mexico affecting market share? - Management noted positive share performance across nearly all nonalcoholic ready-to-drink categories, indicating a successful strategy against competitors [52]