FEMSA (FMX) Q4 Earnings Miss Estimates, Revenues Surpass
Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, reported fourth-quarter 2023 net majority earnings per ADS of 64 cents (Ps. 0.91 per FEMSA unit). The company posted adjusted net majority earnings per ADS of $1.07, missing the Zacks Consensus Estimate of $1.41.
Net consolidated income was Ps. 6,337 million (US$375 million), reflecting a 20.7% decrease from the year-ago quarter.
Total revenues were $11,232 million (Ps. 189,825 million), which improved 4.6% year over year in the local currency. Revenues in U.S. dollars beat the Zacks Consensus Estimate of $11,215 million. Revenue growth was driven by gains across FMX’s business units. On an organic basis, total revenues rose 4.3%.
Shares of the Zacks Rank #1 (Strong Buy) company have advanced 28% in the past year compared with the industry’s growth of 6%.
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FEMSA’s gross profit rose 8.5% year over year to Ps. 77,915 million (US$4,610.4 million). The consolidated gross margin expanded 140 basis points (bps) to 41%, owing to the gross margin expansion at Proximity Americas, Fuel and Coca-Cola FEMSA. Growth was partly negated by margin declines in Health and Proximity Europe.
The company’s gross margin expanded 120 bps at Proximity Americas, 20 bps at Fuel and 190 bps at the Coca-Cola FEMSA segments. However, the gross margin contracted 110 and 200 bps in the Health and Proximity Europe segments, respectively.
FEMSA’s operating income (income from operations) was down 1.4% year over year to Ps. 17,532 million (US$1,037.4 million). On an organic basis, operating income dipped 0.7%. The consolidated operating margin contracted 60 bps to 9.2%, driven by margin contractions at the Coca-Cola FEMSA, Proximity Americas and Health divisions. The gains were partly offset by margin expansions at the Fuel and Proximity Europe division.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Fomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. Quote
Segmental Discussion
Proximity Americas: Total revenues for the segment rose 14.2% year over year to Ps. 71,530 million (US$4,232.6 million). The increase can primarily be attributed to an 8.5% rise in same-store sales on 2.1% growth in store traffic and a 6.3% rise in average ticket. The gains mainly stemmed from robust growth across the OXXO categories due to the rising demand for thirst and gathering occasions, such as beer, snacks and other beverages.
The Proximity Americas division had 22,866 OXXO stores as of Dec 31, 2023. Operating income improved 1% year over year. The operating margin for the segment declined 150 bps to 11.2% due to higher operating expenses.
Proximity Europe: Total revenues for the segment grew 16.4% to Ps. 11,415 million (US$675.5 million). The segment has been benefiting from favorable pricing actions and growth of Valora’s foodservice sales. The Proximity Europe division had 2,808 points of sale as of Dec 31, 2023. Operating income for the segment was up 78.9% year over year, on solid gains from the food products and foodservice category. The operating margin for the segment expanded 180 bps to 5.2%.
Health Division: The segment reported total revenues of Ps. 19,254 million (US$1,139.3 million), up 2.6% year over year. Revenues benefited from favorable sales trends across most regions, offset by the challenging competitive environment in Mexico and negative currency translations.
Backed by these trends, same-store sales rose 5.1% in the quarter. On a currency-neutral basis, total revenues increased 9%, whereas same-store sales increased 3.1%. The segment had 4,474 locations across all regions as of Dec 31, 2023. The operating income declined 43.5% year over year, while the operating margin contracted 240 bps to 3%.
Fuel Division: Total revenues rose 9% to Ps. 15,121 million (US$894.7 million). Average same-station sales improved 4.8%, driven by a 2.1% increase in the average volume and 2.6% growth in the average price per liter. Results also gained from volume growth in its institutional and wholesale customer network. The company had 571 OXXO GAS service stations as of Dec 31, 2023. Operating income rose 13.5% and the operating margin expanded 20 bps to 4.6%.
Coca-Cola FEMSA: Total revenues for the segment advanced 8.1% year over year to Ps. 66,190 million (US$3,916.6 million). KOF’s consolidated operating income increased 7.4%. The segment’s operating margin contracted 10 bps to 14.6%.
Financial Position
FEMSA had cash and cash equivalents of Ps. 165,112 million (US$9,770.1 million) as of Dec 31, 2023. The company’s long-term debt was Ps. 125,417 million (US$7,421.2 million). It incurred a capital expenditure of Ps. 15,679 million (US$927.8 million) in 2023, reflecting higher investments in most businesses.
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Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
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