Background and Relevance of Coca-Cola FEMSA
Coca-Cola FEMSA (KOF), the largest Coca-Cola bottler by sales volume, has initiated a proactive dialogue with the Mexican government alongside other bottlers to address the potential increase in taxes on sugary beverages set to take effect next year. This move highlights the company’s commitment to reducing calorie intake by promoting low or no-calorie products, aligning with its strategic priorities.
Company’s Financial Performance
Ian Craig, Coca-Cola FEMSA’s CEO, mentioned in the third quarter financial and operational report that the company will leverage its sustainable growth model, revenue management initiatives, cost control, productivity improvements, and adjustments in fixed asset investments to adapt to challenging operating conditions, including the sugar tax increase in Mexico.
The company’s total revenue increased by 3.3% to 71,884 million pesos, driven mainly by its revenue management initiatives. However, this growth was partially offset by a slight volume decrease, promotional activities, and unfavorable currency conversion effects, primarily due to the Argentine peso’s depreciation and most of its operational currencies in Central America converting to Mexican pesos.
Excluding currency conversion effects, total revenue grew by 4.7%.
Operational Performance
Coca-Cola FEMSA’s EBITDA increased by 3% in the July-September period compared to the same timeframe in 2024, surpassing Infosel’s consensus forecast by 2.5%. However, the 3.3% increase in revenue fell short of analyst expectations.
The company experienced a slight 0.6% volume decrease, which it attributed to its performance in Mexico due to weaker consumption caused by the economic slowdown.
Key Questions and Answers
- What is Coca-Cola FEMSA’s primary concern? Coca-Cola FEMSA is proactively engaging with the Mexican government to address the potential increase in taxes on sugary beverages.
- Why is this dialogue important? This dialogue reflects the company’s commitment to reducing calorie intake and aligns with its strategic priorities.
- How has the company’s financial performance been affected? Despite a slight volume decrease, Coca-Cola FEMSA’s total revenue increased by 3.3% due to revenue management initiatives.
- What challenges does the company foresee? The company anticipates adapting to challenging operating conditions, including the sugar tax increase in Mexico, by leveraging its sustainable growth model and other initiatives.
