2019 Integrated Report
We are Coca-Cola FEMSA, and we believe in:
That unifies our organization to become an undisputed total beverage leader with sustainable and profitable growth, focused on creating and fulfilling consumer demand anytime, anywhere.
That ensures our teams work together as a cohesive unit that strives to create sustainable value in collaboration with our stakeholders through our everyday decisions and actions.
That requires us to evolve together with our consumers and customers to match their ever-changing needs and generate social and environmental wellbeing as a shared purpose.
José Antonio Fernández Carbajal
John Santa Maria Otazua
Underscoring a year of transformation and capability building, we continued capitalizing on our industry’s potential to produce positive results while navigating dynamic environments.
Thanks to our ongoing transformation, we are developing the capabilities to win in a world marked by rapid changes. Thus, we embarked on our Fuel for Growth strategy to create an even leaner, more agile organization focused on our customers and consumers. This multi-year journey aims to strengthen our organization through new ways of working, strive for efficiency with best-in-class capabilities enabled by digital technology, eliminate redundancy, and ensure our sustainable business growth.
As part of our strategy, we are unifying our organization under one vision to become an undisputed total beverage leader with sustainable, profitable growth; one platform to ensure our teams work as a cohesive unit to create sustainable value for our stakeholders; and one future to maintain our flexibility to evolve together with our consumers and customers.
billion pesos in total revenue
We collected more than 50% of the bottles that we put in Mexico and Brazil.
One Consumer-Centric Platform: Strategic Initiatives
Guided by our obsessive consumer focus, we are consolidating a winning total beverage portfolio to satisfy evolving tastes and lifestyles. We are fostering sparkling beverage growth by leveraging portfolio innovation and affordability, while driving our low or no-sugar beverage portfolio ahead of consumer trends. Additionally, we are improving our competitive position in still beverages, and amplifying our water portfolio to establish consistent leadership across this growing category.
As part of our Fuel for Growth journey, we functionalized our finance, supply chain, and human resources operating models to create a leaner service organization that leverages our company’s scale to drive our operations’ sustainable, profitable business growth.
Underpinned by KOF DNA, we are building a collaborative customer and consumer-centric culture founded on operational excellence, agile decision-making, an owners’ mentality, and always placing our people first.
Moreover, we are accelerating our digitally driven business transformation. After rolling out our KOFmmercial digital platform (KDP) across our traditional trade channel, we deployed KDP throughout Brazil and Mexico’s modern trade channel. In Brazil, we further expanded our first mover advantage across food aggregators and digital channels, while successfully piloting our omnichannel entry capability.
Finally, we continue to make important progress on our sustainability goals. Notably, we collected more than 50% of the bottles that we put into the market, well positioned to achieve our 2030 commitment of collecting 100%. We used 23.7% of recycled materials in our PET packaging, on track to achieve our 2020 goal of 25%. We improved our water use ratio to 1.52 liters of water per liter of beverage produced, on track to achieve our 2020 goal of 1.5 liters. Impressively, 71% of our manufacturing operations’ power comes from clean energy sources, up over seven times the past five years.
One Consumer-Centric Platform: Operating Highlights
Guided by our holistic strategic framework, we navigated a challenging macroeconomic environment to deliver positive results for the year. Our total sales volume increased 1.4% to 3.37 billion unit cases, with transactions growing 2.5% to 20.2 billion. Total revenues grew 6.7% to Ps. 194.5 billion. Operating income grew 3.0% to Ps. 25.4 billion. Operating cash flow grew 4.8% to Ps. 37.1 billion. Importantly, controlling net income reached Ps. 12.1 billion for earnings per share of Ps. 0.72 and per unit of Ps. 5.76 (Ps. 57.60 per ADS).
Our resilient Mexico operation achieved strong top-line growth, despite uncertain macroeconomic conditions. Our portfolio innovation, affordability, and commercial initiatives enabled us to generate price-mix improvements and deliver 8.1% revenue growth, while our ability to drive cost and expense efficiencies resulted in margin expansion.
In Central America, we delivered solid top-line growth, driven mainly by the strong performance of our Guatemala and Costa Rica operations. Our ability to capture synergies from new territories, expanded distribution platform, and improved point-of-sale execution enabled us to achieve outstanding volume growth in Guatemala.
Despite slow macroeconomic growth, our Brazilian operation continued its impressive turnaround, generating strong volumes that built on two years of continuous growth. Importantly, this growth is leading to market share gains across our key beverage categories, driven by our relentless consumer focus, robust portfolio, and point-of-sale execution.
After a complicated start to the year, we’re encouraged by our Colombian operation’s turnaround over the second half of 2019, driven by our efficiency, coverage, and portfolio initiatives. In Argentina, we adapted our portfolio to remain close to our consumers, driven by our affordability strategy.
Our total revenues grew 6.7%
Our operating income grew 3.0% to Ps. 25.4 billion
We seamlessly consolidated our Uruguay operation. Beyond exceeding our estimated synergies, we improved our volumes and margins, driven by increased production efficiency and market share gains in the sparkling and still beverage categories.
Finally, consistent with our disciplined approach to capital allocation and commitment to generating shareholder value, our Board of Directors agreed to propose an ordinary dividend of Ps. 4.86 per unit to the Annual Shareholders Meeting. This proposal represents an increase of 37% versus the previous year, reflecting the strength of our free cash flow generation and our confidence in Coca-Cola FEMSA’s solid financial position.
Moving forward, our overarching strategic priority is to become the best option for our customers and consumers in all of our markets—creating and fulfilling their demand anytime, everywhere.
On behalf of our employees, we thank you for your continued confidence in our ability to deliver economic value and to generate social and environmental wellbeing for you all.
Constantino Spas reflects on his first year as our company’s Chief Financial Officer. He discusses his five key priorities, our company’s positive performance, Fuel for Growth strategy, operating highlights, disciplined capital allocation, and financial flexibility.
José Ramón Martínez, Corporate Affairs Officer, discusses our integrated sustainability strategy. Among other topics, he talks about our main sustainability achievements, environmental stewardship, and strengthening our local communities.
We have the privilege to serve more than 261 million people, through 1.9 million points of sale in 9 markets of Latin-America, with a wide portfolio of leading brands in 10 beverage categories.
water & bulk water
* As of December 31, 2017, Venezuela is reported as an investment in shares
Product mix by category
The strides we took during 2019 to put together the right sets of capabilities and talent positions our organization to generate increased value for all our stakeholders for many years to come.
Millions of Mexican pesos and U.S. dollars as of December 31, 2019 (except volume and per share data). Results under International Financial Reporting Standards.
| Sales volume |
(million unit cases)
|Income from Operations||1,348||25,423||24,673||3.0%|
|Controlling Interest Net Income2||642||12,101||13,910||-13.0%|
|Long-Term Bank Loans and Notes Payable||3,101||58,492||70,201||-16.7%|
|Book value per share3||0.39||7.31||7.43||-1.6%|
economic value distributed
At Coca-Cola FEMSA we are convinced that strong communities are good business. As such, we are in a privileged position to generate economic value to our stakeholders through our good business practices, which ultimately transforms into social value for the countries in which we operate.
|Economic Value Generated||$10,311||$194,471|
|Payments to suppliers||$5,061||$95,456|
|Wages & Benefits for employees||$1,620||$30,561|
|Acquisition of long-term assets||$547||$10,324|
|Dividends paid to shareholders||$394||$7,440|
|Income taxes paid to governments||$255||$4,806|
|Donations & Community Investment||$21||$390|
|Total Economic Value Distributed||$7,899||$148,977|
Volume growth in our sparkling category
Volume growth in our personal and bulk water category in Brazil
Volume growth in our flavored water category in Mexico
Volume growth in our isotonic category in Central America
Volume growth in our Juices, Nectars & Fruit Based category in Central America
Unit cases sold of our recently launched line of Isolite
Volume growth in our energy drinks category
Volume growth in our teas category in Mexico
Volume growth in our dairy products category in Mexico
Volume growth in our plant based category in Colombia