Mexico City, October 26, 2020, Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOF UBL, NYSE: KOF) (“Coca-Cola FEMSA”, “KOF” or the “Company”), the largest Coca-Cola franchise bottler in the world by sales volume, announces results for the third quarter and the first nine months of 2020.
THIRD QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS.
- Consolidated volumes decreased 4.1%, a sequential improvement versus the second quarter, as most markets gradually reduced COVID-19 lockdowns and social distancing measures. Volume increased in Brazil, Guatemala, and Uruguay.
- Total revenues decreased 4.0%, while comparable revenues remained flat. Revenue management initiatives across our operations and extraordinary other operating revenues related to tax reclaims in Brazil were offset by unfavorable price-mix effects across our markets, coupled with unfavorable currency translation effects from most of our operating currencies in South America. Mainly driven by a 16% unfavorable translation effect from the Brazilian
- Operating income increased 1.5%, while comparable operating income increased 7.1%. Declining PET costs, favorable hedging initiatives, operating expense efficiencies, and extraordinary tax effects in Brazil were partially offset by unfavorable price-mix effects, higher concentrate costs and the depreciation of most of our operating currencies as applied to our U.S. dollar- denominated raw material
- Majority net income decreased 38.8%, impacted mainly by extraordinary non-operating expenses of Ps. 1,813 million. Excluding these effects, majority net income would have increased 6.2%.
- Earnings per share were Ps. 0.15 (Earnings per unit were Ps. 1.17 and per ADS were Ps. 72.).
John Santa Maria, Coca-Cola FEMSA’s CEO, commented:
“In the face of what is still a very complex operating environment, I am encouraged to see sequential improvements across our operations. These positive trends are driven not only by gradually recovering consumer mobility, but also by our portfolio initiatives, reinforced point-of-sale execution, and the tremendous effort and commitment from all of Coca-Cola FEMSA’s employees. Consequently, despite a 4.0% decline in revenues for the quarter, we managed to grow our operating income by 1.5%, while expanding our operating cash flow margin by 90 basis points. Importantly, driven by favorable raw material costs and a relentless focus on savings and efficiency, our Mexico and Central America division continued to improve its profitability, generating operating income growth of 5.9% and an operating cash flow margin expansion to reach 23.0%. Additionally, our South America division delivered a significant sequential recovery, driven mainly by our Brazilian operation’s strong volume growth.
I am pleased with our business’ continued resiliency, as we continue to reinforce our portfolio to offer more affordability to our consumers and transform our operating capabilities to ensure our business’ profitable, long-term growth. We remain committed to generating economic value and positively contributing to society and the environment. I am confident that the structural measures we are putting in place will continue to provide solid short- and long-term results and opportunities.”