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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

For the month of October 2008
.
FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V.
(Exact name of Registrant as specified in its charter)

Mexican Economic Development, Inc.
(Translation of Registrant’s name into English)

United Mexican States
(Jurisdiction of incorporation or organization)

General Anaya No. 601 Pte.
Colonia Bella Vista
Monterrey, Nuevo León 64410
México
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _______
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _______

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____________

 
 
 
 
FEMSA Delivers 8.6%
 
Operating Income Growth in 3Q08
 
Monterrey, Mexico, October 28, 2008— Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) today announced its operational and financial results for the third quarter of 2008.
 
Third Quarter 2008 Highlights:
 
·    Consolidated total revenues grew 10.8% and income from operations grew 8.6%.
 
-     In spite of the challenging environment and a more cautious consumer, FEMSA delivered robust growth in operating income driven by strong results
       at Coca-Cola FEMSA and FEMSA Comercio that more than offset weakness at FEMSA Cerveza.
 
·    Coca-Cola FEMSA total revenues and income from operations increased 14.5% and 10.3%, respectively.
 
-    Results mainly driven by double-digit income from operations growth in Mercosur, supported by the integration of Remil.
 
·    FEMSA Cerveza total revenues increased 5.7%
 
-    In an environment of healthy pricing, sales volume in Mexico decreased 1.9%, while sales volume grew 8% in Brazil and 10% in exports.
 
-    Continued raw material pressures and sustained marketing investments behind our brands across our operations, resulted in an 8.2% decrease in income from operations.
 
·    FEMSA Comercio continued its pace of strong growth and margin expansion.
 
-    Income from operations increased over 30% for the seventh consecutive quarter, resulting in an operating margin expansion of 110 basis points to reach 6.5%.
 
José Antonio Fernández, Chairman and CEO of FEMSA, commented “After a strong first half performance, during the third quarter we started seeing some signals of a softening consumer in our main market on top of growing macroeconomic pressures and sustained raw materials inflation across our markets. However, we were again able to deliver consolidated operating income growth. FEMSA Cerveza’s positive pricing trends in the key Mexican market, combined with contained administrative expenses, partially offset the continued pressure from grain prices and sustained marketing activity. Coca-Cola FEMSA continued capturing the benefits of integrating Remil and Jugos del Valle into its platform. Meanwhile, FEMSA Comercio opened 851 net new stores in the last twelve months to surpass the 6,000-store milestone, delivering strong bottom-line growth for the tenth consecutive quarter.
 
These are tough times, however FEMSA’s business position remains as solid as ever. Our balance sheet is healthy, our competitive position across businesses and across markets has never been stronger, and we are working hard to ensure that we maintain our momentum through this challenging period”.
 
 

 
FEMSA Consolidated

Beginning on January 1st 2008, in accordance to changes in the Mexican Financial Reporting Standards (Mexican FRS) related to inflation effects, we discontinued inflation accounting for our subsidiaries in Mexico, Guatemala, Panama, Colombia and Brazil. 2008 figures for these subsidiaries are therefore in nominal pesos. For the rest of our subsidiaries in Nicaragua, Costa Rica, Venezuela and Argentina, we will continue applying inflation accounting during 2008. For comparison purposes, the figures for 2007 have been restated in Mexican pesos with purchasing power as of December 31, 2007.

Total revenues increased 10.8% compared to 3Q07, to Ps. 41.723 billion. Coca-Cola FEMSA and FEMSA Comercio together accounted for over 85% of the consolidated incremental revenue, and FEMSA Cerveza provided the balance.

For the first nine months of 2008, consolidated total revenues increased 9.6% to Ps. 119.191 billion. This growth resulted from double-digit growth at Coca-Cola FEMSA and FEMSA Comercio combined with a mid-single digit growth at FEMSA Cerveza.

Gross profit increased 11.0% compared to 3Q07 to Ps. 19.276 billion in 3Q08. Gross margin improved 10 basis points over the same period in 2007 to 46.2%, as a result of gross profit improvement at FEMSA Comercio, which more than offset the cost pressures at Coca-Cola FEMSA coming from the integration of the lower profitability of Jugos del Valle and increases in sweetener and PET prices, as well as from raw material pressure at FEMSA Cerveza.

For the first nine months of 2008, gross profit increased 10.8% to Ps. 54.950 billion. Gross margin increased 50 basis points compared to the same period in 2007 to 46.1% of total revenues. FEMSA Comercio’s gross profit increase combined with stable margin at Coca-Cola FEMSA more than offset raw material pressure at FEMSA Cerveza.

Income from operations increased 8.6% to Ps. 5.677 billion in 3Q08 as compared to the same period in 2007; double-digit growth at FEMSA Comercio and Coca-Cola FEMSA more than offset an operating income decline at FEMSA Cerveza. FEMSA Comercio’s margin improvement partially compensated margin pressure at Coca-Cola FEMSA and FEMSA Cerveza.

For the first nine months of 2008, income from operations increased 12.0% to Ps. 15.574 billion. Our consolidated operating margin year-to-date reached 13.1%, an improvement of 30 basis points as compared to the same period in 2007, driven by robust top-line growth combined with operating leverage achieved in most of our business units.

Net income decreased 24.1% compared to 3Q07 to Ps. 2.564 billion in 3Q08, as income from operations growth partially offset the shift from a gain to a loss in our foreign exchange position. This shift resulted from the sequential appreciation of the USD against the local currency in all of our markets, as applied to our US dollar liability position. The integral cost of financing reflects the changes in the Mexican Financial Reporting Standards mainly on monetary position, as the inflationary adjustment is no longer applied to the vast majority of our liability position. During the quarter, the increase in other expenses resulted mainly from write-off expenses derived from asset rationalization at Coca-Cola FEMSA in Mexico. The effective tax rate was 33.1% in 3Q08 compared with 28.0% in 3Q07, reflecting tax provisions recorded during the quarter at Coca-Cola FEMSA.

For the first nine months of 2008, in spite of the growth in income from operations, net income decreased 2.2% to Ps. 8.142 billion, compared to the same period of 2007, due to other expenses increases and lower gains in foreign exchange and monetary positions.

Net majority income decreased 15.8% over 3Q07, resulting in Ps. 0.56 per FEMSA Unit1  in 3Q08. Net majority income per FEMSA ADS was US$ 0.51 for the quarter.
 
1
FEMSA Units consist of FEMSA BD Units and FEMSA B Units. Each FEMSA BD Unit is comprised of one Series B Share, two Series D-B Shares and two Series D-L Shares. Each FEMSA B Unit is comprised of five Series B Shares. The number of FEMSA Units outstanding as of September 30, 2008 was 3,578,226,270 equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.
 
October 28, 2008 
2
  
 
 


Capital expenditures increased 46.8% over 3Q07 to Ps. 3.998 billion in 3Q08, mainly reflecting increased investment in the beverage business units related to incremental capacity and distribution assets and the smoothening of FEMSA Comercio’s new store opening curve to achieve more openings ahead of the busy fourth-quarter.

The consolidated balance sheet as of September 30, 2008, recorded a cash balance of Ps. 5.754 billion (US$ 524.4 million), a decrease of Ps. 5,383 million (US$ 490.6 million) compared to the same period of 2007, mainly as a result of cash acquisitions made by Coca-Cola FEMSA over the last twelve months, including Remil and Jugos del Valle and the payment of the maturities of our certificados bursátiles during the year. Short-term debt was Ps. 8.389 billion (US$ 764.5 million) and long-term debt was Ps. 29.904 billion (US$ 2.725 billion). Our gross debt declined by Ps. 2.889 billion year on year as a result of the aforementioned payment of certificados bursátiles and certain bank debt over the last twelve months. Our net debt increased by Ps. 2.494 billion (US$227.3 million) mainly due to the cash acquisitions as described above.

Consistent with FEMSA’s conservative approach, as of September 30, 2008, our ratio of net debt to EBITDA2 was only 1.1x, while our mix of US dollar-denominated debt represented 16.6% and our mix of fixed interest rate represented 70.8%. In terms of our debt profile, we expect to pay down most of the maturities coming due in 2009 with internal cash generation. For 2010 and 2011, we have minor debt maturities coming due, and our debt profile currently extends as far out as 2017.

As a matter of policy, we follow a conservative approach to leverage and risk management, and make limited use of derivative instruments to reduce the volatility and uncertainty of operating results by hedging risks such as interest rate, foreign exchange and the price of raw materials.

Soft Drinks – Coca-Cola FEMSA

Coca-Cola FEMSA’s financial results and discussion are incorporated by reference from Coca-Cola FEMSA’s press release, which is attached to this press release or visit www.coca-colafemsa.com.

Beer – FEMSA Cerveza

Mexico sales volume decreased 1.9% compared with 3Q07 to 6.757 million hectoliters in 3Q08. This decrease reflects price increases implemented in the quarter in addition to the one made at the beginning of the year, as well as some unfavorable weather conditions experienced during the quarter and an increasingly cautious consumer. Our Tecate brand family had another quarter of strong performance and our new line extensions, such as Sol Limón y Sal and Sol Cero, delivered encouraging results. For the first nine months of 2008, Mexico sales volume increased 2.4% to 20.275 million hectoliters.

Brazil sales volume increased 8.0% over 3Q07 reaching 2.370 million hectoliters in 3Q08, as balanced growth across our product portfolio drove these results. For the first nine months of 2008, Brazil sales volume increased 7.6% to 7.035 million hectoliters.

Export sales volume increased 10.0% compared with 3Q07 to 948.8 thousand hectoliters in 3Q08, despite a challenging environment in the US. The increase was mainly driven by our Dos Equis and Tecate brands in the U.S. as well as by Sol in other key markets. For the first nine months of 2008, export sales volume increased 8.5% to 2.727 million hectoliters.

Total revenues increased 5.7% over 3Q07 to Ps. 10.647 billion in 3Q08; higher average price per hectoliter in Mexico and Brazil, combined with solid volume growth in exports and Brazil drove these results. Mexican beer sales represented 75.0% of total beer revenues, while Brazil and Export beer sales reached 15.6% and 9.4% of total beer revenues, respectively.
 
2
Net debt/EBITDA is calculated by dividing net debt at the end of the quarter by EBITDA for the last twelve months, as reported in Mexican pesos and converted to US dollars with the period-end exchange rate from each period.
 
October 28, 2008 
3
  
 
 

 
Mexico price per hectoliter increased 6.2% over 3Q07 to Ps. 1,087.2 in 3Q08, resulting from price increases implemented during the last twelve months as well as from the positive pricing effect of incremental domestic volume brought under direct distribution during the last twelve months, which represented 89% of our total domestic volume during the first nine months. Brazil price per hectoliter increased 5.6% compared to the same period of 2007 to Ps. 645.1, driven by price increases implemented during the last twelve months. Export price per hectoliter decreased 6.5% to Ps. 964.4 in 3Q08 as compared with 3Q07, impacted by a stronger peso, however in US dollars it increased by 2.2% in the quarter driven by price increases implemented over the last twelve months across our US product portfolio.
 
For the first nine months of 2008, total revenues increased 6.6% to Ps. 30.893 billion. Mexican beer revenues reached 75.3% of total beer revenues, in line with the same period of 2007. Brazil beer revenues represented 15.3% of total beer revenues, up from 14.9% in the comparable period in 2007. Export beer revenues were 9.4% of total beer revenues, down from 9.8% in the comparable period in 2007.

Cost of sales reached Ps. 4.898 billion in 3Q08, an increase in cost per hectoliter of 6.8%, higher than the 4.1% increase average price per hectoliter in the same period, resulting from raw materials pressure, particularly grains and higher energy costs in Mexico and Brazil. Gross profit increased 3.7% over 3Q07 to Ps. 5.749 billion in 3Q08, while gross margin declined by 110 basis points from 55.1% in 3Q07 to 54.0% in 3Q08.

For the first nine months of 2008, cost of sales increased 8.1% to Ps. 14.115 billion. Gross margin year-to-date declined by 60 basis points to 54.3%.

Income from operations decreased 8.2% compared to 3Q07 to Ps. 1,508 million in 3Q08, representing a margin decline of 210 basis points. Cost pressure experienced during the quarter and an increase in selling expenses, more than offset the robust top-line growth and administrative expenses rationalization together with a decline in our capitalized investments in the ERP system, which have been fully amortized. Operating expenses increased 8.7% over 3Q07 to Ps. 4.241 billion, resulting from incremental selling expenses driven by continuous marketing investment behind our brands and at the point of sale, including the timing effect of the launch of new advertisement campaigns for our core brands in Mexico, as well as by operating expenses resulting from the incremental volumes that we brought under our direct distribution network.

For the first nine months of 2008, income from operations increased 1.4% to Ps. 3.934 billion, representing 12.7% of total revenues, 70 basis points below the comparable period of 2007.

FEMSA Comercio

Total revenues increased 9.9% over 3Q07 to Ps. 12.286 billion in 3Q08. The opening of 237 net new convenience stores in the quarter to reach 851 net new stores in the last twelve months, more than compensated the same-store sales decline in the quarter. As of September 30, 2008, there were a total of 6,088 of our convenience stores in Mexico, well on track to meet the objective for the year. Same-store sales decreased an average of 3.2% for the quarter over 3Q07, due to a 13.6% decline in the average customer ticket more than offsetting the 11.9% increase in store traffic. This decrease was driven mainly by a weaker performance during September reflecting unfavorable weather conditions and a softening consumer environment. As was the case during the previous two quarters of 2008, ticket and traffic dynamics reflect the mix shift from prepaid wireless phone cards to the sale of electronic air-time, for which only the margin is recorded, not the full amount of the air-time recharge. On a comparable basis excluding this change, the average ticket would have grown in the mid-single-digit in 3Q08.

For the first nine months of 2008, total revenues increased 12.3% to Ps. 34.941 billion. FEMSA Comercio same-store sales increased an average of 0.6% driven by a 13.9% increase in store traffic, which more than offset an 11.2% reduction in average ticket.
 
October 28, 2008 
4
  
 
 
 
Gross profit increased by 23.6% in 3Q08 compared to 3Q07, resulting in a 340 basis points gross margin expansion reaching 31.1%. A relevant portion of this increase resulted from the shift towards electronic air-time recharges as described above, as well as from growth in higher-margin categories such as ready-to-drink coffee, among others. The balance came from better pricing strategies and improved commercial terms with our supplier partners. For the first nine months of 2008, gross margin expanded by 250 basis points to 29.7%.

Income from operations increased 30.5% over 3Q07 to Ps. 795 million in 3Q08. Operating expenses increased 21.9% to Ps. 3,031 million, mainly driven by incremental selling expenses such as higher energy costs at the store level, and expenses related to the strengthening of FEMSA Comercio’s organizational structure, as planned. Operating margin expanded 110 basis points over 3Q07 reaching 6.5%, as the strong expansion of the gross margin more than offset the increase in operating expenses.

For the first nine months of 2008, income from operations increased 36.2% to Ps. 1.938 billion, resulting in an operating margin of 5.5%, a 90 basis points expansion as compared to the previous year.

CONFERENCE CALL INFORMATION:

 
Our Third Quarter 2008 Conference Call will be held on: Tuesday October 28, 2008, 12:00 PM Eastern Time (10:00 AM Mexico City Time). To participate in the conference call, please dial: Domestic US: (1-888) 820-9408, International: (1-913) 312-1432. The conference call will be webcast live through streaming audio. For details please visit www.femsa.com/investor.
 
If you are unable to participate live, the conference call replay will be available through November 4, 2008; dialing Domestic US: (1-888) 203-1112, International: (1-719) 457-0820 using passcode: 4423442. Additionally, the conference call audio will be available on http://ir.femsa.com/results.cfm
 
We are a holding company whose principal activities are grouped under the following sub-holding companies and carried out by their respective operating subsidiaries: Coca-Cola FEMSA, S.A.B. de C.V., which engages in the production, distribution and marketing of non-alcoholic beverages; FEMSA Cerveza, S.A. de C.V., which engages in the production, distribution and marketing of beer and flavored alcoholic beverages; and FEMSA Comercio, S.A. de C.V., which engages in the operation of convenience stores.

The translations of Mexican pesos into US dollars are included solely for the convenience of the reader, using the noon day buying rate for pesos as published by the Federal Reserve Bank of New York at September 30, 2008, which was 10.9726 Mexican pesos per US dollar.

FORWARD LOOKING STATEMENTS
This report may contain certain forward-looking statements concerning our future performance that should be considered as good faith estimates made by us. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which could materially impact our actual performance.
 
Six pages of tables and Coca-Cola FEMSA’s press release to follow
 
October 28, 2008 
5
  
 
 

FEMSA
Consolidated Income Statement
Millions of Pesos

 
 
For the third quarter of:
  
For the nine months of:
  
   
  
2008 (A)
 
% of rev.
  
2007 (B)
  
% of rev.
  
% Increase 
  
2008 (A)
  
% of rev.
  
2007 (B)
  
% of rev.
  
% Increase
  
Total revenues  
    
41,723
   
100.0
   
37,659
   
100.0
   
10.8
   
119,191
   
100.0
   
108,724
   
100.0
   
9.6
 
Cost of sales  
    
22,447
   
53.8
   
20,293
   
53.9
   
10.6
   
64,241
   
53.9
   
59,151
   
54.4
   
8.6
 
Gross profit  
    
19,276
   
46.2
   
17,366
   
46.1
   
11.0
   
54,950
   
46.1
   
49,573
   
45.6
   
10.8
 
Administrative expenses  
    
2,287
   
5.5
   
2,336
   
6.2
   
(2.1
)
  
6,874
   
5.8
   
6,804
   
6.3
   
1.0
 
Selling expenses  
    
11,312
   
27.1
   
9,801
   
26.0
   
15.4
   
32,502
   
27.2
   
28,867
   
26.5
   
12.6
 
Operating expenses  
    
13,599
   
32.6
   
12,137
   
32.2
   
12.0
   
39,376
   
33.0
   
35,671
   
32.8
   
10.4
 
Income from operations  
    
5,677
   
13.6
   
5,229
   
13.9
   
8.6
   
15,574
   
13.1
   
13,902
   
12.8
   
12.0
 
Other expenses  
    
(567
)
  
 
    
(206
)
  
 
    
N.S.
   
(1,444
)
  
 
    
(754
)
  
 
    
91.5
 
Interest expense  
    
(1,066
)
  
   
(1,118
)
  
   
(4.7
)
  
(3,526
)
  
   
(3,570
)
  
   
(1.2
)
Interest income  
    
114
   
 
    
175
   
 
    
(34.9
)
  
492
   
 
    
575
   
 
    
(14.4
)
Interest expense, net  
    
(952
)
  
   
(943
)
  
   
1.0
   
(3,034
)
  
   
(2,995
)
  
   
1.3
 
Foreign exchange (loss) gain  
    
(462
)
  
   
116
   
   
N.S.
   
206
   
   
482
   
   
(57.3
)
Gain on monetary position  
    
230
   
   
557
   
   
(58.7
)
  
514
   
   
984
   
   
(47.8
)
Unhedged derivative instrument loss  
    
(96
)
  
 
    
(65
)
  
 
    
47.7
   
(125
)
  
 
    
(1
)
  
 
    
N.S.
 
Integral result of financing  
    
(1,280
)
  
 
    
(335
)
  
 
    
N.S.
   
(2,439
)
  
 
    
(1,530
)
  
 
    
59.4
 
Income before income tax  
    
3,830
   
   
4,688
   
   
(18.3
)
  
11,691
   
   
11,618
   
   
0.6
 
Income tax  
    
(1,266
)
  
 
    
(1,311
)
  
 
    
(3.4
)
  
(3,549
)
  
 
    
(3,289
)
  
 
    
7.9
 
Net income  
    
2,564
   
 
    
3,377
   
 
    
(24.1
)
  
8,142
   
 
    
8,329
   
 
    
(2.2
)
Net majority income  
    
2,020
   
   
2,400
   
   
(15.8
)
  
5,854
   
   
5,871
   
   
(0.3
)
Net minority income  
    
544
   
 
    
977
   
 
    
(44.3
)
  
2,288
   
 
    
2,458
   
 
    
(6.9
)
                         
(A)
Average Mexican Pesos of 2008.                        
(B)
Constant Mexican Pesos as of Decmber 31, 2007                        

EBITDA & CAPEX  
  
 
  
 
  
 
  
 
  
   
 
  
  
 
  
 
  
 
  
 
  
Income from operations  
    
5,677
   
13.6
    
5,229
   
13.9
    
8.6
   
15,574
   
13.1
    
13,902
   
12.8
    
12.0
 
Depreciation  
    
1,291
   
3.1
    
1,138
   
3.0
    
13.4
   
3,617
   
3.0
    
3,255
   
3
    
11.1
 
Amortization & other  
    
882
   
2.1
    
921
   
2.5
    
(4.2
)
  
2,910
   
2.4
    
2,855
   
2.6
    
1.9
 
EBITDA  
    
7,850
   
18.8
    
7,288
   
19.4
    
7.7
   
22,101
   
18.5
    
20,012
   
18.4
    
10.4
 
CAPEX  
    
3,998
   
 
    
2,724
   
 
    
46.8
   
8,824
   
 
    
7,342
   
 
    
20.2
 

FINANCIAL RATIOS  
  
2008
 
2007
 
Var. p.p.
  
Liquidity(1) 
    
0.92
   
1.02
   
(0.10
)
Interest coverage(2) 
    
8.25
   
7.73
   
0.52
 
Leverage(3) 
    
0.79
   
0.88
   
(0.09
)
Capitalization(4) 
    
30.68
%
  
35.05
%
  
(4.37
)

(1)
Total current assets / total current liabilities.          
(2)
Income from operations + depreciation + amortization & other / interest expense, net.    
(3)
Total liabilities / total stockholders' equity.          
(4)
Total debt / long-term debt + stockholders' equity.        
 
Total debt = short-term bank loans + current maturities long-term debt + long-term bank loans and notes payable.
 
October 28, 2008 
6
  
 
 

FEMSA
Consolidated Balance Sheet
As of September 30:

       
  
   
 
 
  
 
  
ASSETS      
    
2008(A)
 
  
2007(B)
 
  
% Increase
  
Cash and cash equivalents      
    
5,754
   
11,137
   
(48.3
)
Accounts receivable      
    
9,035
   
7,268
   
24.3
 
Inventories      
    
11,726
   
9,385
   
24.9
 
Prepaid expenses and other      
    
4,369
   
3,442
   
26.9
 
Total current assets      
    
30,884
   
31,232
   
(1.1
)
Property, plant and equipment, net      
    
57,283
   
53,585
   
6.9
 
Intangible assets(1)     
    
62,631
   
59,868
   
4.6
 
Other assets      
    
17,976
   
15,767
   
14.0
 
TOTAL ASSETS      
    
168,774
   
160,452
   
5.2
 
       
              
LIABILITIES & STOCKHOLDERS´ EQUITY    
                    
Bank loans      
    
2,493
   
3,478
   
(28.3
)
Current maturities long-term debt      
    
5,896
   
5,695
   
3.5
 
Interest payable      
    
380
   
477
   
(20.3
)
Operating liabilities      
    
24,773
   
20,875
   
18.7
 
Total current liabilities      
    
33,542
   
30,525
   
9.9
 
Long-term debt (2)     
    
29,904
   
32,009
   
(6.6
)
Labor liabilities      
    
2,754
   
3,412
   
(19.3
)
Other liabilities      
    
7,671
   
9,033
   
(15.1
)
Total liabilities      
    
73,871
   
74,979
   
(1.5
)
Total stockholders’ equity      
    
94,903
   
85,473
   
11.0
 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
    
168,774
   
160,452
   
5.2
 

(1)
Includes mainly the intangible assets generated by acquisitions.    
(A)
Mexican Pesos for the end of 2008.      
(B)
Constant Mexican Pesos as of Decmber 31, 2007      
(2)
Includes the effect of derivative financial instruments on long-term debt.  

   
  
September 30, 2008
  
DEBT MIX  
    
Ps.
 
 
% Integration
 
 
Average Rate
  
Denominated in:  
              
Mexican pesos  
    
30,541
   
79.8
%
  
9.1
%
Dollars  
    
6,373
   
16.6
%
  
5.8
%
Argentinan pesos  
    
654
   
1.7
%
  
16.6
%
Venezuelan bolivars  
    
385
   
1.0
%
  
24.3
%
Brazilian Reals  
    
340
   
0.9
%
  
13.2
%
Total debt  
    
38,293
   
100.0
%
  
8.9
%
   
              
Fixed rate(1) 
    
27,123
   
70.8
%
    
Variable rate(1) 
    
11,170
   
29.2
%
    

% of Total Debt
  
2008
 
2009
 
2010
 
2011
 
2012
 
2013
 
2014+
 
DEBT MATURITY PROFILE
    
6.0
%
  
16.1
%
  
7.9
%
  
11.6
%
  
21.5
%
  
19.4
%
  
17.5
%

(1)
Includes the effect of interest rate swaps.                
 
October 28, 2008 
7
  
 
 


Coca-Cola FEMSA
Results of Operations
Millions of Pesos

   
  
For the third quarter of:
 
For the nine months of:
  
   
  
2008 (A)
  
% of rev.
  
2007 (B)
  
% of rev.
  
% Increase  
  
2008 (A)
  
% of rev.
  
2007 (B)
  
% of rev.
  
% Increase
  
Total revenues  
    
19,770
   
100.0
   
17,264
   
100.0
   
14.5
   
56,248
   
100.0
   
50,899
   
100.0
   
10.5
 
Cost of sales  
    
10,374
   
52.5
   
8,789
   
50.9
   
18.0
   
29,349
   
52.2
   
26,528
   
52.1
   
10.6
 
Gross profit  
    
9,396
   
47.5
   
8,475
   
49.1
   
10.9
   
26,899
   
47.8
   
24,371
   
47.9
   
10.4
 
Administrative expenses  
    
976
   
4.9
   
987
   
5.7
   
(1.1
)
  
2,869
   
5.1
   
2,741
   
5.4
   
4.7
 
Selling expenses  
    
5,226
   
26.4
   
4,592
   
26.6
   
13.8
   
14,782
   
26.3
   
13,378
   
26.3
   
10.5
 
Operating expenses  
    
6,202
   
31.3
   
5,579
   
32.3
   
11.2
   
17,651
   
31.4
   
16,119
   
31.7
   
9.5
 
Income from operations  
    
3,194
   
16.2
   
2,896
   
16.8
   
10.3
   
9,248
   
16.4
   
8,252
   
16.2
   
12.1
 
Depreciation  
    
468
   
2.4
   
428
   
2.5
   
9.3
   
1,385
   
2.5
   
1,246
   
2.4
   
11.2
 
Amortization & other  
    
345
   
1.7
   
335
   
1.9
   
3.0
   
969
   
1.7
   
1,004
   
2.0
   
(3.5
)
EBITDA  
    
4,007
   
20.3
   
3,659
   
21.2
   
9.5
   
11,602
   
20.6
   
10,502
   
20.6
   
10.5
 
Capital expenditures
   
1,447
         
1,018
         
42.1
   
2,640
         
2,385
         
10.7
 
 
(A)
Average Mexican Pesos of 2008.                        
(B)
Constant Mexican Pesos as of Decmber 31, 2007                        

Sales volumes
                                         
(Millions of unit cases)  
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
Mexico  
    
293.2
   
51.3
   
286.1
   
54.2
   
2.5
   
866.1
   
52.7
   
838.2
   
53.7
   
3.3
 
Latincentro  
    
137.6
   
24.0
   
131.7
   
25.0
   
4.5
   
397.3
   
24.2
   
391.3
   
25.0
   
1.5
 
Mercosur  
    
141.6
   
24.7
   
109.9
   
20.8
   
28.8
   
379.6
   
23.1
   
332.9
   
21.3
   
14.0
 
Total  
    
572.4
   
100.0
   
527.7
   
100.0
   
8.5
   
1,643.0
   
100.0
   
1,562.4
   
100.0
   
5.2
 
 
October 28, 2008 
8
  
 
 


FEMSA Cerveza
Results of Operations
Millions of Pesos

   
  
For the third quarter of:
 
For the nine months of:
  
   
  
2008 (A)
  
% of rev.
  
2007 (B)
  
% of rev.
  
% Increase  
  
2008 (A)
  
% of rev.
  
2007 (B)
  
% of rev.
  
% Increase
  
Sales:  
                                          
Mexico  
    
7,346
   
69.0
   
7,053
   
70.0
   
4.2
   
21,416
   
69.3
   
20,068
   
69.2
   
6.7
 
Brazil  
    
1,529
   
14.4
   
1,341
   
13.3
   
14.0
   
4,347
   
14.1
   
3,970
   
13.7
   
9.5
 
Export  
    
915
   
8.6
   
890
   
8.9
   
2.8
   
2,666
   
8.6
   
2,621
   
9.1
   
1.7
 
Beer sales  
    
9,790
   
92.0
   
9,284
   
92.2
   
5.5
   
28,429
   
92.0
   
26,659
   
92.0
   
6.6
 
Other revenues  
    
857
   
8.0
   
790
   
7.8
   
8.5
   
2,464
   
8.0
   
2,329
   
8.0
   
5.8
 
Total revenues  
    
10,647
   
100.0
   
10,074
   
100.0
   
5.7
   
30,893
   
100.0
   
28,988
   
100.0
   
6.6
 
Cost of sales  
    
4,898
   
46.0
   
4,528
   
44.9
   
8.2
   
14,115
   
45.7
   
13,060
   
45.1
   
8.1
 
Gross profit  
    
5,749
   
54.0
   
5,546
   
55.1
   
3.7
   
16,778
   
54.3
   
15,928
   
54.9
   
5.3
 
Administrative expenses  
    
1,014
   
9.5
   
1,059
   
10.5
   
(4.2
)
  
3,052
   
9.9
   
3,185
   
11.0
   
(4.2
)
Selling expenses  
    
3,227
   
30.3
   
2,844
   
28.3
   
13.5
   
9,792
   
31.7
   
8,863
   
30.5
   
10.5
 
Operating expenses  
    
4,241
   
39.8
   
3,903
   
38.8
   
8.7
   
12,844
   
41.6
   
12,048
   
41.5
   
6.6
 
Income from operations  
    
1,508
   
14.2
   
1,643
   
16.3
   
(8.2
)
  
3,934
   
12.7
   
3,880
   
13.4
   
1.4
 
Depreciation  
    
427
   
4.0
   
413
   
4.1
   
3.4
   
1,265
   
4.1
   
1,236
   
4.3
   
2.3
 
Amortization & other  
    
570
   
5.3
   
597
   
5.9
   
(4.5
)
  
1,903
   
6.2
   
1,802
   
6.2
   
5.6
 
EBITDA  
    
2,505
   
23.5
   
2,653
   
26.3
   
(5.6
)
  
7,102
   
23.0
   
6,918
   
23.9
   
2.7
 
Capital expenditures  
    
1,671
         
1,141
         
46.5
   
4,250
         
3,407
         
24.7
 
                         
(A)
Average Mexican Pesos of 2008.                        
(B)
Constant Mexican Pesos as of Decmber 31, 2007                        

Sales volumes  
  
 
  
 
  
 
  
 
  
   
  
 
  
 
  
 
  
 
  
 
  
(Thousand hectoliters)  
                                          
Mexico  
    
6,756.8
   
67.1
   
6,888.2
   
69.2
   
(1.9
)
  
20,274.8
   
67.5
   
19,792.4
   
68.6
   
2.4
 
Brazil  
    
2,370.0
   
23.5
   
2,194.5
   
22.1
   
8.0
   
7,035.0
   
23.4
   
6,535.7
   
22.7
   
7.6
 
Exports  
    
948.8
   
9.4
   
862.7
   
8.7
   
10.0
   
2,727.1
   
9.1
   
2,512.9
   
8.7
   
8.5
 
Total  
    
10,075.6
   
100.0
   
9,945.4
   
100.0
   
1.3
   
30,036.9
   
100.0
   
28,841.0
   
100.0
   
4.1
 
   
                                          
Price per hectoliter  
                                          
Mexico  
    
1,087.2
       
1,023.9
       
6.2
   
1,056.3
       
1,013.9
       
4.2
 
Brazil  
    
645.1
       
611.1
       
5.6
   
617.9
       
607.4
       
1.7
 
Exports  
    
964.4
         
1,031.6
         
(6.5
)
  
977.6
         
1,043.0
         
(6.3
)
Total  
    
971.7
         
933.5
         
4.1
   
946.5
         
924.3
         
2.4
 
   
                                          
Precio por hectolitro en moneda local
                                          
Brasil (Reales)
    
104.0
         
99.5
         
4.5
   
99.1
         
99.0
         
0.1
 
Exportación (USD)
    
94.2
         
92.2
         
2.2
   
93.7
         
92.7
         
1.1
 
 
October 28, 2008 
9
  
 
 


FEMSA Comercio
Results of Operations
Millions of Pesos

 
 
For the third quarter of:
 
For the nine months of:
 
   
 
2008 (A)
 
% of rev.
 
2007 (B)
 
% of rev.
 
% Increase  
 
2008 (A)
 
% of rev.
 
2007 (B)
 
% of rev.
 
% Increase
  
Total revenues  
    
12,286
   
100.0
   
11,177
   
100.0
   
9.9
   
34,941
   
100.0
   
31,121
   
100.0
   
12.3
 
Cost of sales  
    
8,460
   
68.9
   
8,081
   
72.3
   
4.7
   
24,559
   
70.3
   
22,652
   
72.8
   
8.4
 
Gross profit  
    
3,826
   
31.1
   
3,096
   
27.7
   
23.6
   
10,382
   
29.7
   
8,469
   
27.2
   
22.6
 
Administrative expenses  
    
201
   
1.6
   
177
   
1.6
   
13.6
   
617
   
1.8
   
555
   
1.8
   
11.2
 
Selling expenses  
    
2,830
   
23.0
   
2,310
   
20.7
   
22.5
   
7,827
   
22.4
   
6,491
   
20.8
   
20.6
 
Operating expenses  
    
3,031
   
24.6
   
2,487
   
22.3
   
21.9
   
8,444
   
24.2
   
7,046
   
22.6
   
19.8
 
Income from operations  
    
795
   
6.5
   
609
   
5.4
   
30.5
   
1,938
   
5.5
   
1,423
   
4.6
   
36.2
 
Depreciation  
    
167
   
1.4
   
139
   
1.2
   
20.1
   
486
   
1.4
   
397
   
1.3
   
22.4
 
Amortization & other  
    
117
   
0.9
   
104
   
1.0
   
12.5
   
336
   
1.0
   
317
   
1.0
   
6.0
 
EBITDA  
    
1,079
   
8.8
   
852
   
7.6
   
26.6
   
2,760
   
7.9
   
2,137
   
6.9
   
29.2
 
Capital expenditures  
    
765
          
503
          
52.1
   
1,763
          
1,387
          
27.1
 

(A)
Average Mexican Pesos of 2008.
(B)
Constant Mexican Pesos as of Decmber 31, 2007                    

Information of Convenience Stores  
  
 
  
 
  
   
  
 
  
 
  
 
  
Total stores  
                
6,088
   
5,237
   
16.2
 
Net new convenience stores  
    
237
   
140
   
69.3
   
851
   
755
   
12.7
 
Same store data: (1) 
                          
Sales (thousands of pesos)  
    
644.7
   
665.8
   
(3.2
)
  
640.5
   
636.9
   
0.6
 
Traffic  
    
25.3
   
22.6
   
11.9
   
24.6
   
21.6
   
13.9
 
Ticket  
    
25.5
   
29.5
   
(13.6
)
  
26.1
   
29.4
   
(11.2
)

(1)
Monthly average information per store, considering same stores with at least 13 months of operations.                 
 
October 28, 2008 
10
  
 
 


FEMSA
Macroeconomic Information

 
  
 
 
 
 
 
 
Exchange Rate
 
 
 
Inflation
 
as of September 30, 2008
 
as of September 30, 2007
 
 
 
 
 
September 07 -
 
December 07 -
 
 
 
 
 
 
 
 
 
 
 
3Q 2008
 
September 08
 
September 08
 
Per USD
 
Per Mx. Peso
 
Per USD
 
Per Mx. Peso
 
Mexico
    
1.83
%
  
5.47
%
  
3.90
%
  
10.79
   
1.0000
   
10.92
   
1.0000
 
Colombia
    
0.48
%
  
7.57
%
  
6.53
%
  
2,174.62
   
0.0050
   
2,023.19
   
0.0054
 
Venezuela
    
5.81
%
  
34.43
%
  
21.74
%
  
2.15
   
5.0195
   
2,150.00
   
0.0051
 
Brazil
    
0.94
%
  
7.04
%
  
5.25
%
  
1.91
   
5.6375
   
1.84
   
5.9382
 
Argentina
    
1.35
%
  
8.69
%
  
6.06
%
  
3.14
   
3.4424
   
3.15
   
3.4668
 
 
October 28, 2008 
11
  
 

2008 THIRD-QUARTER AND FIRST NINE MONTHS RESULTS

   
Third Quarter
      
YTD
      
   
2008
  
2007
  
Δ%
  
2008
  
2007
  
Δ%
  
Total Revenues
    
19,770
    
17,264
    
14.5%
 
  
56,248
    
50,899
    
10.5
%
Gross Profit
    
9,396
    
8,475
    
10.9%
 
  
26,899
    
24,371
    
10.4
%
Operating Income
    
3,194
    
2,896
    
10.3%
 
  
9,248
    
8,252
    
12.1
%
Majority Net Income
    
1,252
    
1,940
    
-35.5%
 
  
4,747
    
4,984
    
-4.8
%
EBITDA(1)
    
4,007
    
3,659
    
9.5%
 
  
11,602
    
10,502
    
10.5
%
                                       
Net Debt (2)
    
12,209
    
11,374
    
7.3%
 
                  
                                        
(3) EBITDA/ Interest Expense, net
    
10.04
    
8.43
                          
(3) EBITDA/ Interest Expense
    
7.57
    
6.35
                          
(4) Earnings per Share
    
0.68
    
1.05
                          
Capitalization(5)
    
24.3
%
  
29.2
%
                        

Expressed in million of Mexican pesos. Figures of 2007 are expresed with purchasing power as of December 31, 2007
(1) EBITDA = Operating income + Depreciation + Amortization & Other operative Non-cash Charges.
See reconciliation table on page 10 except for Earnings per Share
(2) Net Debt = Total Debt - Cash
(3) LTM figures
(4) On a quarterly basis
(5) Total debt / (long-term debt + stockholders' equity)
 
·  Total revenues reached Ps. 19,770 million in the third quarter of 2008, an increase of 14.5% compared to the third quarter of 2007; excluding the positive effect of Refrigerantes Minas Gerais (“Remil”), total revenues would have increased 7.0% compared to the third quarter of 2007.
·  Driven by double digit operating income growth from our Mercosur division, consolidated operating income increased 10.3% to Ps. 3,194 million for the third quarter of 2008. Our operating margin reached 16.2% for the third quarter of 2008.
·  Consolidated majority net income decreased 35.5% to Ps. 1,252 million in the third quarter of 2008, resulting in earnings per share of Ps. 0.68 in the third quarter of 2008.
 
Mexico City (October 23, 2008), Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFL, NYSE: KOF) (“Coca-Cola FEMSA” or the “Company”), the largest Coca-Cola bottler in Latin America and the second-largest Coca-Cola bottler in the world in terms of sales volume, announces results for the third quarter of 2008.
 
"In the face of today's challenging economic environment, our company was able to deliver double-digit top-line growth this quarter. We continued to integrate our new franchise territory into our existing Brazilian operations with great results. In addition to the organic growth of our existing Brazilian operations, this acquisition accounted for half of our company's consolidated incremental top-line for the quarter, reinforcing this important engine for growth. In August, our company and The Coca-Cola Company entered into an agreement to jointly acquire the Brisa bottled water business in Colombia from Bavaria, a subsidiary of SAB Miller; this acquisition, once completed, will enable us to expand our product portfolio to satisfy consumers' preferences and advance our water strategy. We also started to distribute the Jugos Del Valle line of juice-based beverages in Colombia, Panama, and Nicaragua. This new line of business is helping us to introduce innovative new products such as Vallefrut in Mexico." said Carlos Salazar Lomelin, Chief Executive Officer of the company.
October 23, 2008
Page 12
 

CONSOLIDATED RESULTS

Until December 31, 2007, we applied inflationary accounting for all of our operations. Beginning January 1, 2008, in accordance with changes in the Mexican Financial Reporting Standards related to inflation effects, we discontinued inflation accounting for our subsidiaries in Mexico, Guatemala, Panama, Colombia and Brazil. For the rest of our subsidiaries (Argentina, Venezuela, Costa Rica and Nicaragua) we will continue applying the inflationary accounting method. The figures for 2007 are stated in Mexican pesos with purchasing power at December 31, 2007 (instead of being restated as of September 30, 2008 as would have been the case under the previous methodology) taking into account local inflation of each country with reference to the consumer price index and converted from local currency to Mexican pesos using the official exchange rate of December 31, 2007 published by the local central bank of each country.
 
Beginning with the first quarter of 2008, we decided to align our quarterly disclosure based on the way we manage the business. We have regrouped our operations into three divisions: (i) Mexico division, (ii) Latincentro division, which is comprised of the territories we operate in Colombia, Venezuela, Guatemala, Nicaragua, Costa Rica and Panama, and (iii) Mercosur division, which is comprised of the territories we operate in Brazil and Argentina.
 
Our consolidated total revenues increased 14.5% to Ps. 19,770 million in the third quarter of 2008, compared to the third quarter of 2007, as a result of increases in all of our divisions, including the consolidation of the recently acquired franchise Refrigerantes Minas Gerais, Ltda. (“Remil”). Our consolidated average price per unit case increased 4.1% to Ps. 33.42 in the third quarter of 2008 as compared to the same period of 2007, as a result of higher average prices in our Latincentro and Mercosur divisions.
 
Total sales volume increased 8.5% to 572.4 million unit cases in the third quarter of 2008 as compared to the same period of 2007; excluding Remil, total sales volume increased 3.3% mainly driven by incremental volumes from brand Coca-Cola, our bottled water business and still beverages. Sparkling beverages sales volume increased 6.6% on a consolidated basis during the quarter, although this number would have grown almost 1.0% without the effect of the inclusion of Remil. Still beverages sales volume grew close to 100%, mainly driven by volumes from the Jugos del Valle brand in our Mexico division, accounting for more than 20% of incremental volumes. Bottled water, including bulk water, grew more than 8% representing the balance.
 
Our gross profit increased 10.9% to Ps. 9,396 million in the third quarter of 2008, compared to the third quarter of 2007, driven by increases in our Mercosur and Latincentro divisions, with Mercosur contributing the majority of the growth. Gross margin reached 47.5% in the third quarter of 2008 as compared to 49.1% in the same period of 2007. The margin decline was mainly driven by (i) lower profitability from the Jugos del Valle line of business as expected this year; (ii) higher sweetener costs in Brazil, Argentina and Venezuela; and (iii) higher PET costs in Mexico, Brazil, Argentina.
 
Our consolidated operating income increased 10.3% to Ps. 3,194 million in the third quarter of 2008, mainly driven by double-digit operating income growth in our Mercosur division. Our operating margin was 16.2% in the third quarter of 2008, a decrease of 60 basis points. Revenue growth and operating leverage partially compensated for higher cost of goods sold.
 
During the third quarter of 2008, we recorded Ps. 562 million in the other expenses line. These expenses were mainly driven by the write off of some fixed assets related to the closing of one of our production facilities in Mexico and the re-allocation of long term employee benefits previously recorded as long term assets in the balance sheet, in accordance with the Mexican Financial Reporting Standards.
 
Our integral result of financing in the third quarter of 2008 recorded an expense of Ps. 514 million as compared to Ps. 7 million in the same period of 2007, mainly due to a foreign exchange expense as applied to our U.S. denominated debt combined with a less favorable monetary position driven by non-inflationary accounting applied to certain divisions of our business.
 
During the third quarter of 2008, income tax, as a percentage of income before taxes, was 38.3%, compared to 28.4% in the same quarter of 2007. This difference was mainly driven by additional tax provisions recorded during the quarter.
 
Our consolidated majority net income decreased by 35.5% to Ps. 1,252 million in the third quarter of 2008 as compared to the third quarter of 2007, driven by an increase in the other expenses line combined with a higher integral result of financing recorded this quarter compared with the same period of last year. Earnings per share (EPS) were Ps. 0.68 (Ps 6.78 per ADR) computed on the basis of 1,846.5 million shares outstanding (each ADR represents 10 local shares). 
 
October 23, 2008
Page 13
 
 
 
BALANCE SHEET
 
As of September 30, 2008, Coca-Cola FEMSA had a cash balance of Ps. 3,530 million, a decrease of Ps. 4,012 million, compared to December 31, 2007, mainly as a result of cash used in the acquisitions of Remil and the Agua de los Angeles jug water business.

Total short-term bank debt was Ps. 4,746 million and long-term debt was Ps. 10,993 million. Total debt decreased Ps. 3,177 million compared with year end 2007 mainly driven by the maturities of our “Certificados Bursatiles” in April and July 2008. As a result of both factors, net debt increased approximately Ps. 835 million compared to year end 2007. KOF’s total debt balance includes dollar denominated debt in the amount of US$ 795 million.

The weighted average cost of debt for the quarter was 7.20%. The following charts set forth the Company’s debt profile by currency and interest rate type and by maturity date as of September 30, 2008:
           
       
% Interest Rate
  
Currency
  
% Total Debt(1)
  
Floating(1)
  
Mexican pesos
    
38.1
%
  
99.0
%
U.S. dollars
    
54.6
%
  
42.8
%
Venezuelan bolivars
    
2.4
%
  
0.0
%
Argentine pesos
    
4.2
%
  
33.7
%
Brazilian Reais
    
0.7
%
  
0.0
%

(1) After giving effect to cross-currency swaps, forwards, and interest rate swaps.

Debt maturity profile
                           
Maturity Date
  
2008
  
2009
  
2010
  
2011
  
2012
  
2013 +
  
% of Total Debt
    
2.8
%
  
27.3
%
  
6.6
%
  
0.1
%
  
24.0
%
  
39.2
%

Consolidated Cash Flow
Expressed in million of Mexican pesos (PS.) and U.S. dollars (USD) as of September 30, 2008
 
  
Jan - Sep 2008
  
 
  
Ps.
  
USD
  
Consolidated Net Income
    
4,900
    
447
  
Non cash charges to net income
    
2,144
    
195
  
 
    
7,044
    
642
  
Change in working capital
    
410
    
37
  
Resources Generated by Operating Activities
    
7,454
    
679
  
Total Investments
    
(5,678
)
  
(517
)
Dividends paid
    
(945
)
  
(86
)
Debt decrease
    
(4,807
)
  
(438
)
Increase in cash and cash equivalents
    
(3,976
)
  
(362
)
Cahs and cash equivalents at begining of period
    
7,542
    
687
  
Translation Effect
    
(36
)
  
(3
)
Cash and cash equivalents at end of period
    
3,530
    
322
  
 
The difference between the reduction in debt of the balance sheet and the debt decrease in nominal terms presented in the cash flow is related to the inflation effect and foreign exchange impact, presented separately in accordance to changes with the Mexican Financial Reporting Standards related to cash flow.
 
October 23, 2008
Page 14
 
 

MEXICO DIVISION OPERATING RESULTS

In November 2007, Coca-Cola FEMSA together with The Coca-Cola Company acquired 100% of Jugos del Valle, S.A.B. de C.V. As of February 2008, we and the rest of the Coca-Cola bottlers are distributing the Jugos del Valle portfolio in our respective territories through the traditional channel. Volume, average price per unit case, cost of goods sold and operating expenses related to these products are recorded in our consolidated and Mexico division operating results. We do not expect to capture any profits from this line of business during 2008.

Revenues
 
Total revenues from our Mexico division increased 1.8% to Ps. 8,533 million in the third quarter of 2008, as compared to the same period of the previous year. Incremental volumes accounted for the incremental revenues during the quarter. Average price per unit case declined to Ps. 28.99, a 0.8% decline, as compared to the third quarter of 2007, reflecting (i) lower volumes in sparkling beverages and higher volumes of brand Coca-Cola in multiserve presentations, which were partially compensated with higher average prices per unit case from our still beverage category. Excluding bulk water under the brands Ciel and Agua de los Angeles, our average price per unit case was Ps. 34.18, a 0.6% increase as compared to the same period of 2007.

Total sales volume increased 2.5% to 293.2 million unit cases in the third quarter of 2008, as compared to the third quarter of 2007, resulting from more than 9% volume growth in our bottled water business and incremental volumes in the still beverage category, increasing more than 200% driven by the Jugos del Valle product line, which more than compensated for a sales volume decline of 1.9% in sparkling beverages.

Operating Income

Our gross profit remained flat at Ps. 4,414 million in the third quarter of 2008 as compared to the same period of 2007. Lower cost of sweeteners year-over-year offset higher PET resin and concentrate costs. Gross margin decreased from 52.6% in the third quarter of 2007 to 51.7% in the same period of 2008, driven by lower profitability from the Jugos del Valle line of business, as expected this year.

Operating income decreased 0.5% to Ps. 1,696 million in the third quarter of 2008, compared to Ps. 1,705 million in the same period of 2007, as a result of revenue growth and lower operating expenses, which partially compensated for higher cost of goods sold. Our operating margin was 19.9% in the third quarter of 2008, a decrease of 40 basis points as compared to the same period of 2007.
 
October 23, 2008
Page 15
 
 
 
LATINCENTRO DIVISION OPERATING RESULTS (Colombia, Venezuela, Guatemala, Nicaragua, Costa Rica and Panama)
 
During this quarter Coca-Cola FEMSA started to distribute Jugos del Valle in Colombia, Panama and Nicaragua. Volume, average price per unit case, cost of goods sold and operating expenses related to these products are recorded in our consolidated and Latincentro division operating results.

Revenues
 
Total revenues reached Ps. 5,768 million in the third quarter of 2008, an increase of 6.7% as compared to the same period of 2007. Volume growth accounted for close to 70% of incremental revenues. Average price per unit case increased 2.2% as a result of higher average prices per unit case in Venezuela which more than compensated for average price per unit case decreases in Colombia and Central America. Average price per unit case increased to Ps. 41.88 in the third quarter of 2008, as compared to the third quarter of 2007.

Total sales volume in our Latincentro division increased 4.5% to 137.6 million unit cases in the third quarter of 2008, as compared to the same period of 2007. Volume increase was mainly driven by (i) the growth of brand Coca-Cola, (ii) growth of flavored sparkling beverages across our territories in the Latincentro division and (iii) the introduction of the Jugos del Valle line of business in Colombia.

Operating Income
 
Gross profit reached Ps. 2,599 million, an increase of 3.3% in the third quarter of 2008, as compared to the same period of 2007. Gross margin declined from 46.5% in the third quarter of 2007 to 45.1% in the same period of 2008. The gross margin decrease of 140 basis points was a consequence of lower revenues in Colombia and higher sweetener cost in Venezuela.

Our operating income increased 3.9% to Ps. 751 million in the third quarter of 2008, compared to the third quarter of 2007, as a result of a tight control of operating expenses in Central America and Colombia which more than offset higher labor costs in Venezuela. Our operating margin reached 13.0% in the third quarter of 2008, resulting in a 40 basis points decrease as compared to the same period of 2007.
 
October 23, 2008
Page 16
 
 
 
MERCOSUR DIVISION OPERATING RESULTS (Brazil and Argentina)

As of June 2008, Coca-Cola FEMSA is including the Remil operations in its Mercosur division. Volume and average price per unit case exclude beer results.

Revenues

Net revenues increased 56.0% to Ps. 5,392 million in the third quarter of 2008, as compared to the same period of 2007. Excluding beer, net revenues increased 52.6% to Ps. 4,870 million in the third quarter of 2008, as compared to the same period of 2007. Higher volumes, including Remil, accounted for more than 60% of incremental net revenues and average price per unit case increase represented the balance. Average price per unit case, excluding beer, increased 18.4% to Ps. 34.40 during the third quarter of 2008. Excluding Remil and beer, net revenues increased 12.1% reaching Ps. 3,578 million. Total revenues from beer in Brazil were Ps. 522 million in the third quarter of 2008, including Remil’s beer sales.

Sales volume, excluding beer, increased 28.8% to 141.6 million unit cases in the third quarter of 2008, as compared to the third quarter of 2007. Sales volume, excluding Remil and beer increased 4.1% to reach 114.4 million unit cases. Sparkling beverages sales volume growth, excluding Remil, accounted for more than 75% of the incremental volumes, driven by brand Coca-Cola and the strong performance of Coca-Cola Zero. Bottled water and still beverages provided the balance. Excluding Remil, Brazil accounted for more than 70% of incremental volumes and Argentina provided the balance.

Operating Income

In the third quarter of 2008, our gross profit increased 54.1% to Ps. 2,383 million, as compared to the same period of the previous year. Our Mercosur gross margin decreased 100 basis points to 43.6% in the third quarter of 2008 mainly driven by higher sweetener and resin costs in Brazil and Argentina, as compared to the same period of last year.

Operating income increased 59.6% reaching Ps. 747 million in the third quarter of 2008, as compared to Ps. 468 million in the same period of 2007. Operating leverage achieved by higher revenues, including Remil, more than compensated for (i) higher expenses related to expansion in our cooler coverage and renewal of our distribution fleet in Brazil, (ii) an increase in sales force to strengthen our presence and execution in certain retail segments in Brazil and iii) higher labor costs in Argentina. Our operating margin was 13.7% in the third quarter of 2008, an increase of 20 basis points as compared to the third quarter of 2007.
 
October 23, 2008
Page 17
 
 

SUMMARY OF NINE-MONTHS RESULTS

Our consolidated total revenues increased 10.5% to Ps. 56,248 million in the first nine months of 2008, as compared to the same period of 2007, as a result of growth in all of our divisions; Mexico and Latincentro accounted for close to 40% of this growth and Mercosur represented the balance. Excluding Remil, our consolidated total revenues increased 7.2% to Ps. 54,566 million. Consolidated average price per unit case increased 4.2% to Ps. 33.30 in the first nine months of 2008. Higher average prices per unit case, mainly in our Mercosur division, combined with the integration of the Jugos del Valle line of business which carries higher average price per unit case in our Mexico division, drove this increase.

Total sales volume increased 5.2% to 1,643.0 million unit cases in the first nine months of 2008, as compared to the same period of the previous year. Sales volume growth in our Mexico and Mercosur divisions accounted for the majority of our incremental volumes. Sparkling beverages sales accounted for more than 60% of incremental volumes and our water business and still beverages, represented the balance. Excluding Remil, total sales volume increased 2.9% to reach 1,608.3 million unit cases.

Our gross profit increased 10.4% to Ps. 26,899 million in the first nine months of 2008, as compared to the same period of the previous year, driven by gross profit growth across all of our divisions. Gross margin reached 47.8% during the first nine months of 2008 remaining flat as compared to the same period of 2007 despite of lower profitability from the Jugos del Valle line of business in Mexico, as expected this year.

Our consolidated operating income increased 12.1% to Ps. 9,248 million in the first nine months of 2008, as compared to the same period of 2007. Our Mercosur and Latincentro divisions accounted for more than 80% of this growth and our Mexico division represented the balance. Our operating margin improved 20 basis points to 16.4% in the first nine months of 2008, mainly driven by the improved operating leverage that resulted from higher revenues and a tight control on expenses.

Our consolidated majority net income was Ps. 4,747 million in the first nine months of 2008 a decrease of 4.8% compared to the same period of 2007. Operating income growth partially offset expenses recorded in the other expenses line in conjunction with a higher integral result of financing as compared with the same period of last year. EPS was Ps. 2.57 (Ps. 25.71 per ADR) in the first nine months of 2008, computed on the basis of 1,846.5 million shares outstanding (each ADR represents 10 local shares). 
 
October 23, 2008
Page 18
 
 
 
RECENT DEVELOPMENTS

·
On August 7, 2008, Coca-Cola FEMSA, S.A.B. de C.V. and The Coca-Cola Company, entered into an agreement to jointly acquire the Colombian Brisa bottled water business (including the Brisa brand and production assets) from Bavaria, a subsidiary of SABMiller. The closing of the transaction is subject to approval from the Colombian anti-trust authorities and compliance by both parties with customary closing conditions. This transaction will enable us to increase our presence in the water business and complement our portfolio. Brisa sold 47 million unit cases in 2007 in Colombia. The purchase price, which will be shared equally by Coca-Cola FEMSA and The Coca-Cola Company, is US$92 million. The parties have also agreed customary arrangements regarding the performance of the business between signing and closing.
 
CONFERENCE CALL INFORMATION
 
Our third-quarter 2008 Conference Call will be held on: October 23, 2008, at 11:30 A.M. Eastern Time (10:30 A.M. Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 866-700-7477 or International: 617-213-8840. We invite investors to listen to the live audiocast of the conference call on the Company’s website, www.coca-colafemsa.com
 
If you are unable to participate live, an instant replay of the conference call will be available through October 30, 2008. To listen to the replay, please dial: Domestic U.S.: 888-286-8010 or International: 617-801-6888. Pass code: 72519928.
 
v v v
 
Coca-Cola FEMSA, S.A.B. de C.V. produces and distributes Coca-Cola, Sprite, Fanta, Lift and other trademark beverages of The Coca-Cola Company in Mexico (a substantial part of central Mexico, including Mexico City and southeast Mexico), Guatemala (Guatemala City and surrounding areas), Nicaragua (nationwide), Costa Rica (nationwide), Panama (nationwide), Colombia (most of the country), Venezuela (nationwide), Brazil (greater São Paulo, Campiñas, Santos, the state of Mato Grosso do Sul, part of the state of Goias and Minas Gerais) and Argentina (federal capital of Buenos Aires and surrounding areas), along with bottled water, beer and other beverages in some of these territories. The Company has 31 bottling facilities in Latin America and serves over 1,500,000 retailers in the region. The Coca-Cola Company owns a 31.6% equity interest in Coca-Cola FEMSA.
 
v v v
 
This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance and should be considered as good faith estimates by Coca-Cola FEMSA. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, many of which are outside Coca-Cola FEMSA’s control that could materially impact the Company’s actual performance.
 
References herein to “US$” are to United States dollars. This news release contains translations of certain Mexican peso amounts into U.S. dollars for the convenience of the reader. These translations should not be construed as representations that Mexican peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.
 
U.S. dollar amounts in this report, solely for the convenience of the reader, have been translated from Mexican pesos at the noon day buying rate for pesos as published by the Federal Reserve Bank of New York at September 30, 2008, which exchange rate was Ps. 10.9726 to US $ 1.00.
 
v v v
 
(6 pages of tables to follow)

October 23, 2008
Page 19


 
Consolidated Income Statement                               
Expressed in million of Mexican pesos(1), figures of 2007 are expresed with purchasing power as of December 31, 2007
 
      
 
3Q 08
% Rev
 
3Q 07
% Rev
 
Δ%
 
YTD 08
% Rev
 
YTD 07
% Rev
 
Δ%
  
Volume (million unit cases) (2)
    
572.4
       
527.7
       
8.5
%
  
1,643.0
       
1,562.4
       
5.2
%
Average price per unit case (2)
    
33.42
     
32.11
   
 
    
4.1
%
  
33.30
   
 
    
31.95
   
 
    
4.2
%
Net revenues  
    
19,654
       
17,211
       
14.2
%
  
55,940
       
50,706
       
10.3
%
Other operating revenues (5)
    
116
        
53
   
 
    
118.9
%
  
308
   
 
    
193
   
 
    
59.6
%
Total revenues
    
19,770
   
100
%
  
17,264
   
100
%
  
14.5
%
  
56,248
   
100
%
  
50,899
   
100
%
  
10.5
%
Cost of sales  
    
10,374
   
52.5
%
  
8,789
   
50.9
%
  
18.0
%
  
29,349
   
52.2
%
  
26,528
   
52.1
%
  
10.6
%
Gross profit  
    
9,396
   
47.5
%
  
8,475
   
49.1
%
  
10.9
%
  
26,899
   
47.8
%
  
24,371
   
47.9
%
  
10.4
%
Operating expenses
    
6,202
   
31.4
%
  
5,579
   
32.3
%
  
11.2
%
  
17,651
   
31.4
%
  
16,119
   
31.7
%
  
9.5
%
Operating income
    
3,194
   
16.2
%
  
2,896
   
16.8
%
  
10.3
%
  
9,248
   
16.4
%
  
8,252
   
16.2
%
  
12.1
%
Other expenses, net
    
562
   
 
    
122
   
 
    
360.7
%
  
1,267
   
 
    
523
   
 
    
142.3
%
  Interest expense
    
407
       
491
       
-17.1
%
  
1,566
       
1,682
       
-6.9
%
  Interest income
    
71
       
141
       
-49.6
%
  
357
       
461
       
-22.6
%
  Interest expense, net
    
336
       
350
       
-4.0
%
  
1,209
       
1,221
       
-1.0
%
  Foreign exchange loss (gain)
    
180
       
(24
)
      
-850.0
%
  
(26
)
      
(72
)
      
-63.9
%
  (Gain) on monetary position in Inflationary subsidiries
    
(232
)
      
(312
)
      
-25.6
%
  
(517
)
      
(584
)
      
-11.5
%
  Market value loss (gain) on inefective derivative instruments
    
230
       
(7
)
      
-3385.7
%
  
122
       
(69
)
      
-276.8
%
Integral result of financing
    
514
   
   
    
7
   
  
    
7242.9
%
  
788
   
  
    
496
   
  
    
58.9
%
Income before taxes
    
2,118
   
 
    
2,767
   
 
    
-23.5
%
  
7,193
   
 
    
7,233
   
  
    
-0.6
%
Taxes  
    
812
   
 
    
786
   
 
    
3.3
%
  
2,293
   
 
    
2,101
   
  
    
9.1
%
Consolidated net income
    
1,306
   
 
    
1,981
   
 
    
-34.1
%
  
4,900
   
 
    
5,132
   
  
    
-4.5
%
Majority net income
    
1,252
   
6.3
%
  
1,940
   
11.2
%
  
-35.5
%
  
4,747
   
8.4
%
  
4,984
   
9.8
%
  
-4.8
%
Minority net income
    
54
   
 
    
41
   
 
    
31.7
%
  
153
   
 
    
148
   
  
    
3.4
%
Operating income
    
3,194
   
16.2
%
  
2,896
   
16.8
%
  
10.3
%
  
9,248
   
16.4
%
  
8,252
   
16.2
%
  
12.1
%
Depreciation  
    
468
       
428
       
9.3
%
  
1,385
       
1,246
       
11.2
%
Amortization and other operative non-cash charges (3)
    
345
   
 
    
335
   
 
    
3.0
%
  
969
   
 
    
1,004
   
 
    
-3.5
%
EBITDA (4) 
    
4,007
   
20.3
%
  
3,659
   
21.2
%
  
9.5
%
  
11,602
   
20.6
%
  
10,502
   
20.6
%
  
10.5
%

(1) Except volume and average price per unit case figures.                                
(2) Sales volume and average price per unit case exclude beer results                                
(3) Includes returnable bottle breakage expense. 
(4) EBITDA = Operating Income + depreciation, amortization & other operative non-cash charges.
(5) Since november 2007, we integrated Complejo Industrial CAN, S.A. (CICAN) a can bottling facility in Argentina.
Since June 2008, we integrated Minas Gerais (Remil) in Brazil.
 October 23, 2008
Page 20 
                                    
 
 
Consolidated Balance Sheet    
Expressed in million of Mexican pesos, figures of 2007 are expresed with purchasing power as of December 31, 2007
 
Assets
  
 
  
Sep 08
  
 
  
Dec 07
  
Current Assets
                  
Cash and cash equivalents
    
Ps.
    
3,530
   
Ps.
    
7,542
 
Total accounts receivable
          
4,200
         
4,706
 
Inventories
          
4,407
         
3,418
 
Prepaid expenses and other
           
1,735
          
1,792
 
Total current assets
          
13,872
         
17,458
 
Property, plant and equipment
                          
Bottles and cases
          
1,444
         
1,175
 
Property, plant and equipment
          
38,945
         
37,420
 
Accumulated depreciation
           
(17,317
)
         
(16,672
)
Total property, plant and equipment, net
          
23,072
         
21,923
 
Investment in shares
          
1,516
         
1,476
 
Deferred charges, net
          
1,342
         
1,255
 
Intangibles assets and other assets
           
47,809
          
45,066
 
Total Assets
    
Ps.
    
87,611
   
Ps.
    
87,178
 
                           
                           
Liabilities and Stockholders' Equity
          
Sep 08
          
Dec 07
  
Current Liabilities
                          
Short-term bank loans and notes
   
Ps.
    
4,746
   
Ps.
    
4,814
 
Interest payable
          
173
         
274
 
Suppliers
          
6,567
         
6,100
 
Other current liabilities
           
5,492
          
5,009
 
Total Current Liabilities
          
16,978
         
16,197
 
Long-term bank loans
          
10,993
         
14,102
 
Pension plan and seniority premium
          
850
         
993
 
Other liabilities
           
5,014
          
5,105
 
Total Liabilities
          
33,835
         
36,397
 
Stockholders' Equity
                  
Minority interest
          
1,627
         
1,641
 
Majority interest:
                          
Capital stock
          
3,116
         
3,116
 
Additional paid in capital
          
13,333
         
13,333
 
Retained earnings of prior years
          
34,662
         
27,930
 
Net income for the period
          
4,747
         
6,908
 
Cumulative results of holding non-monetary assets 
 
(3,709
)
         
(2,147
)
Total majority interest
           
52,149
         
49,140
 
Total stockholders' equity
           
53,776
         
50,781
 
Total Liabilities and Equity
    
Ps.
    
87,611
   
Ps.
    
87,178
 

October 23, 2008
Page 21 

 

Mexico Division                                
Expressed in million of Mexican pesos(1), figures of 2007 are expresed with purchasing power as of December 31, 2007
                               
  
 
3Q 08
 
% Rev
 
3Q 07
 
% Rev
 
Δ%
 
YTD 08
 
% Rev
 
YTD 07
 
% Rev
 
Δ%
  
Volume (million unit cases)
    
293.2
       
286.1
       
2.5
%
  
866.1
       
838.2
       
3.3
%
Average price per unit case
   
28.99
       
29.21
       
-0.8
%
  
29.16
       
29.05
       
0.4
%
Net revenues
    
8,499
       
8,357
       
1.7
%
  
25,254
       
24,352
       
3.7
%
Other operating revenues
    
34
   
   
    
29
   
 
    
17.2
%
  
96
   
 
    
122
   
 
    
-21.3
%
Total revenues
    
8,533
   
100.0
%
  
8,386
   
100.0
%
  
1.8
%
  
25,350
   
100.0
%
  
24,474
   
100.0
%
  
3.6
%
Cost of sales
    
4,119
   
48.3
%
  
3,973
   
47.4
%
  
3.7
%
  
12,321
   
48.6
%
  
11,802
   
48.2
%
  
4.4
%
Gross profit
    
4,414
   
51.7
%
  
4,413
   
52.6
%
  
0.0
%
  
13,029
   
51.4
%
  
12,672
   
51.8
%
  
2.8
%
Operating expenses
    
2,718
   
31.9
%
  
2,708
   
32.3
%
  
0.4
%
  
8,155
   
32.2
%
  
7,917
   
32.3
%
  
3.0
%
Operating income
    
1,696
   
19.9
%
  
1,705
   
20.3
%
  
-0.5
%
  
4,874
   
19.2
%
  
4,755
   
19.4
%
  
2.5
%
Depreciation, amortization & other operative non-cash charges (2)
    
384
   
4.5
%
  
427
   
5.1
%
  
-10.1
%
  
1,226
   
4.8
%
  
1,260
   
5.1
%
  
-2.7
%
EBITDA (3)
    
2,080
   
24.4
%
  
2,132
   
25.4
%
  
-2.4
%
  
6,100
   
24.1
%
  
6,015
   
24.6
%
  
1.4
%
                                     
(1) Except volume and average price per unit case figures.                                
(2) Includes returnable bottle breakage expense.
(3) EBITDA = Operating Income + Depreciation, amortization & other operative non-cash charges.

Latincentro Division                                
Expressed in million of Mexican pesos(1) figures of 2007 are expresed with purchasing power as of December 31, 2007
   
 
 
3Q 08
 
% Rev
 
3Q 07
 
% Rev
 
Δ%
 
YTD 08
 
% Rev
 
YTD 07
 
% Rev
 
Δ%
  
Volume (million unit cases)
    
137.6 
        
131.7 
        
4.5
%
  
397.3
       
391.3
       
1.5
%
Average price per unit Case
   
41.88
       
40.98
       
2.2
%
  
42.70
       
40.53
       
5.3
%
Net revenues
    
5,763
       
5,397
       
6.8
%
  
16,964
       
15,859
       
7.0
%
Other operating revenues
    
5
   
 
    
11
   
 
    
-54.5
%
  
14
   
 
    
27
   
 
    
-48.1
%
Total revenues
    
5,768
   
100.0
%
  
5,408
   
100.0
%
  
6.7
%
  
16,978
   
100.0
%
  
15,886
   
100.0
%
  
6.9
%
Cost of sales
    
3,169
   
54.9
%
  
2,892
   
53.5
%
  
9.6
%
  
9,255
   
54.5
%
  
8,751
   
55.1
%
  
5.8
%
Gross profit
    
2,599
   
45.1
%
  
2,516
   
46.5
%
  
3.3
%
  
7,723
   
45.5
%
  
7,135
   
44.9
%
  
8.2
%
Operating expenses
    
1,848
   
32.0
%
  
1,793
   
33.2
%
  
3.1
%
  
5,376
   
31.7
%
  
5,166
   
32.5
%
  
4.1
%
Operating income
    
751
   
13.0
%
  
723
   
13.4
%
  
3.9
%
  
2,347
   
13.8
%
  
1,969
   
12.4
%
  
19.2
%
Depreciation, amortization & other operative non-cash charges (2)
    
249
   
4.3
%
  
224
   
4.1
%
  
11.2
%
  
663
   
3.9
%
  
664
   
4.2
%
  
-0.2
%
EBITDA (3)
    
1,000
   
17.3
%
  
947
   
17.5
%
  
5.6
%
  
3,010
   
17.7
%
  
2,633
   
16.6
%
  
14.3
%
                                     
(1) Except volume and average price per unit case figures.                                
(2) Includes returnable bottle breakage expense.
(3) EBITDA = Operating Income + Depreciation, amortization & other operative non-cash charges.
                        
October 23, 2008
Page 22 


Mercosur Division                                
Expressed in million of Mexican pesos(1), figures of 2007 are expresed with purchasing power as of December 31, 2007                    
Financial figures include beer results
 
  
 
3Q 08
 
% Rev
 
3Q 07
 
% Rev
 
Δ%
 
YTD 08
 
% Rev
 
YTD 07
 
% Rev
 
Δ%
  
Volume (million unit cases) (2)
    
141.6
       
109.9
       
28.8
%
  
379.6
       
332.9
       
14.0
%
Average price per unit case (2)
    
34.40
       
29.04
       
18.4
%
  
32.89
       
29.18
       
12.7
%
Net revenues
    
5,392
       
3,457
       
56.0
%
  
13,722
       
10,495
       
30.7
%
Other operating revenues (5)
    
77
   
  
   
13
   
 
   
492.3
%
  
198
   
 
   
44
   
 
   
350.0
%
Total revenues
    
5,469
   
100.0
%
  
3,470
   
100.0
%
  
57.6
%
  
13,920
   
100.0
%
  
10,539
   
100.0
%
  
32.1
%
Cost of sales
    
3,086
   
56.4
%
  
1,924
   
55.4
%
  
60.4
%
  
7,773
   
55.8
%
  
5,975
   
56.7
%
  
30.1
%
Gross profit
    
2,383
   
43.6
%
  
1,546
   
44.6
%
  
54.1
%
  
6,147
   
44.2
%
  
4,564
   
43.3
%
  
34.7
%
Operating expenses
    
1,636
   
29.9
%
  
1,078
   
31.1
%
  
51.8
%
  
4,120
   
29.6
%
  
3,036
   
28.8
%
  
35.7
%
Operating income
    
747
   
13.7
%
  
468
   
13.5
%
  
59.6
%
  
2,027
   
14.6
%
  
1,528
   
14.5
%
  
32.7
%
Depreciation, Amortization & Other operative non-cash charges (2)
    
180
   
3.3
%
  
112
   
3.2
%
  
60.7
%
  
465
   
3.3
%
  
326
   
3.1
%
  
42.6
%
EBITDA (4)
    
927
   
17.0
%
  
580
   
16.7
%
  
59.8
%
  
2,492
   
17.9
%
  
1,854
   
17.6
%
  
34.4
%
                                     
(1) Except volume and average price per unit case figures.                                
(2) Sales volume and average price per unit case exclude beer results                                
(3) Includes returnable bottle breakage expense.                                   
(4) EBITDA = Operating Income + Depreciation, amortization & other operative non-cash charges.
(5) Since november 2007, we integrated Complejo Industrial CAN, S.A. (CICAN) a can bottling facility in Argentina.                             
Since June 2008, we integrated Minas Gerais (Remil) in Brazil.
October 23, 2008
Page 23
                                  
 

 

SELECTED INFORMATION
          &# 160;          
For the three months ended September 30, 2008 and 2007
 
Expressed in million of Mexican pesos. Figures of 2007 are expresed with purchasing power as of December 31, 2007

   
3Q 08
  
Capex
    
1,446.8
 
Depreciation
    
468.0
 
Amortization & Other non-cash charges
    
345.0
 

   
3Q 07
  
Capex
    
1,017.6
 
Depreciation
    
428.0
 
Amortization & Other non-cash charges
    
335.0
 

VOLUME
Expressed in million unit cases          

   
3Q 08
 
3Q 07
 
 
 
 
 
Sparkling
 
Water (1)
 
Bulk Water (2)
 
Still (3)
 
Total
 
Sparkling
 
Water (1)
 
Bulk Water (2)
 
Still (3)
 
Total
 
Mexico
    
220.0
    
14.1
    
                     50.1
    
9.0
    
293.2
    
224.3
    
14.4
    
                     44.4
    
3.0
    
286.1
  
Central America
    
28.1
    
1.4
    
-
    
2.4
    
31.9
    
27.5
    
1.3
    
-
    
1.9
    
30.7
  
Colombia
    
42.5
    
2.7
    
2.2
    
1.9
    
49.3
    
43.2
    
2.8
    
2.8
    
0.7
    
49.5
  
Venezuela
    
51.5
    
3.4
    
-
    
1.5
    
56.4
    
46.6
    
3.1
    
-
    
1.8
    
51.5
  
Latincentro
    
122.1
    
7.5
    
2.2
    
5.8
    
137.6
    
117.3
    
7.2
    
2.8
    
4.4
    
131.7
  
Brazil
    
91.7
    
5.0
    
-
    
2.7
    
99.4
    
63.5
    
4.3
    
-
    
1.1
    
68.9
  
Argentina
    
40.3
    
0.6
    
-
    
1.3
    
42.2
    
39.4
    
0.3
    
-
    
1.3
    
41.0
  
Mercosur
    
132.0
    
5.6
    
-
   
4.0
    
141.6
    
102.9
    
4.6
    
-
   
2.4
    
109.9
  
Total
    
474.1
    
27.2
    
52.3
    
18.8
    
572.4
    
444.5
    
26.3
    
47.1
    
9.8
    
527.7
  
(1) Excludes water presentations larger than 5.0 Lt          
(2) Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations        
(3) Still Beverages include flavored water
·
Volume of Brazil, Mercosur division, and Consolidated for quarterly results includes tree months of Remil’s operation, accounting for 27.2 million unit cases.
 
SELECTED INFORMATION         
 
For the nine months ended September 30, 2008 and 2007       
 
Expressed in million of Mexican pesos. Figures of 2007 are expresed with purchasing power as of December 31, 2007    
 
   
YTD 08
  
Capex
    
2,640.4
 
Depreciation
    
1,385.0
 
Amortization & Other non-cash charges
    
969.0
 

   
YTD 07
  
Capex
    
2,384.9
 
Depreciation
    
1,246.0
 
Amortization & Other non-cash charges
    
1,004.0
 

VOLUME
Expressed in million unit cases

   
YTD 08
  
YTD 07
  
   
CSD
  
Water
  
Jug Water
  
Other
  
Total
  
CSD
  
Water(1)
  
Jug Water
  
Other
  
Total
  
Mexico
    
653.9
    
43.2
    
147.2
    
21.9
    
866.1
    
653.3
    
44.2
    
131.8
    
8.9
    
838.2
  
Central America
    
87.5
    
4.2
    
-
    
6.8
    
98.5
    
84.4
    
4.2
    
-
    
5.6
    
94.2
  
Colombia
    
125.2
    
7.6
    
7.3
    
3.2
    
143.3
    
126.9
    
8.1
    
8.2
    
1.9
    
145.1
  
Venezuela
    
142.1
    
8.9
    
-
    
4.5
    
155.5
    
137.2
    
8.6
    
-
    
6.2
    
152.0
  
Latincentro
    
354.8
    
20.7
    
7.3
    
14.5
    
397.3
    
348.5
    
20.9
    
8.2
    
13.7
    
391.3
  
Brazil
    
229.3
    
14.7
    
-
    
5.2
    
249.2
    
190.8
    
14.2
    
-
    
3.4
    
208.4
  
Argentina
    
124.2
    
1.7
    
-
    
4.4
    
130.4
    
120.0
    
0.6
    
-
    
3.9
    
124.5
  
Mercosur
    
353.5
    
16.4
    
-
    
9.6
    
379.6
    
310.8
    
14.8
    
-
    
7.3
    
332.9
  
Total
    
1,362.2
    
80.4
    
154.5
    
46.0
    
1,643.0
    
1,312.6
    
80.0
    
139.9
    
29.9
    
1,562.4
  
(1) Excludes water presentations larger than 5.0 Lt          
(2) Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations        
(3) Still Beverages include flavored water          
 
·
Volume of Brazil, Mercosur division, and Consolidated for the nine months results includes four months of Remil’s operation, accounting for 34.7 million unit cases.
October 23, 2008
 
Page 24


September 2008
Macroeconomic Information

   
Inflation (1)
  
Foreign Exchange Rate
 (local currency per US Dollar) (2)
  
   
LTM
  
3Q 2008
  
YTD
  
September 08
  
Dec 07
  
September 07
  
                           
Mexico
    
5.47
%
  
1.83
%
  
3.90
%
  
10.7920
    
10.8662
    
10.9203
  
Colombia
    
7.57
%
  
0.48
%
  
6.53
%
  
2,174.6200
    
2,014.7600
    
2,023.1900
  
Venezuela (3)
    
34.43
%
  
5.81
%
  
21.74
%
  
2.1500
    
2,150
    
2,150
  
Brazil
   
7.04
%
  
0.94
%
  
5.25
%
  
1.9143
    
1.7713
    
1.8390
  
Argentina
    
8.69
%
  
1.35
%
  
6.06
%
  
3.1350
    
3.1490
    
3.1500
  
 
(1) Source: Mexican inflation is published by Banco de México (Mexican Central Bank).      
(2) Exchange rates at the end of period are the official exchange rates published by the Central Bank of each country.     
(3) In Venezuela since January 1, 2008, the local currency is 'Bolivar Fuerte', 'Bolivar' the former currency, was divided by one thousand.
 
October 23, 2008
 
Page 25

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.

FOMENTO ECONÓMICO MEXICANO, S.A. DE C.V.
   
/s/ Javier Astaburuaga
 
Javier Astaburuaga
 
 
Date: October 28, 2008