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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 2021

 

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 ¨

 

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 ¨ No x

 

If "Yes" is marked, indicate below the file number assigned to the registrant in

connection with Rule 12g3-2(b): 82-_____________

 

 

 

 

 

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.
   
  By: /s/ Eugenio Garza y Garza
  Eugenio Garza y Garza
  Director of Finance and Corporate Development

Date: October, 28, 2021

 

 

 

 

Exhibit 99.1

 

 

 

FEMSA Announces Third Quarter 2021 Results

 

Monterrey, Mexico, October 28, 2021 — Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) (NYSE: FMX; BMV: FEMSAUBD) announced today its operational and financial results for the third quarter of 2021.

 

HIGHLIGHTS

 

·Our results in 3Q20 were significantly impacted by the COVID-19 pandemic and the related changes in consumer mobility and behavior across markets. As we look at our 3Q21 results, the comparison base of 3Q20 is only a partial benchmark. Therefore, to facilitate the reader’s assessment of our business units’ performance in 3Q21, we provide the following table that includes variations versus 3Q19 as well.

 

FINANCIAL SUMMARY FOR THE THIRD QUARTER 2021

Information includes figures in millions of Ps. and variations as change vs. respective period

 

   Revenues   Gross Profit   Income
from Operations		   Same-Store Sales 
   3Q21   % var vs.
3Q20		   % var vs.
3Q19		   3Q21   % var vs.
3Q20		   % var vs.
3Q19		   3Q21   % var vs.
3Q20		   % var vs.
3Q19		   % var vs.
3Q20		   % var vs.
3Q19		 
FEMSA CONSOLIDATED   142,443    12.6%   9.2%   53,094    9.4%   8.6%   12,976    14.3%   2.7%          
FEMSA COMERCIO                                                       
Proximity Division   50,808    11.7%   4.9%   21,009    17.0%   8.4%   4,642    87.6%   5.2%   9.7%   (3.5)%
Health Division   18,319    8.2%   15.1%   5,495    6.7%   17.5%   967    4.8%   49.5%   4.2%   6.4%
Fuel Division (1)   10,349    20.5%   (16.2)%   1,330    12.4%   (10.5)%   417    35.4%   (26.1)%   16.7%   (19.2)%
LOGISTICS & DISTRIBUTION   11,734    N/A    N/A    2,561    N/A    N/A    602    N/A    N/A           
COCA-COLA FEMSA   48,316    3.4%   (0.8)%   21,817    2.1%   0.7%   6,476    (9.0%)   (7.7)%          

 

(1)variations vs. comparable results

 

Eduardo Padilla, FEMSA’s CEO, commented:

 

“During the third quarter, data and sentiment towards the health emergency were still uneven across our markets and some operating restrictions remained in place but began to ease in September. At OXXO, same-store sales were stable sequentially, but profitability showed compelling gains reflecting higher efficiency. Our Health Division continued to benefit from dynamic trading conditions in Chile, as well as solid execution across the platform, while our Fuel Division saw better vehicle mobility trends in Mexico, even if we remained below pre-pandemic levels. For its part, our Logistics and Distribution business reflected improving conditions in Latin America, coupled with an environment in the United States that is steadily improving but a bit more slowly than expected, particularly for certain end-user segments. Finally, Coca-Cola FEMSA delivered solid volume performance in most markets, particularly in South America, and was able to mitigate pressures from supply chain disruption and higher raw material costs. All in all, it seems we are finally turning the corner and can look forward to a more normal 2022.

 

Beyond the short-term, however, our company today is in a much better position than it was last year, and I would dare say, than ever before. Every one of our business units is in solid shape, with considerable avenues for growth, and we have the balance sheet flexibility to pursue our opportunities and execute on our optionality. I am excited and very optimistic about the future of FEMSA, and as I approach my retirement, I am especially thankful to our more than 320,000 colleagues that put in their best effort day after day, and year after year. It has been the honor of my lifetime to work with, and for, you all.”

 

   Follow tomorrow´s event live
 10:00 AM ET Earnings Conference Call

1

 

QUARTERLY RESULTS

Results are compared to the same period of previous year

 

femsa consolidateD

 

FEMSA CONSOLIDATED

3Q21 Financial Summary

(Millions of Ps.)

 

   3Q21   3Q20   Var.   Org. 
Revenues   142,443    126,501    12.6%   11.1%
Income from Operations   12,976    11,355    14.3%   13.4%
Income from Operations Margin (%)   9.1    9.0    10 bps      
Operative Cash Flow (EBITDA)   20,572    18,812    9.4%   8.8%
Operative Cash Flow (EBITDA) Margin (%)   14.4    14.9    -50 bps     
Net Income   16,046    4,691    N.S.      

 

CONSOLIDATED NET DEBT

(Millions of Ps.)

 

As of September 30, 2021  Ps.   US$ 3 
Cash   114,668    5,577 
Short-term debt   5,075    247 
Long-term debt 4   179,327    8,721 
Net debt 4   69,734    3,391 

 

Total revenues increased 12.6% in 3Q21 compared to 3Q20, reflecting growth across our business units coupled with an undemanding comparison base for the quarter, partially offset by increased operating restrictions in Mexico, in connection with the third wave of the COVID-19 pandemic. On an organic1 basis, total revenues increased 11.1%.

 

Gross profit increased 9.4%. Gross margin decreased 110 basis points, mainly driven by a contraction at Coca-Cola FEMSA, and at FEMSA Comercio’s Health and Fuel Divisions, partially offset by an expansion at FEMSA Comercio’s Proximity Division.

 

Income from operations increased 14.3%. On an organic1 basis, income from operations increased 13.4%. Consolidated operating margin increased 10 basis points to 9.1% of total revenues, reflecting margin expansion at FEMSA Comercio’s Proximity and Fuel Divisions, partially offset by margin contractions at Coca-Cola FEMSA and FEMSA Comercio’s Health Division.

 

Our effective income tax rate was 32.6% in 3Q21 compared to 33.2% in 3Q20, and our income tax was Ps. 4,205 million in 3Q21.

 

Net consolidated income increased to Ps. 16,046 million, driven by: i) higher income from operations; ii) higher non-operating income, reflecting dividends received from our investment in JRD; iii) a non-cash foreign exchange gain related to FEMSA’s U.S. dollar-denominated cash position as impacted by the depreciation of the Mexican peso; and iv) an increase in our participation in associates’ results, which mainly reflects the improved results of our investment in Heineken relative to 3Q20, including an exceptional gain recorded by Heineken reflecting a fair value adjustment from one of their investments. This was partially offset by higher interest expense.

 

Net majority income was Ps. 3.94 per FEMSA Unit2 and US$1.92 per FEMSA ADS.

 

Capital expenditures amounted to Ps. 6,713 million, reflecting the reactivation of ongoing investment activities at most of our business units.

 

 

1 Excludes the effects of significant mergers and acquisitions in the last twelve months.

2 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, 2021 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

3 The exchange rate published by the Federal Reserve Bank of New York for September 30, 2021 was 20.5620 MXN per USD.

4 Includes the effect of derivative financial instruments on long-term debt. Excludes long-term leases.

October 28, 2021 2

 

 

 

 

FEMSA COMERCIO – Proximity DIVISION

 

FEMSA COMERCIO – PROXIMITY DIVISION

3Q21 Financial Summary 

(Millions of Ps. except same-stores sales)

 

   3Q21   3Q20   Var. 
Same-store sales (thousands of Ps.)   795    724    9.7%
Revenues   50,808    45,478    11.7%
Income from Operations   4,642    2,474    87.6%
Income from Operations Margin (%)   9.1    5.4    370 bps
Operative Cash Flow (EBITDA)   7,502    5,269    42.4%
Operative Cash Flow (EBITDA) Margin (%)   14.8    11.6    320 bps

 

 

  

Total revenues increased 11.7% in 3Q21 compared to 3Q20, reflecting a 9.7% average same-store sales increase, driven by a 6.8% growth in average customer ticket and an increase of 2.8% in store traffic. These figures reflect an undemanding comparison base coupled with a shift in our sales mix towards home consumption categories and SKUs in connection with the COVID-19 pandemic, partially offset by increased operating restrictions during the quarter. During the quarter, OXXO’s store base expanded by 163 units to reach 364 total net new store openings for the last twelve months. As of September 30, 2021, FEMSA Comercio’s Proximity Division had a total of 19,997 OXXO stores.

 

Gross profit reached 41.3% of total revenues, reflecting more dynamic commercial income activity and promotional programs with our key supplier partners, coupled with sustained growth of the services category including income from financial services.

 

Income from operations amounted to 9.1% of total revenues, driven by higher operating leverage. Operating expenses increased 5.8% to Ps. 16,367 million, below revenues, reflecting cost efficiencies and tight expense control, partially offset by our continuing initiative to gradually shift from commission-based store teams to employee-based teams and an undemanding comparison base in 3Q20 that included extraordinary expenses in connection with the COVID-19 pandemic.

 

October 28, 20213

 

  

FEMSA COMERCIO – HEALTH DIVISION

 

FEMSA COMERCIO – HEALTH DIVISION

3Q21 Financial Summary

(Millions of Ps. except same-stores sales)

 

   3Q21   3Q20   Var. 
Same-store sales (thousands of Ps.)   1,374    1,319    4.2%
Revenues   18,319    16,932    8.2%
Income from Operations   967    923    4.8%
Income from Operations Margin (%)   5.3    5.5    -20 bps
Operative Cash Flow (EBITDA)   1,868    1,846    1.2%
Operative Cash Flow (EBITDA) Margin (%)   10.2    10.9    -70bps

 

 

 

Total revenues increased 8.2% in 3Q21 compared to 3Q20, mainly reflecting higher consumption in Chile coupled with positive trends in our Mexican and Colombian operations, partially offset by a negative currency translation effect related to the depreciation of the Chilean and Colombian pesos relative to the Mexican peso. During the quarter, the Health Division’s store base expanded by 81 units reaching a total of 3,540 points of sale across its territories as of September 30, 2021. This figure reflects the addition of 291 net new store openings for the last twelve months. Same-store sales for drugstores increased an average of 4.2%, reflecting the revenue drivers described above. On a currency-neutral1 basis, total revenues increased 16.4% while same-store sales increased by 16.2%.

 

Gross profit represented 30.0% of total revenues, reflecting: i) higher institutional sales in our operations in Chile and Colombia; and ii) increased promotional activities in our operations in South America. These were partially offset by improved efficiency and more effective collaboration and execution with key supplier partners in Mexico.

 

Income from operations amounted to 5.3% of total revenues. Operating expenses increased 7.1% to Ps. 4,528 million, below revenue growth, reflecting tight expense control and efficiency gains across our operations.

 

 

1 Calculated by translating comparable period figures at the foreign currency exchange rates used in the current period.

 

October 28, 20214

 

  

 

FEMSA COMERCIO – FUEL DIVISION

 

FEMSA COMERCIO – FUEL DIVISION

3Q21 Financial Summary

(Millions of Ps. except same-stations sales)

 

    3Q21    Comparable
3Q20(1)		    Var.*    Reported
3Q20		 
Same-station sales (thousands of Ps.)   6,077    5,206    16.7%   5,206 
Revenues   10,349    8,585    20.5%   8,568 
Income from Operations   417    308    35.4%   316 
Income from Operations Margin (%)   4.0    3.6    40 bps   3.7 
Operative Cash Flow (EBITDA)   656    532    23.3%   540 
Operative Cash Flow (EBITDA) Margin (%)   6.3    6.2    10bps   6.3 
                     
(1) Includes wholesale and distribution operations       
*vs. Comparable Results            

 

 

 

Total revenues increased 20.5% in 3Q21 compared to 3Q20, reflecting a 16.7% average same-station sales increase, driven by a 4.8% growth in the average volume and a 11.4% increase in the average price per liter. This reflects an undemanding comparison base which was affected by reduced vehicle mobility in connection with the COVID-19 pandemic. During the quarter, the Fuel Division added 3 stations, reaching a total of 566 points of sale as of September 30, 2021. This figure reflects the addition of 15 total net new stations for the last twelve months.

 

Gross profit reached 12.9% of total revenues.

 

Income from operations amounted to 4.0% of total revenues. Operating expenses increased 4.3% to Ps. 913 million, below revenues, reflecting tight expense control and positive operating leverage.

 

October 28, 20215

 

 

Logistics and Distribution

 

LOGISTICS AND DISTRIBUTION

3Q21 Financial Summary

(Millions of Ps.)

 

    3Q21 
Revenues   11,734 
Income from Operations   602 
Income from Operations Margin (%)   5.1 
Operative Cash Flow (EBITDA)   1,257 
Operative Cash Flow (EBITDA) Margin (%)   10.7 

 

Total revenues amounted to Ps. 11,734 million, reflecting stable demand dynamics in our operations in Latin America, coupled with a gradual recovery of some end-user segments in the United States.

 

Gross profit reached 21.8% of total revenues, reflecting favorable sales mix and efficiencies in our Latin American operations.

 

Income from operations represented 5.1% of total revenues. Operating expenses totaled Ps. 1,959 million, reflecting high operating leverage driven by tight expense control and efficiencies across markets.

 

October 28, 20216

 

 

 

 

results FOR FIRST Nine MOnths OF 2021 

 

Results are compared to the same period of previous year

 

femsa consolidated

 

FEMSA CONSOLIDATED

Financial Summary for the First Nine Months

(Millions of Ps.) 

 

   2021   2020   Var.   Org. 
Revenues   404,275    363,155    11.3%   7.9%
Income from Operations   36,475    28,323    28.8%   26.9%
Income from Operations Margin (%)   9.0    7.8    120 bps     
Operative Cash Flow (EBITDA)   58,925    51,062    15.4%   13.6%
Operative Cash Flow (EBITDA) Margin (%)   14.6    14.1    50 bps      
Net Income   27,568    3,018    N.S.      

 

Total revenues increased 11.3%. On an organic basis,1 total revenues increased 7.9% reflecting growth across all operations.

 

Gross profit increased 11.4%. Gross margin remained flat at 38.0% of total revenues, reflecting gross margin expansion at Coca-Cola FEMSA and FEMSA Comercio’s Proximity Division, offset by a contraction at FEMSA Comercio’s Health and Fuel Divisions.

 

Income from operations increased 28.8%. On an organic basis,1 income from operations increased 26.9%. Our consolidated operating margin increased 120 basis points to 9.0% of total revenues, reflecting margin expansion at Coca-Cola FEMSA and FEMSA Comercio’s Proximity and Health Division, partially offset by a contraction at FEMSA Comercio’s Fuel Division.

 

Net consolidated income increased to Ps. 27,568 million, reflecting: i) higher income from operations at all our business units; ii) higher non-operating income; and iii) an increase in our participation in associates’ results, which mainly reflects the results of our investment in Heineken, including an exceptional gain recorded by Heineken during the 3Q21, reflecting a fair value adjustment from one of their investments. These were partially offset by higher interest expense.

 

Net majority income per FEMSA Unit2 was Ps. 6.08 (US$2.96 per ADS).

 

Capital expenditures amounted to Ps. 15,254 million, reflecting lower investments at most of our business units.

 

 

1 Excludes the effects of significant mergers and acquisitions in the last twelve months.

2 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, 2021 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

 

October 28, 2021 7

 

 

femsa comercio – PROXIMITY division

 

FEMSA COMERCIO – PROXIMITY DIVISION

Financial Summary for the First Nine Months

(Millions of Ps. except same-stores sales)  

 

   2021   2020   Var. 
Same-store sales (thousands of Ps.)   761    717    6.1%
Revenues   145,076    134,508    7.9%
Income from Operations   11,622    7,113    63.4%
Income from Operations Margin (%)   8.0    5.3    270 bps
Operative Cash Flow (EBITDA)   20,058    15,645    28.2%
Operative Cash Flow (EBITDA) Margin (%)   13.8    11.6    220 bps

 

Total revenues increased 7.9%. OXXO’s same-store sales increased an average of 6.1%, driven by a 10.0% increase in average customer ticket, partially offset by a 3.6% decrease in store traffic.

 

Gross profit reached 41.0% of total revenues.

 

Income from operations amounted to 8.0% of total revenues, reflecting an undemanding comparison base in 2020, driven by the COVID-19 pandemic. Operating expenses increased 3.4% to Ps. 47,899 million.

 

femsa comercio – health division

 

FEMSA COMERCIO – HEALTH DIVISION

Financial Summary for the First Nine Months

(Millions of Ps. except same-stores sales)  

 

   2021   2020   Var. 
Same-store sales (thousands of Ps.)   1,380    1,243    11.0%
Revenues   54,446    47,852    13.8%
Income from Operations   2,833    1,813    56.3%
Income from Operations Margin (%)   5.2    3.8    140 bps
Operative Cash Flow (EBITDA)   5,418    4,454    21.6%
Operative Cash Flow (EBITDA) Margin (%)   10.0    9.3    70 bps

 

Total revenues increased by 13.8%. Same-store sales for drugstores increased by an average of 11.0%, reflecting positive trends in our Mexican, Chilean and Colombian operations, partially offset by strict mobility restrictions across our South American operations.

 

Gross profit reached 29.4% of total revenues.

 

Income from operations amounted to 5.2% of total revenues. Operating expenses increased 6.1% to Ps. 13,165 million.

 

October 28, 2021 8

 

 

 

FEMSA COMERCIO – FUEL DIVISION

 

FEMSA COMERCIO – FUEL DIVISION

Financial Summary for the First Nine Months

(Millions of Ps. except same-stations sales)

 

   2021   Comparable
2020(1)		   Var.*   Reported
2020		 
Same-station sales (thousands of Ps.)   5,703    5,211    9.4%   5,211 
Revenues   28,858    25,824    11.7%   25,808 
Income from Operations   981    923    6.3%   602 
Income from Operations Margin (%)   3.4    3.6    -20 bps    2.3 
Operative Cash Flow (EBITDA)   1,700    1,593    6.7%   1,272 
Operative Cash Flow (EBITDA) Margin (%)   5.9    6.2    -30 bps    4.9 
(1) Includes wholesale and distribution operations            
*vs. Comparable Results                    

 

Total revenues increased 11.7%. Same-station sales increased an average of 9.4%, reflecting a 11.4% increase in the average price per liter, partially offset by a 1.8% decrease in average volume.

 

Gross profit reached 12.8% of total revenues.

 

Income from operations amounted to 3.4% of total revenues. Operating expenses increased 4.3% to Ps. 2,726 million.

 

Logistics and Distribution

 

LOGISTICS AND DISTRIBUTION

Financial Summary for the First Nine Months

(Millions of Ps.)

 

   2021 
Revenues   33,809 
Income from Operations   1,553 
Income from Operations Margin (%)   4.6 
Operative Cash Flow (EBITDA)   3,418 
Operative Cash Flow (EBITDA) Margin (%)   10.1 

 

Total revenues amounted to Ps. 33,809 million, reflecting positive demand dynamics in our operations in Latin America, coupled with gradual recovery trends in the United States. These were partially offset by the negative currency translation effect from the depreciation of the Brazilian Real relative to the Mexican peso.

 

Gross profit reached 21.8% of total revenues, reflecting favorable sales mix and efficiencies in our Latin American operations.

 

Income from operations represented 4.6% of total revenues. Operating expenses totaled Ps. 5,829 million, reflecting high operating leverage driven by tight expense control and efficiencies across markets.

 

October 28, 20219

 

 

coca-cola femsa

 

Coca-Cola FEMSA’s financial results and discussion thereof are incorporated by reference from Coca-Cola FEMSA’s press release, which is attached to this press release or may be accessed by visiting http://www.coca-colafemsa.com

 

RECENT DEVELOPMENTS

 

·On August 31, 2021, FEMSA announced that Envoy Solutions, FEMSA’s specialized distribution subsidiary in the United States, reached an agreement to acquire Daycon Products Co. (“Daycon”), an independent specialized distribution company based in Upper Marlboro, Maryland. Daycon will further expand and strengthen FEMSA’s distribution footprint along the East Coast of the United States, including Washington D.C. and the states of Virginia, West Virginia, Maryland, Delaware, New Jersey and Pennsylvania. This transaction represents another important step in FEMSA’s strategic path to build a leading national distribution platform in the United States. Revenues of the acquired business for the last twelve months as of June 2021, were approximately US$ 75 million. The transaction was successfully closed during September 2021.

 

·On September 8, 2021, FEMSA announced that Envoy Solutions, FEMSA’s specialized distribution subsidiary in the United States, reached an agreement to acquire Penn Jersey Paper Co. (“PJP”), an independent specialized distribution company based in Philadelphia, Pennsylvania. PJP fits well with FEMSA’s distribution footprint along the East Coast, expanding its coverage to include the Philadelphia metro area and New York City. This transaction represents another important step in FEMSA’s strategic path to build a leading national distribution platform in the United States. Revenues of the acquired business for the last twelve months as of June 2021, were over US$ 200 million. The transaction is subject to customary closing conditions and approvals and is expected to close during the fourth quarter of 2021.

 

·On October 18, 2021, FEMSA announced that in accordance with its senior leadership succession planning process, and consistent with previously established timeframes, Eduardo Padilla will retire from his position as FEMSA’s Chief Executive Officer on January 1, 2022. Accordingly, FEMSA’s Board of Directors has appointed Daniel Rodríguez Cofré, currently CEO of FEMSA Comercio, to become FEMSA’s Chief Executive Officer as of January 1, 2022.

 

CONFERENCE CALL INFORMATION:

 

Our Third Quarter 2021 Conference Call will be held on: Friday, October 29, 2021, 10:00 AM Eastern Time (9:00 AM Mexico City Time). To participate in the conference call, please dial: Domestic US: (800) 263 0877; International: +1 (646) 828 8143; Conference Id: 1173151. 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 audio will be available on http://ir.FEMSA.com/results.cfm

 

October 28, 202110

 

 

FEMSA is a company that creates economic and social value through companies and institutions and strives to be the best employer and neighbor to the communities in which it operates. It participates in the retail industry through FEMSA Comercio, comprising a Proximity Division operating OXXO, a small-format store chain, a Health Division, which includes drugstores and related activities, and a Fuel Division, which operates the OXXO Gas chain of retail service stations. In the beverage industry, it participates through Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world by volume; and in the beer industry, as the second largest shareholder of Heineken, one of the world’s leading brewers with operations in over 70 countries. FEMSA also participates in the logistics and distribution industry through its Strategic Business Unit, which additionally provides point-of-sale refrigeration and plastic solutions to its business units and third-party clients. Across its business units, FEMSA has more than 320,000 employees in 13 countries. FEMSA is a member of the Dow Jones Sustainability MILA Pacific Alliance, the FTSE4Good Emerging Index and the Mexican Stock Exchange Sustainability Index, among other indexes that evaluate its sustainability performance.

 

The translations of Mexican pesos into US dollars are included solely for the convenience of the reader, using the noon buying rate for Mexican pesos as published by the Federal Reserve Bank of New York on September 30, 2021, which was 20.5620 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.

 

eight pages of tables and Coca-Cola FEMSA’s press release to follow

 

October 28, 202111

 

 

 

FEMSA

Consolidated Income Statement

Millions of Pesos

 

   For the third quarter of:   For the nine months of: 
   2021   % of rev.   2020   % of rev.   % Var.   % Org.(A)   2021   % of rev.   2020   % of rev.   % Var.   % Org.(A) 
Total revenues   142,443    100.0    126,501    100.0    12.6    11.1    404,275    100.0    363,155    100.0    11.3    7.9 
Cost of sales   89,349    62.7    77,965    61.6    14.6         250,665    62.0    225,301    62.0    11.3      
Gross profit   53,094    37.3    48,536    38.4    9.4         153,610    38.0    137,854    38.0    11.4      
Administrative expenses   6,903    4.8    5,914    4.7    16.7         19,321    4.8    16,189    4.5    19.3      
Selling expenses   33,259    23.4    31,062    24.5    7.1         97,425    24.1    92,199    25.4    5.7      
Other operating expenses (income), net (1)   (44)   -    205    0.2    (121.5)        389    0.1    1,143    0.3    (66.0)     
Income from operations(2)   12,976    9.1    11,355    9.0    14.3    13.4    36,475    9.0    28,323    7.8    28.8    26.9 
Other non-operating expenses (income)   (2,005)        2,554         (178.5)        (3,008)        9,653         (131.2)     
Interest expense   3,983         3,035         31.2         12,718         12,549         1.3      
Interest income   329         528         (37.7)        876         1,846         (52.5)     
Interest expense, net   3,654         2,507         45.8         11,842         10,703         10.6      
Foreign exchange loss (gain)   (1,496)        2,790         (153.6)        (535)        (5,326)        (90.0)     
Other financial expenses (income), net.   (64)        (91)        (29.7)        (351)        (270)        30.0      
Financing expenses, net   2,094         5,206         (59.8)        10,956         5,107         114.5      
Income before income tax and participation in associates results   12,887         3,595          N.S.          28,527         13,563         110.3      
Income tax   4,205    32.6%   1,195    33.2%    N.S.          10,178    36%   11,651    86%   (12.6)     
Participation in associates results(3)   7,364         2,291          N.S.          9,219         1,106          N.S.       
(Loss) Consolidated net income   16,046         4,691          N.S.          27,568         3,018          N.S.       
Net majority income   14,114         3,223          N.S.          21,768         (692)         N.S.       
Net minority income   1,932         1,468         31.6         5,800         3,710         56.3      
                                                             
Operative Cash Flow & CAPEX   2021    % Integral    2020    % Integral    % Inc.    % Org.(A)    2021    % Integral    2020    % Integral    % Inc.    % Org.(A) 
Income from operations   12,976    9.1    11,355    9.0    14.3    13.4    36,475    9.0    28,323    7.8    28.8    26.9 
Depreciation   6,272    4.4    6,304    5.0    (0.5)        18,721    4.6    18,774    5.2    (0.3)     
Amortization & other non-cash charges   1,324    0.9    1,153    0.9    14.8         3,729    1.0    3,965    1.1    (6.0)     
Operative Cash Flow (EBITDA)   20,572    14.4    18,812    14.9    9.4    8.8    58,925    14.6    51,062    14.1    15.4    13.6 
CAPEX   6,713         4,851         38.4         15,254         14,542         4.9      

 

(A) Organic basis (% Org.) excludes the effects of significant mergers and acquisitions in the last twelve months.

(1) Other operating expenses (income), net = other operating expenses (income) +(-) equity method from operated associates.

(2) Income from operations = gross profit - administrative and selling expenses  - other operating expenses (income), net.  

(3) Mainly represents the equity method participation in Heineken´s and Raizen convenience stores results, net.

 

October 28, 202112

 

 

 

FEMSA

Consolidated Balance Sheet

Millions of Pesos

 

   Sep-21   Dec-20   % Inc.                         
ASSETS                                    
Cash and cash equivalents   114,668    107,624    6.5                         
Investments   10,386    662     N.S.                          
Accounts receivable   30,161    28,249    6.8                         
Inventories   47,620    44,034    8.1                         
Other current assets   21,325    20,700    3.0                         
Total current assets   224,160    201,269    11.4                         
Investments in shares   107,646    98,270    9.5                         
Property, plant and equipment, net   112,422    113,106    (0.6)                        
Right of use   55,411    54,747    1.2                         
Intangible assets (1)   153,477    155,501    (1.3)                        
Other assets   68,966    61,955    11.3                         
TOTAL ASSETS   722,082    684,848    5.4                         
                                        
LIABILITIES & STOCKHOLDERS´ EQUITY                                       
Bank loans   2,372    4,469    (46.9)                        
Current maturities of long-term debt   2,703    4,332    (37.6)                        
Interest payable   1,638    2,069    (20.8)                        
Current maturities of long-term leases   6,896    6,772    1.8                         
Operating liabilities   119,091    100,771    18.2                         
Total current liabilities   132,700    118,413    12.1                         
Long-term debt (2)   179,327    174,706    2.6                         
Long-term leases   52,903    51,536    2.7                         
Laboral obligations   7,393    7,253    1.9                         
Other liabilities   24,594    25,753    (4.5)                        
Total liabilities   396,917    377,661    5.1                         
Total stockholders’ equity   325,165    307,187    5.9                         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   722,082    684,848    5.4                         
                                        
   September 30, 2021                 
DEBT MIX (2)   % of Total     Average Rate                     
Denominated in:                              
Mexican pesos   37.2%   7.4%                    
U.S. Dollars   37.1%   3.3%                    
Euros   15.7%   0.7%                    
Colombian pesos   1.0%   3.8%                    
Argentine pesos   0.3%   47.5%                    
Brazilian reais   6.8%   7.5%                    
Chilean pesos   1.1%   3.4%                    
Uruguayan Pesos   0.8%   6.6%                    
Guatemalan Quetzal   0.0%   6.3%                    
Total debt   100.0%   4.9%                    
                               
Fixed rate (2)   93.7%                         
Variable rate (2)   6.3%                         
                               
DEBT MATURITY PROFILE   2021    2022    2023    2024    2025    2026+ 
% of Total Debt   1.0%   1.7%   3.6%   3.4%   1.0%   89.2%

 

(1) Includes mainly the intangible assets generated by acquisitions.

(2) Includes the effect of derivative financial instruments on long-term debt.

 

October 28, 202113

 

 

 

FEMSA Comercio - Proximity Division

Results of Operations

Millions of Pesos

 

   For the third quarter of:   For the nine months of: 
   2021   % of rev.   2020   % of rev.   % Var.   2021   % of rev.   2020   % of rev.   % Var. 
Total revenues   50,808    100.0    45,478    100.0    11.7    145,076    100.0    134,508    100.0    7.9 
Cost of sales   29,799    58.7    27,528    60.5    8.2    85,555    59.0    81,076    60.3    5.5 
Gross profit   21,009    41.3    17,950    39.5    17.0    59,521    41.0    53,432    39.7    11.4 
Administrative expenses   1,464    2.9    1,334    2.9    9.7    4,269    2.9    3,988    3.0    7.0 
Selling expenses   14,831    29.2    14,061    31.0    5.5    43,427    30.0    41,870    31.1    3.7 
Other operating expenses (income), net   72    0.1    81    0.2    (11.1)   203    0.1    461    0.3    (56.0)
Income from operations   4,642    9.1    2,474    5.4    87.6    11,622    8.0    7,113    5.3    63.4 
Depreciation   2,620    5.2    2,600    5.7    0.8    7,760    5.3    7,705    5.7    0.7 
Amortization & other non-cash charges   240    0.5    195    0.5    23.1    676    0.5    827    0.6    (18.3)
Operative cash flow (EBITDA)   7,502    14.8    5,269    11.6    42.4    20,058    13.8    15,645    11.6    28.2 
CAPEX   2,195         1,740         26.2    5,233         5,688         (8.0)
                                                   
Information of OXXO Stores                                                  
Total stores                            19,997         19,633         1.9 
Stores Mexico                            19,719         19,373         1.8 
Stores South America                            278         260         6.9 
                                                   
Net new conveniences stores:                                                  
vs. Last quarter   163         75         117.3                          
Year-to-date   431         303         42.2                          
Last-twelve-months   364         793         (54.1)                         
                                                   
Same-store data: (1)                                                  
Sales (thousands of pesos)   794.6         724.1         9.7    761.1         717.3         6.1 
Traffic (thousands of transactions)   17.6         17.1         2.8    17.3         17.9         (3.6)
Ticket (pesos)   45.1         42.2         6.8    44.1         40.1         10.0 

 

(1) Monthly average information per store, considering same stores with more than twelve months of operations, income from services are included.

 

October 28, 202114

 

 

 

FEMSA Comercio - Health Division

Results of Operations

Millions of Pesos

 

   For the third quarter of:   For the nine months of: 
   2021   % of rev.   2020   % of rev.   % Var.   2021   % of rev.   2020   % of rev.   % Var. 
Total revenues   18,319    100.0    16,932    100.0    8.2    54,446    100.0    47,852    100.0    13.8 
Cost of sales   12,824    70.0    11,783    69.6    8.8    38,448    70.6    33,630    70.3    14.3 
Gross profit   5,495    30.0    5,149    30.4    6.7    15,998    29.4    14,222    29.7    12.5 
Administrative expenses   795    4.3    798    4.7    (0.4)   2,349    4.3    2,465    5.2    (4.7)
Selling expenses   3,653    20.0    3,410    20.1    7.1    10,766    19.8    9,872    20.5    9.1 
Other operating expenses (income), net   80    0.4    18    0.1     N.S.     50    0.1    72    0.2    (30.6)
Income from operations   967    5.3    923    5.5    4.8    2,833    5.2    1,813    3.8    56.3 
Depreciation   698    3.8    744    4.4    (6.2)   2,142    3.9    2,187    4.6    -2.1 
Amortization & other non-cash charges   203    1.1    179    1.0    13.4    443    0.9    454    0.9    (2.4)
Operative cash flow (EBITDA)   1,868    10.2    1,846    10.9    1.2    5,418    10.0    4,454    9.3    21.6 
CAPEX   424         325         30.5    1,009         1,062         (5.0)
                                                   
Information of Stores                                                  
Total Stores                            3,540         3,249         9.0 
Stores Mexico                            1,394         1,290         8.1 
Stores South America                            2,146         1,959         9.5 
                                                   
Net new stores:                                                  
vs. Last quarter   81         60         35.0                          
Year-to-date   172         88         95.5                          
Last-twelve-months   291         119         144.5                          
                                                   
Same-store data: (1)                                                  
   Sales (thousands of pesos)   1,374.3         1,318.8         4.2    1,379.6         1,243.0         11.0 

 

(1) Monthly average information per store, considering same stores with more than twelve months of all the operations of FEMSA Comercio - Health Division.

 

October 28, 202115

 

 

 

FEMSA Comercio - Fuel Division

Results of Operations

Millions of Pesos

 

   For the third quarter of: 
           Comparable (A)   As Reported 
   2021   % of rev.   2020   % of rev.   % Var.   2020   % of rev.   % Var. 
Total revenues   10,349    100.0    8,585    100.0    20.5    8,568    100.0    20.8 
Cost of sales   9,019    87.1    7,402    86.2    21.8    7,401    86.4    21.9 
Gross profit   1,330    12.9    1,183    13.8    12.4    1,167    13.6    14.0 
Administrative expenses   65    0.6    71    0.8    (8.5)   71    0.8    (8.5)
Selling expenses   848    8.3    804    9.4    5.5    780    9.1    8.7 
Other operating expenses (income), net   -    -    -    -    -    -    -    - 
Income from operations   417    4.0    308    3.6    35.4    316    3.7    32.0 
Depreciation   240    2.3    219    2.6    9.6    219    2.6    9.6 
Amortization & other non-cash charges   (1)   -    5    -    (120.0)   5    -    (120.0)
Operative cash flow   656    6.3    532    6.2    23.3    540    6.3    21.5 
CAPEX   40         124         (67.6)   124         (67.6)
                                         
Information of OXXO GAS Service Stations                                        
Total service stations   566         551         2.7                
Net new service stations                                        
vs. Last quarter   3         -         -                
Year-to-date   8         6         33.3                
Last-twelve-months   15         10         50.0                
                                         
Volume (million of liters) total stations   540         509         6.0                
                                         
Same-stations data: (1)                                        
Sales (thousands of pesos)   6,077.0         5,206.1         16.7                
Volume (thousands of liters)   324.5         309.6         4.8                
Average price per liter   18.7         16.8         11.4                

 

(A) Unaudited consolidated financial information

(1) Monthly average information per station, considering same stations with more than twelve months of operations.  

 

FEMSA Comercio - Fuel Division

Results of Operations

Millions of Pesos

 

   For the nine months of: 
           Comparable (A)   As Reported 
   2021   % of rev.   2020   % of rev.   % Var.   2020   % of rev.   % Var. 
Total revenues   28,858    100.0    25,824    100.0    11.7    25,808    100.0    11.8 
Cost of sales   25,151    87.2    22,287    86.3    12.8    22,639    87.7    11.1 
Gross profit   3,707    12.8    3,537    13.7    4.8    3,169    12.3    17.0 
Administrative expenses   211    0.7    178    0.7    18.5    178    0.7    18.5 
Selling expenses   2,521    8.7    2,430    9.4    3.7    2,383    9.3    5.8 
Other operating expenses (income), net   (6)   -    6    -     N.S.     6    -     N.S.  
Income from operations   981    3.4    923    3.6    6.3    602    2.3    63.0 
Depreciation   715    2.5    648    2.5    10.3    648    2.5    10.3 
Amortization & other non-cash charges   4    -    22    0.1    (81.8)   22    0.1    (81.8)
Operative cash flow   1,700    5.9    1,593    6.2    6.7    1,272    4.9    33.6 
CAPEX   209         337         (38.0)   337         (38.0)
                                         
Information of OXXO GAS Service Stations                                        
Total service stations   566         551         2.7                
Net new service stations                                        
vs. Last quarter   3         -         -                
Year-to-date   8         6         33.3                
Last-twelve-months   15         10         50.0                
                                         
Volume (million of liters) total stations   1,539         1,551         (0.8)               
                                         
Same-stations data: (1)                                        
Sales (thousands of pesos)   5,702.8         5,211.4         9.4                
Volume (thousands of liters)   308.1         313.7         (1.8)               
Average price per liter   18.5         16.6         11.4                

 

(A) Unaudited consolidated financial information

(1) Monthly average information per station, considering same stations with more than twelve months of operations.  

 

October 28, 202115

 

 

 

Logistics and Distribution

Results of Operations

Millions of Pesos

 

   For the third quarter of:   For the nine months of: 
   2021   % of rev.   2021   % of rev. 
Total revenues   11,734    100.0    33,809    100.0 
Cost of sales   9,172    78.2    26,427    78.2 
Gross profit   2,561    21.8    7,382    21.8 
Administrative expenses   1,077    9.2    3,232    9.6 
Selling expenses   888    7.6    2,595    7.6 
Other operating expenses (income), net   (6)   (0.1)   2    - 
Income from operations   602    5.1    1,553    4.6 
Depreciation   463    3.9    1,307    3.9 
Amortization & other non-cash charges   192    1.7    558    1.6 
Operative cash flow (EBITDA)   1,257    10.7    3,418    10.1 
CAPEX   108         433      

 

October 28, 202116

 

 

 

Coca-Cola FEMSA

Results of Operations

Millions of pesos

 

   For the third quarter of:   For the nine months of: 
   2021   % of rev.   2020   % of rev.   % Var.   2021   % of rev.   2020   % of rev.   % Var. 
Total revenues   48,316    100.0    46,734    100.0    3.4    141,091    100.0    135,015    100.0    4.5 
Cost of sales   26,499    54.8    25,367    54.3    4.5    76,668    54.3    73,927    54.8    3.7 
Gross profit   21,817    45.2    21,367    45.7    2.1    64,423    45.7    61,088    45.2    5.5 
Administrative expenses   2,653    5.5    2,079    4.4    27.6    6,759    4.8    5,808    4.3    16.4 
Selling expenses   12,877    26.7    12,137    26.0    6.1    37,876    26.9    36,511    27.0    3.7 
Other operating expenses (income), net   (190)   (0.4)   32    0.1     N.S.     168    0.1    796    0.6    (78.9)
Income from operations   6,476    13.4    7,119    15.2    (9.0)   19,620    13.9    17,973    13.3    9.2 
Depreciation   2,202    4.6    2,281    4.9    (3.5)   6,640    4.7    6,853    5.1    (3.1)
Amortization & other non-cash charges   641    1.3    674    1.5    (4.9)   1,899    1.4    2,537    1.9    (25.1)
Operative cash flow (EBITDA)   9,320    19.3    10,075    21.6    (7.5)   28,159    20.0    27,363    20.3    2.9 
CAPEX   3,907         2,397         63.0    8,222         6,262         31.3 
                                                   
Sales volumes                                                  
(Millions of unit cases)                                                  
Mexico and Central America   509.0    59.6    498.7    61.7    2.1    1,526.1    60.9    1,496.7    62.8    2.0 
South America   122.6    14.4    101.3    12.5    21.1    349.3    13.9    298.0    12.5    17.2 
Brazil   222.8    26.1    208.0    25.7    7.1    631.1    25.2    587.5    24.7    7.4 
Total   854.5    100.0    807.9    100.0    5.9    2,506.5    100.0    2,382.2    100.0    5.2 

 

October 28, 202118

 

 

FEMSA

Macroeconomic Information

 

       End-of-period Exchange Rates 
   Inflation   Sep-21   Dec-20 
   3Q 2021   LTM (1) Sep-21   Per USD   Per MXN   Per USD   Per MXN 
Mexico   0.79%   5.87%   20.31    1.0000    19.95    1.0000 
Colombia   0.77%   4.46%   3,834.68    0.0053    3,432.50    0.0058 
Brazil   1.76%   9.80%   5.44    3.7331    5.20    3.8387 
Argentina   5.29%   48.27%   98.74    0.2057    84.15    0.2371 
Chile   1.41%   4.76%   803.59    0.0253    711.24    0.0280 
Euro Zone   0.35%   3.75%   0.85    23.8952    0.81    24.5213 

 

(1) LTM = Last twelve months.

 

October 28, 202119

 

 

 

 

Coca-Cola FEMSA Announces Results for Third Quarter and First Nine Months of 2021

 

Mexico City, October 27, 2021, 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 2021.

 

THIRD QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS

 

·Consolidated volumes increased 5.8% as compared to the third quarter of 2020 and 1.5% as compared to the same period of 2019. This increase was driven mainly by strong volume growth in our territories in South America and Central America, as most of our markets continued to show sequential recovery. These effects were partially offset by flat volume performance in Mexico, driven mainly by unfavorable weather conditions during the quarter.
·Total revenues increased 3.4%, while comparable revenues increased 8.8%, driven by volume growth, pricing initiatives, and favorable price-mix effects. These factors were partially offset by (i) unfavorable currency translation effects; (ii) a tough comparison base due to an entitlement to reclaim tax payments in Brazil; and (iii) a decline in beer revenues related to the partial transition of the beer portfolio in Brazil. Total revenues declined 0.8% versus the same period of 2019.
·Operating income decreased 9.0%, while on a comparable basis decreased 7.0%. This decline was driven mainly by a non-recurring tax income recognized during the third quarter of 2020 and by the normalization of certain operating expenses. These effects were partially offset by our favorable raw material hedging initiatives and the resumption of the recognition of tax credits in Brazil related to the Manaus Free Trade Zone. By normalizing the non-recurring tax effects, our operating income would have increased 6.3%. As compared to the same period of 2019, our operating income decreased 7.7%.
·Majority net income increased 38.8%, as our third quarter 2020 included one-time non-operating expenses of Ps. 1,813 million, mainly related to the sale of our dairy joint venture Estrella Azul in Panama and an impairment recognized in Leão Alimentos, our non-carbonated beverage joint-venture in Brazil.
·Earnings per share1 were Ps. 0.20 (Earnings per unit were Ps. 1.63 and per ADS were Ps. 16.28.).

 

FINANCIAL SUMMARY FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2021

 

Change vs. same period of last year

 

        Total Revenues   Gross Profit  Operating Income  Majority Net Income  
      3Q 2021  YTD 2021  3Q 2021  YTD 2021  3Q 2021  YTD 2021  3Q 2021  YTD 2021  
   Consolidated  3.4% 4.5% 2.1% 5.5% (9.0)% 9.2% 38.8% 39.0%  
As Reported  Mexico & Central America  7.3% 6.6% 6.7% 8.2% (1.6)% 10.4%     
   South America  (1.9)% 1.4% (5.6)% 0.6% (20.6)% 6.4%     
                            
   Consolidated  8.8% 11.1% 6.8% 11.3% (7.0)% 13.3%     
Comparable (2)  Mexico & Central America  9.3% 8.4% 8.6% 9.8% (0.5)% 11.5%     
   South America  8.1% 15.5% 3.5% 14.3% (17.4)% 17.5%     

 

John Santa Maria, Coca-Cola FEMSA’s CEO, commented:

 

“For the third quarter, our focus on affordability and execution enabled us to deliver 5.8% year-on-year volume growth, 1.5% ahead of the volume we achieved during 2019. This performance reflects double-digit volume growth in South America, driven by outstanding performance in Colombia, Brazil, and Argentina. Notably, our stable volume performance in Mexico, due mainly to unfavorable weather, was offset by double-digit growth across all of our territories in Central America. On the profitability front, excluding one-time tax effects in Brazil, our revenue management initiatives together with our favorable raw material hedging strategies enabled us to protect our gross margin in the face of the challenging supply chain and input cost environment that is affecting industries worldwide. This allowed a normalized operating income to increase 6.3%.

 

Moreover, we continue taking important steps across all of our strategic fronts—from portfolio management to sustainable development. In Brazil, we continue to complement our beer portfolio, while in other markets, we began pilot testing additional categories as distribution opportunities. Finally, we are very proud to have successfully issued the first sustainability-linked bonds in the Mexican market, enabling us to align our financial strategy with ambitious water efficiency targets that are now public commitments. We are convinced that we have the right strategy and talent to continue positioning Coca-Cola FEMSA for continuous growth and success for many years to come.”

 

 

(1)Quarterly earnings / outstanding shares. Earnings per share (EPS) were calculated using 16,806.7 million shares outstanding. For the convenience of the reader, as a KOFUBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares), earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOFUBL Units.
(2)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 20 of 35 

 

 

RECENT DEVELOPMENTS

 

·Consistent with the enhancement of our cooperation framework with The Coca-Cola Company and our consumer-centric, multi-category strategy, Coca-Cola FEMSA is running pilot programs to test the distribution of leading spirits and consumer brands in Mexico and Brazil as well as the distribution of leading spirits brands and other alcoholic products in Colombia and Panama. We expect these pilot programs will enable us to assess and learn from new shopper and consumption occasions, and gather the necessary insights to strengthen our value proposition for retailers and consumers in the future. We expect this will complement our reach, joint consumer value proposition, and provide partners with a unique edge to communicate with target consumers. As these are currently pilot tests, further details will be provided in due course.

 

·Following a favorable decision from Brazilian tax authorities, Coca-Cola FEMSA has been entitled to reclaim tax payments made in prior years in Brazil, resulting in a non-recurring positive effect on its third quarter results, affecting mainly other operating revenues and other operating expenses, net. The total amount of non-recurrent tax effects in Brazil in the operating income for the third quarter of 2021 is Ps. 620 million as compared to Ps. 1,609 million during the same period of the previous year. This results in a net unfavorable amount of Ps. 989 million for the third quarter of 2021.

 

·On August 11, 2021, the Company announced that its subsidiary in Brazil, reached an agreement in conjunction with Coca-Cola Andina, to acquire the Brazilian craft beer brand “Therezópolis”.

 

·On September 16, 2021, the Company announced that its subsidiary Spal Indústria Brasileira de Bebidas S.A. and the Coca-Cola System in Brazil had signed an agreement to distribute Estrella Galicia beers in the country. This agreement is consistent with the Coca-Cola System’s long-term strategy to complement its beer portfolio in Brazil.

 

·On September 21, 2021, the Company issued its first sustainability-linked bonds in the Mexican market for a total amount of Ps. 9,400 million. The Company priced bonds at a fixed rate of 7.36% (Mbono+0.34%) for an amount of Ps. 6,965 million due in 7 years, and bonds at a variable rate of TIIE + 0.05% for an amount of Ps. 2,435 million due in 5 years. As part of these bonds, the Company commits to achieve a water use ratio of 1.36 liters of water per liter of beverage produced by 2024 and 1.26 liters by 2026. In the event that such indicators are not met by the dates established in the pricing documents, the interest rate will increase by 25 basis points to remain at 7.61% and TIIE + 0.30%, respectively.

 

·As of September 30, 2021, the Company had a cash position of more than Ps. 50 billion.

 

·On November 3, 2021, Coca-Cola FEMSA will pay the second installment of the 2020 dividend approved for Ps. 0.63 per share (equivalent to Ps. 5.04 per unit).

 

CONFERENCE CALL INFORMATION

 

 

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 21 of 35 

 

 

 

CONSOLIDATED THIRD QUARTER RESULTS

 

 

CONSOLIDATED THIRD QUARTER RESULTS

 

   As Reported   Comparable (1) 
Expressed in millions of Mexican pesos  3Q 2021   3Q 2020   Δ%   Δ% 
Total revenues   48,316    46,734    3.4%   8.8%
Gross profit   21,817    21,367    2.1%   6.8%
Operating income   6,476    7,119    (9.0)%   (7.0)%
Operating cash flow (2)   9,320    10,075    (7.5)%   (4.3)%

 

Volume increased 5.8% to 854.5 million unit cases, driven mainly by strong volume growth in Colombia, Brazil, Argentina, Guatemala, and the rest of our territories in Central America. This growth was partially offset by flat performance in Mexico, which was driven mainly by unfavorable weather conditions. Consolidated volume increased 1.5% versus our 2019 baseline.

 

Total revenues increased 3.4% to Ps. 48,316 million, driven mainly by volume growth, our pricing initiatives, and favorable price-mix effects across our markets. These effects were partially offset by unfavorable currency translation effects from all of our operating currencies, and a reduction in beer sales resulting from the partial transition of our beer portfolio in Brazil. Our total revenues increased despite a tough comparison base that included non-recurring other operating revenues related to an entitlement to reclaim tax payments in Brazil. On a comparable basis, total revenues would have increased 8.8%. Total revenues declined 0.8% versus the same period of 2019.

 

Gross profit increased 2.1% to Ps. 21,817 million, and gross margin contracted 50 basis points to 45.2%. This increase was due to favorable raw material hedging strategies, coupled with revenue management initiatives and the resumption of tax credits on concentrate purchased from the Manaus Free Trade Zone in Brazil. However, these effects were partially offset by an increase in raw material costs and the depreciation in the average exchange rate of most of our operating currencies as applied to our U.S. dollar-denominated raw material costs. On a comparable basis, gross profit would have increased 6.8%. Gross profit increased 0.7% versus the third quarter of 2019.

 

Operating income decreased 9.0% to Ps. 6,476 million, and operating margin contracted 180 basis points to 13.4%. This decrease was driven mainly by the recognition of non-recurring tax effects in Brazil of Ps. 620 million as compared to Ps. 1,609 million recognized during the same period of the previous year, coupled with the normalization of certain operating expenses such as marketing, labor, and maintenance related to the reopening and increased mobility across most of our operations. These effects were partially offset by favorable top-line performance. On a comparable basis, operating income would have decreased 7.0%. Our operating income decreased 7.7% versus our 2019 baseline.

 

 

(1)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.
(2)Operating cash flow = operating income + depreciation + amortization & other operating non-cash charges.

 

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 22 of 35 

 

 

 

 

 

 

Comprehensive financing result recorded an expense of Ps. 1,030 million, compared to an expense of Ps. 1,421 million in the same period of 2020.

 

The Company recorded an interest expense of Ps. 1,613 million as compared to an expense of Ps. 1,701 million in the same period of 2020. This reduction was driven mainly by the payment of short-term financing incurred during the first quarter of 2020 and the payment of a Mexican Peso-denominated bond.

 

Additionally, the Company recorded a foreign exchange gain of Ps. 305 million as compared to a foreign exchange loss of Ps. 135 million recorded during the same period of 2020, as our cash exposure in U.S. dollars was positively impacted by the depreciation of the Mexican Peso and the Brazilian Real during the quarter.

 

These effects were partially offset by a loss in financial instruments of Ps. 42 million recorded during the quarter related to the increase in interest rates in Brazil.

 

Income tax as a percentage of income before taxes was 33.3% as compared to 33.7% during the same period of the previous year. This was driven mainly by the effect of the sale of Estrella Azul in the same period of 2020, partially offset by the effect of higher inflation recognized during the quarter.

 

Net income attributable to equity holders of the company reached Ps. 3,419 million as compared to Ps. 2,463 million during the same period of the previous year. This increase was driven mainly by the one-time non-operative expenses related to the sale of Estrella Azul in Panama and an impairment recognized in Leão Alimentos, our non-carbonated beverage joint venture in Brazil recorded during the same period of 2020. This effect was partially offset by other non-operating expenses of Ps. 296 million recognized during the quarter. Earnings per share1 were Ps. 0.20 (Earnings per unit were Ps. 1.63, and earnings per ADS were Ps. 16.28.).

 

 

(1)Quarterly earnings / outstanding shares. Earnings per share (EPS) for all periods are adjusted to give effect to the stock split resulting in 16,806.7 million shares outstanding. For the convenience of the reader, as a KOFUBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares), earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOFUBL Units.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 23 of 35 

 

 

 

 

CONSOLIDATED FIRST NINE MONTHS RESULTS

 

 

 

CONSOLIDATED FIRST NINE MONTHS RESULTS
                 
   As Reported   Comparable (1) 
Expressed in millions of Mexican pesos  YTD 2021   YTD 2020   Δ%   Δ% 
Total revenues   141,091    135,015    4.5%   11.1%
Gross profit   64,423    61,088    5.5%   11.3%
Operating income   19,620    17,973    9.2%   13.3%
Operating cash flow (2)   28,159    27,363    2.9%   7.7%

 

Volume increased 5.2% to 2,506.5 million unit cases in the first nine months of 2021 as compared to the same period of 2020, driven mainly by gradual recoveries and increases in mobility across our markets. Consolidated volume increased 1.1% as compared with the same period of 2019.

 

Total revenues increased 4.5% to Ps. 141,091 million in the first nine months of 2021 as compared to the same period of 2020, driven mainly by volume growth, coupled with our pricing initiatives and favorable price-mix effects. These factors were partially offset by unfavorable currency translation effects resulting from the depreciation of all of our operating currencies into Mexican Pesos. In addition, during the same period of 2020, we recorded non-recurring other operating revenues related to an entitlement to reclaim tax payments in Brazil. On a comparable basis, total revenues would have increased 11.1%. Total revenues declined 1.0% versus the same period of 2019.

 

Gross profit increased 5.5% to Ps. 64,423 million in the first nine months of 2021 as compared to the same period of 2020, and gross margin expanded 50 basis points to 45.7%. Our raw material hedging initiatives, cost efficiencies, favorable price-mix effects, and the recognition of Ps. 1,083 million related to the resumption of tax credits on concentrate purchased from the Manaus Free Trade Zone in Brazil were partially offset by an unfavorable currency hedging position and the depreciation in the average exchange rate of most of our operating currencies as applied to our U.S. dollar-denominated raw material costs. On a comparable basis, gross profit would have increased 11.3%. Gross profit remained flat versus our 2019 baseline.

  

 

(1)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.
(2)Operating cash flow = operating income + depreciation + amortization & other operating non-cash charges.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 24 of 35 

 

 

 

 

Operating income increased 9.2% to Ps. 19,620 million in the first nine months of 2021 as compared to the same period of 2020, and operating margin expanded 60 basis points to 13.9%. This increase was driven mainly by operating expense efficiencies and an increase in gross profit. These effects were partially offset by the normalization of certain operating expenses such as marketing, labor, and maintenance related to increases in mobility across our operations, coupled with unfavorable currency translation effects. On a comparable basis, operating income would have increased 13.3%. Our operating income increased 3.0% versus our 2019 baseline.

 

Comprehensive financing result recorded an expense of Ps. 3,477 million during the first nine months of 2021 compared to an expense of Ps. 4,889 million in the same period of 2020.

 

Interest expense, net, recorded a decrease during the first nine months of 2021, driven mainly by a one-time interest expense related to our successful debt refinancing initiatives during the first quarter of 2020, coupled with the payment of short-term financings during the first nine months of 2021 and a Mexican Peso-denominated bond. These short-term financings were a preventive measure to reinforce the Company’s cash position in the face of the uncertainties driven by the COVID-19 pandemic.

 

In addition, we recognized a gain in monetary position in inflationary subsidiaries of Ps. 433 million as compared to a gain of Ps. 288 million recorded during the same period of 2020.

 

These effects were partially offset by a lower foreign exchange gain of Ps. 149 million, as compared to a gain of Ps. 357 million registered during the same period of 2020, as our cash exposure to U.S. dollars was positively impacted by the depreciation of the Mexican Peso.  

 

Income tax as a percentage of income before taxes was 35.5% as compared to 32.3% during the first nine months of the previous year. This increase was driven mainly by the effect of higher inflation and the effects of certain changes on tax legislation where we operate offset by a reduction in impairments recognized as compared to the same period of 2020.

 

Net income attributable to equity holders of the company reached Ps. 9,893 million in the first nine months of 2021 as compared to Ps. 7,119 million during the same period of the previous year. This increase was driven mainly by an increase in operating income, coupled with lower financing costs and lower non-operative expenses mainly related to impairments recognized during the first nine months of 2020. Earnings per share1 were Ps. 0.59 (Earnings per unit were Ps. 4.71, and earnings per ADS were Ps. 47.09.).

 

 

(1)Earnings / outstanding shares. Earnings per share (EPS) for all periods are adjusted to give effect to the stock split resulting in 16,806.7 million shares outstanding. For the convenience of the reader, as each KOFUBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares), earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOFUBL Units.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 25 of 35 

 

 

 

 

 

 

MEXICO & CENTRAL AMERICA DIVISION THIRD QUARTER RESULTS

 

(Mexico, Guatemala, Costa Rica, Panama, and Nicaragua)  

 

 

 

MEXICO & CENTRAL AMERICA DIVISION RESULTS
                 
   As Reported   Comparable (1) 
Expressed in millions of Mexican pesos  3Q 2021   3Q 2020   Δ%   Δ% 
Total revenues   28,760    26,807    7.3%   9.3%
Gross profit   14,201    13,303    6.7%   8.6%
Operating income   4,265    4,336    (1.6)%   (0.5)%
Operating cash flow (2)   6,062    6,175    (1.8)%   (0.3)%

 

Volume increased 2.1% to 509.0 million unit cases, driven by double-digit growth in Guatemala, Panama, Nicaragua, and Costa Rica, partially offset by flat performance in Mexico, driven mainly by unfavorable weather conditions. Volume decreased 5.0% versus our 2019 baseline. 

 

Total revenues increased 7.3% to Ps. 28,760 million, driven by volume growth, our pricing initiatives, and favorable price-mix effects. These effects were partially offset by an unfavorable currency translation effect from most of our operating currencies in Central America as translated into Mexican Pesos. On a comparable basis, total revenues would have increased 9.3%. Total revenues grew 2.1% versus the same period of 2019. 

 

Gross profit increased 6.7% to Ps. 14,201 million, and gross margin contracted 20 basis points to 49.4%. This increase was driven mainly by our pricing initiatives, our raw material hedging strategies, and favorable price-mix effects. However, these factors were partially offset by higher concentrate costs in Mexico and an unfavorable currency hedging position. On a comparable basis, gross profit would have increased 8.6%. Gross profit increased 6.1% versus our 2019 baseline. 

 

Operating income decreased 1.6% to Ps. 4,265 million, and operating margin contracted 140 basis points to 14.8%, driven mainly by the normalization of certain operating expenses such as marketing, labor, and maintenance as compared to the same period of 2020. On a comparable basis, operating income would have decreased 0.5%. Our operating income increased 4.1% versus our 2019 baseline. 

 

 

(1)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.
(2)Operating cash flow = operating income + depreciation + amortization & other operating non-cash charges.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 26 of 35 

 

 

 

SOUTH AMERICA DIVISION THIRD QUARTER RESULTS

 

(Brazil, Argentina, Colombia, and Uruguay)  

 

 

 

SOUTH AMERICA DIVISION RESULTS
                 
   As Reported   Comparable (1) 
Expressed in millions of Mexican pesos  3Q 2021   3Q 2020   Δ%   Δ% 
Total revenues   19,556    19,927    (1.9)%   8.1%
Gross profit   7,616    8,064    (5.6)%   3.5%
Operating income   2,211    2,783    (20.6)%   (17.4)%
Operating cash flow (2)   3,258    3,899    (16.5)%   (11.0)%

  

Volume increased 11.7% to 345.5 million unit cases, driven by strong volume growth of 26.8% in Colombia, 15.9% in Argentina, and 7.1% in Brazil. The division’s volume increased 12.7% versus our 2019 baseline. 

 

Total revenues decreased 1.9% to Ps. 19,556 million. This decrease was driven mainly by a tough comparison base due to an entitlement to reclaim tax payments in Brazil, coupled with unfavorable currency translation effects resulting from the depreciation of all of our operating currencies as compared to the Mexican Peso. In addition, the decrease was driven by a reduction in beer revenues as a result of the partial transition of our beer portfolio in Brazil. These effects were partially offset by our volume growth, pricing initiatives, and revenue management. On a comparable basis, total revenues would have increased 8.1%. Total revenues declined 4.8% versus the same period of 2019. 

 

Gross profit decreased 5.6% to Ps. 7,616 million, and gross margin contracted 160 basis points to 38.9%. This margin contraction was driven mainly by the depreciation of the average exchange rate of all our local currencies in the division as applied to our U.S. dollar-denominated raw material costs, higher sugar and freight costs, and the partial transition of our beer portfolio in Brazil. These effects were partially offset by favorable raw material hedging strategies and lower concentrate costs in Brazil related to the resumption of tax credits on concentrate purchased from the Manaus Free Trade Zone. On a comparable basis, gross profit would have increased 3.5%. Gross profit decreased 8.0% versus our 2019 baseline.

   

Operating income decreased 20.6% to Ps. 2,211 million, resulting in a margin contraction of 270 basis points to 11.3%. This reduction was driven mainly by the normalization of marketing, labor, and maintenance expenses and the partial transition of our beer portfolio in Brazil. In addition, this decrease was driven by the recognition of non-recurring tax effects in Brazil of Ps. 620 million as compared to Ps. 1,609 million recognized during the same period of the previous year. These effects were partially offset by an operative foreign exchange gain. On a comparable basis, operating income would have decreased 17.4%. Operating income decreased 24.2% versus our 2019 baseline.

 

 

(1)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.
(2)Operating cash flow = operating income + depreciation + amortization & other operating non-cash charges.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 27 of 35 

 

 

 

 

DEFINITIONS

 

Volume is expressed in unit cases. Unit case refers to 192 ounces of finished beverage product (24 eight-ounce servings) and, when applied to soda fountains, refers to the volume of syrup, powders, and concentrate that is required to produce 192 ounces of finished beverage product.

 

Transactions refers to the number of single units (e.g., a can or a bottle) sold, regardless of their size or volume or whether they are sold individually or in multipacks, except for soda fountains, which represent multiple transactions based on a standard 12 oz. serving.

 

Operating income is a non-GAAP financial measure computed as “gross profit – operating expenses – other operating expenses, net + operative equity method (gain) loss in associates.”

 

Operating cash flow is a non-GAAP financial measure computed as “operating income + depreciation + amortization & other operating non-cash charges.”

 

Earnings per share are equal to “Earnings / outstanding shares.” Earnings per share (EPS) for all periods are adjusted to give effect to the stock split resulting in 16,806,658,096 shares outstanding. For the convenience of the reader, as each KOFUBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares), earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOFUBL Units.

 

COMPARABILITY

 

In an effort to provide our readers with a more useful representation of our company's underlying financial and operating performance, as of the first quarter 2020, we adjusted our methodology to calculate our comparable figures, no longer excluding hyperinflationary operations. Due to this change, our “comparable” term means, with respect to a year-over-year comparison, the change of a given measure excluding the effects of: (i) mergers, acquisitions, and divestitures; and (ii) translation effects resulting from exchange rate movements. In preparing this measure, management has used its best judgment, estimates, and assumptions in order to maintain comparability.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 28 of 35 

 

 

 

 

 

ABOUT THE COMPANY

 

Stock listing information: Mexican Stock Exchange, Ticker: KOFUBL | NYSE (ADS), Ticker: KOF | Ratio of KOFUBL to KOF = 10:1

 

Coca-Cola FEMSA files reports, including annual reports and other information with the U.S. Securities and Exchange Commission, or the “SEC,” and the Mexican Stock Exchange (Bolsa Mexicana de Valores, or the “BMV”) pursuant to the rules and regulations of the SEC (that apply to foreign private issuers) and of the BMV. Filings we make electronically with the SEC and the BMV are available to the public on the Internet at the SEC’s website at www.sec.gov, the BMV’s website at www.bmv.com.mx, and our website at www.coca-colafemsa.com.

 

Coca-Cola FEMSA, S.A.B. de C.V. is the largest Coca-Cola franchise bottler in the world by sales volume. The Company produces and distributes trademark beverages of The Coca-Cola Company, offering a wide portfolio of 129 brands to a population of more than 265 million. With over 80 thousand employees, the Company markets and sells approximately 3.3 billion unit cases through close to 2 million points of sale a year. Operating 49 manufacturing plants and 268 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain. The Company is a member of the Dow Jones Sustainability Emerging Markets Index, Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the Mexican Stock Exchange’s IPC and Social Responsibility and Sustainability Indices, among others. Its operations encompass franchise territories in Mexico, Brazil, Guatemala, Colombia, and Argentina, and, nationwide, in Costa Rica, Nicaragua, Panama, Uruguay, and Venezuela through its investment in KOF Venezuela. For further information, please visit www.coca-colafemsa.com.

 

 

 

ADDITIONAL INFORMATION

 

All of the financial information presented in this report was prepared under International Financial Reporting Standards (IFRS).

 

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance, which 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, which 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. dollars amounts or could be converted into U.S. dollars at the rate indicated.

 

(6 pages of tables to follow)

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 29 of 35 

 

 

 

 

 

COCA-COLA FEMSA
CONSOLIDATED INCOME STATEMENT
Millions of Pesos (1)
                                                 
   For the Third Quarter of:   For the First Nine Months of: 
   2021   % of Rev.   2020   % of Rev.   Δ% Reported   Δ% Comparable
(7)		   2021   % of Rev.   2020   % of Rev.   Δ% Reported   Δ% Comparable
(7)		 
Transactions (million transactions)   4,891.6         4,185.2         16.9%   16.9%   13,926.9    -    12,473.1         11.7%   11.7%
Volume (million unit cases)   854.5         807.9         5.8%   5.8%   2,506.5    -    2,382.2         5.2%   5.2%
Average price per unit case   52.94         51.17         3.5%        51.99    -    51.15         1.7%     
Net revenues   47,916         45,248         5.9%        140,370    -    133,008         5.5%     
Other operating revenues   399         1,486         -73.1%   -    721    0%   2,006         -64.1%   - 
Total revenues (2)   48,316    100.0%   46,734    100.0%   3.4%   8.8%   141,091    100.0%   135,015    100.0%   4.5%   11.1%
Cost of goods sold   26,499    54.8%   25,367    54.3%   4.5%        76,668    54.3%   73,927    54.8%   3.7%     
Gross profit   21,817    45.2%   21,367    45.7%   2.1%   6.8%   64,423    45.7%   61,088    45.2%   5.5%   11.3%
Operating expenses   15,530    32.1%   14,216    30.4%   9.2%        44,636    31.6%   42,320    31.3%   5.5%     
Other operative expenses, net   (136)   -0.3%   3    0.0%   NA         232    0.2%   526    0.4%   -55.9%     
Operative equity method (gain) loss in associates(3)   (53)   -0.1%   28    0.1%   NA         (64)   0.0%   270    0.2%   NA      
Operating income (5)   6,476    13.4%   7,119    15.2%   -9.0%   -7.0%   19,620    13.9%   17,973    13.3%   9.2%   13.3%
Other non operative expenses, net   296    0.6%   1,813    3.9%   -83.7%        217    0.2%   2,804    2.1%   -92.3%     
Non Operative equity method (gain) loss in associates (4)   (20)   0.0%   (15)   0.0%   37.6%        51    0.0%   (112)   -0.1%   NA      
Interest expense   1,613         1,701         -5.2%   -    4,570    -    6,388         -28.5%     
Interest income   202         298         -32.0%        562    0.0%   853         -34.0%     
Interest expense, net   1,410         1,403         0.5%        4,007    0.0%   5,536         -27.6%     
Foreign exchange loss (gain)   (305)        135         NA         (149)   0.0%   (357)        -58.4%     
Loss (gain) on monetary position in inflationary subsidiries   (117)        (117)        0.5%   -    (433)   -    (288)        50.5%     
Market value (gain) loss on financial instruments   42         (0)        NA         51    0.0%   (2)        NA      
Comprehensive financing result   1,030         1,421         -27.6%        3,477    0.0%   4,889         -28.9%     
Income before taxes   5,170         3,899         32.6%        15,876    0.0%   10,392         52.8%     
Income taxes   1,697         1,320         28.5%   -    5,626    -    3,413         64.9%     
Consolidated net income   3,473         2,579         34.7%   -    10,250    -    6,980         46.9%     
Net income attributable to equity holders of the company   3,419    7.1%   2,463    5.3%   38.8%   44.0%   9,893    7.0%   7,119    5.3%   39.0%     
Non-controlling interest   54    0.1%   116    0.2%   -53.6%        356    0.3%   (140)   -0.1%   NA      

 

Operating Cash Flow & CAPEX  2021   % of Rev.   2020   % of Rev.   Δ% Reported   Δ% Comparable
(7)		   2021   % of Rev.   2020   % of Rev.   Δ% Reported   Δ% Comparable
(7)		 
Operating income (5)   6,476    13.4%   7,119    15.2%   -9.0%        19,620    13.9%   17,973    13.3%   9.2%     
Depreciation   2,202         2,281         -3.5%        6,640         6,853         -3.1%     
Amortization and other operative non-cash charges   641         674         -4.9%        1,900         2,357         -19.4%     
Operating cash flow (5)(6)   9,320    19.3%   10,075    21.6%   -7.5%   -4.3%   28,159    20.0%   27,363    20.3%   2.9%   7.7%
CAPEX   3,907         2,397         63.0%        8,224         6,262         31.3%     

 

(1)Except volume and average price per unit case figures.
(2)Please refer to page 14 and 15 for revenue breakdown.
(3)Includes equity method in Jugos del Valle and Leão Alimentos, among others.
(4)Includes equity method in PIASA, IEQSA, Beta San Miguel, IMER, and KSP Participacoes, among others.
(5)The operating income and operating cash flow lines are presented as non-GAAP measures for the convenience of the reader.
(6)Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.
(7)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 30 of 35 

 

 

 

 

 

MEXICO & CENTRAL AMERICA DIVISION
RESULTS OF OPERATIONS
Millions of Pesos (1)
                                                 
   For the Third Quarter of:   For the First Nine Months of: 
   2021   % of Rev.   2020   % of Rev.   Δ%
 Reported		   Δ%
 Comparable (6)		   2021   % of Rev.   2020   % of Rev.   Δ%
 Reported		   Δ%
Comparable (6)		 
Transactions (million transactions)   2,619.0         2,408.9         8.7%   8.7%   7,793.6         7,351.8         6.0%   6.0%
Volume (million unit cases)   509.0         498.7         2.1%   2.1%   1,526.1         1,496.7         2.0%   2.0%
Average price per unit case   56.47         53.72         5.1%        55.67         53.22         4.6%     
Net revenues   28,742         26,788                   84,965         79,663                
Other operating revenues   18         19                   37         47                
Total Revenues (2)   28,760    100.0%   26,807    100.0%   7.3%   9.3%   85,002    100.0%   79,711    100.0%   6.6%   8.4%
Cost of goods sold   14,560    50.6%   13,504    50.4%             42,554    50.1%   40,474    50.8%          
Gross profit   14,201    49.4%   13,303    49.6%   6.7%   8.6%   42,448    49.9%   39,236    49.2%   8.2%   9.8%
Operating expenses   9,811    34.1%   8,860    33.1%             28,383    33.4%   26,046    32.7%          
Other operative expenses, net   161    0.6%   96    0.4%             412    0.5%   610    0.8%          
Operative equity method (gain) loss in associates (3)   (36)   -0.1%   11    0.0%             (106)   -0.1%   114    0.1%          
Operating income (4)   4,265    14.8%   4,336    16.2%   -1.6%   -0.5%   13,759    16.2%   12,467    15.6%   10.4%   11.5%
Depreciation, amortization & other operating non-cash charges   1,797    6.2%   1,840    6.9%             5,287    6.2%   5,794    7.3%          
Operating cash flow (4)(5)   6,062    21.1%   6,175    23.0%   -1.8%   -0.3%   19,046    22.4%   18,261    22.9%   4.3%   5.7%

 

(1)Except volume and average price per unit case figures.
(2)Please refer to page 14 and 15 for revenue breakdown.
(3)Includes equity method in Jugos del Valle, among others.
(4)The operating income and operating cash flow lines are presented as non-GAAP measures for the convenience of the reader.
(5)Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.
(6)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

  

SOUTH AMERICA DIVISION
RESULTS OF OPERATIONS
Millions of Pesos (1)
                                                 
   For the Third Quarter of:   For the First Nine Months of: 
   2021   % of Rev.   2020   % of Rev.   Δ%
 Reported		   Δ%
 Comparable (6)		   2021   % of Rev.   2020   % of Rev.   Δ%
 Reported		   Δ%
Comparable (6)		 
Transactions (million transactions)   2,272.6         1,776.3         27.9%   27.9%   6,133.3         5,121.3         19.8%   19.8%
Volume (million unit cases)   345.5         309.3         11.7%   11.7%   980.4         885.5         10.7%   10.7%
Average price per unit case   45.23         47.05         -3.9%        49.00         47.64         2.9%     
Net revenues   19,175         18,459                   55,404         53,345                
Other operating revenues   381         1,468                   684         1,959                
Total Revenues (2)   19,556    100.0%   19,927    100.0%   -1.9%   8.1%   56,088    100.0%   55,304    100.0%   1.4%   15.5%
Cost of goods sold   11,939    61.1%   11,863    59.5%             34,113    60.8%   33,452    60.5%          
Gross profit   7,616    38.9%   8,064    40.5%   -5.6%   3.5%   21,975    39.2%   21,852    39.5%   0.6%   14.3%
Operating expenses   5,719    29.2%   5,356    26.9%             16,253    29.0%   16,274    29.4%          
Other operative expenses, net   (297)   -1.5%   (92)   -0.5%             (180)   -0.3%   (85)   -0.2%          
Operative equity method (gain) loss in associates (3)   (17)   -0.1%   17    0.1%             41    0.1%   156    0.3%          
Operating income (4)   2,211    11.3%   2,783    14.0%   -20.6%   -17.4%   5,861    10.4%   5,506    10.0%   6.4%   17.5%
Depreciation, amortization & other operating non-cash charges   1,046    5.3%   1,116    5.6%             3,252    5.8%   3,596    6.5%          
Operating cash flow (4)(5)   3,258    16.7%   3,899    19.6%   -16.5%   -11.0%   9,113    16.2%   9,102    16.5%   0.1%   12.2%

 

(1)Except volume and average price per unit case figures.
(2)Please refer to page 14 and 15 for revenue breakdown.
(3)Includes equity method in Leão Alimentos and Verde Campo, among others.
(4)The operating income and operating cash flow lines are presented as non-GAAP measures for the convenience of the reader.
(5)Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.
(6)Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

 

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 31 of 35 

 

 

 

 

 

COCA-COLA FEMSA 
CONSOLIDATED BALANCE SHEET 
Millions of Pesos 
  
    Sep-21    Dec-20    % Var. 
Assets               
Current Assets               
Cash, cash equivalents and marketable securities   50,088    43,497    15%
Total accounts receivable   8,928    11,523    -23%
Inventories   13,634    9,727    40%
Other current assets   6,608    7,693    -14%
Total current assets   79,259    72,440    9%
Non-Current Assets               
Property, plant and equipment   109,888    109,551    0%
Accumulated depreciation   (50,813)   (50,091)   1%
Total property, plant and equipment, net   59,076    59,460    -1%
Right of use assets   1,374    1,278    7%
Investment in shares   7,372    7,623    -3%
Intangible assets and other assets   102,542    103,971    -1%
Other non-current assets   19,468    18,294    6%
Total Assets   269,090    263,066    2%
Liabilities & Equity               
Current Liabilities               
Short-term bank loans and notes payable   2,704    5,017    -46%
Suppliers   19,755    17,195    15%
Short-term leasing Liabilities   558    560      
Other current liabilities   25,409    20,073    27%
Total current liabilities   48,426    42,845    13%
Non-Current Liabilities               
Long-term bank loans and notes payable   82,690    82,461    0%
Long Term Leasing Liabilities   838    746      
Other long-term liabilities   14,391    14,557    -1%
Total liabilities   146,345    140,609    4%
Equity               
Non-controlling interest   5,917    5,583    6%
Total controlling interest   116,828    116,874    0%
Total equity   122,745    122,457    0%
Total Liabilities and Equity   269,090    263,066    2%

 

Liabilities & Equity  Sep-21   Dec-20   % Var. 
Current Liabilities               
Short-term bank loans and notes payable   2,704    5,017    -46%
Suppliers   19,755    17,195    15%
Short-term leasing Liabilities   558    560      
Other current liabilities   25,409    20,073    27%
Total current liabilities   48,426    42,845    13%
Non-Current Liabilities               
Long-term bank loans and notes payable   82,690    82,461    0%
Long Term Leasing Liabilities   838    746      
Other long-term liabilities   14,391    14,557    -1%
Total liabilities   146,345    140,609    4%
Equity               
Non-controlling interest   5,917    5,583    6%
Total controlling interest   116,828    116,874    0%
Total equity   122,745    122,457    0%
Total Liabilities and Equity   269,090    263,066    2%

 

   September 30, 2021 
Debt Mix  % Total Debt
(1)		   % Interest Rate
Floating (1) (2)		   Average
Rate		 
Currency               
Mexican Pesos   53.4%   9.5%   7.4%
U.S. Dollars   27.4%   0.0%   2.9%
Colombian Pesos   1.8%   0.0%   4.0%
Brazilian Reals   15.0%   55.5%   7.5%
Uruguayan Pesos   1.7%   0.0%   6.6%
Argentine Pesos   0.7%   0.0%   47.5%
Total Debt   100%   6.2%   6.4%

 

(1) After giving effect to cross- currency swaps and financial leases.
(2) Calculated by weighting each year´s outstanding debt balance mix.

 

Debt Maturity Profile

 

 

 

Financial Ratios  LTM 2021   FY 2020   Δ% 
Net debt including effect of hedges (1)(3)   32,542    42,194    -22.9%
Net debt including effect of hedges / Operating cash flow (1)(3)   0.85    1.13      
Operating cash flow/ Interest expense, net (1)   7.03    5.46      
Capitalization (2)   41.5%   42.7%     

 

(1) Net debt = total debt - cash            
(2) Total debt / (long-term debt + shareholders' equity)          
(3) After giving effect to cross-currency swaps.          

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 32 of 35 

 

 

 

 

COCA-COLA FEMSA
QUARTERLY- VOLUME, TRANSACTIONS & REVENUES

 

Volume
   3Q 2021   3Q 2020   YoY 
   Sparkling   Water (1)   Bulk (2)   Stills   Total   Sparkling   Water (1)   Bulk (2)   Stills   Total   Δ % 
Mexico   321.5    19.7    72.0    30.4    443.6    325.7    16.0    72.2    28.2    442.1    0.3%
Guatemala   29.5    1.0    -    2.1    32.6    27.2    0.8    -    1.1    29.1    12.2%
CAM South   27.1    1.6    0.1    4.0    32.8    23.5    1.0    0.1    2.9    27.5    19.5%
Mexico and Central America   378.2    22.3    72.1    36.4    509.0    376.4    17.8    72.3    32.2    498.64    2.1%
Colombia   59.8    7.6    3.9    6.0    77.2    50.8    3.3    3.7    3.0    60.9    26.8%
Brazil (3)   193.4    12.0    1.9    15.6    222.8    184.4    9.6    2.1    11.9    208.0    7.1%
Argentina   28.7    2.7    1.2    3.0    35.6    25.2    1.7    1.4    2.3    30.7    15.9%
Uruguay   8.6    1.0    -    0.2    9.8    8.7    0.8    -    0.1    9.6    1.8%
South America   290.4    23.3    6.9    24.8    345.5    269.2    15.5    7.3    17.3    309.3    11.7%
TOTAL   668.6    45.6    79.0    61.2    854.5    645.6    33.3    79.6    49.5    807.9    5.8%

 

(1) Excludes water presentations larger than 5.0 Lt ; includes flavored water.
(2) Bulk Water  = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations; includes flavored water

 

Transactions                                    
   3Q 2021   3Q 2020   YoY 
   Sparkling   Water   Stills   Total   Sparkling   Water   Stills   Total   Δ % 
Mexico   1,748.7    147.6    213.8    2,110.1    1,704.1    120.6    189.8    2,014.6    4.7%
Guatemala   229.3    10.7    22.0    262.0    195.3    7.8    10.8    213.9    22.5%
CAM South   195.0    10.1    41.7    246.9    147.8    6.3    26.4    180.5    36.8%
Mexico and Central America   2,173.1    168.4    277.5    2,619.0    2,047.3    134.7    227.0    2,408.9    8.7%
Colombia   408.7    82.0    56.8    547.5    295.7    39.0    26.1    360.7    51.8%
Brazil (3)   1,218.0    104.5    172.1    1,494.7    1,051.3    80.0    114.7    1,246.1    20.0%
Argentina   144.1    16.8    22.4    183.3    103.6    9.2    14.4    127.1    44.1%
Uruguay   41.5    4.0    1.7    47.2    38.2    3.1    1.1    42.4    11.3%
South America   1,812.3    207.3    253.0    2,272.6    1,488.7    131.3    156.3    1,776.3    27.9%
TOTAL   3,985.3    375.7    530.6    4,891.6    3,536.0    266.0    383.2    4,185.2    16.9%

 

Revenues            
Expressed in million Mexican Pesos  3Q 2021   3Q 2020   Δ % 
Mexico   23,657    22,103    7.0%
Guatemala   2,601    2,449    6.2%
CAM South   2,502    2,255    10.9%
Mexico and Central America   28,760    26,807    7.3%
Colombia   3,631    3,068    18.4%
Brazil (4)   13,322    14,752    -9.7%
Argentina   1,828    1,354    35.0%
Uruguay   775    753    2.8%
South America   19,556    19,927    -1.9%
TOTAL   48,316    46,734    3.4%

 

(3) Volume and transactions in Brazil do not include beer.
(4) Brazil includes beer revenues of Ps.2,683 million for the third quarter of 2021 and Ps.3,909 million for the same period of the previous year.

 

 

 

 

 

(1)Volume is expressed in unit cases. Unit case refers to 192 ounces of finished beverage product (24 eight-ounce servings) and, when applied to soda fountains, refers to the volume of syrup, powders, and concentrate that is required to produce 192 ounces of finished beverage product.
(2)Transactions refers to the number of single units (e.g., a can or a bottle) sold, regardless of their size or volume or whether they are sold individually or in multipacks, except for soda fountains, which represent multiple transactions based on a standard 12 oz. serving.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 33 of 35 

 

 

 

 

COCA-COLA FEMSA

YTD - VOLUME, TRANSACTIONS & REVENUES

Volume

 

   YTD 2021   YTD 2020   YoY 
   Sparkling   Water (1)   Bulk (2)   Stills   Total   Sparkling   Water (1)   Bulk (2)   Stills   Total   Δ % 
Mexico   966.4    61.0    213.8    90.7    1,331.9    973.6    53.2    216.8    83.7    1,327.3    0.4%
Guatemala   87.7    3.0    -    5.2    95.9    77.8    3.0    -    5.2    86.0    11.6%
CAM South   81.7    4.7    0.4    11.6    98.2    72.8    5.0    0.4    11.6    89.8    9.4%
Mexico and Central America   1,135.8    68.6    214.1    107.5    1,526.1    1,124.0    59.3    217.2    96.1    1,496.7    2.0%
Colombia   167.6    18.0    11.3    14.7    211.7    147.5    11.7    12.4    9.0    180.7    17.2%
Brazil (3)   551.5    31.8    5.6    42.3    631.1    516.3    30.8    6.8    33.6    587.5    7.4%
Argentina   86.9    7.9    4.1    9.3    108.3    72.3    6.7    4.0    6.2    89.2    21.4%
Uruguay   25.6    3.3    -    0.5    29.4    25.1    2.7    -    0.3    28.2    4.2%
South America   831.6    61.0    21.1    66.8    980.4    761.2    52.0    23.2    49.1    885.5    10.7%
TOTAL   1,967.4    129.6    235.2    174.3    2,506.5    1,885.3    111.3    240.4    145.2    2,382.2    5.2%

 

(1) Excludes water presentations larger than 5.0 Lt ; includes flavored water.

(2) Bulk Water  = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations; includes flavored water

 

Transactions

 

   YTD 2021   YTD 2020   YoY 
   Sparkling   Water   Stills   Total   Sparkling   Water   Stills   Total   Δ % 
Mexico   5,234.5    450.1    632.6    6,317.1    5,188.7    397.2    574.9    6,160.8    2.5%
Guatemala   672.4    30.7    53.6    756.6    542.7    23.9    26.8    593.4    27.5%
CAM South   572.5    30.3    117.1    719.9    479.4    24.5    93.7    597.6    20.5%
Mexico and Central America   6,479.3    511.1    803.2    7,793.6    6,210.8    445.6    695.4    7,351.8    6.0%
Colombia   1,101.5    195.7    133.1    1,430.3    880.4    143.7    80.2    1,104.3    29.5%
Brazil (3)   3,327.2    272.3    444.2    4,043.7    2,916.4    255.1    322.4    3,493.8    15.7%
Argentina   410.8    46.4    66.2    523.4    318.6    37.1    39.9    395.6    32.3%
Uruguay   118.6    12.3    5.0    135.9    112.2    11.7    3.6    127.6    6.5%
South America   4,958.1    526.7    648.5    6,133.3    4,227.6    447.6    446.1    5,121.3    19.8%
TOTAL   11,437.4    1,037.8    1,451.7    13,926.9    10,438.4    893.2    1,141.5    12,473.1    11.7%

 

Revenues

 

Expressed in million Mexican Pesos  YTD 2021   YTD 2020   Δ% 
Mexico   69,905    65,673    6.4%
Guatemala   7,607    6,903    10.2%
CAM South   7,491    7,135    5.0%
Mexico and Central America   85,002    79,711    6.6%
Colombia   10,034    8,847    13.4%
Brazil (4)   38,493    40,126    -4.1%
Argentina   5,327    4,184    27.3%
Uruguay   2,234    2,147    4.1%
South America   56,088    55,304    1.4%
TOTAL   141,091    135,015    4.5%

 

(3) Volume and transactions in Brazil do not include beer.

(4) Brazil includes beer revenues of Ps. 10,045 million for the first nine months of 2021 and Ps. 11,163 million for the same period of the previous year.

 

 

 

 

 

(1)Volume is expressed in unit cases. Unit case refers to 192 ounces of finished beverage product (24 eight-ounce servings) and, when applied to soda fountains, refers to the volume of syrup, powders, and concentrate that is required to produce 192 ounces of finished beverage product.
(2)Transactions refers to the number of single units (e.g., a can or a bottle) sold, regardless of their size or volume or whether they are sold individually or in multipacks, except for soda fountains, which represent multiple transactions based on a standard 12 oz. serving.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 34 of 35 

 

 

 

 

 

COCA-COLA FEMSA

MACROECONOMIC INFORMATION

 

Inflation (1)            
             
   LTM   3Q21   YTD 
Mexico   5.87%   1.46%   4.81%
Colombia   4.46%   0.87%   4.02%
Brazil   9.80%   2.27%   6.03%
Argentina   48.27%   9.12%   35.89%
Costa Rica   2.15%   2.49%   1.26%
Panama   2.58%   0.37%   1.97%
Guatemala   4.07%   4.87%   1.63%
Nicaragua   5.00%   4.83%   3.63%
Uruguay   7.54%   2.12%   6.60%

 

(1)Source: inflation estimated by the company based on historic publications from the Central Bank of each country.

 

Average Exchange Rates for each period (2)
 
   Quarterly Exchange Rate
(Local Currency per USD)		   Year to Date Exchange Rate
(Local Currency per USD)		 
   3Q21   3Q20   Δ %   YTD 21   YTD 20   Δ % 
Mexico   20.01    22.11    -9.5%   20.13    21.61    -6.8%
Colombia   3,846.74    3,733.60    3.0%   7.73    7.69    0.5%
Brazil   5.23    5.38    -2.8%   35.14    34.09    3.1%
Argentina   97.24    73.33    32.6%   620.59    574.89    7.9%
Costa Rica   624.59    594.32    5.1%   1.00    1.00    0.0%
Panama   1.00    1.00    0.0%   3,749.15    3,692.48    1.5%
Guatemala   7.74    7.72    0.2%   5.32    4.92    8.0%
Nicaragua   35.26    34.47    2.3%   95.00    64.59    47.1%
Uruguay   43.25    42.74    1.2%   43.67    41.36    5.6%

 

End-of-period Exchange Rates
 
   Closing Exchange Rate
(Local Currency per USD)		   Closing Exchange Rate
(Local Currency per USD)		 
   Sep-21   Sep-20   Δ %   Jun-21   Jun-20   Δ % 
Mexico   20.31    22.46    -9.6%   19.80    22.97    -13.8%
Colombia   3,834.68    3,878.94    -1.1%   3,756.67    3,758.91    -0.1%
Brazil   5.44    5.64    -3.6%   5.00    5.48    -8.7%
Argentina   98.74    76.18    29.6%   95.72    70.46    35.9%
Costa Rica   629.71    606.68    3.8%   621.92    583.49    6.6%
Panama   1.00    1.00    0.0%   1.00    1.00    0.0%
Guatemala   7.73    7.79    -0.7%   7.74    7.70    0.6%
Nicaragua   35.34    34.60    2.2%   35.17    34.34    2.4%
Uruguay   42.94    42.58    0.9%   43.58    42.21    3.2%

 

(2)Average exchange rate for each period computed with the average exchange rate of each month.

 

Coca-Cola FEMSA Reports 3Q2021 Results
October 27, 2021		Page 35 of 35