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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 2023

 

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, 27, 2023

 

 

 

 

Exhibit 99.1 

 

 

 

3Q 2023

Results

October 27, 2023

 

 

 

Investor Contact

(52) 818-328-6167

investor@femsa.com.mx

femsa.gcs-web.com

 

Media Contact

(52) 555-249-6843

comunicacion@femsa.com.mx

femsa.com

 

October 27, 2023  |  Page 1

 

 

HIGHLIGHTS

 

Monterrey, Mexico, October 27, 2023 — Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) (NYSE: FMX; BMV: FEMSAUBD, FEMSAUB) announced today its operational and financial results for the third quarter of 2023.

 

•FEMSA: Total Consolidated Revenues grew 19.3% against 3Q22.

•FEMSA Retail1: Proximity Americas total Revenues increased 20.8% against 3Q22.

•DIGITAL: Spin by OXXO had 6.4 million active users2 while Spin Premia had 17.7 million active loyalty users2 and an average tender3 of 28.3%.

•COCA-COLA FEMSA: Total volume and revenues grew 11.6% and 10.1%, respectively, against 3Q22.

 

Financial Summary for the Third Quarter and First Nine Months 2023

Change vs. comparable period

 

   Total Revenues   Gross Profit   Income from Operations   Same-Store Sales 
   3Q23   YTD23   3Q23   YTD23   3Q23   YTD23   3Q23   YTD23 
FEMSA Consolidated   19.3%   19.4%   22.1%   21.3%   12.6%   8.8%          
Proximity Americas   20.8%   20.8%   23.9%   21.1%   14.7%   17.2%   15.1%   16.1%
Health   0.2%   0.1%   (0.6)%   3.6%   (10.4)%   (5.7)%   (3.6)%   (3.5)%
Fuel   14.2%   14.3%   10.2%   12.4%   3.3%   10.1%   8.1%   8.8%
Coca-Cola FEMSA   10.1%   9.2%   13.6%   10.9%   15.3%   13.0%          

 

José Antonio Fernandez Carbajal, FEMSA’s Chief Executive Officer, commented:

 

“The third quarter was very favorable for our business, with strong momentum across most of our operations. However, our positive results were tempered by the unfortunate passing of FEMSA’s former CEO, Daniel Rodriguez Cofré, in the month of August. We honor his legacy by continuing to execute on the strategy that he helped design and put in place.

 

Our quarterly results show a continuation, and in some cases an acceleration, of the positive trends that we have seen during the past several quarters, and again offer a glimpse of the significant organic growth potential we have before us. Notably, Proximity Americas increased revenues by more than 20 percent, driven by strong traffic trends at OXXO and reflecting an accelerated store expansion. In Europe, Valora continued to grow its top line, while Health revenues were again stable, reflecting a challenging comparison base in Chile as well as significant currency headwinds. For its part, Coca-Cola FEMSA delivered very strong results across its income statement, while Digital@FEMSA continued to add users at a rapid pace. Importantly, we are achieving solid growth today, while also investing significant capital in the future of our core business verticals, across markets but particularly in Mexico.

 

On the strategic front, during the third quarter we continued to make progress executing the FEMSA Forward gameplan, announcing the creation of a new distribution platform in the United States by bringing together Envoy Solutions and BradyIFS. The regulatory process has advanced according to schedule, and we expect this transaction to close soon.

 

As we approach the final stretch, we are well positioned to close the year on a high note, and already begin to look forward to an interesting and dynamic 2024.”

 

 

1 FEMSA Retail: Proximity Americas & Europe, Fuel and FEMSA Health.

2 Active User for Spin by OXXO: Any user with a balance or that has transacted within the last 56 days. Active User for Spin Premia: User that has transacted at least once with OXXO Premia within the last 90 days.

3 Tender: OXXO Mexico MXN sales with OXXO Premia or Spin Premia redemption or accrual divided by Total OXXO Mexico MXN Sales, during the period. 

 

October 27, 2023  |  Page 2

 

 

QUARTERLY RESULTS

Results are compared to the same period of previous year

 

FEMSA CONSOLIDATED  

 

3Q23 Financial Summary

Amounts expressed in millions of Mexican Pesos (Ps.)

 

   3Q23   3Q22   Var.   Org. 
Total Revenues   188,095    157,693    19.3%   11.9%
Income from Operations   15,929    14,146    12.6%   9.8%
Operating Margin (%)   8.5    9.0    (50)bps     
Adjusted EBITDA4   25,366    22,046    15.1%   7.7%
Adjusted  EBITDA  Margin (%)   13.5    14.0    (50)bps     
Net Income   12,758    13,268    (3.8)%     

 

Net Debt ex-KOF5

Amounts expressed in millions of Mexican Pesos (Ps.)

 

As of September 30, 2023  Ps.   US$3 
Cash   140,738    8,209 
Long-Term Debt   75,187    4,386 
Lease Liabilities   93,338    5,444 
Net debt   27,787    1,621 
ND / Adj. EBITDA   0.49x   - 

 

Total revenues increased 19.3% in 3Q23 compared to 3Q22, driven by growth across our business units. On an organic1 basis, total revenues increased 11.9%.

 

Gross profit increased 22.1%. Gross margin expanded 90 basis points, reflecting the consolidation of Proximity Europe, as well as margin expansions at Proximity and Coca-Cola FEMSA. This was partially offset by a margin contraction at Health and Fuel.

 

Income from operations increased 12.6%. On an organic basis, income from operations increased 9.8%. Consolidated operating margin decreased 50 basis points to 8.5% of total revenues, reflecting margin expansion at Coca-Cola FEMSA, offset by margin contractions at Proximity Americas, Health, and Fuel, as well as the consolidation of Proximity Europe.

 

Our effective income tax rate was 31.8% in 3Q23 compared to 35.0% in 3Q22. Our income tax provision was Ps. 6,540 million in 3Q23.

 

Net consolidated income was Ps. 12,758 million, reflecting: i) higher income from operations; ii) a non-cash foreign exchange gain of Ps. 5,374, related to FEMSA’s U.S. dollar-denominated cash position as impacted by the depreciation of the Mexican peso; and iii) a decrease in net interest expenses during the quarter. This was offset by a decrease in net income from discontinued operations compared with 3Q22, which included the results of FEMSA’s participation in Heineken.

 

Net majority income was Ps. 2.72 per FEMSA Unit2 and US$1.56 per FEMSA ADS.

 

Capital expenditures amounted to Ps. 9,791 million, driven by ongoing investment activities across our business units.

 

 

1 Excludes the effects of significant mergers and acquisitions in the last twelve months, including the acquisition of Valora.

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, 2023 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, 2023 was 17.4064 MXN per USD.

4 Adjusted EBITDA: Operating Income + Depreciation + Amortizations.

5 ex-KOF: FEMSA Consolidated reported information – Coca-Cola FEMSA Consolidated reported information.

Adjusted EBITDA ex-KOF: FEMSA Consolidated Adjusted EBITDA as described above – Coca-Cola FEMSA’s Consolidated Adjusted EBITDA + Dividends received by FEMSA from Coca-Cola FEMSA and other investments.

All Net Debt calculations are shown on an Ex-KOF basis. For a detailed reconciliation of this metric please see table on page 17 of this document.

 

October 27, 2023  |  Page 3

 

 

PROXIMITY AMERICAS

OXXO (Mexico & Latam3)

  

 

3Q23 Financial Summary
Amounts expressed in millions of Mexican Pesos (Ps.) except same-store sales

 

             
   3Q23   3Q22   Var. 
Same-store sales (thousands of Ps.)   1,047.2    910.1    15.1%
Total Revenues   74,020    61,252    20.8%
Income from Operations   6,577    5,734    14.7%
Income from Operations Margin (%)   8.9    9.4    (50)bps
Adjusted EBITDA   9,963    8,768    13.6%
Adjusted EBITDA Margin (%)   13.5    14.3    (80)bps

 

Net Additions
Vs. comparable quarter		 Store Base
As of 3Q23		 Same-Store Sales
 In thousands of Ps.		 Adjusted EBITDA
In millions of Ps.
       
       

 

Total revenues increased 20.8% in 3Q23 compared to 3Q22, reflecting a 15.1% average same-store sales increase, driven by 6.6% growth in average customer ticket and an increase of 8.0% in store traffic. These figures reflect a strong performance across most of OXXO’s categories supported by the thirst and gathering occasions, such as beer, snacks, and other beverages. During the quarter, the OXXO store base in Mexico & Latam expanded by 293 units to reach 1,453 total net store additions for the last twelve months. As of September 30, 2023, Proximity Americas had a total of 22,352 OXXO stores.

 

Gross profit reached 41.2% of total revenues, reflecting strong commercial activity and promotional programs from key suppliers, offset by a decrease in the contribution of financial services relative to 3Q22.

 

Income from operations amounted to 8.9% of total revenues. Operating expenses increased 26.7% to Ps. 23,943 million, above revenues, reflecting an increase in labor expenses in connection with recent labor reforms in Mexico.

 

 

3 OXXO Latam: OXXO Colombia, Chile and Peru. 

 

October 27, 2023  |  Page 4

 

 

PROXIMITY AMERICAS
 Other formats		  

 

Bara1

 

Total revenues increased 36.7% in 3Q23 compared to 3Q22, driven by a 15.6% average same-store sales increase, reflecting the strong performance of the groceries, home hygiene and convenience categories, particularly beverages. During the quarter, the Bara store base expanded by 13 units to reach 309 total Bara stores as of September 30, 2023.

 

Grupo Nós2

 

Total revenues for the period grew 151.6%3 year-over-year, reaching R$209.3 million4. This figure reflects the successful evolution and expansion of the OXXO value proposition which resulted in same-store sales growth at OXXO of 12.4%3, as well as the addition of 204 net new OXXO stores for the last twelve months. During the quarter, the store base of Grupo Nós expanded by 30 units, the majority of which are OXXO stores. As of September 30, 2023, Grupo Nós had a total of 1,668 stores, which include 380 company owned and operated OXXO stores.

 

 

1 Bara store count and results are not consolidated within the Proximity Americas reported figures.

2 OXXO’s non-consolidated joint-venture with Raízen in Brazil.

3 Local currency, BRL.

4 The exchange rate published by the Federal Reserve Bank of New York for September 30, 2023 was 5.0021 BRL per USD. 

 

October 27, 2023  |  Page 5

 

 

PROXIMITY EUROPE1

Valora

 

3Q23 Financial Summary

Amounts expressed in millions of Mexican Pesos (Ps.)

 

    3Q23
Total Revenues   11,194 
Income from Operations   348 
Income from Operations Margin (%)   3.1 
Adjusted EBITDA   1,555 
Adjusted EBITDA Margin (%)   13.9 

 

Total revenues increased 8.7%2 in 3Q23 compared to 3Q22 to Ps. 11,194 million, reflecting traffic recovery as well as positive pricing initiatives, and the growth of Valora’s foodservice and B2B business. As of the end of the period, Proximity Europe had 2,810 points of sale.

 

Gross profit reached 41.8% of total revenues, reflecting the continued recovery of the foodservice category, which has a structurally higher margin.

 

Income from operations amounted to 3.1% of total revenues, reflecting the contribution of foodservice, as well as positive operating leverage.

 

 

1 The Proximity Europe segment is comprised of Valora. The acquisition of Valora was concluded in October 2022.

2 Local currency, CHF. 

 

October 27, 2023  |  Page 6

 

 

HEALTH

 

3Q23 Financial Summary

Amounts expressed in millions of Mexican Pesos (Ps.) except same-store sales

 

    3Q23   3Q22   Var. 
Same-store sales (thousands of Ps.)   1,131.1    1,173.4    (3.6)%
Total Revenues   18,569    18,526    0.2%
Income from Operations   844    942    (10.4)%
Income from Operations Margin (%)   4.5    5.1    (60)bps
Adjusted EBITDA   1,848    1,843    0.3%
Adjusted EBITDA Margin (%)   10.0    9.9    10bps

 

Net Additions

Vs. comparable quarter

Locations

As of 3Q23

Same-Store Sales

In thousands of Ps.

Adjusted EBITDA

In millions of Ps.

       
       

 

Total revenues increased 0.2% in 3Q23 compared to 3Q22, mainly reflecting positive local currency sales trends in Chile and Colombia, offset by a challenging competitive environment in Mexico, and by a negative currency translation effect. During the quarter, FEMSA Health’s store base expanded by 80 units reaching a total of 4,347 locations across its territories as of September 30, 2023. This figure reflects the addition of 365 net new locations for the last twelve months. Same-store sales decreased an average of 3.6%, reflecting the trends described above. However, on a currency-neutral1 basis, total revenues grew 13.6% while same-store sales increased by 4.7%.

 

 

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

 

October 27, 2023  |  Page 7

 

 

Gross profit represented 29.2% of total revenues, reflecting improved efficiency and more effective collaboration and execution with key supplier partners, as well as a negative mix effect reflecting an increase in the contribution of our institutional sales channel in Colombia.

 

Income from operations amounted to 4.5% of total revenues. Operating expenses increased 1.4% to Ps. 4,587 million, reflecting an increase in labor expenses in Mexico and Chile, partially offset by tight expense control across our operations.

 

FUEL  

 

3Q23 Financial Summary

Amounts expressed in millions of Mexican Pesos (Ps.) except same-station sales

 

    3Q23   3Q22   Var. 
Same-station sales (thousands of Ps.)   8,236.9    7,617.6    8.1%
Total Revenues   15,782    13,823    14.2%
Income from Operations   710    687    3.3%
     Income from Operations Margin (%)   4.5    5.0    (50)bps
Adjusted EBITDA   1,026    960    6.9%
     Adjusted EBITDA Margin (%)   6.5    6.9    (40)bps

 

Net Additions

Vs. comparable quarter

Service Station Base

As of 3Q23

Same-Station Sales

In thousands of Ps.

Adjusted EBITDA

In millions of Ps.

 

Total revenues increased 14.2% in 3Q23 compared to 3Q22, reflecting a 8.1% average same-station sales increase, driven by 4.0% growth in average volume and 4.0% increase in the average price per liter, as well as volume growth in our institutional and wholesale customer network. The OXXO Gas retail network had 571 points of sale as of September 30, 2023. This figure reflects the addition of three net stations for the last twelve months.

 

Gross profit was 12.4% of total revenues.

 

Income from operations amounted to 4.5% of total revenues. Operating expenses increased 14.5% to Ps. 1,241 million, reflecting increased labor expenses.

 

October 27, 2023  |  Page 8

 

 

FEMSA Retail Operations Summary

 

       Currency-neutral terms where applicable

 

Total Revenue Growth (% vs year ago)

 

   3Q23 
Proximity Americas     
OXXO1   20.8%
Mexico   20.7%
OXXO Latam2   28.3%
      
Other Proximity Americas formats     
Bara   36.7%
OXXO Brazil3   151.6%
      
Proximity Europe4   8.7%
OXXO Gas   14.2%
      
FEMSA Health5   13.6%
Chile   6.6%
Colombia   16.9%
Ecuador   0.8%
Mexico   7.0%

 

1 OXXO Consolidated figures shown in MXN including currency effects.
2 Includes OXXO Colombia, Chile and Peru.
3 Operated through Grupo Nós, our joint-venture with Raízen.
4 Local currency (CHF).
5 FEMSA Health Include franchised stores in Ecuador.

 

Total Unit Growth (% vs year ago)

 

   3Q23 
Proximity Americas     
OXXO   7.0%
Mexico   5.9%
OXXO Latam1   48.7%
      
Other Proximity Americas formats     
Bara   28.8%
OXXO Brazil2   115.9%
      
Proximity Europe3   2.0%
OXXO Gas   0.5%
      
FEMSA Health   9.5%
Chile   2.1%
Colombia   14.7%
Ecuador   5.9%
Mexico   12.8%

 

1 Includes OXXO Colombia, Chile and Perú.
2 Operated through Grupo Nós, our joint-venture with Raízen.
3 Includes company owned and franchised units.

 

Same-Store Sales

 

   3Q23 
Proximity Americas     
OXXO1   15.1%
Mexico   15.2%
OXXO Latam2   15.1%
      
Other Proximity Americas formats     
Bara   15.6%
OXXO Brazil3   12.4%
      
Proximity Europe4   N.A. 
OXXO Gas5   8.1%
      
FEMSA Health5   4.7%
Chile   2.3%
Colombia   12.6%
Ecuador   1.3%
Mexico   (5.3)%

 

1 OXXO Consolidated figures shown in MXN including currency effects.
2 Includes OXXO Colombia, Chile and Peru.
3 Operated through Grupo Nós, our joint-venture with Raízen.
4 Local currency (CHF).
5 Only includes retail sales. FEMSA Health Include franchised stores in Ecuador.

 

October 27, 2023  |  Page 9

 

 

DIGITAL@FEMSA1  

 

Spin by OXXO

 

Spin by OXXO acquired 1.2 million users during the quarter to reach 8.8 million total users in 3Q23, compared to 4.3 million users in 3Q22. This represents an increase of 105.8% YoY and a 6.2% compound monthly growth rate. Active users2 represented 72.5% of the total acquired user base. Total transactions per month increased 15.6%3 during the quarter to reach an average of 41.8 million per month in 3Q23, reflecting an increase in user engagement.

 

Spin Premia

 

Spin Premia acquired 3.8 million users during the quarter to reach 36.6 million total users in 3Q23, compared to 22.0 million users in 3Q22. This represents an increase of 66.0% YoY and a 4.3% compound monthly growth rate. Active users4 represented 48.3% of the total acquired user base. The average tender5 during the quarter was 28.3%.

 

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 coca-colafemsa.com.

 

 

1 Digital@FEMSA’s results are included within the Other business segment.

2 Active User for Spin by OXXO: Any user with a balance or that has transacted within the last 56 days.

3 Represents the quarter-over-quarter growth of average monthly transactions.

4 Active User for Spin Premia: User that has transacted at least once with OXXO Premia or Spin Premia within the last 90 days.

5 Tender: OXXO Mexico MXN sales with OXXO Premia or Spin Premia redemption or accrual divided by Total OXXO Mexico MXN Sales, during the period.

 

 

October 27, 2023  |  Page 10

 

 

RESULTS FOR THE FIRST NINE MONTHS OF 2023

Results are compared to the same period of previous year

 

FEMSA CONSOLIDATED  

 

Financial Summary for the First Nine Months

Amounts expressed in millions of Mexican Pesos (Ps.)

 

   2023   2022   Var.   Org. 
Total Revenues   539,113    451,443    19.4%   10.9%
Income from Operations   44,009    40,447    8.8%   6.1%
Operating Margin (%)   8.2    9.0    (80)bps     
Adjusted EBITDA1   72,434    63,481    14.1%   6.6%
Adjusted EBITDA Margin (%)   13.4    14.1    (70)bps     
Net Income   71,994    26,793    168.7%     

 

Total revenues increased 19.4%. On an organic basis2, total revenues increased 10.9% reflecting growth across most of our operations.

 

Gross profit increased 21.3%. Gross margin increased 60 basis points to 38.2% of total revenues, reflecting gross margin expansion at Proximity Americas and Coca-Cola FEMSA, as well as the consolidation of Proximity Europe, offset by margin contraction at Health and Fuel.

 

Income from operations increased 8.8%. On an organic basis2, income from operations increased 6.1%. Our consolidated operating margin decreased 80 basis points to 8.2% of total revenues, reflecting margin expansions at Coca-Cola FEMSA, offset by margin contractions at Proximity Americas, Fuel, and Health, as well as by the consolidation of Proximity Europe.

 

Net consolidated income increased to Ps. 71,994 million, reflecting; i) a Ps. 35,473 million net income from discontinued operations, mostly reflecting the accounting re-measurement from historical cost to fair value of FEMSA’s investment in Heineken, as well as the divestiture of this investment as part of the FEMSA Forward strategy announced on February 15, 2023, net of taxes; ii) a Ps. 12,963 million non-cash financial product that mostly reflects the repurchase of US$ 1.7 billion3 of FEMSA’s outstanding debt at favorable price levels during 1Q23, also in connection with FEMSA Forward; and iii) a Ps. 9,577 other non-operating income, mostly reflecting the divestment of FEMSA’s minority stake in Jetro Restaurant Depot. This was offset by a non-cash foreign exchange loss of Ps. 3,575, related to FEMSA’s U.S. dollar-denominated cash position as impacted by the appreciation of the Mexican peso, during the first nine months of the year.

 

Net majority income per FEMSA Unit4 was Ps.17.88 (US$10.27 per ADS).

 

Capital expenditures amounted to Ps. 23,279 million, reflecting the reactivation of ongoing investment activities at most of our business units.

 

 

1 Adjusted EBITDA: Operating Income + Depreciation + Amortizations.

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

3 Face value

4 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, 2023 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

 

October 27, 2023  |  Page 11

 

 

RECENT DEVELOPMENTS

 

·On Aug 29, 2023, FEMSA announced that it entered into definitive agreements with BradyIFS to create a new platform within the facility care, foodservice disposables, and packaging distribution industries in the United States. The combined platform will bring together Envoy Solutions LLC and BradyIFS in a highly complementary combination, positioned to serve and provide value to its customers and suppliers effectively and efficiently across the country. The transaction is subject to customary conditions and regulatory approvals.

 

Upon closing, FEMSA will receive approximately US$1.7 billion in cash and retain an ownership stake of approximately 37% in the combined entity, which is expected to have pro-forma revenues approaching US$5 billion.

 

For the purposes of this transaction, the Envoy Solutions valuation implies an unlevered double-digit annualized rate of return on the accumulated capital invested by FEMSA since entering this business in 2020.

 

Approximately 63% of the combined entity will be owned by existing BradyIFS equity holders led by Kelso & Company and its affiliate funds and including BradyIFS management; by funds managed by Warburg Pincus LLC; and by the current minority shareholders of Envoy Solutions.

 

·On Sep 22, 2023, FEMSA announced changes to its organizational structure that bring it into full alignment with the FEMSA Forward strategy and its three core business verticals: Retail, Coca-Cola FEMSA, and Digital. The Company also announced movements within its senior leadership team, involving internal and newly attracted talent. These changes will enable the organization to operate with maximum focus, positioning FEMSA to pursue and capture its considerable and compelling opportunities for long-term profitable growth.

 

The Retail business vertical will be led by Jose Antonio Fernández Garza-Lagüera. Jose Antonio is currently CEO of Digital@FEMSA, where he nurtured FEMSA’s digital ecosystem from its early days and has helped Spin become the prominent fintech and loyalty platform in Mexico. Before Digital, Jose Antonio held leadership roles at every one of FEMSA’s major business units for over a decade, including as Head of Strategic Planning at OXXO and FEMSA Comercio. Jose Antonio will be supported in his new role by a world-class operational team: Carlos Arenas (Proximity OXXO Mexico), Constantino Spas (Proximity Americas and Fuel), Michael Mueller (Proximity Europe), Jacobo Caller (Proximity Multiformat), and Daniel Belaúnde (FEMSA Health).

 

Juan Carlos Guillermety is joining the Company as CEO of Digital@FEMSA. Juan Carlos comes to FEMSA from Nubank, where he held various senior leadership positions since 2019, after a long tenure at Visa International. Juan Carlos will lead the rapidly growing talent pool that is shaping the future of FEMSA’s digital ecosystem.

 

There is no change at Coca-Cola FEMSA. Ian Craig will continue to lead this key business vertical as its CEO. Other operations outside of FEMSA’s core verticals, including those that are in the active process of being divested, will report to the Corporate Office led by Francisco Camacho. These changes to FEMSA’s organizational structure and senior leadership team were designed in conjunction with the FEMSA Forward strategy as announced in February of this year, consistent with FEMSA’s leadership succession and talent development process. The new appointments have been approved by FEMSA’s Board of Directors and will become effective on November 1st, 2023, with executives transitioning into their new roles and responsibilities in the coming months

 

October 27, 2023  |  Page 12

 

 

CONFERENCE CALL INFORMATION

 

Our Third Quarter 2023 Conference Call will be held on: Friday, October 27, 2023, 11:00 AM Eastern Time (9:00 AM Mexico City Time). The conference call will be webcast live through streaming audio.

 

Telephone: Toll Free US: (866) 580 3963
  International: +1 (786) 697 3501

 

Webcast: https://edge.media-server.com/mmc/p/6zh9pt2t/
   
Conference ID: FEMSA

 

If you are unable to participate live, the conference call audio will be available on https://femsa.gcs-web.com/financial-reports/quarterly-results

 

 

ABOUT FEMSA

 

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 a Proximity Division operating OXXO, a small-format store chain, and other related retail formats, and Proximity Europe which includes Valora, our European retail unit which operates convenience and foodvenience formats. In the retail industry it also participates though a FEMSA Health, which includes drugstores and related activities and Digital@FEMSA, which includes Spin by OXXO and Spin Premia, among other digital financial services initiatives. In the beverage industry, it participates through Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world by volume. Across its business units, FEMSA has more than 350,000 employees in 18 countries. FEMSA is a member of the Dow Jones Sustainability MILA Pacific Alliance, the FTSE4Good Emerging Index and the Mexican Stock Exchange Sustainability Index: S&P/BMV Total México ESG, 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, 2023, which was 17.4064 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.

 

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

 

October 27, 2023  |  Page 13

 

 

 

FEMSA – Consolidated Income Statement

Amounts expressed in millions of Mexican Pesos (Ps.)

 

   For the third quarter of:   For the nine months of: 
   2023   %
of rev.		   2022   %
of rev.		   % Var.   %
Org.(A)		   2023   %
of rev.		   2022   %
of rev.		   % Var.   %
Org.(A)		 
Total revenues   188,095    100.0    157,693    100.0    19.3    11.9    539,113    100.0    451,443    100.0    19.4    10.9 
Cost of sales   116,013    61.7    98,677    62.6    17.6         333,277    61.8    281,714    62.4    18.3      
Gross profit   72,081    38.3    59,016    37.4    22.1         205,836    38.2    169,729    37.6    21.3      
Administrative expenses   8,339    4.4    7,365    4.7    13.2         24,862    4.6    20,534    4.5    21.1      
Selling expenses   48,060    25.5    37,414    23.6    28.5         136,871    25.4    108,545    24.1    26.1      
Other operating expenses (income), net (1)   (246)   (0.1)   91    0.1     N.S.          94    -    203    -    (53.7)     
Income from operations (2)   15,929    8.5    14,146    9.0    12.6    9.8    44,009    8.2    40,447    9.0    8.8    6.1 
Other non-operating expenses (income)   (262)        41          N.S.          (9,577)        146          N.S.       
Interest expense   3,170         3,615         (12.3)        8,964         11,965         (25.1)     
Interest income   2,697         1,161         132.3         12,963         2,694          N.S.       
Interest expense, net   472         2,455         (80.8)        (3,999)        9,270          N.S.       
Foreign exchange loss (gain)   (5,374)        (1,212)         N.S.          3,575         211          N.S.       
Other financial expenses (income), net   504         47          N.S.          520         346         50.3      
Financing expenses, net   (4,397)        1,290          N.S.          96         9,827         (99.0)     
Income before income tax and participation in associates results   20,588         12,815         60.7         53,490         30,321         76.4      
Income tax   6,540         4,482         45.9         16,431         11,124         47.7      
Participation in associates results (3)   (110)        37          N.S.          (538)        87          N.S.       
Continued Operations net income (Loss)   13,938         8,370         66.5         36,521         19,284         89.4      
Discontinued Operations net income (Loss)   (1,180)        4,898         (108.9)        35,473         7,509         32.4      
Consolidated net income (Loss)   12,758         13,268         (3.8)        71,994         26,793         168.7      
Net majority income   9,742         10,748         (9.4)        63,964         19,980          N.S.       
Net minority income   3,016         2,520         19.7         8,030         6,813         17.9      
                                                             
Operative Cash Flow & CAPEX  2023   %
of rev.		   2022   %
of rev.		   % Var.   %
Org.(A)		   2023   %
of rev.		   2022   %
of rev.		   % Var.   %
Org.(A)		 
Income from operations   15,929    8.5    14,146    9.0    12.6    9.8    44,009    8.2    40,447    9.0    8.8    6.1 
Depreciation   8,234    4.4    6,669    4.2    23.5         24,328    4.5    19,533    4.3    24.5      
Amortization & other non-cash charges   1,190    0.6    1,230    0.8    (3.2)        4,097    0.7    3,502    0.8    17.0      
Adjusted EBITDA   25,366    13.5    22,046    14.0    15.1    7.7    72,434    13.4    63,481    14.1    14.1    6.6 
CAPEX   9,791         8,017         22.1         23,279         19,900         17.0      

 

 

(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 results of our joint-venture with Raízen, Grupo Nós, net of taxes.

(4) At the end of September, the CAPEX effectively paid is equivalent to Ps. 23,800 million.

 

October 27, 2023  |  Page 14

 

 

FEMSA – Consolidated Balance Sheet
Amounts expressed in millions of Mexican Pesos (Ps.)

 

ASSETS  Sep-23   Dec-22   % Inc. 
Cash and cash equivalents   160,442    83,439    92.3 
Investments   18,840    51     N.S.  
Accounts receivable   45,304    45,527    (0.5)
Inventories   55,782    62,224    (10.4)
Other current assets   43,350    35,208    23.1 
Current Assets Available for sale   54,723    -     N.S.  
Total current assets   378,441    226,449    67.1 
Investments in shares   10,876    103,669    (89.5)
Property, plant and equipment, net   138,420    134,001    3.3 
Right of use   85,076    83,966    1.3 
Intangible assets (1)   153,133    190,772    (19.7)
Other assets   52,212    59,958    (12.9)
TOTAL ASSETS   818,158    798,815    2.4 

 

LIABILITIES & STOCKHOLDERS’ EQUITY  Sep-23   Dec-22   % Inc. 
Bank loans   2,936    1,862    57.7 
Current maturities of long-term debt   6,062    14,471    (58.1)
Interest payable   1,770    2,075    (14.7)
Current maturities of long-term leases   11,743    12,095    (2.9)
Operating liabilities   164,085    144,411    13.6 
Short term liabilities available for sale   9,828    -     N.S. 
Total current liabilities   196,424    174,914    12.3 
Long-term debt (2)   132,350    170,989    (22.6)
Long-term leases   83,210    81,222    2.4 
Laboral obligations   7,583    7,048    7.6 
Other liabilities   22,690    26,841    (15.5)
Total liabilities   442,257    461,014    (4.1)
Total stockholders’ equity   375,901    337,801    11.3 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   818,158    798,815    2.4 

 

   September 30, 2023 
DEBT MIX (2)  % of Total   Average
Rate		 
Denominated in:          
Mexican pesos   50.9%   7.8%
U.S. Dollars   28.8%   3.2%
Euros   8.4%   2.7%
Swiss Francs   1.0%   1.3%
Colombian pesos   0.6%   0.0%
Argentine pesos   0.0%   0.0%
Brazilian reais   9.2%   0.0%
Chilean pesos   1.0%   10.5%
Uruguayan Pesos   0.0%   0.0%
Guatemalan Quetzal   0.0%   0.0%
Total debt   100.0%   5.2%
Fixed rate (2)   82.6%     
Variable rate (2)   17.4%     

 

DEBT MATURITY PROFILE  2024   2025   2026   2027   2028   2029+ 
% of Total Debt   0.4%   3.8%   1.5%   8.8%   13.9%   71.5%

 

 

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

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

 

October 27, 2023  |  Page 15

 

 

Net Debt & Adjusted EBITDA ex-KOF

Amounts expressed in millions of US Dollars (US.) 

 

   Twelve months ended September 30, 2023 
   Reported Adj. EBITDA   Adjustments   Adj. EBITDA Ex-KOF4 
Proximity Americas & Europe1   2,482    -    2,482 
Fuel   202    -    202 
Health Division   431    -    431 
Envoy Solutions   -    -    - 
Coca-Cola FEMSA2   2,544    (2,544)   - 
Other3   (189)   -    (189)
FEMSA Consolidated   5,471    (2,544)   2,926 
                
Dividends Received4   -    405    405 
                
FEMSA Consolidated ex-KOF   5,471    (2,139)   3,332 

 

   As of September 30, 2023 
   Reported   Adjustments   Ex-KOF 
Cash & Equivalents   8,209    -    8,209 
Coca-Cola FEMSA Cash & Equivalents   2,248    (2,248)   - 
Cash & Equivalents   10,457    (2,248)   8,209 
                
Financial Debt5   4,386    -    4,386 
Coca-Cola FEMSA Financial Debt   3,859    (3,859)   - 
Lease Liabilities   5,444    -    5,444 
Coca-Cola FEMSA Lease Liabilities   94    (94)   - 
Debt   13,783    (3,953)   9,830 
                
FEMSA Net Debt   3,326    (1,705)   1,621 

 

Translated to USD for readers’ convenience using the exchange rate published by the Federal Reserve Bank of New York for September 30, 2023 which was 17.4064 MXN per USD.

 

 

1 Includes Proximity Europe only for the consolidated period.                    

2 Coca-Cola FEMSA adjustment represents 100% of its LTM Adjusted EBITDA.                

3 Includes FEMSA Other Businesses (including Solistica and Digital@FEMSA), FEMSA corporate expenses and the effects of consolidation adjustments

4 Reflects cash dividends received from Coca-Cola FEMSA for approximately US$295 mm, US$45 mm from JRD, and US$57 mm from Heineken during the last twelve months. 5 Includes EUR€ 500.0 mm in notes convertible to Heineken Holding N.V. shares.

 

October 27, 2023  |  Page 16

 

 

Proximity Americas – Results of Operations

Amounts expressed in millions of Mexican Pesos (Ps.)

 

   For the third quarter of:  For the nine months of: 
   2023  %
of rev.		  2022  %
of rev.		  % Var.  2023  %
of rev.		  2022  %
of rev.		  % Var. 
Total revenues  74,020   100.0   61,252   100.0   20.8   206,990   100.0   171,306   100.0   20.8 
Cost of sales  43,500   58.8   36,620   59.8   18.8   122,381   59.1   101,419   59.2   20.7 
Gross profit  30,520   41.2   24,632   40.2   23.9   84,609   40.9   69,887   40.8   21.1 
Administrative expenses  1,737   2.3   1,496   2.4   16.1   4,507   2.2   4,372   2.6   3.1 
Selling expenses  22,110   29.9   17,363   28.3   27.3   61,687   29.8   49,785   29.0   23.9 
Other operating expenses (income), net  96   0.1   39   0.1   146.2   164   0.1   158   0.1   3.8 
Income from operations  6,577   8.9   5,734   9.4   14.7   18,251   8.8   15,572   9.1   17.2 
Depreciation  3,140   4.2   2,831   4.6   10.9   9,157   4.4   8,231   4.8   11.3 
Amortization& other non-cash charges  246   0.4   203   0.3   21.2   688   0.4   767   0.4   (10.3)
Adjusted EBITDA  9,963   13.5   8,768   14.3   13.6   28,096   13.6   24,570   14.3   14.4 
CAPEX  4,198       2,985       40.6   9,804       6,776       44.7 
                                         
Information of OXXO Stores                                        
Total stores                      22,352       20,899       7.0 
Stores Mexico                      21,583       20,382       5.9 
Stores South America                      769       517       48.7 
                                         
Net new convenience stores:                                        
vs. Last quarter  293       231       26.8                     
Year-to-date  894       468       91.0                     
Last-twelve-months  1,453       902       61.1                     
                                         
Same-store data: (1)                                        
Sales (thousands of pesos)  1,047.2       910.1       15.1   994.9       857       16.1 
Traffic (thousands of transactions)  19.5       18.1       8.0   18.7       17.5       7.1 
Ticket (pesos)  53.6       50.3       6.6   53.2       49.1       8.4 

 

 

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

 

October 27, 2023  |  Page 17

 

 

Proximity Europe – Results of Operations

Amounts expressed in millions of Mexican Pesos (Ps.)

 

    For the third quarter of:     For the nine months of:  
    2023     %
of rev.		     2023     %
of rev.		  
Total revenues     11,194       100.0       32,137       100.0  
Cost of sales     6,516       58.2       18,635       58.0  
Gross profit     4,678       41.8       13,502       42.0  
Administrative expenses     815       7.3       2,335       7.3  
Selling expenses     3,518       31.4       10,416       32.4  
Other operating expenses (income), net     (3 )     -       (53 )     (0.2 )
Income from operations     348       3.1       804       2.5  
Depreciation     1,079       9.6       3,261       10.1  
Amortization & other non-cash charges     128       1.2       337       1.1  
Adjusted EBITDA     1,555       13.9       4,402       13.7  
CAPEX     468               742          

 

October 27, 2023  |  Page 18

 

 

Health Division – Results of Operations
Amounts expressed in millions of Mexican Pesos (Ps.)

 

   For the third quarter of:  For the nine months of: 
   2023  %
of rev.		  2022  %
of rev.		  % Var.  2023  %
of rev.		  2022  %
of rev.		  % Var. 
Total revenues  18,569   100.0   18,526   100.0   0.2   56,105   100.0   56,026   100.0   0.1 
Cost of sales  13,138   70.8   13,061   70.5   0.6   39,228   69.9   39,732   70.9   (1.3)
Gross profit  5,431   29.2   5,465   29.5   (0.6)  16,877   30.1   16,294   29.1   3.6 
Administrative expenses  768   4.1   953   5.1   (19.4)  2,238   4.0   2,135   3.8   4.8 
Selling expenses  3,836   20.7   3,580   19.4   7.2   11,867   21.2   11,236   20.1   5.6 
Other operating expenses (income), net  (17)  (0.1)  (10)  (0.1)  70.0   16   -   (1)  -    N.S.  
Income from operations  844   4.5   942   5.1   (10.4)  2,756   4.9   2,924   5.2   (5.7)
Depreciation  762   4.1   727   3.9   4.8   2,311   4.1   2,203   3.9   4.9 
Amortization& other non-cash charges  242   1.4   174   0.9   39.1   744   1.4   550   1.0   35.3 
Adjusted EBITDA  1,848   10.0   1,843   9.9   0.3   5,811   10.4   5,677   10.1   2.4 
CAPEX  378       245       54.3   996       245        N.S.  
                                         
Information of Stores                                        
Total stores                      4,347       3,971       9.5 
Stores Mexico                      1,710       1,516       12.8 
Stores South America                      2,637       2,455       7.5 
                                         
Net new stores:                                        
vs. Last quarter  80       84       (4.8)                    
Year-to-date  241       319       (24.5)                    
Last-twelve-months  365       431       (15.3)                    
                                         
Same-store data: (1)                                        
Sales (thousands of pesos)  1,131.1       1,173.4       (3.6)  1,174.5       1,216.9       (3.5)

 

 

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

 

October 27, 2023  |  Page 19

 

 

Fuel – Results of Operations

Amounts expressed in millions of Mexican Pesos (Ps.)

 

   For the third quarter of:   For the nine months of: 
   2023  

%

of rev.

   2022  

%

of rev.

   % Var.   2023  

%

of rev.

   2022  

%

of rev.

   % Var. 
Total revenues   15,782    100.0    13,823    100.0    14.2    43,378    100.0    37,938    100.0    14.3 
Cost of sales   13,831    87.6    12,052    87.2    14.8    38,056    87.7    33,203    87.5    14.6 
Gross profit   1,951    12.4    1,771    12.8    10.2    5,322    12.3    4,735    12.5    12.4 
Administrative expenses   70    0.4    58    0.4    20.7    199    0.5    148    0.4    34.5 
Selling expenses   1,152    7.4    1,029    7.4    12.0    3,303    7.6    2,963    7.8    11.5 
Other operating expenses (income), net   19    0.1    (3)   -     N.S.     19    -    (12)   -     N.S.  
Income from operations   710    4.5    687    5.0    3.3    1,801    4.2    1,636    4.3    10.1 
Depreciation   285    1.8    266    1.9    7.1    844    1.9    784    2.1    7.7 
Amortization & other non-cash charges   31    0.2    7    -     N.S.     60    0.1    31    0.1    93.5 
Adjusted EBITDA   1,026    6.5    960    6.9    6.9    2,705    6.2    2,451    6.5    10.4 
CAPEX   48         22         115.7    116         58         98.7 
                                                   
Information of OXXO GAS Service Stations                                                  
Total stores                            571         568         0.5 
Net new convenience stores:                                                  
vs. Last quarter   1         (1)        -                          
Year-to-date   3         1         -                          
Last-twelve-months   3         2         50.0                          
Volume (millions of liters) total stations   616         613         0.6    1,840         1,755         4.8 

Same-store data: (1)

                                                  
Sales (thousands of pesos)   8,236.9         7,617.6         8.1    7,430.3         6,826.7         8.8 
Traffic (thousands of liters)   391.7         376.8         4.0    358.7         342.2         4.8 
Average price per liter   21.0         20.2         4.0    20.8         20.0         3.8 

 

 

(A) Unaudited consolidated financial information.

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

 

October 27, 2023  |  Page 20

 

 

Coca-Cola FEMSA – Results of Operations

Amounts expressed in millions of Mexican Pesos (Ps.)

 

   For the third quarter of:   For the nine months of: 
   2023  

%

of rev.

   2022  

%

of rev.

   % Var.   2023  

%

of rev.

   2022  

%

of rev.

   % Var. 
Total revenues   62,853    100.0    57,093    100.0    10.1    181,376    100.0    166,042    100.0    9.2 
Cost of sales   34,005    54.1    31,702    55.5    7.3    99,926    55.1    92,573    55.8    7.9 
Gross profit   28,848    45.9    25,392    44.5    13.6    81,451    44.9    73,469    44.2    10.9 
Administrative expenses   3,239    5.2    2,895    5.1    11.9    9,824    5.4    8,238    5.0    19.3 
Selling expenses   16,731    26.5    15,038    26.4    11.3    46,676    25.8    43,052    25.8    8.4 
Other operating expenses (income), net   418    0.7    124    0.2     N.S.     235    0.1    298    0.2    (21.1)
Income from operations   8,460    13.5    7,335    12.8    15.3    24,716    13.6    21,881    13.2    13.0 
Depreciation   2,468    3.9    2,515    4.4    (1.9)   7,179    4.0    7,287    4.4    (1.5)
Amortization & other non-cash charges   912    1.4    776    1.4    17.5    1,851    1.0    1,983    1.2    (6.7)
Adjusted EBITDA   11,840    18.8    10,626    18.6    11.4    33,746    18.6    31,151    18.8    8.3 
CAPEX   4,964         4,034         23.1    11,713         -         N.S. 
                                                   
Sales Volumes                                                  
(Millions of unit cases)                                                  
Mexico and Central America   633.2    61.3    555.8    60.0    13.9    1,813.9    60.6    1,640.5    59.4    10.6 
South America   144.0    13.9    131.1    14.2    9.8    420.5    14.1    398.9    14.5    5.4 
Brazil   255.9    24.8    238.9    25.8    7.1