Coca-Cola FEMSA 4Q24 Financial Summary
Business Context and Reporting Period
Coca-Cola FEMSA, S.A.B. de C.V., the world's largest Coca-Cola franchise bottler by sales volume, reported results for the fourth quarter and full year ended December 31, 2024. The filing, submitted on February 21, 2025, covers operations across Mexico, Central America, and South America. The company serves over 272 million consumers through more than 2.1 million points of sale.
Key Financial Metrics
| Metric | 4Q 2024 | 4Q 2023 | YoY Change | FY 2024 | FY 2023 | YoY Change |
|---|---|---|---|---|---|---|
| Total Revenues (Ps. Million) | 75,528 | 66,078 | 14.3% | 279,793 | 245,088 | 14.2% |
| Gross Profit (Ps. Million) | 35,695 | 30,475 | 17.1% | 128,736 | 110,860 | 16.1% |
| Operating Income (Ps. Million) | 12,092 | 9,674 | 25.0% | 40,141 | 34,180 | 17.4% |
| Net Income (Majority) (Ps. Million) | 7,286 | 5,392 | 35.1% | 23,729 | 19,536 | 21.5% |
| Adjusted EBITDA (Ps. Million) | 16,104 | 13,149 | 22.5% | 56,205 | 46,418 | 21.1% |
| Earnings Per Share (Ps.) | 0.43 | 0.32 | 34.4% | 1.41 | 1.16 | 21.6% |
| Volume Growth (Unit Cases) | 2.2% | - | - | 4.4% | - | - |
| CAPEX (Ps. Million) | 13,778 | 9,837 | 40.1% | 29,416 | 21,396 | 37.5% |
Liquidity and Debt: As of December 31, 2024, Net Debt (including hedges) was Ps. 38,329 million, resulting in a Net Debt/Adjusted EBITDA ratio of 0.68x. Total debt comprised 59.1% Mexican Pesos, 19.2% Brazilian Reals, and 18.3% U.S. Dollars. The average interest rate on total debt was 8.4%.
Material Changes vs. Prior Period
- Revenue and Profit Growth: Consolidated revenue grew 14.3% in 4Q24, driven by volume growth (2.2%), revenue management initiatives, and favorable mix. Operating income surged 25.0% due to top-line growth and operating expense efficiencies.
- Margin Expansion: Gross margin expanded 120 basis points to 47.3% in 4Q24, aided by easing sweetener and PET costs and favorable hedging. Operating margin increased 140 basis points to 16.0%.
- Regional Performance: South America was the primary growth driver with 19.4% revenue growth and 26.9% operating income growth, led by Brazil and Uruguay. Mexico & Central America saw 10.4% revenue growth.
- Unusual Items: The company incurred one-time net expenses of Ps. 730 million in 4Q24 (Ps. 1,637 million for the full year) related to asset write-offs and debris removal from hurricanes in Mexico and flooding in Brazil. These figures include recognized insurance claims.
- Financing Results: Comprehensive financing expense decreased to Ps. 980 million in 4Q24 from Ps. 1,285 million in 4Q23, primarily due to a foreign exchange gain of Ps. 57 million compared to a loss of Ps. 317 million in the prior year.
Guidance, Outlook, and Risks
Management Commentary: CEO Ian Craig described 2024 as the "second chapter" of the company's transformation, highlighting record CAPEX deployment to expand production and distribution capacity. The company successfully rolled out AI-driven sales tools (Juntos+ Advisor) in Brazil and expanded its B2B platform (Juntos+) to 1.3 million active users.
Outlook: Management remains optimistic about opportunities across Latin American markets, citing a vibrant beverage industry and a growing region. The company aims to continue generating value through an adaptive organizational structure.
Risks and Contingencies:
- Foreign Exchange: Significant exposure to currency fluctuations, particularly the depreciation of the Mexican Peso and Brazilian Real against the U.S. Dollar, impacting raw material costs and translation of results.
- Climate Events: Ongoing financial impact from natural disasters (hurricanes in Mexico, flooding in Brazil), though partially mitigated by insurance claims.
- Inflation: High inflation in Argentina (117.76% LTM) and varying rates across other operating territories affecting cost structures and pricing power.
Investor Verification Checklist
- Insurance Recovery: Verify the timing and sufficiency of insurance claim recoveries related to the Ps. 1,637 million in disaster-related expenses.
- Argentina Operations: Assess the sustainability of the 106.8% revenue growth in Argentina given the 117.76% inflation rate and currency volatility.
- CAPEX Efficiency: Monitor the return on the record CAPEX spend (Ps. 29.4 billion in FY24) intended to expand capacity.
- Digital Adoption: Track the monetization and user engagement metrics of the Juntos+ platform and AI sales tools.
- Debt Maturity: Review the debt maturity profile, noting that 23.9% of total debt is floating rate, exposing the company to interest rate hikes.