Business Context and Reporting Period
Company: Coca-Cola FEMSA, S.A.B. de C.V.
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Filing Date: April 15, 2026
Accounting Basis: International Financial Reporting Standards (IFRS)
Reporting Currency: Mexican Pesos (Ps.) with U.S. Dollar (US$) translations for convenience.
Coca-Cola FEMSA is the largest franchise bottler of Coca-Cola trademark products in the world by sales volume. The company operates in Mexico, Central America (Guatemala, Nicaragua, Costa Rica, Panama), and South America (Colombia, Brazil, Argentina, Uruguay). As of December 31, 2025, the company employed approximately 108,840 people and operated 55 bottling plants and 256 distribution centers.
Key Financial Metrics (Year Ended December 31, 2025)
| Metric | 2025 (Ps. Millions) | 2024 (Ps. Millions) | Change |
|---|---|---|---|
| Total Revenues | 291,746 | 279,793 | +4.3% |
| Gross Profit | 133,176 | 128,736 | +3.4% |
| Gross Margin | 45.6% | 46.0% | -40 bps |
| Net Income (Consolidated) | 25,016 | 24,549 | +1.9% |
| Net Income (Parent Equity Holders) | 23,845 | 23,729 | +0.5% |
| Earnings Per Share (Basic) | Ps. 1.42 | Ps. 1.41 | +0.7% |
| Operating Cash Flow | 30,773 | 42,442 | -27.5% |
| Total Debt | 79,778 | 73,697 | +8.2% |
| Cash and Cash Equivalents | 28,067 | 32,779 | -14.4% |
Segment Performance:
- Mexico and Central America: Revenues of Ps. 169,641 million (+1.6%); Gross Profit of Ps. 81,234 million (+0.6%).
- South America: Revenues of Ps. 122,105 million (+8.3%); Gross Profit of Ps. 51,942 million (+8.3%).
Material Changes vs. Prior Period
- Volume vs. Price: Total sales volume decreased by 1.8% to 4,150.4 million unit cases, primarily due to declines in Mexico (-5.2%), Colombia (-0.8%), and Panama. However, the average price per unit case increased by 6.0% to Ps. 68.09, driven by revenue management initiatives.
- Margin Compression: Gross margin decreased by 40 basis points to 45.6%. This was driven by higher promotional discounts, unfavorable product mix, and higher fixed costs (labor), partially offset by lower sweetener costs.
- Argentina Hyperinflation: Argentina continues to be treated as a hyperinflationary economy. The company recognized a gain on monetary position of Ps. 383 million in 2025 (vs. Ps. 216 million in 2024) due to inflationary effects on liabilities.
- Insurance Recoveries: The company recognized insurance recoveries related to hurricanes in Mexico and floods in Brazil, resulting in a net gain in "Other income" of Ps. 1,882 million in 2025.
- Interest Expense: Increased by 7.9% to Ps. 8,130 million, driven by the issuance of U.S. dollar-denominated bonds due in 2035 and increased notional amounts in Mexican pesos.
Guidance, Outlook, Risks, and Unusual Items
Capital Expenditures: The company has budgeted capital expenditures for 2026 to range between 7.0% and 7.5% of total revenues, focusing on infrastructure, manufacturing, distribution, and IT.
Dividends: For fiscal year 2025, a dividend of Ps. 1.935 per unit was declared, to be paid in four installments in 2026. This represents an increase from the Ps. 1.840 per unit declared for 2024.
Material Weakness in Internal Controls: Management identified a material weakness in Information Technology General Controls (ITGCs) related to ERP systems supporting financial accounting. This weakness relates to user access controls and program change management. Despite this, no material errors were identified in the 2025 financial statements.
Key Risks:
- Regulatory & Tax: Significant tax reforms in Mexico (effective Jan 1, 2026) increase excise taxes on sugary and non-caloric sweetened beverages. Brazil is implementing a broad tax reform (CBS/IBS) starting Jan 1, 2026. Colombia introduced a net wealth tax effective March 31, 2026.
- Raw Materials: Prices for PET resin (linked to crude oil) and sugar remain volatile. The company uses hedging strategies to mitigate these risks.
- Geopolitical & Economic: Operations are exposed to currency fluctuations (MXN, BRL, ARS) and economic conditions in Mexico and Brazil, which account for 74.9% of total revenues.
- Climate & ESG: Increasing regulatory requirements regarding plastic packaging, water stewardship, and carbon emissions may increase compliance costs.
Investor Verification Checklist
- Internal Control Remediation: Verify the progress of the remediation plan for the identified material weakness in ITGCs and its impact on future financial reporting reliability.
- Tax Reform Impact: Assess the quantitative impact of the new Mexican excise taxes (effective Jan 1, 2026) and the Brazilian tax reform on 2026 profitability and cash flows.
- Volume Trends in Mexico: Monitor the recovery of sales volume in Mexico, which declined 5.2% in 2025 due to macroeconomic deceleration and brand sentiment issues.
- Argentina Inflation: Track the volatility of the Argentine peso and the continued application of hyperinflationary accounting standards on the financial statements.
- Debt Maturity Profile: Review the debt maturity schedule, noting the issuance of new bonds in early 2026 and the mix of fixed vs. variable rate debt (26.1% variable after swaps).