MEXICO: Coca-Cola buoys Femsa, as Cerveza struggles

By | 20 February 2008

Fomento Economico Mexicano (Femsa) has posted a healthy set of full-year results, despite "weakness" at its beer division.

The Mexican drinks company said yesterday (19 February) that net income in 2007 leapt by 21.1% on 2006, coming in at MXN11.94bn (US$1.11bn), as sales headed north, rising 8.4% to MXN147.56bn.

Operating profit also rose, by 6% to MXN19.57bn.

While the company's Coca-Cola Femsa division delivered a net income increase of 30.5% to MXN6.91bn and sales up 8.1% to MXN69.25bn, Femsa Cerveza had a tougher time of it last year. Although sales were up by 4.3%, operating income slid by 11.7% on 2006 to MXN5.40bn, reflecting "continued pressure on raw materials, lower average price per hectolitre and sustained investment in our brand portfolio", the company said.

The beer unit saw operating expenses rise by 6.3% over 2006, due to "continued investment in channel development and brand-building activities for Sol and Tecate in Mexico as well as for Dos Equis and Tecate in the US, and stepped-up marketing activities in Brazil in connection with our Sol and Kaiser brands".

"While FEMSA Cerveza faced significant headwinds from high raw material costs and intensified competition in Mexico, particularly in the first half of the year, our operations in Brazil continued to grow according to plan and our export volumes again grew in the double digits, driven by continued strong performance in the US," said group chairman and CEO Jose Antonio Fernandez. "For its part, Coca-Cola FEMSA delivered a strong set of numbers aided by growing profitability in Mexico and in most of its Central and South American markets.

"We enter this new year with optimism that we will be able to successfully navigate what may turn out to be another challenging year, while we continue to build the unique system that is FEMSA," Fernandez concluded.

Sectors: Beer & cider, Soft drinks, Water

Companies: FEMSA

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