MEXICO: Coca-Cola FEMSA's expenses outpace sales - analyst
An analyst has raised concern over Coca-Cola FEMSA's Q2 results, branding them "weak" and highlighting that operating expenses grew much faster than sales.
The Mexico-based firm revealed late yesterday (24 July) that first-half net profits rose 9% to MXN5.64bn (US$412m). However, Q2 profits were flat despite sales leaping 27.8% to MXN36.12bn.
Analysts at JP Morgan said the jump in Q2 net sales was driven "solely by pricing". "The currency neutral, organic sales growth of 12% came entirely from pricing," it said in a note.
Reported EBITDA grew 17% to MXN6.3bn, but only 7% of that growth was organic, "What jumps out is that operating expenses grew much faster than sales," the analysts said. These expenses include new IT system amortisation and investments in innovations in Mexico, as well as labour and logistic expenses in Venezuela, Argentina and Brazil, Coca-Cola FEMSA's management said in a conference call, according to JP Morgan.
Coca-Cola FEMSA also "toned down" its full-year expectations. "Earlier this year, management said EBITDA margin could be flat. Today, they said this is likely to be slightly down for the full year," JP Morgan said.
- Focus - Edrington's FY Performance by Brand
- Where Beer is Brewed Can Leave a Bad Taste
- Analysis - Storm clouds lift over Diageo Towers
- Pernod relies on Indian whiskey to crack Africa
- Analysis - Cider's Campaign Gains
- Former Bacardi exec takes De Kuyper CEO role
- Diageo lining up Gleneagles sale - report
- Diageo CFO Mahlan to head up N America
- Edrington posts FY profits drop
- TWE, Pernod hail China-Aus FTA
- Global liqueurs insights - market forecasts, product innovation and consumer trends research
- The IWSR Company Profile 2014 – Remy Cointreau
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Edrington Group in Spirits (World)
- Global Tequila insights - market forecasts, product innovation and consumer trends research