MEXICO: Femsa operating profit up 13% in second quarter

The Mexican brewer and soft drinks group, Fomento Economico Mexicano (Femsa), reported operating profit before interest and taxes for the second quarter of 2002 of MXN2.733 billion, 13% up on the second quarter of 2001 and ahead of analysts' predictions.

Femsa, which produces the Tecate, Sol and Dos Equis beer brands, and also owns 51% of Coca-Cola Femsa (KOF), Mexico's largest Coke bottler, posted sales revenues of MXN13.372 billion, up 4.9% from last year.

The company attributed the sales growth chiefly to an 8.6% rise in turnover at KOF and said continued gains in efficiency at all its subsidiaries allowed it to boost profitability in a "very tough quarter".

Sergio Saenz, director of Femsa's beer division, said that the company's domestic market share fell by 0.7% in the first half of 2002. The company generally has a market share in Mexico of around 45%. "I would estimate for a 12-month moving average (a loss of) 0.3%," Saenz said. "We do not have any evidence that would be a permanent loss."

Net beer sales were static while sales volumes rose marginally. Export volumes rose by 6% fuelled by continued high demand in the US.

Femsa re-stated its projection for the full year. "Despite the challenging economic environment and resulting weakness in domestic demand, we believe the implementation of the strategic plan for the year is on track and on budget," the company said. "We therefore reiterate our expectations for the full year 2002: a target growth range of 1% to 2% for domestic (beer) volumes and 5% to 7% for export volumes."