MEXICO: FEMSA reports fall in Q3 net income
Fomento Económico Mexicano (FEMSA) this week reported a fall in third-quarter net income as foreign exchange rates negatively hit the growth made in operating profits.
Net income decreased 24.1% to MXN2.56bn (US$200.4m), as income from operations growth partially offset the shift from a gain to a loss in the company's foreign exchange position.
However, the soft drinks bottler and brewer said its consolidated total revenues grew 10.8% and income from operations grew 8.6%, driven by strong results at Coca-Cola FEMSA and FEMSA Comercio that more than offset weakness at FEMSA Cerveza.
Coca-Cola FEMSA total revenues and income from operations increased 14.5% and 10.3%, respectively.
The results, the company said, were mainly driven by double-digit income from operations growth in Mercosur, supported by the integration of Remil.
FEMSA Cerveza saw total revenues increase 5.7%, but the company said that in an environment of "healthy pricing", sales volume in Mexico decreased 1.9%, while sales volume grew 8% in Brazil and 10% in export markets.
A statement added: "Continued raw material pressures and sustained marketing investments behind our brands across our operations, resulted in an 8.2% decrease in income from operations."
FEMSA Comercio, meanwhile, saw income from operations increase over 30% for the seventh consecutive quarter, resulting in an operating margin expansion of 110 basis points to reach 6.5%.
José Antonio Fernández, chairman and CEO of FEMSA, said: "After a strong first-half performance, during the third quarter we started seeing some signals of a softening consumer in our main market on top of growing macroeconomic pressures and sustained raw materials inflation across our markets.
"However, we were again able to deliver consolidated operating income growth. FEMSA Cerveza's positive pricing trends in the key Mexican market, combined with contained administrative expenses, partially offset the continued pressure from grain prices and sustained marketing activity.
"Coca-Cola FEMSA continued capturing the benefits of integrating Remil and Jugos del Valle into its platform."
He added: "These are tough times, however FEMSA's business position remains as solid as ever. Our balance sheet is healthy, our competitive position across businesses and across markets has never been stronger, and we are working hard to ensure that we maintain our momentum through this challenging period."
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