Fomento Economico Mexicano (FEMSA), the leading Latin American beverages group, yesterday reported second quarter volumes up 3.8%. The company said that domestic volumes increased 2.5%, while exports leapt 16.8% during the period.

Jose Antonio Fernandez, chairman and CEO of FEMSA, said, "This quarter was an eventful one, particularly for our beer operations, and each new development builds on our enthusiasm and expectations for the future. We announced the unwinding of our business relationship with Interbrew and our repurchase of the 30% of FEMSA Cerveza.

"We also announced a new commercial agreement with Heineken for the import, marketing and distribution of our brands in the key US market. And we reached an agreement to be the exclusive importers and distributors of Coors Light in Mexico.

"While these are all excellent news, and the new agreements will significantly improve our business platform going forward, I am particularly pleased with the results achieved in the domestic beer market, where we turned in another solid quarter of profitable volume growth."

FEMSA total revenues increased by 14.2% to Ps. 23.222 billion during 2Q04 from Ps. 20.333 billion during 2Q03. The company said that the increase was driven by revenue growth in every one of its main sub-holding companies.

The growth in total revenues during the second quarter included a 17% increase in total revenues from Coca-Cola FEMSA and solid revenue growth of 19.5% at FEMSA Comercio.

Income from operations (including results of affiliated companies) increased by 4.4% to Ps. 3.646 billion during the quarter, resulting in an operating margin of 15.7%.

For the first half of 2004, income from operations increased by 17.8% reaching Ps. 6.218 billion from Ps. 5.277 billion in the first semester of 2003.

Fernandez said: "The combination of such encouraging news from our beer operations, with the significant progress made by KOF in the integration of its new territories and the development of the right competitive strategies for each market, as well as yet another quarter of robust growth at Oxxo, fill us with satisfaction and optimism about the road ahead. However, we realize that with growth comes added responsibility. We are taking every step to ensure that our balance sheet remains strong, and our flexibility high, as we continue to consolidate FEMSA as one of the leading beverage companies in the world".