MEXICO: Strong quarter offsets commodity costs at FEMSA

Fomento Economico Mexicano (FEMSA) has posted a lift in both sales and profits for its first quarter.

The Mexican company, which operates both in the beer and soft drinks sectors, said today (28 April) that operating profit in the first three months of 2008 came in 19.6% up on the corresponding period a year earlier at MXN3.98bn (US$381m). The rise came on the back of an 8.4% increase in group sales, totalling MXN36.18bn, with top-line growth coupling with a decline in administrative expenses helping to offset raw material pressures. Sales volumes grew by 7.1% in Mexico, by 12.6% in exports and by 2.9% in Brazil.

Net majority profit was up by 13.1% at MXN1.29bn.

"Our first quarter 2008 results provide a compelling example of the strength of our unique continental integrated platform," said FEMSA's chairman and CEO, Jose Antonio Fernandez. "Coca-Cola FEMSA delivered strong numbers aided by growing profitability in Mexico and in all of its divisions. FEMSA Cerveza results reflected a strong quarter, aided by positive weather conditions partially offsetting raw material pressures; our Brazilian operations started the year with some softness, however our export volumes again grew in the double digits, driven by continued strong performance in the US.

"We start this new year with strong first quarter results and conviction that we will be able to successfully navigate what may turn out to be a challenging year, while we continue to strengthen FEMSA's business platform."

Late last week, FEMSA's Coca-Cola unit reported a 6.4% rise in sales for the quarter to MXN17.26bn (US$1.65bn) with continued growth in its domestic market contributing to the rise. Net profit for the quarter was MXN1.62bn, up 31.8% compared to the same time last year.

Consolidated operating income rose 15.7% to MXN2.8bn.