just on Call: Coca-Cola FEMSA eyes life beyond Latin America
Coca-Cola FEMSA said it had not yet reached any conclusion on the potential purchase of the Philippines unit
Speaking on the firm's earnings call yesterday (28 February), Coca-Cola FEMSA's CEO, Carlos Salazar Lomelin, told analysts that the company was attracted to the Philippines unit due to the similarities in consumption power and market fragmentation to those of Latin America. However, he said the company's decision on whether to purchase the unit will depend on the outcome of an analysis process, which has only just begun.
Last week, Coca-Cola FEMSA announced it had signed a 12-month exclusivity agreement to evaluate the potential acquisition. This would be its first acquisition outside Latin America.
Lomelin said: "The 12 months is to do with the fact that we are starting during a very important season for sales in the Philippines, so they prefer to delay our landing to start the analysis that we have to do."
Some analysts are uncertain about the bottler's credentials to integrate businesses outside of Latin America. But, Lomelin said: "We have very little information, but based on what we know, we think that it is a market that has certain similar aspects to what we have in Latin America in the fragmentation of the system, and the consumption power of some of the consumers.
"We think that we can take advantage of some of our expertise that we have in developing these types of markets."
He added that Coca-Cola FEMSA may look for more opportunities outside of its home region. "When you look at what is left in Latin America, you have a very large bottler like Arca, but assuming that these bottlers continue independently, there is not much opportunity to continue growing," he told analysts. "There are a few territories in Mexico, there are some in Brazil, but then there is not much left."
The CEO pointed to Asia. "Asia always catches our attention during our analyses, because of the potential for growth that you see, and the development that you see."
Coca-Cola FEMSA yesterday reported an increase in full-year profits, despite a "challenging commodity cost environment". For the 12 months to the end of December, net profits climbed by 8.3% to MXN10.61bn (US$826.3m). Operating profits grew by 18% to MXN20.15bn, while net sales in the period amounted to MXN124.71bn, a 20.5% increase on 2010.
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