The Mexican drinks company Fomento Economico Mexicano (FEMSA) has reported net profits down 42% to pesos 401m, compared to pesos 690m, for the first quarter.
The decline was steeper than expected as the company was hit by a weakening Mexican peso.
Mexico’s peso dropped 16 percent against the dollar in the 12 months to March 31. It depreciated more than 3 percent in the first quarter.
“The nonoperating charges that impacted this result were mainly a larger interest expense reflecting a larger net debt balance, a significant foreign exchange loss related to the devaluation of the peso against the dollar and a higher effective tax rate,” Femsa said in a statement.
However consolidated unit case volume increased by 6.8% as a result of the 6.6% and 7.6% volume growth in the Mexican and Argentine operations, respectively.
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By GlobalDataConsolidated operating income increased by 5.2% to Ps. 994.3m, reaching a consolidated operating margin of 24.0%, an increase of 1.0 percentage point as compared to the first quarter of 2002.
“Once again, our consolidated results were positive in terms of revenue and operating income growth. Beyond short-term metrics, however, we continue to invest in the transformation to improve our core businesses going forward. The sustained effort to strengthen our operations and financial structure is now bearing fruit with the acquisition of Panamco. This transaction will consolidate FEMSA as one of the most successful companies in Mexico, as well as the leader in beverages in Latin America. We have managed FEMSA with a long-term vision, results orientation and operational and financial discipline. Today we have a solid track record, but the real challenge lies ahead. We will not be satisfied until we have realized the potential that this new stage in our company offers to us,” said Jose Antonio Fernandez, chairman and CEO of FEMSA.
