FEMSA Announces Fourth Quarter and Full Year 2023 Results
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Insights
The growth in Total Consolidated Revenues by 4.6% for FEMSA in 4Q23 compared to 4Q22 indicates a positive trend in the company's overall performance. This is particularly noteworthy given the challenging macroeconomic conditions and tough comparison bases from previous quarters. The expansion of Proximity Americas by 14.2% is significant, as it suggests a successful strategy in store expansion and an ability to maintain high-single-digit comparable sales at OXXO, which is a key driver for the company's retail growth.
However, the report of increased labor costs in Mexico and other specific situations affecting profitability is a concern for investors, as it may signal rising operational costs that could impact future margins. While the company's strategic focus on capital allocation and leverage reduction is reassuring, it will be important to monitor how these cost pressures are managed in the coming quarters.
The decline in Income from Operations for FEMSA Consolidated (-1.4% for 4Q23 and -6.4% year-to-date) is a red flag that needs to be examined closely. This decline, amidst an increase in revenues, suggests that the company is facing margin compression, possibly due to the aforementioned labor costs and other expenses. Investors should assess the sustainability of the company's earnings, particularly in the Health segment, which reported a significant decrease in profitability with a 43.5% drop in Income from Operations for 4Q23.
Additionally, the strong performance of Coca-Cola FEMSA, with both volume and revenue growth, is indicative of effective market penetration and product demand. This performance is a positive sign for the company's beverage segment and could be a stabilizing factor against the volatility seen in other segments.
The report mentions a challenging macro environment, particularly in Europe where Valora achieved substantial growth. This is an interesting contrast to the global economic headwinds, suggesting that FEMSA's diversification strategy and presence in different markets may be providing some resilience. The mention of a strategic plan aiming to reach a leverage objective within two to three years is also of interest. This suggests that the company is prioritizing financial stability and debt management, which is crucial in an environment where interest rates may fluctuate and affect borrowing costs.
Furthermore, the growth in the company's digital segment, with Spin by OXXO and Spin Premia showing substantial active user growth, reflects the ongoing trend of digital transformation in retail. The average tender of 31.0% for Spin Premia indicates a strong customer engagement, which could translate into higher sales and customer loyalty in the long run.
MONTERREY, Mexico, Feb. 23, 2024 (GLOBE NEWSWIRE) -- Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) (NYSE: FMX; BMV: FEMSAUBD, FEMSAUB) announced today its operational and financial results for the fourth quarter and full year of 2023.
- FEMSA: Total Consolidated Revenues grew
4.6% against 4Q22. - FEMSA Retail1: Proximity Americas total Revenues increased
14.2% against 4Q22. - DIGITAL: Spin by OXXO had 6.9 million active users2 while Spin Premia had 19.3 million active loyalty users2 and an average tender3 of
31.0% . - COCA-COLA FEMSA: Total volume and revenues grew
6.1% and8.1% , respectively, against 4Q22.
Financial Summary for the Fourth Quarter and Full Year 2023
Change vs. comparable period
| Total Revenues | Gross Profit | Income from Operations | Same-Store Sales | |||||
| 4Q23 | YTD23 | 4Q23 | YTD23 | 4Q23 | YTD23 | 4Q23 | YTD23 | |
| FEMSA Consolidated | ( | ( | ||||||
| Proximity Americas | ||||||||
| Health | ( | ( | ( | |||||
| Fuel | ||||||||
| Coca-Cola FEMSA | ||||||||
José Antonio Fernandez Carbajal, FEMSA’s Chief Executive Officer, commented:
“Our results for the fourth quarter were strong, but less uniform across business units than what we saw earlier in the year. Revenues were robust, even as we cycled tough comparison bases at certain business units. However, on the expense side we felt more directly the cumulative effect from increased labor costs in Mexico, as well as some business- and country-specific situations that impacted our profitability.
“Proximity Americas increased revenues by more than
“On the strategic front, we recently provided incremental information regarding our capital allocation framework, and we stand ready to begin executing the plan in order to reach our stated leverage objective within two to three years.
“In short, we wrapped up a unique year that was transformational on the strategic front, with remarkable results resulting from our FEMSA Forward strategy. Today, we are a leaner, more focused company, ideally positioned to pursue and capture the most compelling opportunity set we have ever had before us. Once again, I thank the entire FEMSA team for their excellent work, as we get ready to write another exciting chapter.”
To obtain the full text of this earnings release, please visit our Investor Relations website at https://femsa.gcs-web.com/ under the Financial Reports section |
| CONFERENCE CALL INFORMATION | |
| Our Fourth Quarter and Full Year 2023 Conference Call will be held on: Friday, February 23, 2024, 10:00 AM Eastern Time (9:00 AM Mexico City Time). The conference call will be webcast live through streaming audio. | |
| Telephone: | Toll Free US: (866) 580 3963 |
| International: +1 (786) 697 3501 | |
| Webcast: | https://edge.media-server.com/mmc/p/j59xingg/ |
| Conference ID: | FEMSA |
| If you are unable to participate live, the conference call audio will be available on https://femsa.gcs-web.com/financial-reports/quarterly-results | |
ABOUT FEMSA
FEMSA is a company that creates economic and social value through companies and institutions and strives to be the best employer and neighbor to the communities in which it operates. Across its business units, FEMSA has more than 350,000 employees in 18 countries. FEMSA is a member of the Dow Jones Sustainability MILA Pacific Alliance, the FTSE4Good Emerging Index and the Mexican Stock Exchange Sustainability Index: S&P/BMV Total México ESG, among other indexes that evaluate its sustainability performance.
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1 FEMSA Retail: Proximity Americas & Europe, Fuel and FEMSA Health.
2 Active User for Spin by OXXO: Any user with a balance or that has transacted within the last 56 days.
Active User for Spin Premia: User that has transacted at least once with OXXO Premia within the last 90 days.
3 Tender: OXXO Mexico MXN sales with OXXO Premia or Spin Premia redemption or accrual divided by Total OXXO Mexico MXN Sales, during the period.
FAQ
What were FEMSA's total consolidated revenue growth for Q4 and full year 2023?
How did FEMSA's Proximity Americas segment perform in Q4 2023?
What was the active user count for Spin by OXXO in Q4 2023?
What was the revenue growth percentage for Coca-Cola FEMSA in Q4 2023?
When will FEMSA's Fourth Quarter and Full Year 2023 Conference Call be held?
What strategic initiatives did FEMSA mention in the press release?
Where can the full text of the earnings release be found?
