Retailer, bottler Femsa's profit hit by strong peso
Reuters
Published Oct 27, 2023 09:49AM ET
Updated Oct 27, 2023 01:20PM ET
By Kylie Madry
MEXICO CITY (Reuters) -Mexico's Femsa, which controls one of the world's largest Coca-Cola (NYSE:KO) bottlers and a sprawling empire of Oxxo corner shops, reported a 9% year-on-year fall in third-quarter net profit on Friday, partly due to a strong peso.
Although Femsa said profit was lifted by stronger underlying operations, an exchange-rate bump on dollar-denominated debt and a dip in net interest expenses, the effects were offset by its U.S. exposure and a drop in income from discontinued operations, including a stake it had held in Heineken (AS:HEIN).
Femsa said its net income for the period dropped to 9.74 billion pesos ($559 million) from 10.75 billion pesos, while its earnings before interest, tax, depreciation and amortization (EBITDA) rose by 15% to 25.37 billion pesos.
Despite the hit from the peso, which has appreciated 14% from the September 2022-September 2023 period, Femsa's "operating momentum remains robust, particularly when looking at trends on a constant currency basis," JP Morgan analysts said.
Shares in Femsa, which is looking to redouble its efforts on its core business by selling off stakes in Heineken and Jetro Restaurant Depot, were up around 3% in mid-morning trading.
While same-store sales in its Oxxo stores across Latin America grew by 15% - boosted by demand for snacks, beer and other drinks - Femsa said this growth should slow to the higher single digits next year, but double digits may not be "out of the question" earlier on.
Femsa's fintech arm, Spin by Oxxo, saw growth of 1.2 million new users in the quarter, taking its total user base to 8.8 million, more than double the year-ago figure.
Across-the-board growth meant quarterly revenue rose 19% to 188.1 billion pesos ($10.79 billion) in the July-to-September period, Femsa said.
The company added that it expected to close soon on a deal to establish a joint supply platform for cleaning products, food disposable and packaging with Bradyifs in the United States.
Femsa had said it in August it would hold a 37% stake.
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($1 = 17.4279 Mexican pesos at end-September)
Written By: Reuters
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