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Fomento Economico Mexicano S.A.B. de C.V. (FMX - Free Report) , alias FEMSA, reported second-quarter 2024 net majority earnings per ADS of $1.93 (Ps. 3.52 per FEMSA unit). The company posted adjusted net majority earnings per ADS of $1.87, up from $1.64 in the year-ago quarter.
Net consolidated income was Ps. 15,669 million (US$858.1 million), reflecting an increase of 75.5% from Ps. 8,926 million from the year-ago quarter.
Total revenues were $11.5 billion (Ps. 198,745 million), which improved 12.2% year over year in the local currency. Revenue growth was driven by gains across most of its business units. The increase was partly negated by unstable weather conditions and gains from the Holy Week holidays that occurred in the prior-year quarter.
Shares of the Zacks Rank #3 (Hold) company have lost 14.8% in the year-to-date period against the industry’s 5.3% growth.
Image Source: Zacks Investment Research
Margins
FEMSA’s gross profit rose 19.1% year over year to Ps. 82,440 million (US$4.5 billion). The consolidated gross margin expanded 240 basis points (bps), owing to the gross margin expansion in Proximity Americas, Proximity Europe and Coca-Cola FEMSA; and steady margins in FEMSA’s Health and Fuel operations.
The company’s gross margin expanded 310 bps at Proximity Americas, 120 bps at Proximity Europe, 10 bps at Health division and 160 bps at the Coca-Cola FEMSA segments. The gross margin contracted 40 bps at the Fuel segment.
FEMSA’s operating income (income from operations) improved 15.8% year over year to Ps. 17,626 million (US$965.2 million), driven by growth across most of its operating segments, offset by a decline in the Health division. The consolidated operating margin increased 30 bps to 8.9%, driven by margin expansion at Proximity Europe and flat margins at Proximity Americas, Coca-Cola FEMSA, and the Fuel division.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Proximity Americas: Total revenues for the segment rose 8.9% year over year to Ps. 78,526 million (US$4.3 billion). The increase can primarily be attributed to a 4.1% rise in same-store sales, driven by a 4.7% rise in average customer tickets, offset by a 0.6% store traffic decline. The rise was mainly driven by gains in the water and candy categories at the OXXO stores, offset by the negative mix effects that led to declines in beer and soft drinks sales.
The Proximity Americas division had 23,680 OXXO stores as of Jun 30, 2024. Operating income improved 7.6% year over year. The operating margin for the segment declined 10 bps to 9.9% due to a 20.3% increase in operating expenses.
Proximity Europe: Total revenues for the segment grew 5.8% year over year to Ps. 11,466 million (US$627.9 million). The segment benefited from strong sales across all countries attributed to robust promotional income, and growth in retail sales and the B2B business, offset by adverse weather. The Proximity Europe division had 2,789 points of sale as of Jun 30, 2024. Operating income for the segment rose 175% year over year on solid gains from the B2B business. The operating income for the Proximity Europe segment rose 41% year over year, with a 100-bps expansion in the operating margin to 3.9%.
Health Division: The segment reported total revenues of Ps. 18,894 million (US$1 billion), down 0.4% year over year. Revenues were impacted by persistent competition in Mexico and a decline in Ecuador due to a tough macroeconomic environment, offset by revenue growth in Chile and Colombia. The segment’s store base reached 4,496 locations as of Jun 30, 2024. Same-store sales dipped 1.1% in the quarter. The operating income declined 14.8% year over year, while the operating margin contracted 70 bps to 4.1%.
Fuel Division: Total revenues rose 16.2% year over year to Ps. 16,796 million (US$919.8 million). Average same-station sales rose 15.9%, driven by a 10% increase in the average volume and a 5.4% rise in the average price per liter. These increases were aided by volume growth in retail and institutional sales, alongside effective pricing policies executed in the quarter. The company had 570 OXXO GAS service stations as of Jun 30, 2024. Operating income rose 24.1% and the operating margin expanded 30 bps to 4.2%.
Coca-Cola FEMSA: Total revenues for the segment advanced 13.1% year over year to Ps. 69,456 million (US$3.8 billion). Coca-Cola FEMSA’s consolidated operating income increased 13.8%. The segment’s operating margin expanded by 10 bps to 14%.
Financial Position
FEMSA had cash and cash equivalents of Ps. 121,429 million (US$6.6 billion) as of Jun 30, 2024. The company’s long-term debt was Ps. 131,542 million (US$7.2 billion). It incurred a capital expenditure of Ps. 11,312 million (US$619.5 million) in second-quarter 2024, reflecting higher investments in Coca-Cola FEMSA and Proximity Americas aimed at organic growth and improving productivity, efficiency, and competitiveness.
Key Picks
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Vital Farms (VITL - Free Report) , Freshpet (FRPT - Free Report) and Post Holdings (POST - Free Report) .
Vital Farms, which offers a range of produced pasture-raised foods, currently flaunts a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter earnings surprise of 102.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current fiscal year’s sales and earnings suggests growth of 22.6% and 66.1%, respectively, from the year-ago reported numbers.
Freshpet, a pet food company, presently sports a Zacks Rank #1. FRPT has a trailing four-quarter earnings surprise of 118.2%, on average.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 24.8% and 177.1%, respectively, from the year-ago period’s reported figure.
Post Holdings is a consumer-packaged goods holding company involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. POST currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggests growth of 14.2% and 6.9%, respectively, from the year-ago period's reported figures.
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FEMSA (FMX) Posts Sturdy Q2 Growth: Revenues & Earnings Up Y/Y
Fomento Economico Mexicano S.A.B. de C.V. (FMX - Free Report) , alias FEMSA, reported second-quarter 2024 net majority earnings per ADS of $1.93 (Ps. 3.52 per FEMSA unit). The company posted adjusted net majority earnings per ADS of $1.87, up from $1.64 in the year-ago quarter.
Net consolidated income was Ps. 15,669 million (US$858.1 million), reflecting an increase of 75.5% from Ps. 8,926 million from the year-ago quarter.
Total revenues were $11.5 billion (Ps. 198,745 million), which improved 12.2% year over year in the local currency. Revenue growth was driven by gains across most of its business units. The increase was partly negated by unstable weather conditions and gains from the Holy Week holidays that occurred in the prior-year quarter.
Shares of the Zacks Rank #3 (Hold) company have lost 14.8% in the year-to-date period against the industry’s 5.3% growth.
Image Source: Zacks Investment Research
Margins
FEMSA’s gross profit rose 19.1% year over year to Ps. 82,440 million (US$4.5 billion). The consolidated gross margin expanded 240 basis points (bps), owing to the gross margin expansion in Proximity Americas, Proximity Europe and Coca-Cola FEMSA; and steady margins in FEMSA’s Health and Fuel operations.
The company’s gross margin expanded 310 bps at Proximity Americas, 120 bps at Proximity Europe, 10 bps at Health division and 160 bps at the Coca-Cola FEMSA segments. The gross margin contracted 40 bps at the Fuel segment.
FEMSA’s operating income (income from operations) improved 15.8% year over year to Ps. 17,626 million (US$965.2 million), driven by growth across most of its operating segments, offset by a decline in the Health division. The consolidated operating margin increased 30 bps to 8.9%, driven by margin expansion at Proximity Europe and flat margins at Proximity Americas, Coca-Cola FEMSA, and the Fuel division.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Fomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. Quote
Segmental Discussion
Proximity Americas: Total revenues for the segment rose 8.9% year over year to Ps. 78,526 million (US$4.3 billion). The increase can primarily be attributed to a 4.1% rise in same-store sales, driven by a 4.7% rise in average customer tickets, offset by a 0.6% store traffic decline. The rise was mainly driven by gains in the water and candy categories at the OXXO stores, offset by the negative mix effects that led to declines in beer and soft drinks sales.
The Proximity Americas division had 23,680 OXXO stores as of Jun 30, 2024. Operating income improved 7.6% year over year. The operating margin for the segment declined 10 bps to 9.9% due to a 20.3% increase in operating expenses.
Proximity Europe: Total revenues for the segment grew 5.8% year over year to Ps. 11,466 million (US$627.9 million). The segment benefited from strong sales across all countries attributed to robust promotional income, and growth in retail sales and the B2B business, offset by adverse weather. The Proximity Europe division had 2,789 points of sale as of Jun 30, 2024. Operating income for the segment rose 175% year over year on solid gains from the B2B business. The operating income for the Proximity Europe segment rose 41% year over year, with a 100-bps expansion in the operating margin to 3.9%.
Health Division: The segment reported total revenues of Ps. 18,894 million (US$1 billion), down 0.4% year over year. Revenues were impacted by persistent competition in Mexico and a decline in Ecuador due to a tough macroeconomic environment, offset by revenue growth in Chile and Colombia. The segment’s store base reached 4,496 locations as of Jun 30, 2024. Same-store sales dipped 1.1% in the quarter. The operating income declined 14.8% year over year, while the operating margin contracted 70 bps to 4.1%.
Fuel Division: Total revenues rose 16.2% year over year to Ps. 16,796 million (US$919.8 million). Average same-station sales rose 15.9%, driven by a 10% increase in the average volume and a 5.4% rise in the average price per liter. These increases were aided by volume growth in retail and institutional sales, alongside effective pricing policies executed in the quarter. The company had 570 OXXO GAS service stations as of Jun 30, 2024. Operating income rose 24.1% and the operating margin expanded 30 bps to 4.2%.
Coca-Cola FEMSA: Total revenues for the segment advanced 13.1% year over year to Ps. 69,456 million (US$3.8 billion). Coca-Cola FEMSA’s consolidated operating income increased 13.8%. The segment’s operating margin expanded by 10 bps to 14%.
Financial Position
FEMSA had cash and cash equivalents of Ps. 121,429 million (US$6.6 billion) as of Jun 30, 2024. The company’s long-term debt was Ps. 131,542 million (US$7.2 billion). It incurred a capital expenditure of Ps. 11,312 million (US$619.5 million) in second-quarter 2024, reflecting higher investments in Coca-Cola FEMSA and Proximity Americas aimed at organic growth and improving productivity, efficiency, and competitiveness.
Key Picks
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Vital Farms (VITL - Free Report) , Freshpet (FRPT - Free Report) and Post Holdings (POST - Free Report) .
Vital Farms, which offers a range of produced pasture-raised foods, currently flaunts a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter earnings surprise of 102.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current fiscal year’s sales and earnings suggests growth of 22.6% and 66.1%, respectively, from the year-ago reported numbers.
Freshpet, a pet food company, presently sports a Zacks Rank #1. FRPT has a trailing four-quarter earnings surprise of 118.2%, on average.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 24.8% and 177.1%, respectively, from the year-ago period’s reported figure.
Post Holdings is a consumer-packaged goods holding company involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. POST currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggests growth of 14.2% and 6.9%, respectively, from the year-ago period's reported figures.