COCA-COLA FEMSA SAB DE CV Investor Relations
Maria Dyla Castro | mariadyla.castro@kof.com.mx
Jorge Collazo | jorge.collazo@kof.com.mx
Maria Fernanda Garcia | maria.garciacr@kof.com.mx
Coca-Cola FEMSA Announces First Quarter 2019 Results
Mexico City, April 26, 2019, Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOF UBL, NYSE: KOF)("Coca-ColaFEMSA", "KOF" or the "Company"), the largestCoca-Colafranchise bottler in the world by sales volume, announces results for the first quarter of 2019.
OPERATIONAL AND FINANCIAL HIGHLIGHTS
∙Volumes performed strongly in Brazil; transactions outperformed volumes in Argentina and Brazil.
∙Revenues increased 4.8%, while comparable revenues grew 10.0%. Pricing ahead of inflation in most of our operations, combined with volume growth in Brazil was partially offset by unfavorable currency translation effects from all of our operating currencies.
∙Operating income declined 0.9% while comparable operating income increased 9.2%, driven mainly by higher concentrate costs, higher PET prices, the depreciation of most of our operating currencies as applied to our U.S. dollar denominated raw material costs and higher labor expenses, effects that were partially offset by lower sweetener costs and operating expense efficiencies.
∙Earnings per share1were Ps. 0.15 (earnings per unit were Ps. 1.23 and per ADS were Ps. 12.33).
FINANCIAL SUMMARY FOR THE FIRST QUARTER RESULTS | |||||||||
Change vs. same period of last year | |||||||||
Total Revenues | Gross Profit | Operating Income | Majority Net Income | ||||||
1Q19 | 1Q19 | 1Q19 | 1Q19 | ||||||
Consolidated | 4.8% | 3.3% | (0.9%) | 7.3% | |||||
As Reported (2) | Mexico & Central America | 11.4% | 12.4% | 15.6% | |||||
South America | (1.9%) | (6.4%) | (15.0%) | ||||||
Consolidated | 10.0% | 8.8% | 9.2% | ||||||
Comparable (3) | Mexico & Central America | 7.2% | 8.3% | 12.4% | |||||
South America | 13.7% | 9.7% | 5.4% | ||||||
John Santa Maria, Coca-Cola FEMSA's CEO, commented:
"I am pleased with our Company's positive results to start the year. Despite currency volatility and uncertain economic conditions that affected our financial performance, our revenues grew 4.8% while our comparable revenues grew 10.0%. In addition, our operating income declined 0.9% while our comparable operating income increased 9.2%. In Mexico & Central America, we reported healthy top-and-bottom line growth, as we continued leveraging our state-of-the-art analytics capabilities. Our South America Division's performance was driven mainly by strong volume growth in Brazil, where we continued to gain share across categories thanks to our robust portfolio and relentless point-of-sale execution. To protect our profitability, we continued to implement mitigation actions to navigate complex environments in Colombia and Argentina. Finally, guided by the clarity of our vision of becoming a total beverage leader with global footprint, on April 11, we completed our previously announced stock split and listing of units for trading in the Mexican Stock Exchange and the New York Stock Exchange. This important milestone enhances the flexibility of our capital structure by increasing our capacity to issue equity, positioning our Company for further sustainable, profitable growth and expansion."
(1)Quarterly earnings / outstanding shares. Earnings per share (EPS) for all periods are adjusted to give effect to the stock split resulting in 16,806.7 million shares outstanding. For the convenience of the reader, as a KOF UBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares); earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOF UBL Units.
(2)According to IFRS 5, figures for 2018 do not include the Philippines as it is presented as a discontinued operation as of January 1, 2018.
(3)Please refer to page 7 for our definition of "comparable" and a description of the factors affecting the comparability of our financial and operating performance.
Page 1 of 13
RECENT DEVELOPMENTS
∙During the first quarter 2019, the Company prepaid Ps. 4,700 million of bilateral loans due in October 2019.
∙On March 8, 2019, the Company held an Extraordinary General Shareholders Meeting that resolved amendments to the Company´s bylaws. As a result, Series A shareholders are entitled to appointup to13 Directors, Series D shareholders are entitled to appoint up to5 and Series L shareholders continue to have the right to appoint up to 3. On March 14, as a result of these amendments our shareholders approved a Board of Directors composed of 18 members as compared to 21, previously.
∙On March 14, 2019, the Company held its Annual Ordinary General Shareholders Meeting, during which its shareholders approved the Company's consolidated financial statements for the year ended December 31, 2018, the annual report presented by the Board of Directors, the declaration of dividends corresponding to fiscal year 2018, and the composition of the Board of Directors and the Finance and Planning, Audit, and Corporate Practices Committees for 2019. Shareholders approved the payment of the proposed cash dividend of Ps. 3.54 per share. After giving effect to the stock split, the dividend payment approved is equivalent to Ps. 0.4425 per share, to be paid in two installments as of May 3, 2019, and November 1, 2019.
∙On April 11, 2019,Coca-Cola FEMSA completed the previously announced eight-for-one stock split, the issuance of new Series B shares (with full voting rights) and the creation and listing of KOF UBL units. As a result, (a) Series A and Series D split eight-for- one, and (b) for each Series L shares (KOF L), its holders received a new KOF UBL unit that replaces the previous KOF L. Each new KOF UBL unit consists of 3 Series B shares and 5 Series L shares (with limited voting rights). As of the same date, KOF UBL units were listed for trading on the Mexican Stock Exchange (BMV) under ticker symbol KOF UBL and ADSs (each representing 10 units) were listed for trading on the New York Stock Exchange (NYSE) under ticker symbol KOF.
The capital stock of the Company prior to and immediately after the Stock Split is as follows:
OUTSTANDING SHARES PRIOR TO THE STOCK SPLIT | OUTSTANDING SHARES IMMEDIATELY AFTER THE STOCK SPLIT | |||||||||||
Trading Ticker | Series of | Shareholders | Outstanding | % of the | % of shares with | Trading Ticker | Series of | Shareholders | Outstanding | % of the | % of shares with | |
shares | shares | capital stock | full voting rights | shares | shares | capital stock | full voting rights | |||||
Wholly-owned | Wholly-owned | |||||||||||
Not trading | A | subsidiary of Fomento | 992,078,519 | 47.223% | 62.964% | Not trading | A | subsidiary of Fomento | 7,936,628,152 | 47.223% | 55.968% | |
Económico Mexicano, | Económico Mexicano, | |||||||||||
S.A.B. de C.V. | S.A.B. de C.V. | |||||||||||
Wholly-owned | Wholly-owned | |||||||||||
Not trading | D | subsidiaries of | 583,545,678 | 27.777% | 37.036% | Not trading | D | subsidiaries of | 4,668,365,424 | 27.777% | 32.921% | |
The Coca-Cola Company | The Coca-Cola Company | |||||||||||
Trading | Public float | Trading | Public float | |||||||||
KOF L in BMV | L | 525,208,065 | 25.0% | 0.0% | KOF UBL unit in BMV | B | 1,575,624,195 | 9.375% | 11.111% | |||
(limited voting rights) | (full voting rights) | |||||||||||
KOF in NYSE | KOF in NYSE | |||||||||||
(Each unit comprised | ||||||||||||
of 3 series B shares | Public float | |||||||||||
and 5 series L shares) | L | 2,626,040,325 | 15.625% | 0.0% | ||||||||
(limited voting rights) | ||||||||||||
Total | 2,100,832,262 | 100% | 100% | Total | 16,806,658,096 | 100% | 100% | |||||
∙Coca-ColaFEMSA released its 2018 integrated report entitled "Clarity, Consistency and Commitment", the annual report on Form 20-F filing to the U.S. Securities and Exchange Commission, and the annual report filing to the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores).These three reports are available on the Investor Relations section of Coca-Cola FEMSA´s website at www.coca-colafemsa.com
CONFERENCE CALL INFORMATION
Tuesday February 26, 2019
Friday April 26, 2019
10:00 A.M. Eastern Time
9:30 A.M. Eastern Time
9:00 A.M. Mexico City Time
8:30 A.M. Mexico City Time
Mr. JohnMr.AnthonyJohn AnthonySantaSantaMaria,MariaCh ef, ExecutiveChiefExecutiveOfficerOfficer
Mr. ConstantinoMr. ConstantinoSpas,SpasChief, ChiefFinancialFinancialOfficerOfficer
Mrs. MariaMrs. MariaDyla Castro,Dyla Castro,InvestorInvestorRelationsRelationsDirectorDirector
To participate in the conference call please dial: | |||
Domestic U.S.: 866 548 4713 | Webcast: | ||
International: +1 323 794 2093 | |||
https://webcastlite.mziq.com/cover.html?web | |||
Participant passcode: 9335777 | http://bit.do/KOF1Qresults | ||
castId=c8568ec6-23db-4cd3-9c82- | |||
a8e604b1c320 | |||
Coca-Cola FEMSA Reports 1Q2019 Results | Page 2 of 13 |
April 26, 2019
CONSOLIDATED FIRST QUARTER RESULTS
CONSOLIDATED FIRST QUARTER RESULTS | ||||||
As Reported (1) | Comparable (2) | |||||
Expressed in millions of Mexican pesos | 1Q 2019 | 1Q 2018 | Δ% | Δ% | ||
Total revenues | 46,248 | 44,122 | 4.8% | 10.0% | ||
Gross profit | 20,892 | 20,215 | 3.3% | 8.8% | ||
Operating income | 5,714 | 5,765 | (0.9%) | 9.2% | ||
Operating cash flow (3) | 8,541 | 8,164 | 4.6% | 11.1% | ||
Volumeincreased 1.0% to 796.1 million unit cases, driven mainly by a 9.1% growth in Brazil and the consolidation of recently acquired territories in Guatemala and Uruguay partially offset by volume declines in the rest of our operations. On a comparable basis, total volumes remained flat at 0.1%.
Total revenuesincreased 4.8% to Ps. 46,248 million, driven mainly by price increases in line with or above inflation across our territories coupled with volume growth in Brazil, the consolidation of recently acquired territories in Guatemala and Uruguay and a favorable mix effect driven by transactions growing ahead of volumes. These factors were partially offset by the negative translation effect resulting from the depreciation of all of our operating currencies as compared to the Mexican Peso, combined with volume decline in Argentina, Colombia and Mexico. On a comparable basis, total revenues increased 10.0%.
Gross profitincreased 3.3% to Ps. 20,892 million, and gross margin contracted 60 basis points to 45.2%. Lower sweetener prices were offset by i) higher concentrate costs in Mexico; ii) higher concentrate costs in Brazil, related to the reduction of tax credits on concentrate purchased from the Manaus Free Trade Zone; iii) higher PET prices across most of our operations; and iv) the depreciation in the average exchange rate of most of our operating currencies as applied to our U.S. dollar-denominated raw material costs. On a comparable basis, gross profit increased 8.8%.
Operating incomedeclined 0.9% to Ps. 5,714 million, and operating margin contracted 70 basis points to 12.4%. This decline was driven mainly by higher labor and freight expenses coupled with restructuring indemnities, effects that were partially offset by operating expense efficiencies. On a comparable basis, operating income increased 9.2%.
(1)According to IFRS 5, figures from 2018 do not include the Philippines as it is presented as a discontinued operation as of January 1, 2018.
(2)Please refer to page 7 for our definition of "comparable" and a description of the factors affecting the comparability of our financial and operating performance.
(3)Operating cash flow = operating income + depreciation + amortization & other operatingnon-cash charges.
Coca-Cola FEMSA Reports 1Q2019 Results | Page 3 of 13 |
April 26, 2019
Comprehensive financing resultrecorded an expense of Ps. 1,593 million, compared to an expense of Ps. 2,100 million in the same period of 2018. This reduction was driven mainly by a reduction in our interest expense, net, a reduction in foreign exchange loss-as our cash exposure in U.S. dollars was negatively impacted by the appreciation of the Mexican Peso during the first quarter of 2019-and a reduction in other financial expenses.
Income taxas a percentage of income before taxes was 32.6% as compared to 30.7% during the same period of the previous year. This increase was driven mainly by the increase in the relative weight of Brazil's profits in our consolidated results, which has a higher tax rate, and a higher effective tax in Colombia.
Net income attributable to equity holders of the companyreached Ps. 2,590 million as compared to Ps. 2,414 million during the same period of the previous year. Earnings per share1were Ps. 0.15 (earnings per unit5were Ps. 1.23 and earnings per ADS were Ps. 12.33).
(1)Quarterly earnings / outstanding shares. Earnings per share (EPS) for all periods are adjusted to give effect to the stock split resulting in 16,806.7 million shares outstanding. For the convenience of the reader, as a KOF UBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares), earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOF UBL Units.
Coca-Cola FEMSA Reports 1Q2019 Results | Page 4 of 13 |
April 26, 2019
MEXICO & CENTRAL AMERICA DIVISION FIRST QUARTER RESULTS
(Mexico, Guatemala, Costa Rica, Panama, and Nicaragua)
MEXICO & CENTRAL AMERICA DIVISION RESULTS | ||||||
As Reported (1) | Comparable (2) | |||||
Expressed in millions of Mexican pesos | 1Q 2019 | 1Q 2018 | Δ% | Δ% | ||
Total revenues | 24,823 | 22,277 | 11.4% | 7.2% | ||
Gross profit | 11,781 | 10,484 | 12.4% | 8.3% | ||
Operating income | 3,076 | 2,662 | 15.6% | 12.4% | ||
Operating cash flow (3) | 4,772 | 4,096 | 16.5% | 12.5% | ||
Volumeincreased 0.7% to 478.0 million unit cases, driven by the consolidation of recently acquired territories in Guatemala and volume growth in Costa Rica, partially offset by volume decline in Mexico, Nicaragua and Panama. On a comparable basis, volume declined 2.3%.
Total revenuesincreased 11.4% to Ps. 24,823 million, driven by pricing ahead of inflation across the division, volume growth in Costa Rica and the consolidation of recently acquired territories in Guatemala as of May 1, 2018, partially offset by volume declines in Mexico, Nicaragua and Panama and by an slight unfavorable mix driven by volumes outperforming transactions. On a comparable basis, total revenues increased 7.2%.
Gross profitincreased 12.4% to Ps. 11,781 million and gross profit margin expanded 40 basis points to 47.5% driven mainly by our pricing initiatives and lower sweetener costs. These factors were partially offset by higher concentrate costs in Mexico, higher PET prices and an unfavorable currency hedging position in Mexico. On a comparable basis, gross profit increased 8.3%.
Operating incomeincreased 15.6% to Ps. 3,076 million in the first quarter of 2019, and operating income margin expanded 50 basis points to 12.4% during the period driven mainly by lower maintenance and freight costs, partially offset by a non-cash operating foreign exchange loss and restructuring indemnities. On a comparable basis, operating income increased 12.4%.
(1)According to IFRS 5, figures from 2018 do not include the Philippines as it is presented as a discontinued operation as of January 1, 2018.
(2)Please refer to page 7 for our definition of "comparable" and a description of the factors affecting the comparability of our financial and operating performance.
(3)Operating cash flow = operating income + depreciation + amortization & other operatingnon-cash charges.
Coca-Cola FEMSA Reports 1Q2019 Results | Page 5 of 13 |
April 26, 2019
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Coca-Cola FEMSA SAB de CV published this content on 26 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 26 April 2019 12:47:10 UTC
