FEMSA’s Mixed Fortunes: Revenue Rises as Profits Dip in Q3 2024

FEMSA, the Mexican retail and beverage giant, released its third-quarter results for 2024, revealing a complex financial picture.

The company’s revenue grew, but profits fell sharply. This outcome highlights the challenges FEMSA faces in a competitive market.

The company’s total revenue reached 196.7 billion Mexican pesos ($9.82 billion). This figure represents an 8.3% increase compared to the same period in 2023.

However, FEMSA’s net profit took a significant hit. It dropped by 39.5%, landing at 5.89 billion Mexican pesos ($294.5 million). Several factors contributed to this profit decline.

The company dealt with a high comparison base from the previous year. Additionally, FEMSA experienced reduced foreign exchange gains due to dollar appreciation.

Accounting effects from discontinued operations also played a role. Despite the profit drop, FEMSA‘s CEO, José Antonio Fernandez Carbajal, remained optimistic.

He pointed out that most of the company’s business units performed well. The CEO highlighted strong results from key operations, including Valora and OXXO Gas.

FEMSA’s Mixed Performance Across Business Segments

FEMSA’s various business segments showed mixed results. The Proximity Americas division, which includes OXXO stores, saw a 4.8% revenue increase.

However, same-store sales in Mexico slowed down due to challenging market conditions and unpredictable weather. The company’s European operations fared better. Proximity Europe reported a substantial 20.4% revenue growth.

This increase was partly due to favorable currency effects. FEMSA’s partnership with Coca-Cola also performed well, with revenue up by 10.7%.

FEMSA’s digital services division made significant strides. The Spin by OXXO platform reached 8.2 million active users, growing by 28.9% year-over-year. The Spin Premia loyalty program also expanded, reaching 23.8 million active users.

In Brazil, FEMSA’s joint venture with Raízen showed impressive growth. The partnership, which operates OXXO and Shell Select stores, saw a 63.4% increase in revenues.

Same-store sales in Brazil grew by 10.1%. The company added 39 new OXXO stores in Brazil during the quarter. FEMSA continues to implement its strategic initiatives.

The company is actively returning capital to shareholders through dividends and share buybacks. It’s also divesting non-core assets, such as its stake in Jetro Restaurant Depot.

The Mexican consumer market remains challenging, particularly affecting FEMSA’s Proximity Americas segment. However, the company is adapting to changing consumer trends.

These include a shift towards online shopping and omnichannel retail experiences. As FEMSA navigates these complex market conditions, it faces both opportunities and challenges.

The company’s diverse portfolio and strategic initiatives may help it weather current difficulties. However, the significant profit decline suggests that FEMSA must continue to adapt to maintain its market position.