Coca-Cola Femsa SAB de CV (KOF) Q1 2026 Earnings Call Transcript
Coca-Cola FEMSA, S.A.B. de C.V., a franchise bottler, produces, markets, sells, and distributes Coca-Cola trademark beverages in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Brazil, Argentina, and Uruguay. The company offers sparkling beverages, including colas and flavored sparkling beverages; waters; and other non-carbonated beverages, such as tea, sports drinks, energy drinks, fruit-based beverages, juice, coffee, milk, value-added dairy, and plant-based drinks. It also distributes and sells beer products under the Heineken, Estrella Galicia, and Therezópolis brands, as well as Campari alcoholic beverages, Perfetti confectionary and chewing gum, and Monster products. The company sells its products to distributors, retail outlets, wholesale supermarkets, discount and convenience stores, retailers, points-of-sale outlets, restaurants and bars, stadiums, auditoriums, theaters, and home deliveries. Coca-Cola FEMSA, S.A.B. de C.V. was founded in 1979 and is headquartered in Mexico City, Mexico.
Coca-Cola FEMSA posted resilient 2025 results with volume growth and margin resilience, while guiding 2026 with mixed dynamics—Mexico facing IEPS-driven headwinds and Brazil/Central/South America delivering modest growth and upside from digital initiatives and World Cup opportunities.
⭐ Key Highlights
✔Positive Signals
- December 2025 was the strongest month on record for Mexico and major markets, signaling underlying momentum.
- Brazil achieved its highest fourth-quarter volume on record and ongoing share gains driven by Coke Zero and Sprite Zero.
- Digital enablers (Juntos+ Advisor) delivered efficiency gains and expanded reach in multiple markets.
- Adjusted EBITDA growth in Q4 and strengthening margins in South America, aided by insurance recoveries and cost controls.
- World Cup-related activations and product portfolio breadth present meaningful brand engagement opportunities.
✖Negative Signals
- IEPS excise tax in Mexico creating ongoing gross margin pressure and necessitating cautious pricing.
- Currency translation headwinds impacting reported revenues across several markets.
- Near-term margin compression in Mexico due to higher depreciation and labor costs not fully offset by efficiencies.
- Working capital drag observed in some periods, though normalization is anticipated with ERP rollout.
- Uncertainty around capex intensity in 2026 given tax impacts and macro conditions.
📊Financial Results
- Q4 total revenues MXN 77.7 billion, +2.9% YoY; currency-neutral growth +6%.
- Gross profit MXN 36.3 billion, up 1.8%; gross margin down 60 bp to 46.7%.
- Operating income MXN 13.7 billion, +13.3%; operating margin +160 bp to 17.6% (normalized margin would be ~16.1%).
- Adjusted EBITDA MXN 18.2 billion, +12.8%; EBITDA margin 23.4% (normalized EBITDA margin 21.9%, +30 bp).
- Net income rose 3% to MXN 7.5 billion, supported by operating gains and favorable financials.
🔮Future Guidance
- 2026 consolidated volumes projected to be flat to slightly positive; Mexico expected to see a low-to-mid single-digit decline due to IEPS impact, Brazil and rest of regions expected to grow modestly (Brazil low-to-mid single digits).
- Capex guidance for 2026 to 7%–7.5% of revenue, likely at the lower end due to Mexico capex phasing; 2027–2030 capex path depends on Brazil capacity needs and regulatory/tax developments.
- Ongoing use of revenue growth management and Juntos+ AI capabilities to drive top-line and defend margins amid tax and currency headwinds.
💡Interesting Insights
- Deployment of Juntos+ Advisor across four largest markets is scaling to drive visitation, ticket size, and share gains, acting as a scalable AI-enabled sales optimization platform.
Detailed Analysis
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