SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of July 2018

 

FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V.

(Exact name of Registrant as specified in its charter)

 

Mexican Economic Development, Inc.

(Translation of Registrant’s name into English)

 

United Mexican States

(Jurisdiction of incorporation or organization)

 

General Anaya No. 601 Pte.
Colonia Bella Vista
Monterrey, Nuevo León 64410
México

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports

under cover of Form 20-F or Form 40-F:

 

Form 20-F   x    Form 40-F  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as

permitted by Regulation S-T Rule 101(b)(1): _______

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as

permitted by Regulation S-T Rule 101(b)(7): _______

 

Indicate by check mark whether by furnishing the information contained in this

Form, the registrant is also thereby furnishing the information to the

Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes     ¨  No     x

 

If "Yes" is marked, indicate below the file number assigned to the registrant in

connection with Rule 12g3-2(b): 82-_____________

 

 

 

 

 

 

 

FEMSA Announces Second Quarter 2018 Results

 

Monterrey, Mexico, July 27, 2018 — Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) (NYSE: FMX; BMV: FEMSAUBD) announced today its operational and financial results for the second quarter of 2018.

 

FINANCIAL HIGHLIGHTS:

 

·8.6% revenue growth at FEMSA Consolidated
·130 basis points of gross margin expansion at FEMSA Comercio’s Retail Division
·180 basis points of operating margin expansion at FEMSA Comercio’s Health Division
·Operating margin recovery to 0.7% of total revenues at FEMSA Comercio’s Fuel Division
·2.7% volume growth at Coca-Cola FEMSA Brazil

 

FINANCIAL SUMMARY FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF 2018

Change vs. same period of last year

 

   Revenues   Gross Profit   Income
from Operations		   Same-Store Sales 
   2Q18   YTD18   2Q18   YTD18   2Q18   YTD18   2Q18   YTD18 
FEMSA CONSOLIDATED   8.6%   7.2%   8.3%   7.4%   3.0%   2.3%          
FEMSA COMERCIO                                        
Retail Division   9.7%   11.7%   13.7%   14.4%   7.7%   12.4%   3.0%   5.1%
Health Division   17.1%   10.1%   22.5%   15.3%   93.3%   57.9%   11.8%   6.2%
Fuel Division   21.5%   18.9%   50.9%   46.7%   N.S.    N.S.    5.0%   4.3%
COCA-COLA FEMSA   3.9%   2.0%   0.6%   0.4%   (3.3)%   (4.8)%          

 

Eduardo Padilla, FEMSA’s CEO, commented:

 

“Our results for the second quarter were solid. FEMSA Comercio’s Retail Division again showed healthy trends across its income statement, particularly considering the tough comparison base from the Holy Week calendar shift, as well as a record pace of expansion. The Health Division delivered encouraging results across its markets, reflecting improved commercial activity and more effective execution. For its part, the Fuel Division again faced a low comparison base and thus delivered another quarter of margin recovery, in spite of soft volumes, as well as an improved rate of unit growth. And at Coca-Cola FEMSA, we saw resilient top line performance in Mexico driven by strong pricing, as well as sustained positive volume trends in Brazil, despite the challenging macro environment. Furthermore, during the quarter we took a couple of important steps in our consolidation efforts in the region by announcing the expansion of our bottling operations in Guatemala and the addition of Uruguay to our platform.

 

In terms of macroeconomic trends, the consumer environment in our key Mexico market has been stable, as evidenced by OXXO’s six-month comparable sales growth of 5.1 percent, right in line with our long term expectations. Other variables such as the peso-dollar exchange rate, have improved slightly in recent weeks, which is encouraging. But Mexico is not immune to global concerns on international trade, and there are other macro questions to be answered in the near future. Beyond Mexico, we also face challenges and uncertainties in several markets, so we remain vigilant as ever as we continue to execute our strategy across businesses.”

 

 

 

 

  

 

Results are compared to the same period of previous year

 

femsa consolidated

 

FEMSA CONSOLIDATED

2Q18 Financial Summary

(Millions of Ps.)

   2Q18   2Q17   Var. 
Revenues   124,708    114,801    8.6%
Income from Operations   10,733    10,425    3.0%
Income from Operations Margin (%)   8.6    9.1    -50 bps 
Operative Cash Flow (EBITDA)   15,744    15,284    3.0%
Operative Cash Flow (EBITDA) Margin (%)   12.6    13.3    -70 bps 
Net Income   10,777    6,418    67.9%

 

CONSOLIDATED BALANCE SHEET

(Millions of Ps.)

As of June 30, 2018  Ps.   US$3 
Cash   53,876    2,742 
Short-term debt   14,302    728 
Long-term debt   120,296    6,122 
Net debt4   80,722    4,108 

 

Total revenues increased 8.6% in 2Q18 compared to 2Q17, mainly reflecting solid growth across FEMSA Comercio’s three divisions. On an organic basis,1 total revenues grew 8.9%.

 

Gross profit increased 8.3%. Gross margin decreased 10 basis points, reflecting a contraction in Coca-Cola FEMSA’s gross margin driven by higher costs for raw materials in certain markets, partially offset by solid gross margin expansion across FEMSA Comercio’s three divisions.

 

Income from operations increased 3.0%. On an organic basis,1 it decreased 1.2%. Consolidated operating margin decreased 50 basis points to 8.6% of total revenues, mostly driven by: i) margin contraction at Coca-Cola FEMSA, reflecting a non-cash operating foreign exchange loss in Mexico coupled with additional expenses related to their recent acquisitions, and ii) margin contraction at FEMSA Comercio’s Retail Division, driven by lower sales growth from the negative Holy Week calendar shift.

 

Our effective income tax rate was 32.3% compared to 26.8% in 2Q17. 

 

Net consolidated income increased 67.9%, mainly driven by a non-cash foreign exchange gain related to FEMSA’s U.S. dollar-denominated cash position as impacted by the depreciation of the Mexican peso, and to a lesser extent, by a lower interest expense and an increase in income from operations. As is customary, for 2Q18 we are using Heineken’s 1Q18 net income figure translated at the 2Q18 exchange rate.

 

Net majority income was Ps. 2.46 per FEMSA Unit2 and US$ 1.25 per FEMSA ADS.

 

Capital expenditures amounted to Ps. 6,347 million, reflecting higher investments across all business units.

 

 

1 Excludes the effects of significant mergers and acquisitions in the last twelve month and the results of Coca-Cola FEMSA Venezuela in 2017. The cumulative results of the year Includes the results of Coca-Cola FEMSA Philippines Inc., as if consolidation had taken place at January 2017.

2 FEMSA Units consist of FEMSA BD Units and FEMSA B Units. Each FEMSA BD Unit is comprised of one Series B Share, two Series D-B Shares and two Series D-L Shares. Each FEMSA B Unit is comprised of five Series B Shares. The number of FEMSA Units outstanding as of June 30, 2018 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

3 The exchange rate published by the Federal Reserve Bank of New York for June 29, 2018 was 19.6495 MXN per USD.

4 Includes the effect of derivative financial instruments on long-term debt.

 

July 27, 2018 2

 

 

FEMSA COMERCIO – RETAIL DIVISION

 

FEMSA COMERCIO – RETAIL DIVISION

2Q18 Financial Summary

(Millions of Ps. except same-stores sales)

   2Q18   2Q17   Var. 
Same-store sales (thousands of Ps.)   802    778    3.0%
Revenues   43,517    39,660    9.7%
Income from Operations   3,519    3,268    7.7%
Income from Operations Margin (%)   8.1    8.2    -10 bps 
Operative Cash Flow (EBITDA)   4,844    4,427    9.4%
Operative Cash Flow (EBITDA) Margin (%)   11.1    11.2    -10 bps 

 

 

 

Total revenues increased 9.7% in 2Q18 compared to 2Q17, reflecting the opening of 483 net new OXXO stores in the quarter to reach 1,472 total net new store openings for the last twelve months, ahead of schedule and showing success in our effort to shift more openings toward the first half of the year. As of June 30, 2018, FEMSA Comercio’s Retail Division had a total of 17,246 OXXO stores. OXXO’s same-store sales increased an average of 3.0%, reflecting resilient consumer demand, partially offset by the negative Holy Week calendar shift. This performance was driven by 2.1% growth in average customer ticket and an increase of 1.0% in store traffic.

 

Gross profit increased by 13.7%, resulting in a gross margin expansion of 130 basis points to 38.3% of total revenues. This expansion mainly reflects: i) sustained growth of the services category, including income from financial services, ii) healthy trends in our commercial income activity, and iii) increased and more efficient promotional programs with our key supplier partners.

 

Income from operations increased 7.7%. Operating expenses increased 15.5% to Ps. 13,153 million, above revenues, mainly reflecting: i) our continuing initiative to strengthen our compensation structure of key in-store personnel, in a tightening labor market, ii) increased secure cash transportation costs driven by incremental volume and higher fuel costs, and iii) the accelerated pace of store openings during the quarter, which put pressure on our operating leverage. Operating margin decreased 10 basis points to 8.1% of total revenues.

 

July 27, 2018 3

 

 

FEMSA COMERCIO – HEALTH DIVISION

 

FEMSA COMERCIO – HEALTH DIVISION

2Q18 Financial Summary

(Millions of Ps. except same-stores sales)

   2Q18   2Q17   Var. 
Same-store sales (thousands of Ps.)   1,615    1,444    11.8%
Revenues   13,380    11,431    17.1%
Income from Operations   634    328    93.3%
Income from Operations Margin (%)   4.7    2.9    180 bps 
Operative Cash Flow (EBITDA)   886    561    57.9%
Operative Cash Flow (EBITDA) Margin (%)   6.6    4.9    170 bps 

 

 

 

Total revenues increased 17.1% in 2Q18 compared to 2Q17, mainly driven by growth in our South American operations as well as gradually improving trends in Mexico. As of June 30, 2018, FEMSA Comercio’s Health Division had a total of 2,251 points of sale across our territories, reflecting the addition of 16 net new stores in the quarter to reach 97 total net new store openings for the last twelve months. Same-store sales for drugstores increased by an average of 11.8%, reflecting a positive currency translation effect related to the depreciation of the Mexican peso compared to the Chilean and Colombian pesos in our operations in South America.

 

Gross profit increased by 22.5%, resulting in a gross margin expansion of 140 basis points to 30.6% of total revenues, reflecting: i) commercial activity driving positive margin mix and more effective execution across markets, ii) benefits from the incipient leverage of our recently integrated operating platform in Mexico, and iii) a favorable comparison base from last year.

 

Income from operations increased 93.3%. Operating expenses increased 14.8% to Ps. 3,459 million, below revenues. Operating margin expanded 180 basis points to 4.7% of total revenues reflecting the sales growth and gross margin expansion as described above, combined with tailwinds such as: i) the strength of the Chilean and Colombian pesos relative to the Mexican peso during the second quarter, and ii) increased operating leverage generated by tight expense control and our recently integrated platform in Mexico.

 

July 27, 2018 4

 

 

FEMSA COMERCIO – FUEL DIVISION

 

FEMSA COMERCIO – FUEL DIVISION

2Q18 Financial Summary

(Millions of Ps. except same-stations sales)

   2Q18   2Q17   Var. 
Same-station sales (thousands of Ps.)   8,515    8,111    5.0%
Revenues   11,511    9,473    21.5%
Income from Operations   82    2    N.S. 
Income from Operations Margin (%)   0.7    -    70 bps 
Operative Cash Flow (EBITDA)   122    37    N.S. 
Operative Cash Flow (EBITDA) Margin (%)   1.1    0.4    70 bps 

 

 

  

Total revenues increased 21.5% in 2Q18 compared to 2Q17, reflecting the addition of 32 net new OXXO GAS stations in the quarter to reach 109 total net new stations for the last twelve months. As of June 30, 2018, FEMSA Comercio’s Fuel Division had a total of 499 OXXO GAS service stations. Same-station sales increased an average of 5.0%, as average price per liter increased by 13.6%, while average volume decreased 7.6%.

 

Gross profit increased by 50.9% resulting in a gross margin recovery of 160 basis points to 8.0% of total revenues, reflecting a low comparable base as gross profit per liter remained flat in 2Q17 versus 2016 in peso terms.

 

Income from operations increased significantly. Operating expenses increased 37.9% to Ps. 834 million, above revenues. However, operating margin recovered 70 basis points to 0.7% of total revenues, reflecting better operating leverage that more than offset higher regulatory expenses, information technology upgrades, and expansion-related investments.

 

July 27, 2018 5

 

 

 

Results are compared to the same period of previous year

 

femsa consolidated

 

FEMSA CONSOLIDATED

Financial Summary for the First Six Months

(Millions of Ps.)

   2018   2017   Var. 
Revenues   240,046    224,020    7.2%
Income from Operations   19,142    18,708    2.3%
Income from Operations Margin (%)   8.0    8.4    -40 bps 
Operative Cash Flow (EBITDA)   28,750    28,128    2.2%
Operative Cash Flow (EBITDA) Margin (%)   12.0    12.6    -60 bps 
Net Income   12,254    13,307    (7.9)%

 

Total revenues increased 7.2%, mainly reflecting solid growth at FEMSA Comercio’s three divisions. On an organic basis, 1 total revenues increased 7.1%.

 

Gross profit increased 7.4%. Gross margin increased 10 basis points to 36.3% of total revenues, reflecting gross margin expansion across FEMSA Comercio’s three divisions.

 

Income from operations increased 2.3%. On an organic basis,1 it decreased 1.0%. Our consolidated operating margin decreased 40 basis points to 8.0% of total revenues, reflecting: i) an operating margin contraction in Coca-Cola FEMSA and FEMSA Comercio Retail Division, and ii) the integration and faster growth of FEMSA Comercio’s three divisions, whose lower margins tend to compress FEMSA’s consolidated margins over time.

 

Net consolidated income decreased 7.9% to Ps. 12,254 million, reflecting: i) an unfavorable comparison base from Coca-Cola FEMSA’s consolidation of the Philippines operations in 2017, which resulted in a lower tax rate and a gain in the other non-operating line, coupled with ii) a decrease in our participation in Heineken’s results, partially offset by a positive foreign exchange gain and lower financing expenses.

 

Net majority income per FEMSA Unit2 was Ps. 2.46 (US$ 1.25 per ADS).

 

 

1 Excludes the effects of significant mergers and acquisitions in the last twelve month and the results of Coca-Cola FEMSA Venezuela in 2017. The cumulative results of the year Includes the results of Coca-Cola FEMSA Philippines Inc., as if consolidation had taken place at January 2017.

2 FEMSA Units consist of FEMSA BD Units and FEMSA B Units. Each FEMSA BD Unit is comprised of one Series B Share, two Series D-B Shares and two Series D-L Shares. Each FEMSA B Unit is comprised of five Series B Shares. The number of FEMSA Units outstanding as of June 30, 2018 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

 

July 27, 2018 6

 

 

femsa comercio – retail division

 

FEMSA COMERCIO – RETAIL DIVISION

Financial Summary for the First Six Months

(Millions of Ps. except same-stores sales)

   2018   2017   Var. 
Same-store sales (thousands of Ps.)   766    728    5.1%
Revenues   82,323    73,730    11.7%
Income from Operations   5,392    4,797    12.4%
Income from Operations Margin (%)   6.5    6.5    0 bps 
Operative Cash Flow (EBITDA)   8,010    7,087    13.0%
Operative Cash Flow (EBITDA) Margin (%)   9.7    9.6    10 bps 

 

Total revenues increased 11.7%. OXXO’s same-store sales increased an average of 5.1%, driven by a 3.4% increase in average customer ticket and a 1.6% increase in store traffic.

 

Gross profit increased by 14.4%. Gross margin expanded by 90 basis points to 37.2% of total revenues.

 

Income from operations increased 12.4% resulting in an operating margin of 6.5%, in line with 2017.

 

femsa comercio – health division

 

FEMSA COMERCIO – HEALTH DIVISION

Financial Summary for the First Six Months

(Millions of Ps. except same-stores sales)

   2018   2017   Var. 
Same-store sales (thousands of Ps.)   1,581    1,489    6.2%
Revenues   25,835    23,455    10.1%
Income from Operations   914    579    57.9%
Income from Operations Margin (%)   3.5    2.5    100 bps 
Operative Cash Flow (EBITDA)   1,417    1,058    33.9%
Operative Cash Flow (EBITDA) Margin (%)   5.5    4.5    100 bps 

 

Total revenues increased by 10.1%. Same-store sales for drugstores increased by an average of 6.2%.

 

Gross profit increased by 15.3%. Gross margin expanded by 130 basis points to 30.1% of total revenues, driven by more efficient and effective commercial activity across markets, and to benefits that are gradually beginning to materialize in Mexico from our integration into a single operating platform.

 

Income from operations increased 57.9% resulting in an operating margin of 3.5%, which represents an expansion of 100 basis points, due to an increased operating leverage.

 

July 27, 2018 7

 

 

FEMSA COMERCIO – FUEL DIVISION

 

FEMSA COMERCIO – FUEL DIVISION

Financial Summary for the First Six Months

(Millions of Ps. except same-stations sales)

   2018   2017   Var. 
Same-station sales (thousands of Ps.)   8,339    7,994    4.3%
Revenues   22,104    18,587    18.9%
Income from Operations   219    65    N.S. 
Income from Operations Margin (%)   1    0.3    70 bps 
Operative Cash Flow (EBITDA)   296    129    129.5%
Operative Cash Flow (EBITDA) Margin (%)   1.3    0.7    60 bps 

 

Total revenues increased 18.9%. Same-station sales increased an average of 4.3%, driven by an 11.3% increase in the average price per liter and a decrease of 6.2% in the average volume.

 

Gross profit increased by 46.7%. Gross margin recovered by 160 basis points to 8.2% of total revenues, reflecting the fact that gross profit per liter remained flat in peso terms compared to the same period in 2017.

 

Income from operations increased significantly resulting in an operating margin of 1.0%, which represents a recovery of 70 basis points. This increase reflects better operating leverage that more than offsets higher regulatory expenses.

 

coca-cola femsa

 

Coca-Cola FEMSA’s financial results and discussion thereof are incorporated by reference from Coca-Cola FEMSA’s press release, which is attached to this press release or may be accessed by visiting www.coca-colafemsa.com.

 

July 27, 2018 8

 

 

CONFERENCE CALL INFORMATION:

 

Our Second Quarter 2018 Conference Call will be held on: Friday, July 27, 2018, 10:00 AM Eastern Time (9:00 AM Mexico City Time). To participate in the conference call, please dial: Domestic US: (800) 289 0438; International: +1 (323) 794 2423; Conference Id: 3906562. The conference call will be webcast live through streaming audio. For details please visit www.femsa.com/investor.

 

If you are unable to participate live, the conference call audio will be available on http://ir.FEMSA.com/results.cfm.

 

FEMSA is a leading company that participates in the beverage industry through Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world by volume; and in the beer industry, through its ownership of the second largest equity stake in Heineken, one of the world's leading brewers with operations in over 70 countries. In the retail industry it participates through FEMSA Comercio, comprising a Retail Division operating various small-format store chains including OXXO, a Fuel Division, operating the OXXO GAS chain of retail service stations, and a Health Division, which includes drugstores and related operations. Additionally, through its Strategic Businesses unit, it provides logistics, point-of-sale refrigeration solutions and plastics solutions to FEMSA's business units and third-party clients.

 

The translations of Mexican pesos into US dollars are included solely for the convenience of the reader, using the noon buying rate for Mexican pesos as published by the Federal Reserve Bank of New York on June 29, 2018, which was 19.6495 Mexican pesos per US dollar.

 

FORWARD-LOOKING STATEMENTS

This report may contain certain forward-looking statements concerning our future performance that should be considered as good faith estimates made by us. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which could materially impact our actual performance.

 

Seven pages of tables and Coca-Cola FEMSA’s press release to follow

 

July 27, 2018 9

 

 

FEMSA

Consolidated Income Statement

Millions of Pesos

 

   For the second quarter of:   For the six months of: 
   2018   % of rev.   2017   % of rev.   % Var.   % Org (A)   2018   % of rev.   2017   % of rev.   % Var.   % Org (A) 
Total revenues   124,708    100.0    114,801    100.0    8.6    8.9    240,046    100.0    224,020    100.0    7.2    7.1 
Cost of sales   78,991    63.3    72,597    63.2    8.8         152,964    63.7    142,916    63.8    7.0      
Gross profit   45,717    36.7    42,204    36.8    8.3         87,082    36.3    81,104    36.2    7.4      
Administrative expenses   4,902    3.9    3,972    3.5    23.4         9,194    3.8    8,093    3.6    13.6      
Selling expenses   29,477    23.7    27,615    24.0    6.7         57,940    24.2    54,445    24.3    6.4      
Other operating expenses (income), net (1)   605    0.5    192    0.2    N.S.         806    0.3    (142)   (0.1)   N.S.      
Income from operations(2)   10,733    8.6    10,425    9.1    3.0    (1.2)   19,142    8.0    18,708    8.4    2.3    (1.0)
Other non-operating expenses (income)   415         1,376         (69.8)        603         (1,079)        (155.9)     
Interest expense   2,292         2,696         (15.0)        4,884         5,797         (15.7)     
Interest income   567         301         88.4         1,334         636         109.7      
Interest expense, net   1,725         2,395         (28.0)        3,550         5,161         (31.2)     
Foreign exchange loss (gain)   (5,644)        504         N.S.         (711)        2,170         (132.8)     
Other financial expenses (income), net.   70         (129)        (154.3)        326         (844)        (138.6)     
Financing expenses, net   (3,849)        2,770         N.S.         3,165         6,487         (51.2)     
Income before income tax and participation in associates results   14,167         6,279         125.6         15,374         13,300         15.6      
Income tax   4,581         1,680         172.7         5,182         3,105         66.9      
Participation in associates results(3)   1,191         1,819         (34.5)        2,062         3,112         (33.7)     
Net consolidated income   10,777         6,418         67.9         12,254         13,307         (7.9)     
Net majority income   8,796         4,657         88.9         8,797         8,247         6.7      
Net minority income   1,981         1,761         12.5         3,457         5,060         (31.7)     
                                                             
Operative Cash Flow & CAPEX   2018    % of rev.    2017    % of rev.    % Var.    % Org (A)    2018    % of rev.    2017    % of rev.    % Var.    % Org (A) 
Income from operations   10,733    8.6    10,425    9.1    3.0    (1.2)   19,142    8.0    18,708    8.4    2.3    (1.0)
Depreciation   3,960    3.2    3,775    3.3    4.9         7,778    3.2    7,439    3.3    4.6      
Amortization & other non-cash charges   1,051    0.8    1,084    0.9    (3.0)        1,830    0.8    1,981    0.9    (7.6)     
Operative Cash Flow (EBITDA)   15,744    12.6    15,284    13.3    3.0    2.6    28,750    12.0    28,128    12.6    2.2    0.1 
CAPEX   6,347         5,232         21.3         10,437         11,120         (6.1)     
                                                             
Financial Ratios   2018         2017         Var. p.p.                                    
Liquidity(4)   1.49         1.73         (0.23)                                   
Interest coverage(5)   9.13         6.38         2.75                                    
Leverage(6)   0.80         0.75         0.05                                    
Capitalization(7)   30.24%        27.80%        2.43                                    

 

(A) Organic basis (% Org.) Excludes the effects of significant mergers and acquisitions in the last twelve month and the results of Coca-Cola FEMSA Venezuela in 2017. The cumulative results of the year Includes the results of Coca-Cola FEMSA Philippines Inc., as if consolidation had taken place at January 2017.

(1) Other operating expenses (income), net = other operating expenses (income) +(-) equity method from operated associates.

(2) Income from operations = gross profit - administrative and selling expenses - other operating expenses (income), net.

(3) Mainly represents the equity method participation in Heineken´s results, net.

(4) Total current assets / total current liabilities.

(5) Income from operations + depreciation + amortization & other / interest expense, net.

(6) Total liabilities / total stockholders' equity.

(7) Total debt / long-term debt + stockholders' equity.

Total debt = short-term bank loans + current maturities of long-term debt + long-term bank loans.

 

July 27, 2018 10

 

  

FEMSA

Consolidated Balance Sheet

Millions of Pesos

 

ASSETS  Jun-18   Dec-17   % Var. 
Cash and cash equivalents   53,876    96,944    (44.4)
Investments   24,627    2,160     N.S.  
Accounts receivable   27,095    32,316    (16.2)
Inventories   34,612    34,840    (0.7)
Other current assets   18,407    14,928    23.3 
Total current assets   158,617    181,188    (12.5)
Investments in shares   91,207    96,097    (5.1)
Property, plant and equipment, net   116,471    116,712    (0.2)
Intangible assets (1)   151,353    154,093    (1.8)
Other assets   67,084    40,451    65.8 
TOTAL ASSETS   584,732    588,541    (0.6)
                
LIABILITIES & STOCKHOLDERS´ EQUITY               
Bank loans   3,458    2,830    22.2 
Current maturities of long-term debt   10,844    10,760    0.8 
Interest payable   792    976    (18.9)
Operating liabilities   91,253    90,456    0.9 
Total current liabilities   106,347    105,022    1.3 
Long-term debt (2)   120,296    110,917    8.5 
Labor liabilities   5,547    5,373    3.2 
Other liabilities   27,829    30,317    (8.2)
Total liabilities   260,019    251,629    3.3 
Total stockholders’ equity   324,713    336,912    (3.6)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   584,732    588,541    (0.6)

 

   June 30, 2018 
DEBT MIX (2)  % of Total   Average Rate 
Denominated in:          
Mexican pesos   46.8%   8.1%
U.S. Dollars   0.9%   3.0%
Euros   17.3%   1.8%
Colombian pesos   1.9%   7.1%
Argentine pesos   0.2%   36.8%
Brazilian reais   29.2%   6.9%
Chilean pesos   3.7%   5.5%
Total debt   100.0%   6.5%
           
Fixed rate(2)   85.6%     
Variable rate(2)   14.4%     

 

DEBT MATURITY PROFILE  2018   2019   2020   2021   2022   2023+ 
% of Total Debt   9.0%   10.2%   8.1%   9.3%   1.7%   61.7%

 

(1)Includes mainly the intangible assets generated by acquisitions.
(2)Includes the effect of derivative financial instruments on long-term debt.

 

July 27, 2018 11

 

 

FEMSA Comercio - Retail Division

Results of Operations

Millions of Pesos

 

   For the second quarter of:   For the six months of: 
   2018   % of rev.   2017   % of rev.   % Var.   2018   % of rev.   2017   % of rev.   % Var. 
Total revenues   43,517    100.0    39,660    100.0    9.7    82,323    100.0    73,730    100.0    11.7 
Cost of sales   26,845    61.7    25,001    63.0    7.4    51,677    62.8    46,932    63.7    10.1 
Gross profit   16,672    38.3    14,659    37.0    13.7    30,646    37.2    26,798    36.3    14.4 
Administrative expenses   973    2.2    806    2.0    20.7    1,840    2.2    1,581    2.1    16.4 
Selling expenses   12,097    27.8    10,525    26.6    14.9    23,262    28.3    20,292    27.5    14.6 
Other operating expenses (income), net   83    0.2    60    0.2    38.3    152    0.2    128    0.2    18.8 
Income from operations   3,519    8.1    3,268    8.2    7.7    5,392    6.5    4,797    6.5    12.4 
Depreciation   1,188    2.7    1,038    2.6    14.5    2,359    2.9    2,051    2.8    15.0 
Amortization & other non-cash charges   137    0.3    121    0.4    13.2    259    0.3    239    0.3    8.4 
Operative cash flow   4,844    11.1    4,427    11.2    9.4    8,010    9.7    7,087    9.6    13.0 
CAPEX   2,431    0    2,026    -    20.0    3,935    0    3,650    -    7.8 
                                                   
Information of OXXO Stores                                                  
Total stores                            17,246         15,774         9.3 
Net new convenience stores:                                                  
vs. Last quarter   483         373         29.5                          
Year-to-date   720         549         31.1                          
Last-twelve-months   1,472         1,313         12.1                          
                                                   
Same-store data: (1)                                                  
Sales (thousands of pesos)   801.7         778.1         3.0    765.7         728.4         5.1 
Traffic (thousands of transactions)   23.7         23.4         1.0    22.8         22.4         1.6 
Ticket (pesos)   33.9         33.2         2.1    33.6         32.5         3.4 

 

(A) Organic basis (% Org.) Excludes the effects of significant mergers and acquisitions in the last twelve month

(1) Monthly average information per store, considering same stores with more than twelve months of operations, income from services are included.

July 27, 2018 12

 

 

FEMSA Comercio - Health Division

Results of Operations

Millions of Pesos

 

   For the second quarter of:   For the six months of: 
   2018   % of rev.   2017   % of rev.   % Var.   2018   % of rev.   2017   % of rev.   % Var. 
Total revenues   13,380    100.0    11,431    100.0    17.1    25,835    100.0    23,455    100.0    10.1 
Cost of sales   9,287    69.4    8,090    70.8    14.8    18,046    69.9    16,700    71.2    8.1 
Gross profit   4,093    30.6    3,341    29.2    22.5    7,789    30.1    6,755    28.8    15.3 
Administrative expenses   514    3.8    381    3.3    34.9    1,000    3.9    834    3.6    19.9 
Selling expenses   2,923    21.9    2,618    22.9    11.7    5,832    22.5    5,318    22.6    9.7 
Other operating expenses (income), net   22    0.2    14    0.1    57.1    43    0.2    24    0.1    79.2 
Income from operations   634    4.7    328    2.9    93.3    914    3.5    579    2.5    57.9 
Depreciation   166    1.2    151    1.3    9.9    331    1.3    312    1.3    6.1 
Amortization & other non-cash charges   86    0.7    82    0.7    4.9    172    0.7    167    0.7    3.0 
Operative cash flow   886    6.6    561    4.9    57.9    1,417    5.5    1,058    4.5    33.9 
CAPEX   229    0    176    -    30.1    580    0    372    -    55.9 
                                                   
Information of Stores                                                  
Total stores                            2,251         2,154         4.5 
Net new stores (1):                                                  
vs. Last quarter   16         18         (11.1)                         
Year-to-date   26         34         (23.5)                         
Last-twelve-months   97         120         (19.2)                         
                                                   
Same-store data: (2)                                                  
 Sales (thousands of pesos)   1,614.7         1,444.1         11.8    1,581.1         1,489.2         6.2 

 

(1) Aquisitions are included.

(2) Monthly average information per store, considering same stores with more than twelve months of all the operations of FEMSA Comercio - Health Division.

 

July 27, 2018 13

 

 

FEMSA Comercio - Fuel Division

Results of Operations

Millions of Pesos

 

   For the second quarter of:   For the six months of: 
   2018   % of rev.   2017   % of rev.   % Var.   2018   % of rev.   2017   % of rev.   % Var. 
Total revenues   11,511    100.0    9,473    100.0    21.5    22,104    100.0    18,587    100.0    18.9 
Cost of sales   10,595    92.0    8,866    93.6    19.5    20,301    91.8    17,358    93.4    17.0 
Gross profit   916    8.0    607    6.4    50.9    1,803    8.2    1,229    6.6    46.7 
Administrative expenses   61    0.5    38    0.4    60.5    113    0.5    74    0.4    52.7 
Selling expenses   771    6.8    563    6.0    36.9    1,468    6.7    1,084    5.9    35.4 
Other operating expenses (income), net   2    -    4    -    (50.0)   3    -    6    -    (50.0)
Income from operations   82    0.7    2    -     N.S.     219    1.0    65    0.3     N.S.  
Depreciation   32    0.3    26    0.3    23.1    63    0.3    50    0.3    26.0 
Amortization & other non-cash charges   8    0.1    9    0.1    (11.1)   14    -    14    0.1    - 
Operative cash flow   122    1.1    37    0.4     N.S.     296    1.3    129    0.7    129.5 
CAPEX   129    0    41    -     N.S.     193    0    79    -    144.3 
                                                   
Information of OXXO GAS Service Stations                                                  
Total service stations                            499         390         27.9 
Net new service stations                                                  
vs. Last quarter   32         2          N.S.                           
Year-to-date   47         8          N.S.                           
Last-twelve-months   109         55         98.2                          
                                                   
Volume (million of liters) total stations   708         661         7.1    1,382         1,292         6.9 
                                                   
Same-stations data: (1)                                                  
Sales (thousands of pesos)   8,514.5         8,110.8         5.0    8,339.4         7,994.2         4.3 
Volume (thousands of liters)   523.4         566.2         (7.6)   521.3         555.9         (6.2)
Average price per liter   16.3         14.3         13.6    16.0         14.4         11.3 
Ticket (pesos)   -         -                                    

 

(1)Monthly average information per station, considering same stations with more than twelve months of operations.

 

July 27, 2018 14

 

 

Coca-Cola FEMSA

Results of Operations

Millions of Pesos

 

   For the second quarter of:   For the six months of: 
   2018   % of rev.   2017   % of rev.   % Var.(A)   % Org.(B)   2018   % of rev.   2017   % of rev.   % Var.(A)   % Org.(B) 
Total revenues   52,086    100.0    50,108    100.0    3.9    4.5    101,799    100.0    99,849    100.0    2.0    1.8 
Cost of sales   29,135    55.9    27,282    54.4    6.8         56,931    55.9    55,175    55.3    3.2      
Gross profit   22,951    44.1    22,825    45.6    0.6         44,868    44.1    44,674    44.7    0.4      
Administrative expenses   2,438    4.7    2,255    4.5    8.1         4,637    4.6    4,419    4.4    4.9      
Selling expenses   13,688    26.3    13,913    27.7    (1.6)        27,424    27.4    27,749    27.8    (1.2)     
Other operating expenses (income), net   548    1.1    166    0.3     N.S.          648    0.6    (269)   (0.3)    N.S.       
Income from operations   6,276    12.0    6,491    13.0    (3.3)   (9.5)   12,159    11.9    12,775    12.8    (4.8)   (9.4)
Depreciation   2,478    4.8    2,477    4.9    0.0         4,831    4.7    4,839    4.8    (0.2)     
Amortization & other non-cash charges   757    1.5    802    1.6    (5.6)        1,226    1.3    1,387    1.4    (11.6)     
Operative cash flow   9,511    18.3    9,770    19.5    (2.6)   (3.3)   18,217    17.9    19,000    19.0    (4.1)   (7.1)
CAPEX   2,722         2,539         7.2         4,587         6,425         (28.6)     
                                                             
Sales volumes                                                            
(Millions of unit cases)                                                            
Mexico and Central America   552.2    56.5    543.7    54.7    1.6         1,027.1    54.5    1,016.7    54.2    1.0      
South America   99.9    10.2    124.5    12.5    (19.8)        218.2    11.6    250.3    13.3    (12.8)     
Brazil   170.8    17.5    166.3    16.7    2.7         365.6    19.4    356.4    19.0    2.6      
Philippines   154.2    15.8    160.5    16.1    (4.0)        274.0    14.5    252.8    13.5    8.4      
Total   977.1    100.0    995.0    100.0    (1.8)        1,884.9    100.0    1,876.3    100.0    0.5      

 

(A) The consolidation of Coca- Cola Philippines started on February 1, 2017 additionally the results from Coca-Cola FEMSA Venezuela are no longer included as of January 1, 2018

(B) Organic basis (% Org.) Excludes the effects of significant mergers and acquisitions in the last twelve month and the results of Coca-Cola FEMSA Venezuela in 2017. The cumulative results of the year Includes the results of Coca-Cola FEMSA Philippines Inc., as if consolidation had taken place at January 2017.

 

July 27, 2018 15

 

 

FEMSA

Macroeconomic Information

 

   Inflation   End-of-period Exchange Rates 
   2Q 2018   LTM(1) Jun-18   Jun-18   Dec-17 
           Per USD   Per MXN   Per USD   Per MXN 
Mexico   -0.72%   4.67%   19.86    1.0000    19.74    1.0000 
Colombia   0.50%   3.19%   2,930.80    0.0068    2,984.00    0.0066 
Venezuela   387.34%   12732.12%   346,399.01    0.0001    22,793.30    0.0009 
Brazil   0.79%   2.95%   3.86    5.1515    3.31    5.9660 
Argentina   6.97%   27.61%   28.85    0.6885    18.65    1.0583 
Chile   1.04%   2.20%   647.95    0.0307    615.22    0.0321 
Philippines   0.51%   5.27%   53.52    0.3711    49.92    0.3953 
Euro Zone   2.12%   2.50%   0.87    22.9215    0.84    23.5729 

 

(1)LTM = Last twelve months.

 

July 27, 2018 16

 

 

2018 SECOND QUARTER AND FIRST SIX MONTHS RESULTS

Mexico City, July 26, 2018, Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFL, NYSE: KOF) (“Coca-Cola FEMSA” or the “Company”), the largest Coca-Cola franchise bottler in the world by sales volume, announces results for the second quarter of 2018.

 

Operational and Financial Highlights

 

·Volumes and financial results of the newly acquired territories in Guatemala were consolidated as of May 1, 2018, while the Uruguay acquisition will be consolidated as of July 1, 2018. Coca-Cola FEMSA de Venezuela was deconsolidated as of December 31, 2017.
·Volumes increased in Brazil and Central America while remaining flat in Mexico; transactions outperformed volumes in Argentina, Brazil, Mexico and the Philippines.
·Revenues increased 3.9%, driven by pricing ahead of inflation in Mexico and Argentina, partially offset by unfavorable currency translation effects.
·Comparable revenues grew 7.8% for the quarter driven by growth in Argentina, Brazil, Guatemala and Mexico.
·Operating income declined 3.3%, while comparable operating income declined 5.9% for the quarter, driven mainly by higher PET costs across most of our operations, a non-cash operating foreign exchange loss in Mexico, additional expenses related to our acquisitions, and higher sweetener costs in the Philippines, partially offset by raw material tailwinds in South America.

·Operating cash flow declined 2.6%, while comparable operating cash flow remained flat.

·Majority net income increased 24.7% during the second quarter of 2018, driven by a reduction in our comprehensive financing result, coupled with a decline in other non-operating expenses as compared to the second quarter of 2017, which included Venezuela.

 

Results Summary

 

  Second Quarter   Year to Date
  as Reported   Comparable (1)   as Reported   Comparable (1)
Expressed in millions of Mexican pesos. 2018 D%   D%   2018 D%   D%
Total revenues 52,086 3.9%   7.8%   101,799 2.0%   7.5%
Gross profit 22,951 0.6%   2.8%   44,868 0.4%   4.2%
Operating income 6,276 (3.3)%   (5.9)%   12,159 (4.8)%   (3.9)%
Operating cash flow (2) 9,511 (2.6)%   (0.0)%   18,217 (4.1)%   0.8%
Net income attributable to equity holders of the company 2,781 24.7%       5,195 (38.3)%    
Earnings per share (3) 1.32         2.47      

 

(2)Operating cash flow = operating income + depreciation + amortization & other operating non-cash charges.
(3)Quarterly earnings / outstanding shares as of the end of the period. Outstanding shares were 2,100.8 million

 

Message from the Chief Executive Officer

 

“In the second quarter, we delivered comparable revenue growth of 7.8%, while protecting our comparable operating cash flow. These results reflect our consistent top-line growth in Mexico, third consecutive quarter of volume growth in Brazil, profitability improvements in South America, and better than expected volume performance in the Philippines—all under complex environments. Importantly, during the quarter, we took important steps to continue consolidating our leadership position in the global beverage market as we announced strategic acquisitions in Uruguay and Guatemala, increasing our geographic footprint to 11 countries worldwide. As we enter the second half of the year, we are encouraged by the positive trends in our core markets and the power of our transformational initiatives: our KOFmmercial Digital Platform enables us to leverage on advanced analytics to deploy targeted initiatives at each point of sale, playing a fundamental role in our improved ability to detect and capture opportunities.” said John Santa Maria Otazua, Chief Executive Officer of the Company.

 

 (1)Comparability

 

Please refer to page 10 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

Press Release 2Q 2018 Page 17
July 26, 2018  

 

 

Consolidated results for the second quarter

 

Comparable figures:

Revenues: Comparable total revenues grew 7.8% in the second quarter of 2018 as compared to the same period of 2017, driven by growth in average price per unit case ahead of inflation in Argentina and Mexico, coupled with volume growth in Brazil and Central America and flat performance in Mexico; partially offset by volume declines in Argentina, Colombia and the Philippines.

 

Transactions: Comparable number of transactions increased 0.4%. Our sparkling beverage category grew 3.2%, driven by 6.3% growth in our colas portfolio, partially offset by a 4.6% decline in flavors. Our positive performance in colas was driven by growth in Brazil, Colombia, and the Philippines, partially offset by a decline in Argentina and Central America. Our still beverage category remained flat, driven mainly by the positive performance of Brazil and Mexico, offset by declines in the rest of our operations. Finally, our water category’s transactions increased by 9.4%, driven by growth across our operations, partially offset by a decline in Argentina.

 

Volume: Comparable sales volume declined 1.4% in the second quarter of 2018 as compared to the same period in 2017. Our sparkling beverage portfolio’s volume declined 1.0%, driven by a decline in our flavors portfolio that was partially offset by 1.3% growth in our colas portfolio. Our growth in colas was driven by the positive performance of Brazil, Central America, Colombia and Mexico. Our still beverage category’s volume grew 4.6%, driven by Brazil, Central America and Mexico. Our personal water portfolio’s volume grew 3.4% due to positive performance in most of our operations. Finally, our bulk water portfolio’s volume declined 5.4%, driven by a decline in Mexico, partially offset by growth in the rest of our operations.

 

Gross profit: Comparable gross profit grew 2.8%. Our pricing initiatives, lower sweetener prices in most of our operations and favorable currency hedging positions in Mexico and South America were offset by higher PET prices across most of our operations, higher concentrate prices in Mexico, an unfavorable raw material hedging position in Brazil, higher sweetener costs and the inclusion of the excise tax in the Philippines, which is applied as a cost; and the depreciation in the average exchange rate of the Argentine Peso, the Brazilian Real, and the Philippine Peso as applied to our U.S. dollar-denominated raw material costs.

 

Operating Income: Comparable operating income declined 5.9% for the second quarter of 2018 as compared to the same period of 2017, driven by non-cash operating foreign exchange loss in Mexico and additional expenses related to our acquisitions.

 

Operating cash flow: Comparable operating cash flow remained flat in the second quarter of 2018.

 

As reported figures:

Revenues: Total revenues increased 3.9% to Ps. 52,086 million in the second quarter of 2018 driven by the consolidation of recently acquired territories in Guatemala as of May 1, 2018, coupled with volume growth in Brazil and Central America and price increases above inflation in Argentina and Mexico. These factors were partially offset by the negative translation effect resulting from the depreciation of the Argentine Peso, the Brazilian Real and the Philippine Peso as compared to the Mexican Peso, combined with the deconsolidation of Coca-Cola FEMSA de Venezuela as of December 31, 2017.

 

Transactions: Reported total number of transactions remained flat at 6,699.1 million in the second quarter of 2018 as compared to the same period in 2017.

 

Volume: Reported total sales volume decreased 1.8% to 977.1 million unit cases in the second quarter of 2018 as compared to the same period in 2017.

 

Gross profit: Gross profit increased 0.6% to Ps. 22,951 million, and gross margin contracted 150 basis points to 44.1%.

 

(Continued on next page)

Press Release 2Q 2018 Page 18
July 26, 2018  

 

  

Equity method: The reported share of the profits of associates and joint ventures recorded a loss of Ps. 67 million in the second quarter of 2018, compared to a loss of Ps. 35 million recorded in the second quarter of 2017. This is mainly due to a loss in our dairy joint venture in Panama, partially offset by gains in our joint ventures in Brazil and in our Jugos del Valle joint venture in Mexico.

 

Operating Income: Operating income decreased 3.3% to Ps. 6,276 million, and operating margin contracted 100 basis points to 12.0% during the second quarter 2018 as compared with the same period of 2017. This decline was driven by non-cash operating foreign exchange loss in Mexico, additional expenses related to our acquisitions, which were partially offset by marketing and freight efficiencies in the Philippines.

 

Other non-operative expenses, net: Other non-operative expenses, net, recorded an expense of Ps. 59 million, compared to an expense of Ps. 1,330 million during the second quarter of 2017 which mainly resulted from the effects of negative currency fluctuations in Coca-Cola FEMSA de Venezuela.

 

Comprehensive financing result: Comprehensive financing result in the second quarter of 2018 recorded an expense of Ps. 1,381 million, compared to an expense of Ps. 1,711 million in the same period of 2017.

 

During the second quarter of 2018, we recorded an interest expense, net, of Ps. 1,589 million, compared to Ps. 1,946 million in the second quarter of 2017. This decrease was driven by the decline of short-term interest rates in Brazil; the average exchange rate depreciation of the Brazilian Real compared to the Mexican Peso as applied to existing Brazilian Real-denominated interest expense; and the reduction of debt in Brazil and Colombia. However, these effects were partially offset by: (i) the financing of Ps. 10,100 million for the acquisition of our new territories in Guatemala and Uruguay; and (ii) interest rate increases in Mexico.

 

In addition, for the second quarter, we recorded a foreign exchange gain of Ps. 268 million as compared to a gain of Ps. 139 million in 2017, which resulted from the quarterly depreciation of the Mexican Peso as applied to our U.S. dollar-denominated cash position.

 

Moreover, due to the deconsolidation of Coca-Cola FEMSA de Venezuela no monetary position in hyperinflationary subsidiaries was recorded in the second quarter of 2018 as compared to the same period of 2017.

 

Market value on financial instruments recorded a loss of Ps. 59 million as compared to a loss of Ps. 82 million in the second quarter of 2017.

 

Income tax: During the second quarter of 2018, reported income tax as a percentage of income before taxes was 34.3%, compared to 24.7% in the same period of 2017. This effect was mainly driven by the increase in the relative weight of Brazil’s profits in our consolidated results, which has a higher tax rate, coupled with the deconsolidation of Venezuela, which had deferred taxes in the second quarter 2017.

 

Net income: Consolidated net controlling interest income increased 24.7% to Ps. 2,781 million in the second quarter of 2018, resulting in earnings per share (EPS) of Ps. 1.32 (Ps. 13.24 per ADS).

 

Operating cash flow: Operating cash flow decreased 2.6% to Ps. 9,511 million, and operating cash flow margin contracted 120 basis points to 18.3%.

 

Press Release 2Q 2018 Page 19
July 26, 2018  

 

 

Balance Sheet (1)

 

As of June 30, 2018, we had a cash balance of Ps. 23,469 million, including US$ 251 million denominated in U.S. dollars, an increase of Ps. 4,702 million as compared to December 31, 2017. As of June 30, 2018, total short-term debt was Ps. 12,003 million, and long-term debt was Ps. 81,258 million. Total debt increased by Ps. 9,901 million, and net debt increased by Ps. 5,199 million compared to year-end 2017, due mainly to the financing of Ps. 10,100 million for the acquisition of our new territories in Guatemala and Uruguay.

 

The weighted average cost of debt for the quarter, including the effect of debt swapped to Brazilian Reals and Mexican Pesos, was 7.66%, a reduction as compared to the fourth quarter 2017, due mainly to the reduction of interest rates in Brazil. The following charts set forth the Company’s debt profile by currency and interest rate type and by maturity date as of June 30, 2018.

 

Currency % Total Debt(2) % Interest Rate Floating(2)(3)
Mexican Pesos 53.3% 14.1%
U.S. Dollars 1.3% 0.0%
Colombian Pesos 2.7% 79.0%
Brazilian Reals 42.4% 12.2%
Argentine Pesos 0.2% 0.0%

 

Debt Maturity Profile

 

Maturity Date 2018 2019 2020 2021 2022 2023+
% of Total Debt 11.0% 14.4% 11.0% 13.0% 1.7% 49.1%

 

(1)See page 17 for detailed information.
(2)After giving effect to cross-currency swaps.
(3)Calculated by weighting each year’s outstanding debt balance mix.

 

Selected Financial Ratios

 

  LTM 2018 FY 2017 D %
Net debt including effect of hedges (1)(3) 67,770 68,973 -1.7%
Net debt including effect of hedges / Operating cash flow (1)(3) 1.75 1.74  
Operating cash flow/ Interest expense, net (1) 5.72 4.99  
Capitalization (2) 43.6% 39.3%  

 

(1) Net debt = total debt - cash

(2) Total debt / (long-term debt + shareholders' equity)

(3) After giving effect to cross-currency swaps.

           

Press Release 2Q 2018 Page 20
July 26, 2018  

 

 

Mexico & Central America Division

 

(Costa Rica, Guatemala, México, Nicaragua, and Panama)

 

Comparable figures:

Revenues: Comparable total revenues from our Mexico and Central America division increased 4.3% in the second quarter of 2018, compared to the same period in 2017, driven by an increase in average price per unit case ahead of inflation and flat volumes in Mexico coupled with volume growth in Central America.

 

Transactions: Total transactions in our Mexico and Central America division remained flat in the second quarter of 2018. Our sparkling beverage portfolio’s transactions contracted 0.9%, driven by a 0.7% decline in our colas portfolio and a 1.5% decline in flavors. Our still beverage category’s transactions increased 4.2% in the division, driven by 5.9% growth in Mexico, while our water transactions, including bulk water, increased 1.9%, driven by growth in both Mexico and in Central America.

 

Volume: Total sales volume for the division remained flat in the second quarter of 2018, compared to the same period of 2017. Our sparkling beverage category’s volume increased 0.3%, driven by a 1.3% increase in our colas portfolio. Performance in colas for the division was driven by growth in both Mexico and Central America. Our still beverage category’s volume increased 9.0%, driven by 10.2% growth in Mexico and 2.2% growth in Central America. Our personal water portfolio’s volume increased 1.3%, driven by 2.1% growth in Mexico, partially offset by a 7.3% decline in Central America. Our bulk water portfolio’s volume declined 6.5% in the division due to a contraction in Mexico, partially offset by growth in Central America.

 

Gross profit: Comparable gross profit grew 2.8% in the second quarter of 2018 as compared to the same period in 2017. In Mexico, our pricing initiatives, declining sweetener costs and a favorable currency hedging position were offset by the increase in concentrate costs, higher PET prices and the depreciation of the average exchange rate of the Mexican Peso as applied to U.S. dollar-denominated raw material costs. In Central America, lower sweetener prices were offset by higher PET prices and, an unfavorable price mix in Costa Rica and Guatemala coupled with the depreciation of the average exchange rates of the Guatemalan Quetzal and the Nicaraguan Cordoba as applied to U.S. dollar-denominated raw material costs.

 

Operating income: Comparable operating income in the division decreased 12.5% in the second quarter of 2018 as compared to the same period in 2017.

 

Operating cash flow: Comparable operating cash flow decreased 2.9% in the second quarter of 2018 as compared to the same period in 2017.

 

As reported figures:

Revenues: Reported total revenues increased 7.5% in the second quarter of 2018 as compared to the same period of 2017, driven by the consolidation of recently acquired territories in Guatemala as of May 1, 2018, coupled with price increases above inflation in Mexico and organic volume growth in Central America.

 

Transactions: Reported total number of transactions increased 2.5% in the second quarter of 2018 as compared to the same period in 2017.

 

Volume: Reported total sales volume increased 1.6% in the second quarter of 2018 as compared to the same period in 2017.

 

Gross profit: Reported gross profit increased 5.9% in the second quarter of 2018, and gross profit margin reached 48.8%, a gross margin contraction of 70 basis points.

 

Operating income: Reported operating income decreased 10.4% in the second quarter of 2018, and operating income margin reached 14.4%, contracting 290 basis points during the period.

 

Operating cash flow: Reported operating cash flow declined 0.4% in the second quarter of 2018, resulting in a margin contraction of 170 basis points to 21.3%.

Press Release 2Q 2018 Page 21
July 26, 2018  

 

 

South America Division

 

(Argentina, Brazil and Colombia)

 

Comparable figures:

Revenues: Comparable total revenues increased 5.9%, driven mainly by volume growth in Brazil, coupled with an average price per unit case increase ahead of inflation in Argentina, which was partially offset by volume declines in Argentina and Colombia.

 

Transactions: Comparable transactions in the division decreased 0.3% during the second quarter of 2018. Our sparkling beverage portfolio’s transactions decreased 2.0%, driven by a decline in our flavors portfolio, partially offset by 1.8% growth in colas. Our positive performance in colas was driven by growth in Brazil and Colombia. Our still beverage category’s transactions increased 1.3% driven by growth in Brazil. Our water transactions, including bulk water, increased 13.3%, driven by growth in Brazil and Colombia.

 

Volume: Comparable total sales volume in South America declined 2.4% during the second quarter of 2018 as compared to the same period of 2017. Our sparkling beverage category’s volume decreased 3.4%, driven by a decline in our flavors portfolio, which was partially offset by 1.5% growth in colas. Colas’ positive performance was driven by growth in Brazil and Colombia. Our still beverage category’s volume decreased 4.5%, driven by declines in Argentina and Colombia, partially offset by positive performance in Brazil. Our personal water category’s volume increased 6.6%, driven by growth in Brazil and Colombia. Our bulk water business’s volume increased 14.4%, driven by the positive performance of all our South America operations.

 

Gross profit: Comparable gross profit increased 7.5% as a result of lower sweetener prices and favorable currency hedging position in the division, the appreciation of the Colombian Peso as applied to U.S. dollar-denominated raw material costs, which offset higher PET prices in the division, an unfavorable raw material hedging position in Brazil, and the depreciation of the average exchange rate of the Brazilian Real and the Argentine Peso as applied to our U.S. dollar-denominated raw material costs.

 

Operating income: Comparable operating income in the division increased 19.9% as compared to the same period in 2017.

 

Operating cash flow: Comparable operating cash flow increased 16.6% as compared to the same period of 2017.

 

As reported figures:

Revenues: Reported total revenues declined 7.5% to Ps. 18,177 million in the second quarter of 2018, driven by an unfavorable currency translation effect resulting from the depreciation of the Argentine Peso and the Brazilian Real as compared to the Mexican Peso and the deconsolidation of Coca-Cola FEMSA de Venezuela as of December 31, 2017. These effects were partially offset by volume growth in Brazil, coupled with an average price per unit case increase in Argentina.

 

Transactions: Reported total number of transactions decreased 5.4% to 1,808.2 million in the second quarter of 2018 as compared to the same period in 2017.

 

Volume: Reported total sales volume decreased 6.9% to 270.8 million unit cases in the second quarter of 2018 as compared to the same period in 2017.

 

Gross profit: Reported gross profit decreased 3.6% to Ps. 7,976.4 million in the second quarter of 2018, and gross profit margin expanded 180 basis points to 43.9%.

 

Operating income: Reported operating income grew 25.7% to Ps. 2,151.9 million in the second quarter of 2018, resulting in a margin expansion of 310 basis points to 11.8%.

 

Operating cash flow: Reported operating cash flow increased 1.2% to Ps. 3,112.4 million in the second quarter of 2018, resulting in a margin expansion of 140 basis points to 17.1%.

Press Release 2Q 2018 Page 22
July 26, 2018  

 

 

Asia Division

 

(The Philippines)

As of January 1, 2018, the Philippines implemented a comprehensive tax reform. As part of this reform, among other initiatives, excise taxes on sweetened beverages were applied as follows: (i) 6 Philippine Pesos per liter on beverages containing sugar or non-caloric sweeteners; and (ii) 12 Philippine Pesos per liter on beverages containing high fructose corn syrup (HFCS).

 

As this excise tax is applied to soft drink production, margins in 2018 in this operation are not comparable with margins from 2017. This impact in comparability is caused by the recognition of this excise tax in cost of goods sold and the Company’s increased prices to adjust to this change, resulting in increased revenues.

 

Comparable figures:

Revenues: Comparable total revenues increased 27.7% during the second quarter of 2018, driven by an average price per unit case increase as an adjustment to the excise tax, partially offset by a 4.0% volume decline.

 

Gross profit: Comparable gross profit decreased 11.9% as compared to the same period of 2017, driven mainly by the inclusion of the excise tax on soft drink production as a cost of goods sold, as well as higher sweetener and PET prices and the devaluation of the Philippine Peso as applied to our U.S. dollar-denominated raw material costs.

 

Operating income: Comparable operating income decreased 40.1% as compared to the same period of 2017.

 

Operating cash flow: Comparable operating cash flow decreased 26.2% as compared to the same period of 2017.

 

As reported figures:

Revenues: Reported total revenues increased 27.0% to Ps. 7,517 million for the second quarter 2018 as compared to the same period of 2017. Total revenues were driven by an average price per unit case increase, as an adjustment to the excise tax, partially offset by a volume decline and the negative translation effect resulting from the depreciation the Philippine Peso as compared to the Mexican Peso.

 

Transactions: Reported total number of transactions increased 2.1% to 1,818.8 million in the second quarter of 2018 as compared to the same period of 2017. Our sparkling beverage portfolio’s transactions increased 4.0%, driven by growth in both our colas and flavors portfolio. Our still beverage category’s transactions, excluding powders, increased 18.5%. Our water transactions, including bulk water, increased 4.8%.

 

Volume: Reported total sales volume decreased 4.0% to 154.2 million unit cases in the second quarter of 2018. Our sparkling beverage category’s volume decreased slightly by 0.8%, driven by a 4.2% decline in our colas portfolio, partially offset by 5.7% growth in flavors. Our still beverage category’s volume, excluding powders, increased 11.8%. Our personal water category’s volume decreased 1.6%. Our bulk water business’s volume grew 32.9%.

 

Gross profit: Gross profit decreased 12.4% to Ps. 2,094 million, and gross margin contracted 1,250 basis points to 27.9%.

 

Operating income: Reported operating income declined 40.0% to Ps. 324.0 million in the second quarter of 2018, resulting in a margin contraction of 480 basis points to 4.3%.

 

Operating cash flow: Reported operating cash flow declined 25.9% to Ps. 785.0 million in the second quarter of 2018, resulting in a margin of contraction of 750 basis points to 10.4%.

Press Release 2Q 2018 Page 23
July 26, 2018  

 

 

YTD Consolidated Results

 

Comparable figures:

Revenues: Comparable total revenues grew 7.5% in the first six months of 2018 as compared to the same period of 2017, driven by average price per unit case growth above inflation in Argentina and Mexico, coupled with volume growth in Brazil, Central America and Colombia, partially offset by volume declines in the rest of our operations.

 

Transactions: Comparable number of transactions increased 0.7%. Our sparkling beverage category grew 3.9%, driven by 7.6% growth in our colas portfolio. Our positive performance in colas was driven by growth in Brazil, Central America, Colombia and the Philippines. Our still beverage category increased 1.8% driven mainly by the positive performance of Brazil, Mexico and Central America. Finally, our water category’s transactions increased by 10.9%, driven by growth across our operations, partially offset by a decline in Argentina and Central America.

 

Volume: Comparable sales volume declined 0.7% in the first six months of 2018 as compared to the same period in 2017. Our sparkling beverage portfolio’s volume declined 0.6%, mainly driven by a decline in flavors that was partially offset by 2.2% growth in our colas portfolio which was driven by positive performance in most of our operations. Our still beverage category’s volume decreased 6.4%, driven by declines in Argentina, Colombia and the Philippines, which offset positive performance in the rest of our operations. Our personal water portfolio’s volume grew 4.6% due to positive performance in most of our operations. Finally, our bulk water portfolio’s volume remained flat, driven by growth in most of our operations, which was offset by a decline in Mexico.

 

Gross profit: Comparable gross profit grew 4.2%. Our pricing initiatives, coupled with lower sweetener prices in most of our operations, were offset by an unfavorable currency hedging position in Mexico, higher concentrate prices in Mexico, higher sweetener and PET costs and the inclusion of the excise tax on beverage production in the Philippines, which is applied as a cost; and the depreciation in the average exchange rate of the Argentine Peso, the Brazilian Real, and the Philippine Peso as applied to our U.S. dollar-denominated raw material costs.

 

Operating Income: Comparable operating income declined 3.9% for the first six months of 2018 as compared to the same period of 2017.

 

Operating cash flow: Comparable operating cash flow increased 0.8% in the first six months of 2018.

 

As reported figures:

Revenues: Total revenues increased 2.0% to Ps. 101,799 million in the first six months of 2018 driven by the consolidation of recently acquired territories in Guatemala as of May 1, 2018, coupled with volume growth in Brazil, Central America, and Colombia and price increases above inflation in Argentina and Mexico. These effects were partially offset by the negative translation effect resulting from the depreciation of the Argentine Peso, the Brazilian Real and the Philippine Peso as compared to the Mexican Peso, and the deconsolidation of Coca-Cola FEMSA de Venezuela as of December 31, 2017.

 

Transactions: Reported total number of transactions increased 3.3% to 12,836.7 million in the first six months of 2018 as compared to the same period in 2017.

 

Volume: Reported total sales volume increased 0.5% to 1,884.9 million unit cases in the first six months of 2018 as compared to the same period in 2017.

 

Gross profit: Gross profit increased 0.4% to Ps. 44,868 million, and gross margin contracted 60 basis points to 44.1%.

 

(Continued on next page)

Press Release 2Q 2018 Page 24
July 26, 2018  

 

  

Equity method: The reported share of the profits of associates and joint ventures recorded a loss of Ps. 116 million in the first six months of 2018, compared to a gain of Ps. 11 million recorded in the first six months of 2017. This is mainly due to a loss in our dairy joint venture in Panama, partially offset by gains in our joint ventures in Brazil and in our Jugos del Valle joint venture in Mexico.

 

Operating Income: Operating income decreased 4.8% to Ps. 12,159 million, and operating margin contracted 90 basis points to 11.9% during the first six months of 2018 as compared with the same period of 2017. This decline was driven by additional expenses related to our acquisitions, which were partially offset by marketing and freight efficiencies in the Philippines, as compared to a non-cash operating foreign exchange gain in Mexico in the same period of 2017.

 

Other non-operative expenses, net: Other non-operative expenses, net, recorded an expense of Ps. 121 million, compared to a gain of Ps. 1,335 million during the first six months of 2017 due mainly to the consolidation of Coca-Cola FEMSA Philippines, Inc., starting February 2017 and the effect of negative currency fluctuations in Venezuela during the first six months of 2017.

 

Comprehensive financing result: Comprehensive financing result in the first six months of 2018 recorded an expense of Ps. 3,453 million, compared to an expense of Ps. 3,310 million in the same period of 2017.

 

During the first six months of 2018, we recorded an interest expense, net, of Ps. 3,187 million, compared to Ps. 4,279 million in the same period of 2017. This decrease was driven by the decline of short-term interest rates in Brazil; the average exchange rate depreciation of the Brazilian Real compared to the Mexican Peso as applied to existing Brazilian Real-denominated interest expense; and the reduction of debt in Argentina, Brazil, and Colombia. However, these effects were partially offset by: (i) an interest rate increase in Mexico; (ii) the financing of Ps. 10,100 million for the acquisition of our new territories in Guatemala and Uruguay; and (iii) an interest rate increase resulting from swapping U.S. dollar denominated debt to Brazilian Real and Mexican Peso-denominated debt, as part of our strategy to eliminate our U.S. dollar net debt exposure.

 

In addition, for the first six months of 2018, we recorded a foreign exchange gain of Ps. 39 million as compared to a gain of Ps. 193 million in 2017, which resulted from the depreciation of the Mexican Peso as applied to our U.S. dollar-denominated cash position.

 

Moreover, due to the deconsolidation of Coca-Cola FEMSA de Venezuela no monetary position in hyperinflationary subsidiaries was recorded in the first six months of 2018 as compared to the same period of 2017.

 

Market value on financial instruments recorded a loss of Ps. 305 million as compared to a gain of Ps. 352 million in the first six months of 2017 due to the decrease, during the period, in the long-term interest rates in Brazil as applied to our fixed rate cross-currency swaps.

 

Income tax: During the first six months of 2018, reported income tax as a percentage of income before taxes was 33.3%, compared to 17.4% in the same period of 2017. The lower tax rate in the first six months of 2017 was driven mainly by a one-time non-cash gain recorded in connection with the consolidation of Coca-Cola FEMSA Philippines, Inc. in February 2017.

 

Net income: Consolidated net controlling interest income decreased 38.3% to Ps. 5,195 million in the first six months of 2018, resulting in earnings per share (EPS) of Ps. 2.47 (Ps. 24.73 per ADS), in the face of a high comparable driven mainly by a one-time non-cash gain recorded in connection with the consolidation of Coca-Cola FEMSA Philippines, Inc. in February 2017.

 

Operating cash flow: Operating cash flow decreased 4.1% to Ps. 18,217 million, and operating cash flow margin contracted 110 basis points to 17.9%.

 

Press Release 2Q 2018 Page 25
July 26, 2018  

 

 

Recent Developments

 

·On April 25, 2018, Coca-Cola FEMSA announced that, through subsidiaries, it had acquired two separate franchise territories in Guatemala from The Coca-Cola Company in all cash transactions for US$53.4 million and US$124.6 million, on a cash free and debt free basis. Volumes and financial results were consolidated as of May 1, 2018.

 

·On April 30, 2018, Coca-Cola FEMSA announced that Moody’s and Standard and Poor’s (“S&P”) affirmed their credit ratings on Coca-Cola FEMSA and revised their outlook from negative to stable, reflecting the Company’s strong liquidity and adequate credit metrics.

 

oOn April 16, 2018, Moody’s affirmed its “A2” global scale rating; and

 

oOn April 27, 2018, S&P affirmed its “A-” global scale rating.

 

·On June 28, 2018, Coca-Cola FEMSA announced the acquisition of Montevideo Refrescos S.R.L. from The Coca-Cola Company in an all cash transaction. The aggregate enterprise value of this transaction is US$250.7 million, on a cash free and debt free basis. Volumes and financial results will be consolidated as of July 1, 2018.

 

Comparability

 

The comparability of our financial and operating performance in the second quarter of 2018, as compared to the same period of 2017, was affected by the following factors: (a) as of May 1, 2018 the inclusion of two bottling franchise acquisitions in Guatemala and, (b) as of December 31, 2017, the deconsolidation of Coca-Cola FEMSA de Venezuela.

 

In an effort to provide our readers with a more useful representation of our company's underlying financial and operating performance, we are including the term “Comparable.” This means, with respect to a year-over-year comparison, the change of a given measure excluding the effects of: (i) mergers, acquisitions, and divestitures, (ii) translation effects resulting from exchange rate movements, (iii) the results of Coca-Cola FEMSA de Venezuela in 2017; and including the results of Coca-Cola FEMSA Philippines, Inc., as if its consolidation had taken place on January 1, 2017. In preparing this measure, management has used its best judgment, estimates, and assumptions in order to maintain comparability.

 

Furthermore, as of January 1, 2018, margin comparability in the Philippines was impacted by the excise tax on soft drink production, accounted for in cost of goods sold.

 

Conference Call Information

 

Our second quarter 2018 conference call will be held on July 26, 2018, at 12:30 A.M. Eastern Time (11:30 A.M. Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 800-239-9838 or International: +1 323-794-2551. Participant code: 8474769. We invite investors to listen to the live audio cast of the conference call on the Company’s website, www.coca-colafemsa.com. If you are unable to participate live, the conference call audio will be available at www.coca-colafemsa.com

 

Mexican Stock Exchange Quarterly Filing

 

Coca-Cola FEMSA encourages the reader to refer to our quarterly filing to the Mexican Stock Exchange (Bolsa Mexicana de Valores or BMV) for more detailed information. This filing contains a detailed cash flow statement and selected notes to the financial statements, including segment information. This filing is available at www.bmv.com.mx in the Información Financiera section for Coca-Cola FEMSA (KOF) and on our corporate website at www.coca-colafemsa.com/inversionistas/registros-bmv.

 

Press Release 2Q 2018 Page 26
July 26, 2018  

 

 

Additional Information

 

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance, which should be considered as good faith estimates by Coca-Cola FEMSA. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, many of which are outside Coca-Cola FEMSA’s control, which could materially impact the Company’s actual performance. References herein to “US$” are to United States dollars. This news release contains translations of certain Mexican peso amounts into U.S. dollars for the convenience of the reader. These translations should not be construed as representations that Mexican peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.

 

All of the financial information presented in this report was prepared under International Financial Reporting Standards (IFRS).

 

Earnings per share were computed based on 2,100.8 million shares (each ADS represents 10 local shares).

 

For reporting purposes, all corporate expenses, including the equity method recorded from our stake of the results of Coca-Cola FEMSA Philippines, Inc., were included in the results of the Mexico and Central America division. Starting on February 2013 and ending on January 2017, we incorporated our stake of the results of Coca-Cola FEMSA Philippines, Inc. through the equity method.

 

About the Company

 

Stock listing information: Mexican Stock Exchange, Ticker: KOFL | NYSE (ADR), Ticker: KOF | Ratio of KOF L to KOF = 10:1

 

Coca-Cola FEMSA, S.A.B. de C.V. is the largest franchise bottler in the world by sales volume. The company produces and distributes trademark beverages of The Coca-Cola Company, offering a wide portfolio of 169 brands to more than 396 million consumers daily. With over 100 thousand employees, the Company markets and sells approximately 4 billion unit cases through 2.8 million points of sale a year. Operating 67 manufacturing plants and 344 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain. The Company is a member of the Dow Jones Sustainability Emerging Markets Index, Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the Mexican Stock Exchange’s IPC and Social Responsibility and Sustainability Indices, among others. Its operations encompass franchise territories in Mexico, Guatemala, Colombia, Brazil, and Argentina, and, nationwide, in Nicaragua, Costa Rica, Panama, Uruguay, Venezuela and the Philippines. For further information, please visit www.coca-colafemsa.com

 

For additional information or inquiries, contact the Investor Relations team:

·Maria Dyla Castro | mariadyla.castro@kof.com.mx | (5255) 1519-5186
·Jorge Collazo | jorge.collazo@kof.com.mx | (5255) 1519-5218
·Maria Fernanda Garcia | maria.garciacr@kof.com.mx | (5255) 1519-6240

 

(7 pages of tables to follow)

Press Release 2Q 2018 Page 27
July 26, 2018  

 

 

Quarter - Consolidated Income Statement

Expressed in millions of Mexican pesos(1)

 

   2Q 18   % Rev   2Q 17   % Rev   D %
Reported		   D %
Comparable (8)		 
Transactions (million transactions)   6,699.1         6,690.2         0.1%   0.4%
Volume (million unit cases) (2)   977.1         995.0         -1.8%   -1.4%
Average price per unit case (2)   50.29         47.89         5.0%     
Net revenues   51,985         50,049         3.9%     
Other operating revenues   101         59         72.0%     
Total revenues (3)   52,086    100.0%   50,108    100.0%   3.9%   7.8%
Cost of goods sold   29,135    55.9%   27,282    54.4%   6.8%     
Gross profit   22,951    44.1%   22,825    45.6%   0.6%   2.8%
Operating expenses   16,126    31.0%   16,168    32.3%   -0.3%     
Other operating expenses, net   481    0.9%   132    0.3%   264.6%     
Operating equity method (gain) loss in associates(4)   67    0.1%   35    0.1%   92.2%     
Operating income (5)   6,276    12.0%   6,491    13.0%   -3.3%   -5.9%
Other non operating expenses, net   59         1,330         -95.6%     
Non Operating equity method (gain) loss in associates(6)   (18)        11         NA      
Interest expense   1,682         2,128         -21.0%     
Interest income   93         182         -49.1%     
Interest expense, net   1,589         1,946         -18.3%     
Foreign exchange loss (gain)   (268)        (139)        92.7%     
Loss (gain) on monetary position in inflationary subsidiries   -         (178)        NA      
Market value (gain) loss on financial instruments   59         82         -27.6%     
Comprehensive financing result   1,381         1,711         -19.3%     
Income before taxes   4,854         3,439         41.2%     
Income taxes   1,664         850         95.7%     
Consolidated net income   3,191         2,589         23.2%     
Net income attributable to equity holders of the company   2,781    5.3%   2,229    4.4%   24.7%     
Non-controlling interest   410         360         14.0%     
Operating income (5)   6,276    12.0%   6,491    13.0%   -3.3%     
Depreciation   2,478         2,477         0.0%     
Amortization and other operating non-cash charges   757         802         -5.6%     
Operating cash flow (5)(7)   9,511    18.3%   9,770    19.5%   -2.6%   -0.0%
                               
CAPEX   2,722         2,539                

 

(1) Except volume and average price per unit case figures.

(2) Sales volume and average price per unit case exclude beer results.

(3) Please refer to page 18 for revenue breakdown.

(4) Includes equity method in Jugos del Valle, Leao Alimentos, Estrella Azul, among others.

(5) The operating income and operating cash flow lines are presented as non-gaap measures for the convenience of the reader.

(6) Includes equity method in PIASA, IEQSA, Beta San Miguel, IMER and KSP Participacoes among others.

(7) Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.

(8) Please refer to page 10 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

 

Press Release 2Q 2018 Page 28
July 26, 2018  

 

  

YTD - Consolidated Income Statement

Expressed in millions of Mexican pesos(1)

 

   YTD 2018   % Rev   YTD 2017   % Rev   D %
Reported		   D %
Comparable (8)		 
Transactions (million transactions)   12,836.7         12,431.9         3.3%   0.7%
Volume (million unit cases) (2)   1,884.9         1,876.3         0.5%   -0.7%
Average price per unit case (2)   50.48         49.97         1.0%     
Net revenues   101,580         99,694         1.9%     
Other operating revenues   218         154         41.8%     
Total revenues (3)   101,799    100.0%   99,849    100.0%   2.0%   7.5%
Cost of goods sold   56,931    55.9%   55,175    55.3%   3.2%     
Gross profit   44,868    44.1%   44,674    44.7%   0.4%   4.2%
Operating expenses   32,061    31.5%   32,168    32.2%   -0.3%     
Other operating expenses, net   532    0.5%   (258)   -0.3%   NA      
Operating equity method (gain) loss in associates(4)   116    0.1%   (11)   -0.0%   NA      
Operating income (5)   12,159    11.9%   12,775    12.8%   -4.8%   -3.9%
Other non operating expenses, net   121         (1,335)        NA      
Non Operating equity method (gain) loss in associates(6)   (6)        (26)        -76.2%     
Interest expense   3,694         4,641         -20.4%     
Interest income   506         362         39.9%     
Interest expense, net   3,187         4,279         -25.5%     
Foreign exchange loss (gain)   (39)        (193)        -79.7%     
Loss (gain) on monetary position in inflationary subsidiries   -         (424)        NA      
Market value (gain) loss on financial instruments   305         (352)        NA      
Comprehensive financing result   3,453         3,310         4.3%     
Income before taxes   8,592         10,825         -20.6%     
Income taxes   2,860         1,884         51.8%     
Consolidated net income   5,732         8,941         -35.9%     
Net income attributable to equity holders of the company   5,195    5.1%   8,413    8.4%   -38.3%     
Non-controlling interest   537         528         1.7%     
Operating income (5)   12,159    11.9%   12,775    12.8%   -4.8%     
Depreciation   4,831         4,839         -0.2%     
Amortization and other operating non-cash charges   1,226         1,387         -11.6%     
Operating cash flow (5)(7)   18,217    17.9%   19,000    19.0%   -4.1%   0.8%
                               
CAPEX   4,587         6,425                

 

(1) Except volume and average price per unit case figures.

(2) Sales volume and average price per unit case exclude beer results.

(3) Please refer to page 19 for revenue breakdown.

(4) Includes equity method in Jugos del Valle, Leao Alimentos, Estrella Azul, among others. For January '17 includes Coca-Cola FEMSA Philippines, Inc.

(5) The operating income and operating cash flow lines are presented as non-gaap measures for the convenience of the reader.

(6) Includes equity method in PIASA, IEQSA, Beta San Miguel, IMER and KSP Participacoes among others.

(7) Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.

(8) Please refer to page 10 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

 

Press Release 2Q 2018 Page 29
July 26, 2018  

 

  

Mexico & Central America Division

Expressed in millions of Mexican pesos(1)

 

Quarterly information                        
   2Q 18   % Rev   2Q 17   % Rev   D %
Reported		   D %
Comparable(6)		 
Transactions (million transactions)   3,072.2         2,997.5         2.5%   -0.1%
Volume (million unit cases)   552.2         543.7         1.6%   -0.1%
Average price per unit case   47.78         45.13         5.9%     
Net revenues   26,383         24,536                
Other operating revenues   9         11                
Total revenues (2)   26,392    100.0%   24,547    100.0%   7.5%   4.3%
Cost of goods sold   13,511    51.2%   12,386    50.5%          
Gross profit   12,881    48.8%   12,161    49.5%   5.9%   2.8%
Operating expenses   8,719    33.0%   7,906    32.2%          
Other operating expenses, net   276    1.0%   (26)   -0.1%          
Operating equity method (gain) loss in associates (3)   85    0.3%   42    0.2%          
Operating income (4)   3,800    14.4%   4,239    17.3%   -10.4%   -12.5%
Depreciation, amortization & other operating non-cash charges   1,814    6.9%   1,396    5.7%          
Operating cash flow (4)(5)   5,614    21.3%   5,635    23.0%   -0.4%   -2.9%
                               
Accumulated information                              
    YTD 2018    % Rev    YTD 2017    % Rev    D %
Reported		    D %
Comparable(6)		 
Transactions (million transactions)   5,746.2         5,677.9         1.2%   -0.2%
Volume (million unit cases)   1,027.1         1,016.7         1.0%   0.1%
Average price per unit case   47.37         45.24         4.7%     
Net revenues   48,652         45,995                
Other operating revenues   17         25                
Total revenues (2)   48,669    100.0%   46,020    100.0%   5.8%   4.7%
Cost of goods sold   25,305    52.0%   23,433    50.9%          
Gross profit   23,365    48.0%   22,587    49.1%   3.4%   2.4%
Operating expenses   16,585    34.1%   15,399    33.5%          
Other operating expenses, net   172    0.4%   (92)   -0.2%          
Operating equity method (gain) loss in associates (3)   144    0.3%   46    0.1%          
Operating income (4)   6,463    13.3%   7,233    15.7%   -10.7%   -11.4%
Depreciation, amortization & other operating non-cash charges   3,247    6.7%   2,641    5.7%          
Operating cash flow (4)(5)   9,710    20.0%   9,875    21.5%   -1.7%   -2.6%

 

(1) Except volume and average price per unit case figures.

(2) Please refer to pages 18 and 19 for revenue breakdown.

(3) Includes equity method in Jugos del Valle, Estrella Azul, among others. For January '17 includes Coca-Cola FEMSA Philippines, Inc.

(4) The operating income and operating cash flow lines are presented as non-gaap measures for the convenience of the reader.

(5) Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.

(6) Please refer to page 10 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

 

Press Release 2Q 2018 Page 30
July 26, 2018  

 

 

South America Division

Expressed in millions of Mexican pesos(1)

 

Quarterly information                        
   2Q 18   % Rev   2Q 17   % Rev   D %
Reported		   D %
Comparable(7)		 
Transactions (million transactions)   1,808.2         2,016.7         -5.4%   -0.3%
Volume (million unit cases) (2)   270.8         316.1         -6.9%   -2.4%
Average price per unit case (2)   56.29         59.12         -4.8%     
Net revenues   18,085         19,595                
Other operating revenues   93         48                
Total revenues (3)   18,177    100.0%   19,643    100.0%   -7.5%   5.9%
Cost of goods sold   10,201    56.1%   11,369    57.9%          
Gross profit   7,976    43.9%   8,274    42.1%   -3.6%   7.5%
Operating expenses   5,649    31.1%   6,415    32.7%          
Other operating expenses, net   194    1.1%   154    0.8%          
Operating equity method (gain) loss in associates (4)   (18)   -0.1%   (8)   -0.0%          
Operating income (5)   2,152    11.8%   1,712    8.7%   25.7%   19.9%
Depreciation, amortization & other operating non-cash charges   961    5.3%   1,363    6.9%          
Operating cash flow (5)(6)   3,112    17.1%   3,076    15.7%   1.2%   16.6%
                               
Accumulated information                              
    YTD 2018    % Rev    YTD 2017    % Rev    D %
Reported		    D %
Comparable(7)		 
Transactions (million transactions)   3,819.7         3,929.0         -2.8%   2.1%
Volume (million unit cases) (2)   583.8         606.7         -3.8%   0.5%
Average price per unit case (2)   57.20         63.05         -9.3%     
Net revenues   39,821         44,181                
Other operating revenues   201         129                
Total revenues (3)   40,022    100.0%   44,311    100.0%   -9.7%   6.3%
Cost of goods sold   22,314    55.8%   26,057    58.8%          
Gross profit   17,708    44.2%   18,254    41.2%   -3.0%   12.1%
Operating expenses   12,153    30.4%   13,719    31.0%          
Other operating expenses, net   329    0.8%   (181)   -0.4%          
Operating equity method (gain) loss in associates (4)   (28)   -0.1%   (57)   -0.1%          
Operating income (5)   5,255    13.1%   4,773    10.8%   10.1%   14.9%
Depreciation, amortization & other operating non-cash charges   1,925    4.8%   2,694    6.1%          
Operating cash flow (5)(6)   7,181    17.9%   7,467    16.9%   -3.8%   14.1%

 

(1) Except volume and average price per unit case figures.

(2) Sales volume and average price per unit case exclude beer results.

(3) Please refer to pages 18 and 19 for revenue breakdown.

(4) Includes equity method in Leao Alimentos, Verde Campo, among others.

(5) The operating income and operating cash flow lines are presented as non-gaap measures for the convenience of the reader.

(6) Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.

(7) Please refer to page 10 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

Press Release 2Q 2018 Page 31
July 26, 2018  

 

 

Asia Division

Expressed in millions of Mexican pesos(1)

 

Quarterly information                        
   2Q 18   % Rev   2Q 17   % Rev   D %
Reported		   D %
Comparable(4)		 
Transactions (million transactions)   1,818.8         1,780.5         2.1%   2.1%
Volume (million unit cases)   154.2         160.5         -4.0%   -4.0%
Average price per unit case   48.75         36.87         32.2%     
Net revenues   7,517         5,917                
Other operating revenues   -         -                
Total revenues (3)   7,517    100.0%   5,917    100.0%   27.0%   27.7%
Cost of goods sold   5,423    72.1%   3,527    59.6%          
Gross profit   2,094    27.9%   2,390    40.4%   -12.4%   -11.9%
Operating expenses   1,759    23.4%   1,847    31.2%          
Other operating expenses, net   11    0.1%   3    0.1%          
Operating income (5)   324    4.3%   540    9.1%   -40.0%   -40.1%
Depreciation, amortization & other operating non-cash charges   461    6.1%   519    8.8%          
Operating cash flow (5)(6)   785    10.4%   1,059    17.9%   -25.9%   -26.2%
                               
Accumulated information                              
    YTD 2018    % Rev    YTD 2017(2)    % Rev    D %
Reported		    D %
Comparable(4)		 
Transactions (million transactions) (2)   3,270.8         2,825.1         15.8%   0.6%
Volume (million unit cases) (2)   274.0         252.8         8.4%   -5.8%
Average price per unit case (2)   47.83         37.65         27.0%     
Net revenues   13,107         9,518                
Other operating revenues   -         -                
Total revenues (3)   13,107    100.0%   9,518    100.0%   37.7%   23.6%
Cost of goods sold   9,312    71.0%   5,685    59.7%          
Gross profit   3,795    29.0%   3,833    40.3%   -1.0%   -14.4%
Operating expenses   3,323    25.3%   3,050    32.0%          
Other operating expenses, net   31    0.2%   15    0.2%          
Operating income (5)   441    3.4%   768    8.1%   -42.6%   -44.3%
Depreciation, amortization & other operating non-cash charges   885    6.8%   890    9.4%          
Operating cash flow (5)(6)   1,326    10.1%   1,658    17.4%   -20.0%   -27.0%

 

(1) Except volume and average price per unit case figures.

(2) Includes February to June for 2017

(3) Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.

(4) Please refer to page 10 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

 

Press Release 2Q 2018 Page 32
July 26, 2018  

 

 

Consolidated Balance Sheet

Expressed in millions of Mexican pesos.

         
   Jun-18   Dec-17 
Assets        
Current Assets          
Cash, cash equivalents and marketable securities  Ps.23,469   Ps.18,767 
Total accounts receivable   13,766    17,576 
Inventories   11,385    11,364 
Other current assets   8,330    7,950 
Total current assets   56,951    55,657 
Property, plant and equipment          
Property, plant and equipment   121,442    121,968 
Accumulated depreciation   (48,918)   (46,141)
Total property, plant and equipment, net   72,523    75,827 
Investment in shares   11,327    12,540 
Intangibles assets and other assets   122,394    124,243 
Other non-current assets   18,271    17,410 
Total Assets  Ps.281,466   Ps.285,677 
           
Liabilities and Equity          
Current Liabilities          
Short-term bank loans and notes payable  Ps.12,003   Ps.12,171 
Suppliers   16,728    19,956 
Other current liabilities   20,810    23,467 
Total current liabilities   49,542    55,595 
Long-term bank loans and notes payable   81,258    71,189 
Other long-term liabilities   17,838    18,184 
Total liabilities   148,637    144,968 
Equity          
Non-controlling interest   17,049    18,141 
Total controlling interest   115,779    122,568 
Total equity   132,829    140,710 
Total Liabilities and Equity  Ps.281,466   Ps.285,677 

 

Press Release 2Q 2018 Page 33
July 26, 2018  

 

 

Quarter - Volume, Transactions & Revenues

For the three months ended on June 30, 2018 and 2017

 

 

Volume                          
Expressed in million unit cases 2Q 2018   2Q 2017   YoY
Sparkling Water (1) Bulk (2) Stills Total   Sparkling Water (1) Bulk (2) Stills Total   D%
Mexico 360.9 29.0 76.4 32.4 498.7   360.7 28.4 81.7 29.5 500.3   -0.3%
Central America 45.5 2.6 0.1 5.2 53.5   35.7 2.6 0.1 5.0 43.4   23.2%
Mexico and Central America 406.4 31.6 76.5 37.7 552.2   396.3 31.0 81.9 34.5 543.7   1.6%
Colombia 47.3 7.9 2.7 3.9 61.8   48.9 7.7 2.7 5.7 64.9   -4.8%
Venezuela - - - - -   11.6 1.2 0.1 0.4 13.3   -
Brazil 150.0 9.7 1.6 9.6 170.8   149.8 7.5 1.3 7.7 166.3   2.7%
Argentina 31.0 3.6 1.0 2.5 38.1   37.6 4.6 0.7 3.4 46.3   -17.6%
South America 228.3 21.2 5.3 16.0 270.8   247.8 21.0 4.7 17.2 290.8   -6.9%
Philippines 126.8 7.4 11.9 8.0 154.2   127.9 7.5 9.0 16.2 160.5   -4.0%
Asia 126.8 7.4 11.9 8.0 154.2   127.9 7.5 9.0 16.2 160.5   -4.0%
Total 761.5 60.2 93.7 61.7 977.1   772.0 59.6 95.5 67.9 995.0   -1.8%

 

(1) Excludes water presentations larger than 5.0 Lt ; includes flavored water

(2) Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations; includes flavored water

 

Transactions                          
Expressed in million transactions 2Q 2018   2Q 2017   YoY
Sparkling Water Stills Total   Sparkling Water Stills Total   D%
Mexico 2,154.8 211.5 261.2 2,627.5   2,169.3 207.4 246.8 2,623.6   0.2%
Central America 364.9 16.0 63.7 444.7   293.3 15.7 65.0 374.0   18.9%
Mexico and Central America 2,519.8 227.5 325.0 3,072.2   2,462.6 223.2 311.8 2,997.5   2.5%
Colombia 348.0 82.2 44.4 474.5   371.2 72.4 56.4 500.0   -5.1%
Venezuela - - - -   84.1 9.9 4.9 98.8   -
Brazil 936.1 82.2 107.2 1,125.5   924.4 67.5 88.3 1,080.2   4.2%
Argentina 169.5 20.5 18.1 208.2   187.0 23.3 22.8 233.1   -10.7%
South America 1,453.6 184.9 169.7 1,808.2   1,566.7 173.1 172.4 1,912.2   -5.4%
Philippines 1,636.5 92.4 89.9 1,818.8   1,573.2 88.1 119.3 1,780.5   2.1%
Asia 1,636.5 92.4 89.9 1,818.8   1,573.2 88.1 119.3 1,780.5   2.1%
Total 5,609.8 504.7 584.6 6,699.1   5,602.5 484.3 603.4 6,690.2   0.1%

 

Revenues        
Expressed in million Mexican Pesos 2Q 2018 2Q 2017 D%  
 
Mexico 22,437 21,361 5.0%  
Central America 3,955 3,186 24.1%  
Mexico and Central America 26,392 24,547 7.5%  
Colombia 3,493 3,463 0.8%  
Venezuela - 921 -  
Brazil (3) 12,318 12,237 0.7%  
Argentina 2,366 3,022 -21.7%  
South America 18,177 19,643 -7.5%  
Philippines 7,517 5,917 27.0%  
Asia 7,517 5,917 27.0%  
Total 52,086 50,108 3.9%  

 

(3) Brazil includes Beer revenues of Ps. 2,843 million for the second quarter of 2018 and Ps. 2,402 million for the same period of the previous year.

 

Press Release 2Q 2018 Page 34
July 26, 2018  

 

 

YTD - Volume, Transactions & Revenues

For the six months ended on June 30, 2018 and 2017

 

 

Volume                          
Expressed in million unit cases YTD 2018   YTD 2017   YoY
Sparkling Water (1) Bulk (2) Stills Total   Sparkling Water (1) Bulk (2) Stills Total   D%
Mexico 671.0 54.2 142.9 60.6 928.7   674.6 52.3 150.3 55.6 932.7   -0.4%
Central America 82.3 5.5 0.3 10.2 98.4   68.8 5.2 0.3 9.6 84.0   17.2%
Mexico and Central America 753.3 59.7 143.2 70.8 1,027.1   743.4 57.4 150.6 65.3 1,016.7   1.0%
Colombia 97.7 16.7 5.9 8.2 128.5   93.8 15.1 5.4 11.4 125.8   2.1%
Venezuela - - - - -   22.1 2.6 0.1 1.1 25.9   -
Brazil 319.3 22.1 3.6 20.6 365.6   317.9 18.8 3.0 16.8 356.5   2.6%
Argentina 71.8 8.9 2.5 6.5 89.7   79.2 10.4 1.5 7.5 98.6   -9.1%
South America 488.8 47.7 12.0 35.3 583.8   513.0 46.9 10.1 36.8 606.8   -3.8%
Philippines (3) 224.0 13.3 22.1 14.7 274.0   201.2 11.8 14.9 24.9 252.8   8.4%
Asia 224.0 13.3 22.1 14.7 274.0   201.2 11.8 14.9 24.9 252.8   8.4%
Total 1,466.1 120.7 177.3 120.8 1,884.9   1,457.6 116.2 175.5 127.0 1,876.3   0.5%

 

(1) Excludes water presentations larger than 5.0 Lt ; includes flavored water

(2) Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations; includes flavored water

(3) Philippines information reported for 2017 includes February to June.

 

Transactions                          
Expressed in million transactions YTD 2018   YTD 2017   YoY
Sparkling Water Stills Total   Sparkling Water Stills Total   D%
Mexico 4,041.3 394.1 491.6 4,927.0   4,091.8 384.9 473.9 4,950.5   -0.5%
Central America 659.8 32.2 127.2 819.2   570.6 31.3 125.4 727.4   12.6%
Mexico and Central America 4,701.1 426.4 618.8 5,746.2   4,662.4 416.2 599.3 5,677.9   1.2%
Colombia 722.4 167.6 90.3 980.4   721.5 139.8 116.3 977.6   0.3%
Venezuela - - - -   155.5 24.6 8.7 188.8   -
Brazil 1,960.3 190.6 223.3 2,374.2   1,918.7 167.5 188.2 2,274.5   4.4%
Argentina 373.9 48.0 43.2 465.1   387.1 51.9 49.1 488.1   -4.7%
South America 3,056.6 406.2 356.9 3,819.7   3,182.8 383.8 362.3 3,928.9   -2.8%
Philippines (3) 2,927.0 164.8 179.0 3,270.8   2,500.5 136.7 187.9 2,825.1   15.8%
Asia 2,927.0 164.8 179.0 3,270.8   2,500.5 136.7 187.9 2,825.1   15.8%
Total 10,684.7 997.4 1,154.6 12,836.7   10,345.8 936.6 1,149.5 12,431.9   3.3%

 

Revenues        
Expressed in million Mexican Pesos YTD 2018 YTD 2017 D%  
 
Mexico 41,521 39,474 5.2%  
Central America 7,148 6,546 9.2%  
Mexico and Central America 48,669 46,020 5.8%  
Colombia 7,093 7,098 -0.1%  
Venezuela - 2,173 -  
Brazil (4) 27,166 28,311 -4.0%  
Argentina 5,763 6,728 -14.3%  
South America 40,022 44,311 -9.7%  
Philippines (3) 13,107 9,518 37.7%  
Asia 13,107 9,518 37.7%  
Total 101,799 99,849 2.0%  

 

(4) Brazil includes Beer revenues of Ps. 6,429 million for the first six months of 2018 and Ps. 5,927 million for the same period of the previous year.

 

Press Release 2Q 2018 Page 35
July 26, 2018  

 

 

Macroeconomic Information

Second quarter 2018

 

 

Inflation(1)              
               
  LTM 2Q 18 YTD        
Mexico 4.67% -0.72% 0.57%        
Colombia 3.19% 0.50% 2.57%        
Brazil 2.95% 0.79% 1.73%        
Argentina 27.61% 6.97% 14.18%        
Philippines 5.27% 0.51% 3.11%        

 

(1) Source: inflation estimated by the company based on historic publications from the Central Banks of each country.

 

Average Exchange Rates for each Period (2)          
               
  Quarterly Exchange Rate (local currency per USD)   Accumulated Exchange Rate (local currency per USD)
  2Q 18 2Q 17 D %   YTD 18 YTD 17 D %
Mexico 19.37 18.60 4.2%   19.07 19.49 -2.2%
Guatemala 7.44 7.34 1.4%   7.40 7.39 0.3%
Nicaragua 31.36 29.86 5.0%   31.17 29.68 5.0%
Costa Rica 569.03 575.31 -1.1%   570.49 570.01 0.1%
Panama 1.00 1.00 0.0%   1.00 1.00 0.0%
Colombia 2,840.31 2,918.63 -2.7%   2,850.34 2,920.35 -2.4%
Brazil 3.61 3.21 12.2%   3.43 3.18 7.8%
Argentina 23.53 15.73 49.5%   21.62 15.70 37.6%
Philippines 52.45 49.86 5.2%   51.95 49.92 4.1%

 

End of Period Exchange Rates            
               
  Quarter Exchange Rate (local currency per USD)   Previous Quarter Exchange Rate (local currency per USD)
  Jun 2018 Jun 2017 D %   Mar 2018 Mar 2017 D %
Mexico 19.86 17.90 11.0%   18.34 18.81 -2.5%
Guatemala 7.49 7.34 2.2%   7.40 2.56 188.7%
Nicaragua 31.55 30.04 5.0%   31.16 29.68 5.0%
Costa Rica 570.08 579.87 -1.7%   569.31 567.34 0.3%
Panama 1.00 1.00 0.0%   1.00 1.00 0.0%
Colombia 2,930.80 3,038.26 -3.5%   2,780.47 2,880.24 -3.5%
Brazil 3.86 3.31 16.6%   3.32 3.17 4.9%
Argentina 28.85 16.63 73.5%   20.15 15.39 30.9%
Philippines 53.52 50.47 6.1%   52.21 50.19 4.0%

 

(2) Average exchange rate for each period computed with the average exchange rate of each month.

 

Press Release 2Q 2018 Page 36
July 26, 2018  

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the

registrant has duly caused this report to be signed on its behalf of the

undersigned, thereunto duly authorized.

 

  FOMENTO ECONÓMICO MEXICANO, S.A. DE C.V.
     
  By: /s/ Eduardo Padilla
    Eduardo Padilla
    Chief Executive Officer

 

Date: July 27, 2018