KOF — Coca-Cola FEMSA, S.A.B. de C.V.

Summary of Coca-Cola FEMSA Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Consolidated Volume: Increased 1.3% to 1.09 billion unit cases.
• Total Revenues: Grew 2.9% to MXN 77.7 billion; currency-neutral growth was 6%.
• Gross Profit: Increased 1.8% to MXN 36.3 billion; gross margin contracted 60 basis points to 46.7%.
• Operating Income: Rose 13.3% to MXN 13.7 billion; operating margin expanded 160 basis points to 17.6%.
• Adjusted EBITDA: Increased 12.8% to MXN 18.2 billion; EBITDA margin expanded 210 basis points to 23.4%.
• Net Income: Grew 3% to MXN 7.5 billion, impacted by increased financial expenses and tax rates.

2. Strategic Updates and Business Highlights

• Mexico: Adjusted promotional strategies and affordability initiatives to address a weaker consumer environment. Coke Zero grew 14% year-on-year, while the stills portfolio saw a 7.4% increase.
• Digital Initiatives: The rollout of the Juntos+ Advisor tool improved sales force efficiency and customer engagement across key markets.
• South America: Strong performance in Brazil with a 2.6% volume increase, driven by favorable weather and digital execution. Colombia and Argentina also saw volume growth of 4.5% and 3%, respectively.
• Sustainability: Achieved a record score in sustainability assessments, reinforcing the company’s commitment to long-term value creation.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipate low to mid-single-digit volume declines in Mexico due to the excise tax impact, while Brazil is expected to grow volumes in the low to mid-single digits. Overall, consolidated volume growth is projected to be flattish to slightly positive.
• Strategic Priorities: Focus on growing core business, leveraging digital tools, and maintaining a customer-centric culture while navigating challenges from the excise tax.

4. Bad News, Challenges, or Points of Concern

• Consumer Sentiment: Continued sluggishness in Mexico, with expectations of a low to mid-single-digit decline in volumes due to the excise tax.
• Margin Pressures: Gross margins are under pressure from fixed costs and raw material inflation, particularly aluminum.
• Working Capital Issues: Significant outflows in working capital were noted, primarily due to accounts payable adjustments, which may affect cash flow.

5. Notable Q&A Insights

• Volume Behavior: December marked the highest volume month in Mexico’s history, but early 2026 may see challenges due to tax impacts.
• Pricing Strategy: Management is cautious about implementing further price increases in Mexico, given current consumer sensitivity.
• Brazil’s Competitive Position: Strong performance attributed to consistent brand investment and effective digital tools, leading to market share gains.
• CapEx Guidance: Expected to decrease to 7-7.5% of revenues in 2026, down from 8.2% in 2025, reflecting prior investments in capacity.

Overall, Coca-Cola FEMSA demonstrated resilience in Q4 2025, with strategic adjustments in response to market challenges, while maintaining a focus on long-term growth and sustainability. However, headwinds from consumer sentiment and cost pressures remain significant concerns for the upcoming year.