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 February 2013

 

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-_____________

 

 
 

 

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/ Javier Astaburuaga
  Javier Astaburuaga
  Chief Financial Officer

Date: February 27, 2013

 

 
 

 

 

 

FEMSA Wraps Up 2012 with Double-Digit

Operating Income Growth Across Operations

 

Monterrey, Mexico, February 27, 2013 — Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) announced today its operational and financial results for the fourth quarter and full year 2012 under International Financial Reporting Standards (“IFRS”).

 

Fourth Quarter 2012 Highlights:

 

·FEMSA consolidated total revenues and income from operations grew 11.8% and 24.9%, respectively, compared to the fourth quarter of 2011. On an organic basis total revenues and income from operations grew 9.0% and 22.4%, respectively.

 

·Coca-Cola FEMSA total revenues and income from operations increased 10.4% and 29.5%, respectively, compared to the fourth quarter of 2011. On an organic basis total revenues and income from operations grew 6.0% and 26.0%, respectively.

 

·FEMSA Comercio achieved total revenues growth of 15.6% and income from operations growth of 17.0% compared to 2011, driven by new store openings and 7.5% growth in same-store sales.

 

2012 Full Year Highlights:

 

·FEMSA consolidated total revenues and income from operations grew 18.2% and 19.4%, respectively, compared to 2011 driven by Coca-Cola FEMSA and FEMSA Comercio. On an organic basis total revenues and income from operations grew 13.2% and 14.8%, respectively.

 

·Coca-Cola FEMSA total revenues and income from operations increased 19.9% and 19.4%, driven by double-digit growth in both of its operating divisions, including the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico. On an organic basis total revenues and income from operations grew 11.6% and 13.3%, respectively.

 

·FEMSA Comercio continued its pace of strong floor space growth by opening 1,040 net new stores in 2012. Same-store sales rose 7.7% and income from operations increased 22.7% compared to 2011.

 

·Ordinary dividend of Ps. 6.684 billion proposed by FEMSA’s Board of Directors, to be paid in 2013 subject to approval at the annual shareholders meeting in March 2013, representing an increase of 7.8% over the dividend paid in the prior year and 45.3% over the dividend paid in 2011.

 

 

 
 

 

 

José Antonio Fernández Carbajal, Chairman and CEO of FEMSA, commented: “2012 was an eventful year for FEMSA. There were a couple of “firsts” that we should talk about: For the first time, Coca-Cola FEMSA is venturing beyond Latin America through the acquisition of a 51% interest in the Coca-Cola bottling operations in the Philippines. And for the first time, FEMSA Comercio entered the drugstore business through the acquisition of a controlling stake in Farmacias Yza in the Southeast of Mexico. These are transactions that fit well into our long-term strategy, and they are enabled by the skills and capabilities that our operators have developed in our core businesses over many years. These are exciting opportunities that we are very keen to pursue.

 

There were other important news in 2012 that marked a continuation of trends. The transaction with Grupo Yoli in the Mexican state of Guerrero came on the heels of the previous three transactions with Grupo Tampico, CIMSA and Foque. The Coca-Cola System’s acquisition of Santa Clara as an entry into the high-value-added dairy industry in Mexico was a logical next step once we gained some experience in the dairy industry with Estrella Azul in Panama. And at FEMSA Comercio, reaching and surpassing the milestone of 10,000 stores in Mexico was a remarkable achievement. So again, we are executing on the long term strategy, taking focused and consistent steps.

 

But none of this would be possible or reasonable if it were not for the fact that our core operations, across our markets, continue to grow and perform in very solid fashion driven by our outstanding team. In 2012 our consolidated revenues and income from operations increased by double digits even before considering any acquisitions, and our operating margin was stable in spite of a tough raw material environment at Coca-Cola FEMSA during the first half of the year.

 

As you can tell, we are excited and optimistic about the year that begins and about the future of our company, even in the face of the many challenges that are always ahead. We hope you come along for the journey.”

 

FEMSA Consolidated

 

Total revenues increased 11.8% compared to 4Q11, to Ps. 63.436 billion in 4Q12. Coca-Cola FEMSA and FEMSA Comercio drove the growth in consolidated revenues. On an organic basis total revenues increased 9.0% compared to 4Q11.

 

For the full year of 2012, consolidated total revenues increased 18.2% to Ps. 238.309 billion compared to 2011. On an organic basis, total revenues for 2012 increased 13.2% compared to 2011. This growth resulted from double-digit increases at Coca-Cola FEMSA and FEMSA Comercio.

 

Gross profit increased 14.8% compared to 4Q11, to Ps. 28.029 billion in 4Q12. Gross margin in 4Q12 increased 120 basis points compared to the same period in 2011 to 44.2% of total revenues, mainly driven by margin expansion at Coca-Cola FEMSA.

 

For the full year of 2012, gross profit increased 20.2% compared to 2011, to Ps. 101.300 billion. Gross margin increased 70 basis points compared to 2011 to 42.5% of total revenues, driven by margin expansion at Coca-Cola FEMSA and FEMSA Comercio.

 

Income from operations increased 24.9% as compared to 4Q11, to Ps. 9.735 billion in 4Q12. On an organic basis, income from operations increased 22.4% in 4Q12 compared to the same period in 2011. Consolidated operating margin increased 160 basis points compared to 4Q11, to 15.3% of total revenues, mainly driven by margin expansion at Coca-Cola FEMSA.

 

For the full year of 2012, income from operations increased 19.4% compared to 2011, to Ps. 29.227 billion. On an organic basis income from operations increased 14.8%. Our consolidated operating margin in 2012 increased 20 basis points compared to 2011 at 12.3% of total revenues.

 

 2February 27, 2013
 

 

 

Net consolidated income increased 67.9% compared to 4Q11 to Ps. 12.106 billion in 4Q12, mainly as a result of growth in FEMSA’s income from operations and by the net effect of non-recurring items, including the sale of Quimiproductos as communicated in 3Q12 as well as to an increase in FEMSA’s 20% participation in Heineken’s 4Q12 net income, driven by a non-cash exceptional gain related to the revaluation of certain equity interests held by Heineken in Asia. The effective income tax rate was 29.2% in 4Q12 compared to 31.6% in 4Q11.

 

For the full year of 2012, net consolidated income increased 34.2% compared to 2011, to Ps. 28.051 billion, driven by the growth in income from operations as well as to an increase in FEMSA’s 20% participation in Heineken’s 4Q12 net income, driven by a non-cash exceptional gain as described above.

 

Net majority income for 4Q12 resulted in Ps. 2.70 per FEMSA Unit1. Net majority income per FEMSA ADS was US$ 2.08 for the quarter. For the full year of 2012, net majority income per FEMSA Unit1 was Ps. 5.79 (US$ 4.46 per ADS).

 

Capital expenditures amounted to Ps. 6.207 billion in 4Q12, reflecting incremental investments mainly at Coca-Cola FEMSA. For the full year of 2012, capital expenditures increased to Ps. 15.560 billion, reflecting incremental investments mainly at Coca-Cola FEMSA.

 

Our consolidated balance sheet as of December 31, 2012, recorded a cash balance of Ps. 38.116 billion (US$ 2.940 billion), an increase of Ps. 10.946 billion (US$ 844.4 million) compared to December 31, 2011. Short-term debt was Ps. 8.702 billion (US$ 671.3 million), while long-term debt was Ps. 27.574 billion (US$ 2.127 billion). Our consolidated net cash balance was Ps. 1.840 billion (US$ 141.9 million).

 

Soft Drinks – Coca-Cola FEMSA

Coca-Cola FEMSA’s financial results and discussion are incorporated by reference from Coca-Cola FEMSA’s press release, which is attached to this press release and available at www.coca-colafemsa.com.

 

FEMSA Comercio

 

Total revenues increased 15.6% compared to 4Q11, to Ps. 22.671 billion in 4Q12 mainly driven by the opening of 434 net new stores in the quarter, reaching 1,040 total net new store openings for the year. As of December 31, 2012, FEMSA Comercio had a total of 10,601 convenience stores, in line with the objective for 2012. Same-store sales increased an average of 7.5% for the quarter compared to 4Q11, reflecting a 4.8% increase in average customer ticket and a 2.5% increase in store traffic.

 

For the full year of 2012, total revenues increased 16.6% to Ps. 86.433 billion. FEMSA Comercio’s same-store sales increased an average of 7.7%, driven by a very balanced contribution of a 3.8% increase in store traffic and a 3.8% increase in average customer ticket.

 

Gross profit increased by 16.9% in 4Q12 compared to 4Q11, resulting in a 40 basis point gross margin expansion to 37.8% of total revenues. This increase reflects (i) a positive mix shift due to the growth of higher margin categories, (ii) a more effective collaboration and execution with our key supplier partners, including our achievement of certain sales objectives and the corresponding benefit accrued to us even though the impact was higher in the first nine months of the year as we have been smoothing out the curve, (iii) a more efficient use of promotion-related marketing resources, and (iv) a better execution of segmented pricing strategies across markets. For the full year of 2012, gross margin expanded by 60 basis points to 35.0% of total revenues.

 

 

1FEMSA 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 December 31, 2012 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

  

 3February 27, 2013
 

 

 

Income from operations increased 17.0% over 4Q11 to Ps. 2.406 billion in 4Q12. Operating expenses increased 16.9% to Ps. 6.174 billion, reflecting the growing number of stores as well as incremental expenses relating to, among other things, the continued strengthening of FEMSA Comercio’s organizational and IT structure, and the development of specialized distribution routes aimed at enabling our prepared food initiatives. Operating margin expanded 10 basis points compared to 4Q11, to 10.6% of total revenues in 4Q12.

 

For the full year of 2012, income from operations increased 22.7% to Ps. 6.778 billion, resulting in an operating margin of 7.8%, which represents a 30 basis point expansion from the prior year.

 

Recent Developments

 

·On November 9, 2012, FEMSA announced that its retail subsidiary, FEMSA Comercio, agreed to acquire a 75% stake in Farmacias YZA, a leading drugstore operator in Southeast Mexico, with the current shareholders staying as partners with the remaining 25%. Headquartered in Merida, Yucatan, Farmacias YZA currently operates 333 stores. FEMSA believes that it can contribute its significant expertise in the development of small-box retail formats to what is already a successful regional player in this industry. In turn, this transaction opens a new avenue for growth for FEMSA Comercio. The transaction is pending customary regulatory approvals and is expected to close in the first quarter of 2013.

 

CONFERENCE CALL INFORMATION:
 
Our Fourth Quarter and Full Year 2012 Conference Call will be held on: Thursday February 28, 2013, 12:00 PM Eastern Time (11:00 AM Mexico City Time). To participate in the conference call, please dial: Domestic US: (888) 523-1228; International: (719) 457-2661, Conference Id 7936534. 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 at http://ir.FEMSA.com/results.cfm.

 

FEMSA is a leading company that participates in the beverage industry through Coca-Cola FEMSA, the largest bottler of Coca-Cola products in the world; in the retail industry through FEMSA Comercio, operating OXXO, the largest and fastest-growing chain of stores in Latin America, 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.

 

The translations of Mexican pesos into US dollars are included solely for the convenience of the reader, using the noon day buying rate for Mexican Pesos as published by the Federal Reserve Bank of New York on December 31, 2012, which was 12.9635 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.

  

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

 

 4February 27, 2013
 

 

 

FEMSA
Consolidated Income Statement
Millions of Pesos

 

   For the fourth quarter of:   For the twelve months of: 
   2012 (A)   % of rev.   2011   % of rev.   % Var.   % Org (B)   2012 (A)   % of rev.   2011   % of rev.   % Var.   % Org (B) 
Total revenues   63,436    100.0    56,741    100.0    11.8    9.0    238,309    100.0    201,540    100.0    18.2    13.2 
Cost of sales   35,407    55.8    32,318    57.0    9.6         137,009    57.5    117,244    58.2    16.9      
Gross profit   28,029    44.2    24,423    43.0    14.8         101,300    42.5    84,296    41.8    20.2      
Administrative expenses   2,252    3.6    2,250    4.0    0.1         9,552    4.0    8,172    4.1    16.9      
Selling expenses   15,577    24.6    13,654    24.0    14.1         62,086    26.0    50,685    25.1    22.5      
Other Operating expenses (income), net (1)   465    0.7    725    1.3    (35.0)        435    0.2    955    1.5    (54.5)     
Income from operations(2)   9,735    15.3    7,794    13.7    24.9    22.4    29,227    12.3    24,484    12.1    19.4    14.8 
Other Non-Operating expenses (income)   (571)        275         N.A.          (345)        625         N.A.       
Interest expense   759         653         16.2         2,506         2,302         8.9      
Interest income   250         232         7.8         783         1,014         (22.8)     
Foreign exchange loss (gain)   68         (277)        N.A.          176         (1,148)        N.A.       
Other financial expenses (income), net.   6         (128)        N.A.          5         56         (91.1)     
Financing expenses, net   583         16         N.A.          1,904         196         N.A.       
Income before income tax and Participation in Heineken results   9,723         7,503         29.6         27,668         23,663         16.9      
Income tax   2,843         2,370         20.0         7,949         7,618         4.3      
Participation in Heineken results(3)   5,226         2,076         N.A.          8,332         4,856         71.6      
Net consolidated income   12,106         7,209         67.9         28,051         20,901         34.2      
Net majority income   9,661         5,466         76.7         20,707         15,332         35.1      
Net minority income   2,445         1,743         40.3         7,344         5,569         31.9      

 

   2012 (A)   % of rev.   2011   % of rev.    % Var.   % Org (B)   2012 (A)   % of rev.   2011   % of rev.    % Var.   % Org (B) 
Operative Cash Flow & CAPEX                                                            
Income from operations   9,735    15.3    7,794    13.7    24.9    22.4    29,227    12.3    24,484    12.1    19.4    14.8 
Depreciation   1,823    2.9    1,613    2.8    13.0         7,175    3.0    5,694    2.8    26.0      
Amortization & other non-cash charges   294    0.5    689    1.3    (57.3)        1,278    0.5    1,320    0.7    (3.2)     
Operative Cash Flow (EBITDA)   11,852    18.7    10,096    17.8    17.4    14.5    37,680    15.8    31,498    15.6    19.6    14.2 
CAPEX   6,207         5,313         16.8         15,560         12,609         23.4      

 

Financial Ratios  2012 (A)   2011   Var. p.p. 
Liquidity(4)   1.56    1.53    0.03 
Interest coverage(5)   23.28    23.98    (0.70)
Leverage(6)   0.41    0.37    0.04 
Capitalization(7)   15.26%   13.27%   1.99 

 

(A) We integrated the beverage divisions of Grupo Tampico, Grupo CIMSA and FOQUE in Coca-Cola FEMSA´s operations since October 2011, December 2011 and May 2012, respectively.

(B) % Org. represents the variation in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability.

 

(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) 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.

 

 5February 27, 2013
 

 

 

FEMSA
Consolidated Balance Sheet
Millions of Pesos

 

ASSETS  Dec-12   Dec-11   % Var. 
Cash and cash equivalents   38,116    27,170    40.3 
Accounts receivable   11,812    10,498    12.5 
Inventories   16,345    14,360    13.8 
Other current assets   9,182    7,955    15.4 
Total current assets   75,455    59,983    25.8 
Investments in shares   83,840    78,643    6.6 
Property, plant and equipment, net   61,649    54,562    13.0 
Intangible assets (1)   67,893    63,030    7.7 
Other assets   7,105    7,144    (0.5)
TOTAL ASSETS   295,942    263,362    12.4 
                
LIABILITIES & STOCKHOLDERS´ EQUITY               
Bank loans   4,213    638    N.A.  
Current maturities of long-term debt   4,489    4,935    (9.0)
Interest payable   207    216    (4.2)
Operating liabilities   39,607    33,536    18.1 
Total current liabilities   48,516    39,325    23.4 
Long-term debt (2)   27,574    22,981    20.0 
Labor liabilities   3,675    2,584    42.2 
Other liabilities   6,016    6,301    (4.5)
Total liabilities   85,781    71,191    20.5 
Total stockholders’ equity   210,161    192,171    9.4 
LIABILITIES AND STOCKHOLDERS’ EQUITY   295,942    263,362    12.4 

 

   December 31, 2012 
DEBT MIX (2)  % of Total   Average Rate 
Denominated in:          
Mexican pesos   42.5%   6.4%
Dollars   50.5%   3.4%
Colombian pesos   3.3%   6.8%
Argentine pesos   2.6%   20.0%
Brazilian Reais   1.1%   7.9%
Total debt   100.0%   5.3%
           
Fixed rate(2)   44.5%     
Variable rate(2)   55.5%     

 

% of Total Debt  2013   2014   2015   2016   2017   2018+ 
DEBT MATURITY PROFILE   23.9%   15.2%   22.2%   7.1%   6.9%   24.7%

 

(1) Includes mainly the intangible assets generated by acquisitions.

(2) Includes the effect of derivative financial instruments on long-term debt.

 

 6February 27, 2013
 

 

 

Coca-Cola FEMSA
Results of Operations
Millions of Pesos

 

   For the fourth quarter of:   For the twelve months of: 
   2012 (A)   % of rev.   2011   % of rev.   % Var.   % Org (B)   2012 (A)   % of rev.   2011   % of rev.   % Var.   % Org (B) 
Total revenues   39,860    100.0    36,090    100.0    10.4    6.0%   147,739    100.0    123,224    100.0    19.9    11.6%
Cost of sales   21,045    52.8    19,648    54.4    7.1         79,109    53.5    66,693    54.1    18.6      
Gross profit   18,815    47.2    16,442    45.6    14.4         68,630    46.5    56,531    45.9    21.4      
Administrative expenses   1,364    3.4    1,348    3.7    1.2         6,217    4.2    5,140    4.2    21.0      
Selling expenses   9,898    24.9    8,820    24.5    12.2         40,223    27.2    32,093    26.1    25.3      
Other Operating expenses (income), net   329    0.8    696    1.9    (52.7)        234    0.2    906    0.7    (74.2)     
Income from operations   7,224    18.1    5,578    15.5    29.5    26.0%   21,956    14.9    18,392    14.9    19.4    13.3%
Depreciation   1,244    3.1    1,098    3.0    13.3         5,078    3.4    3,850    3.1    31.9      
Amortization & other non-cash charges   205    0.6    546    1.5    (62.5)        889    0.6    981    0.8    (9.4)     
Operative Cash Flow   8,673    21.8    7,222    20.0    20.1    16.1%   27,923    18.9    23,223    18.8    20.2    12.9%
CAPEX   4,375         3,471         26.0         10,259         7,810         31.4      
                                                             
Sales volumes                                        
(Millions of unit cases)                                                            
Mexico and Central America   476.3    58.6    366.7    56.8    29.9    3.6%   1,871.2    61.4    1,100.5    57.4    70.0    1.9%
South America   337.2    41.5    279.2    43.2    20.8    3.7%   1,175.0    38.6    815.9    42.6    44.0    3.2%
Total   813.5    100.0    645.9    100.0    25.9    3.6%   3,046.2    100.0    1,916.4    100.0    59.0    2.4%

 

(A) We integrated the beverage divisions of Grupo Tampico, Grupo CIMSA and FOQUE in Coca-Cola FEMSA´s operations since October 2011, December 2011 and May 2012, respectively.

(B) % Org. represents the variation in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability.

 

 7February 27, 2013
 

 

 

FEMSA Comercio
Results of Operations
Millions of Pesos

 

   For the fourth quarter of:   For the twelve months of: 
   2012   % of rev.   2011   % of rev.   % Var.   2012   % of rev.   2011   % of rev.   % Var. 
Total revenues   22,671    100.0    19,620    100.0    15.6    86,433    100.0    74,112    100.0    16.6 
Cost of sales   14,091    62.2    12,282    62.6    14.7    56,183    65.0    48,636    65.6    15.5 
Gross profit   8,580    37.8    7,338    37.4    16.9    30,250    35.0    25,476    34.4    18.7 
Administrative expenses   423    1.9    380    1.9    11.3    1,666    1.9    1,433    1.9    16.3 
Selling expenses   5,674    25.0    4,794    24.5    18.4    21,686    25.2    18,353    24.8    18.2 
Other Operating expenses (income), net   77    0.3    107    0.5    (28.0)   120    0.1    167    0.2    (28.1)
Income from operations   2,406    10.6    2,057    10.5    17.0    6,778    7.8    5,523    7.5    22.7 
Depreciation   513    2.3    446    2.3    15.0    1,940    2.2    1,685    2.3    15.1 
Amortization & other non-cash charges   115    0.5    142    0.7    (19.0)   276    0.4    298    0.3    (7.4)
Operative Cash Flow   3,034    13.4    2,645    13.5    14.7    8,994    10.4    7,506    10.1    19.8 
CAPEX   1,565         1,413         10.7    4,708         4,187         12.4 
                                                   
Information of OXXO Stores                                                  
Total stores                            10,601         9,561         10.9 
Net new convenience stores   434         413         5.1    1,040(2)        1,135(2)        (8.4)
                                                   
Same store data: (1)                                                  
Sales (thousands of pesos)   687.3         639.6         7.5    688.0         638.9         7.7 
Traffic (thousands of transactions)   25.1         24.5         2.5    25.7         24.8         3.8 
Ticket (pesos)   27.3         26.1         4.8    26.8         25.8         3.8 

 

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

(2) For the last twelve months for each period.

 

 8February 27, 2013
 

 

 

FEMSA
Macroeconomic Information

 

           End of period, Exchange Rates 
   Inflation   Dec-12   Dec-11 
   4Q 2012   LTM(1) December-12   Per USD   Per Mx. Peso   Per USD   Per Mx. Peso 
Mexico   1.31%   4.77%   13.01    1.0000    13.98    1.0000 
Colombia   0.31%   3.08%   1,768.23    0.0074    1,942.70    0.0072 
Venezuela   3.71%   18.02%   4.30    3.0256    4.30    3.2509 
Brazil   1.42%   5.28%   2.04    6.3666    1.88    7.4521 
Argentina   2.59%   10.01%   4.92    2.6454    4.30    3.2478 
Euro Zone   0.59%   2.61%   0.76    17.1182    0.77    18.0454 

 

(1) LTM = Last twelve months

 

 9February 27, 2013
 

 

 

  

2012 FOURTH-QUARTER AND FULL YEAR RESULTS 

 

    Fourth Quarter       YTD    
    2012 2011 Reported Δ% Excluding M&A
Effects Δ%(4)		   2012 2011 Reported Δ% Excluding M&A
Effects Δ%(4)
  Total Revenues

39,860

36,090

 10.4% 6.0%   147,739 123,224 19.9% 11.6%
  Gross Profit 18,815 16,442 14.4%     68,630 56,531

21.4%

  
  Operating Income

7,224

5,578

29.5%

26.0%

   21,956

18,392

19.4%

13.3%

  Net Controlling Interest Income

4,324

3,211

34.7%

    

13,333

 10,662

25.1%

  
  Operative cash flow(1)

8,673

7,222

20.1%

16.1%

  

27,923

23,223

20.2%

12.9%

  Net Debt (2)

6,680

10,188

-34.4%

            
  Net Debt / Operative cash flow

0.24

 0.44              
  Operative cash flow/ Interest Expense, net 18.24

20.87

              
  Earnings per Share 6.62

5.72

              
  Capitalization (3)

23.1%

 20.3%              
  Expressed in millions of Mexican pesos.
  (1) Operative cash flow = Operating income + Depreciation + Amortization & Other operative Non-cash Charges.
  See reconciliation table on page 8 except for Earnings per Share
  (2) Net Debt = Total Debt - Cash
  (3) Total debt / (long-term debt + shareholders' equity)
  (4)  Excluding M&A Effects means, with respect to a year-over-year comparison, the increase in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability.
   
   Reported total revenues reached Ps. 39,860 million in the fourth quarter of 2012, an increase of 10.4% as compared to the fourth quarter of 2011, mainly as a result of double-digit revenue growth in the Mexico & Central America division, including the integration of Grupo CIMSA and Grupo Fomento Queretano in our Mexican territories. Excluding the non-comparable effect of these territories in Mexico, total revenues increased 6.0%.
   Reported consolidated operating income grew 29.5% to Ps. 7,224 million for the fourth quarter of 2012, driven by double-digit growth in both divisions and the integration of the new territories in Mexico. Our reported operating margin expanded 260 basis points to 18.1% in the fourth quarter of 2012. Excluding the non-comparable effect of Grupo CIMSA and Grupo Fomento Queretano, operating income grew 26.0%.
   Reported consolidated net controlling interest income grew 34.7% to Ps. 4,324 million in the fourth quarter of 2012.
   
  Mexico City (February 27, 2013), Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFL, NYSE: KOF) (“Coca-Cola FEMSA” or the “Company”), the largest franchise bottler in the world, announces results for the fourth quarter of 2012.
   
  "Our territories across Latin America delivered double-digit top- and bottom-line growth building on the integration of the new franchises in Mexico and our operator’s ability to execute in the marketplace and leverage on our value driven commercial model. Capitalizing on our financial and operating flexibility, we continued to firmly advance on our strategy to grow through accretive mergers and acquisitions—from our mergers with the beverage divisions of Grupo Tampico, CIMSA, and Grupo Fomento Queretano, to our acquisition of a majority stake in Coca-Cola Bottlers Philippines, Inc., to our recently announced merger agreement with Grupo Yoli. Altogether, this marks five transactions in the Coca-Cola bottling system in the last 18 months. Entering 2013, I am confident that our growing family of more than 100,000 proud and passionate employees will enable us to transform our industry's arising challenges into opportunities. Working together, we will continue to deliver on our commitment to help people achieve healthy lifestyles through our proactive efforts to promote good nutrition, hydration, and regular physical activity. Simultaneously, we look forward to creating economic, social, and environmental value for all of our stakeholders," said Carlos Salazar Lomelin, Chief Executive Officer of the Company.

 

 

February 27, 2013Page 10
 

 

 

 

 

CONSOLIDATED RESULTS

 

Coca-Cola FEMSA is including the results of Grupo CIMSA as of December 2011 and Grupo Fomento Queretano as of May 2012 in the Company’s Mexico & Central America divisions’ operating results.

All the financial information presented in this report was prepared under International Financial Reporting Standards (IFRS) and 2011 figures have been restated under these accounting standards.

 

Our reported total revenues increased 10.4% to Ps. 39,860 million in the fourth quarter of 2012, compared to the fourth quarter of 2011 mainly as a result of double-digit total revenue growth in the Mexico & Central America division, including the integration of Grupo CIMSA and Grupo Fomento Queretano in our Mexican operations(1). Excluding the non-comparable effects of Grupo CIMSA and Grupo Fomento Queretano in Mexico, total revenues grew 6.0%. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues grew 14.1%, driven by average price per unit case growth in almost every territory and volume growth mainly in Mexico, Colombia, Venezuela, and Brazil.

 

Reported total sales volume increased 10.6% to reach 810.1 million unit cases in the fourth quarter of 2012 as compared to the same period in 2011. Excluding the non-comparable effects of Grupo CIMSA and Grupo Fomento Queretano in Mexico(1), volumes increased 3.6% to reach 759.0 million unit cases. On the same basis, the still beverage category grew 13.5%, mainly driven by the performance of the Jugos del Valle line of business in Venezuela and Mexico. In addition and excluding the non-comparable effects, our sparkling beverage category grew 2.7% driven by 4% growth of brand Coca-Cola and our bottled water portfolio grew 22.3%. These increases compensated for a 3.9% decline in our bulk water business.

 

Our reported gross profit increased 14.4% to Ps. 18,815 million in the fourth quarter of 2012, as compared to the fourth quarter of 2011. Lower PET and sugar prices in most of our territories were partially compensated by the depreciation of the average exchange rate of the Brazilian real(2) and the Argentine peso(2) as applied to our U.S. dollar-denominated raw material costs. As a result, reported cost of goods sold increased 7.1%. Reported gross margin reached 47.2%, an expansion of 160 basis points as compared to the fourth quarter of 2011.

 

As reported during the fourth quarter of 2011, we registered a write-off of certain non-productive assets, including production equipment, coolers, forklifts and returnable bottles and cases, mainly in our South America division. This effect was recorded in the other operative expenses, net line. During the fourth quarter of 2012, this line registered certain restructuring charges related to the integration of the new franchises in Mexico.

 

Our reported operating income increased 29.5% to Ps. 7,224 million in the fourth quarter of 2012, driven by double-digit operating income growth in both divisions, and including the integration of Grupo CIMSA and Grupo Fomento Queretano in Mexico(1). Our reported operating margin reached 18.1% in the fourth quarter of 2012, as compared with 15.5% in the same period of 2011, an expansion of 260 basis points. Excluding the non-comparable effects of Grupo CIMSA and Grupo Fomento Queretano in Mexico, operating income increased 26.0%. On the same basis, operating expenses increased in the fourth quarter of 2012, mainly as a result of higher labor costs in Venezuela and Brazil in combination with higher labor and freight costs in Argentina and continuous investment in marketing across our territories in Mexico. Additionally, as in previous quarters, we recorded additional expenses related to the development of information systems and commercial capabilities in connection with our commercial models across our territories, and certain investments related, among others, to the development of new lines of business and non-carbonated beverage categories.

 

Our comprehensive financing result in the fourth quarter of 2012 recorded an expense of Ps. 611 million as compared to an expense of Ps. 270 million in the same period of 2011. This difference was mainly driven by a foreign exchange loss as a result of the quarterly depreciation of the end-of-period exchange rate of the Mexican peso(2) as applied to a higher US dollar-denominated net debt position.

 

During the fourth quarter of 2012, income tax, as a percentage of income before taxes, was 32.5% as compared to 35.0% in the same period of 2011. The difference was mainly driven by the recording of a tax on shareholders equity in our Colombian subsidiary during 2011.

 

Our reported consolidated net controlling interest income grew 34.7% to Ps. 4,324 million in the fourth quarter of 2012. Earnings per share (EPS) in the fourth quarter of 2012 were Ps. 2.13 (Ps. 21.30 per ADS) computed on the basis of 2,030.5 million shares (each ADS represents 10 local shares).

 

(1)Our Mexican operations include Grupo CIMSA’s results as of December, 2011 and Grupo Fomento Queretano’s results as of May, 2012
(2)See page 12 for average and end of period exchange rates for the fourth quarter of 2012 and full year

 

 

February 27, 2013Page 11
 

 

 

 

 

BALANCE SHEET

 

As of December 31, 2012, we had a cash balance of Ps. 23,234 million, including US$1,032 million denominated in U.S. dollars, an increase of Ps. 11,061 million compared to December 31, 2011. During the fourth quarter of 2012 we assumed US$700 million of bilateral short- and medium-term bank loans to fund our acquisition of 51% of Coca-Cola Bottlers Philippines, Inc. (CCBPI) from The Coca-Cola Company.

 

As of December 31, 2012, total short-term debt was Ps. 5,139 million and long-term debt was Ps. 24,775 million. Total debt increased by Ps. 7,553 million, compared to year end 2011. Net debt decreased Ps. 3,508 million compared to year end 2011. The Company’s total debt balance includes U.S. dollar-denominated debt in the amount of US$ 1,209 million.(1)

 

The weighted average cost of debt for the quarter was 5.6%. The following charts set forth the Company’s debt profile by currency and interest rate type and by maturity date as of December 31, 2012.

 

Currency  % Total Debt(1)   % Interest Rate
Floating(1)(2)		 
Mexican pesos   40.1%   37.3%
U.S. dollars   52.7%   27.5%
Colombian pesos   3.9%   100.0%
Brazilian reals   0.3%   0.0%
Argentine pesos   3.1%   8.2%
(1)After giving effect to interest rate swaps
(2)Calculated by weighting each year’s outstanding debt balance mix

 

Debt Maturity Profile

 

Maturity Date  2013   2014   2015   2016   2017   2018+ 
% of Total Debt   17.1%   17.7%   26.8%   8.3%   0.0%   30.0%

 

Consolidated Cash Flow

 

Starting the third quarter of 2012, Coca-Cola FEMSA encourages the reader to refer to the cash flow contained in our quarterly filing to the Mexican Stock Exchange (Bolsa Mexicana de Valores or BMV) for more detailed information. This cash flow is available at www.bmv.com.mx in the Información Financiera section for Coca-Cola FEMSA (KOF).

We would like to remind the reader that this cash flow statement is presented on a historical basis, whereas the balance sheet included on page 9 of this press release is presented in nominal terms. Certain differences resulting from calculations performed with the information contained in the balance sheet may differ from items shown in the cash flow statement. These differences are presented separately as a part of the Translation Effect in the cash flow statement in accordance with International Financial Reporting Standards.

 

 

February 27, 2013Page 12
 

 

 

 

 

 

MEXICO & CENTRAL AMERICA DIVISION OPERATING RESULTS (Mexico, Guatemala, Nicaragua, Costa Rica and Panama)

 

Coca-Cola FEMSA is including the results of Grupo CIMSA as of December 2011 and Grupo Fomento Queretano as of May 2012 in the Company’s Mexico & Central America divisions’ operating results.

 

Reported total revenues from our Mexico and Central America division increased 18.5% to Ps. 17,154 million in the fourth quarter of 2012, as compared to the same period in 2011, supported by the integration of Grupo CIMSA and Grupo Fomento Queretano in our Mexican operations(1). Excluding the non-comparable effects of Grupo CIMSA and Grupo Fomento Queretano in Mexico(1), total revenues grew 7.4%. On the same basis, increased average price per unit case, mainly reflecting selective price increases across our product portfolio, implemented over the past several months, accounted for 50% of incremental revenues. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues increased 8.1%.

 

Reported total sales volume increased 16.1% to 476.3 million unit cases in the fourth quarter of 2012, as compared to the fourth quarter of 2011. Excluding the non-comparable effects of Grupo CIMSA and Grupo Fomento Queretano in Mexico(1), volumes increased 3.6% to 425.2 million unit cases. On the same basis, sparkling beverage category grew 3.8% driven by a 4% growth of the Coca-Cola brand and the performance of the Sidral Mundet brand in Mexico. Still beverages grew 11.5% mainly driven by the Jugos del Valle line of products in Mexico, the performance of Powerade and Fuze Tea in the division and the performance of del Prado in Central America. Our bottled water portfolio grew 7.3%. These increases compensated for the 1.2% decline in the bulk water business.

 

Our reported gross profit increased 27.8% to Ps. 8,421 million in the fourth quarter of 2012 as compared to the same period in 2011. Reported cost of goods sold increased 10.7%. Reported gross margin reached 49.1% in the fourth quarter of 2012, an expansion of 360 basis points as compared with the same period of the previous year as a result of lower PET and sugar prices in combination with the average appreciation of the Mexican peso(2) as applied to our U.S. dollar-denominated raw material costs. Excluding the integration of the newly merged territories, gross margin expanded 390 basis points.

 

During the fourth quarter of 2012, the other operative expenses, net line we registered certain restructuring charges related to the integration of the new franchises in Mexico.

 

Reported operating income increased 32.8% to Ps. 3,185 million in the fourth quarter of 2012, compared to Ps. 2,398 million in the same period of 2011. Our reported operating margin was 18.6% in the fourth quarter of 2012, as compared with 16.6% in the same period of 2011, an expansion of 200 basis points. Excluding the non-comparable effects of Grupo CIMSA and Grupo Fomento Queretano in Mexico(1), operating income increased 24.6%. On the same basis, operating expenses increased mainly as a result of continuous investment in marketing across our territories in Mexico. Additionally, as in previous quarters, we recorded, additional expenses related to the development of information systems and commercial capabilities in connection with our commercial models and certain investments related, among others, to the development of new lines of business and non-carbonated beverage categories. 

 

(1) Our Mexican operations include Grupo CIMSA’s results as of December, 2011 and Grupo Fomento Queretano’s results as of May, 2012

(2) See page 12 for average and end of period exchange rates for the fourth quarter of 2012 and full year

 

 

February 27, 2013Page 13
 

 

 

 

 

SOUTH AMERICA DIVISION OPERATING RESULTS (Colombia, Venezuela, Brazil and Argentina) 

 

Volume and average price per unit case exclude beer results.

 

Reported total revenues were Ps. 22,706 million in the fourth quarter of 2012, an increase of 5.1% as compared to the same period of 2011, despite the negative translation effect as a result of the devaluation of the Brazilian real(1) and the Argentine peso(1). Excluding beer, which accounted for Ps. 1,069 million during the quarter, revenues increased 6.0% to Ps. 21,637 million. Excluding beer, higher volumes across our operations accounted for close to 61% of incremental revenues. On a currency neutral basis, total revenues increased 18.1% as a result of total revenue growth in every operation.

 

Reported total sales volume in our South America division increased 3.7% to 333.8 million unit cases in the fourth quarter of 2012 as compared to the same period of 2011, driven by volume growth in Colombia, Venezuela and Brazil, that more than compensated for a decline in volume in Argentina. The still beverage category grew 16.6%, mainly driven by the performance of the Jugos del Valle line of business in Venezuela and its continued success in Brazil. Our water portfolio, including bulk water, grew 18.9% and our sparkling beverage category increased 1.6% driven by 4% growth in brand Coca-Cola.

 

Reported gross profit reached Ps. 10,394 million, an increase of 5.5% in the fourth quarter of 2012, as compared to the same period of 2011. Lower cost of PET and sweeteners across the division, were partially offset by the depreciation of the average exchange rate of the Brazilian real(1) and the Argentine peso(1) as applied to our U.S. dollar-denominated raw material costs. As a result, reported cost of goods sold increased 4.7%. Reported gross margin reached 45.8% in the fourth quarter of 2012, an expansion of 20 basis points as compared to the same period of 2011.

 

As reported during the fourth quarter of 2011, we registered a write-off of certain non-productive assets, including production equipment, coolers, forklifts and returnable bottles and cases. This effect was recorded in the other operative expenses, net line.

 

Our reported operating income increased 27.0% to Ps. 4,039 million in the fourth quarter of 2012, compared to the same period of 2011. Reported operating expenses in the fourth quarter of 2012 increased 3.4%, mainly as a result of higher labor costs in Venezuela and Brazil, in combination with higher labor and freight costs in Argentina. Our reported operating margin was 17.8% in the fourth quarter of 2012, an expansion of 310 basis points, as compared with the same period of 2011.

 

(1) See page 12 for average and end of period exchange rates for the fourth quarter of 2012 and full year

 

 

February 27, 2013Page 14
 

 

 

 

 

SUMMARY OF FULL-YEAR RESULTS

 

Our reported consolidated total revenues increased 19.9% to Ps. 147,739 million in 2012, as compared to the same period of 2011, as a result of double-digit total revenue growth in both divisions, and the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in our Mexican operations.(1) Excluding the non-comparable effects of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico, total revenues grew 11.6%. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues increased 15.0% in 2012.

 

Reported total sales volume increased 15.0% to 3,046.2 million unit cases in 2012, as compared to the same period in 2011. Excluding the non-comparable effect of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico, volumes grew 2.4% to 2,713.5 million unit cases. On the same basis, the sparkling beverage category grew 2.0%, mainly driven by the Coca-Cola brand, accounting for more than 65% of incremental volumes. The still beverage category grew 13.5%, mainly driven by the performance of the Jugos del Valle line of business in Mexico, Venezuela and Brazil, and the Del Prado line of business in Central America, representing close to 30% of incremental volumes. Our bottled water portfolio grew 10.0%. These increases more than compensated for a 4.1% decline in our bulk water business.

 

Our reported gross profit increased 21.4% to Ps. 68,630 million in 2012, as compared to the same period of 2011. Reported cost of goods sold increased 18.6% mainly of as a result of higher sweetener costs in Mexico during the first half of the year and the depreciation of the average exchange rate of the Brazilian real(2), the Argentine peso(2) and the Mexican peso(2) as applied to our U.S. dollar-denominated raw material costs. Reported gross margin reached 46.5%, a 60 basis points expansion for 2012, as compared to the same period of 2011.

 

At the end of 2011, we registered a write-off of certain non-productive assets, including production equipment, coolers, forklifts and returnable bottles and cases, mainly in our South America division. This effect was recorded in the other operative expenses, net line. During 2012, this line registered, among other net expenses, certain restructuring charges related to the integration of the new franchises in Mexico.

 

Our reported consolidated operating income increased 19.4% to Ps. 21,956 million in 2012, as compared to the same period of 2011, driven by double-digit operating income growth in both divisions, including the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico. Our reported operating margin was 14.9% in 2012, remaining flat as compared to the same period of 2011. Excluding the non-comparable effects of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico in Mexico, operating income grew 13.3%. On the same basis, operating expenses increased mainly as a result of higher labor costs in Venezuela and Brazil in combination with higher labor and freight costs in Argentina, and continued marketing investment to reinforce our execution in the marketplace, widen our cooler coverage and broaden our returnable base availability across our territories. Additionally, during the year, we recorded additional expenses related to the development of information systems and commercial capabilities in connection with our commercial models, and certain investments related, among others, to the development of new lines of business and non-carbonated beverage categories.

 

Our consolidated net controlling interest income increased 25.1% to Ps. 13,333 million in 2012 as compared to the same period of 2011. Earnings per share (EPS) in 2012 were Ps. 6.62 (Ps. 66.15 per ADS) computed on the basis of 2,015.2 million shares(3) outstanding (each ADS represents 10 local shares).

 

(1) Our Mexican operations include Grupo Tampico’s results as of October, 2011, Grupo CIMSA’s results as of December, 2011 and Grupo Fomento Queretano’s results as of May, 2012

(2) See page 12 for average and end of period exchange rates for the fourth quarter of 2012 and full year

(3) According to International Financial Reporting Standards (IFRS), Earnings Per Share is computed on the basis of the weighted-average number of shares outstanding during the period. The weighted average number of shares is calculated based on the number of days within a reporting period that each share was outstanding, divided by the full length of that reporting period

 

 

February 27, 2013Page 15
 

 

  

 

 

RECENT DEVELOPMENTS

 

On January 17, 2013, Coca-Cola FEMSA announced an agreement to merge its operations with Grupo Yoli, one of the oldest family-owned Coca-Cola bottlers in Mexico, operating mainly in the state of Guerrero as well as in parts of the state of Oaxaca. This merger agreement is subject to the completion of confirmatory legal, financial, and operating due diligence and to customary regulatory and corporate approvals. For additional information, please refer to the press release filed on such date on our website.
As of January 25, 2013, Coca-Cola FEMSA finalized the acquisition of 51% of Coca-Cola Bottlers Philippines, Inc. (CCBPI) from The Coca-Cola Company, for an amount of US$688.5 million in an all-cash transaction. The results of CCBPI will be recognized by Coca-Cola FEMSA using the equity method.
On February 13, 2013 Venezuela devalued its currency by 46.5% to 6.30 bolivars per US dollar from 4.30 bolivars per US dollar. We expect this event will have an effect on our financial results, increasing our operating costs, as a result of the exchange rate movement applied to our US dollar-denominated raw material cost, and reducing our Venezuelan operation results when translated into our reporting currency, the Mexican peso. According to accounting practices, the exchange rate that will be used to translate our financial statements as of February 2013, will be 6.30 bolivars per US dollar. Additionally, during 2013, as a consequence of the change in the Labor Law in Venezuela announced during 2012, and its changes to workweek length, our labor expenses will continue to be pressured. However we will continue to adapt our service models to the dynamics of the market.
On February 26, 2013, Coca-Cola FEMSA’s Board of Directors agreed to propose, for approval at the Annual Shareholders meeting to be held on March 5, 2013, an ordinary dividend of Ps. 5,950 million, to be paid in two installments during May and November of 2013. This proposed amount represents a dividend per share of approximately Ps. 1.45 for the first installment, computed on the basis of 2,030.5 million shares; and a dividend per share of approximately Ps. 1.45 for the second installment, computed on the basis of 2,072.9 million shares which include the 42.4 million shares to be issued to the shareholders of Grupo Yoli, if the merger of Grupo Yoli is approved. In the event that the referred merger of Grupo Yoli with Coca-Cola FEMSA is not approved, the dividend per share of approximately Ps. 1.45 per share will not be modified.

 

CONFERENCE CALL INFORMATION

 

Our fourth-quarter 2012 Conference Call will be held on February 27, 2013, at 11:00 A.M. Eastern Time (10:00 A.M. Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 800-573-4840 or International: 617-224-4326. We invite investors to listen to the live audiocast of the conference call on the Company’s website, www.coca-colafemsa.com

 

If you are unable to participate live, an instant replay of the conference call will be available through March 5, 2013. To listen to the replay, please dial: Domestic U.S.: 888-286-8010 or International: 617-801-6888. Pass code: 88550577.

 

v v v

 

Coca-Cola FEMSA, S.A.B. de C.V. produces and distributes Coca-Cola, Fanta, Sprite, Del Valle, and other trademark beverages of The Coca-Cola Company in Mexico (a substantial part of central Mexico, including Mexico City, as well as southeast and northeast Mexico), Guatemala (Guatemala City and surrounding areas), Nicaragua (nationwide), Costa Rica (nationwide), Panama (nationwide), Colombia (most of the country), Venezuela (nationwide), Brazil (greater São Paulo, Campiñas, Santos, the state of Mato Grosso do Sul, part of the state of Goias, and part of the state of Minas Gerais), Argentina (federal capital of Buenos Aires and surrounding areas) and Philippines (nationwide), along with bottled water, juices, teas, isotonics, beer, and other beverages in some of these territories. The Company has 60 bottling facilities and serves close to 315 million consumers through more than 2,500,000 retailers with more than 100,000 employees worldwide.

 

v v v

 

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.

 

v v v

 

(5 pages of tables to follow)

 

 

February 27, 2013Page 16
 

 

  

 

 

Consolidated Income Statement  
Expressed in millions of Mexican pesos(1)  

 

   4Q 12   % Rev   4Q 11   % Rev   Reported
Δ%		  

Excluding M&A

Effects Δ%(5)

   YTD 12   % Rev   YTD 11   % Rev   Reported
Δ%		  

Excluding M&A

Effects Δ%(5)

 
Volume (million unit cases) (2)   810.1         732.3         10.6%   3.6%   3,046.2         2,648.7         15.0%   2.4%
Average price per unit case (2)   47.58         47.38         0.4%   2.8%   47.27         45.29         4.4%   8.9%
Net revenues   39,612         35,897         10.3%        146,907         122,638         19.8%     
Other operating revenues   248         193         28.5%        832         586         42.0%     
Total revenues   39,860    100%   36,090    100%   10.4%   6.0%   147,739    100%   123,224    100%   19.9%   11.6%
Cost of goods sold   21,045    52.8%   19,648    54.4%   7.1%        79,109    53.5%   66,693    54.1%   18.6%     
Gross profit   18,815    47.2%   16,442    45.6%   14.4%        68,630    46.5%   56,531    45.9%   21.4%     
Operating expenses   11,262    28.3%   10,168    28.2%   10.8%        46,440    31.4%   37,233    30.2%   24.7%     
Other operative expenses, net   329    0.8%   696    1.9%   -52.7%        234    0.2%   906    0.7%   -74.2%     
Operating income (3)   7,224    18.1%   5,578    15.5%   29.5%   26.0%   21,956    14.9%   18,392    14.9%   19.4%   13.3%
Other non operative expenses, net   (75)        178         -142.1%        538         383         40.5%     
Interest expense   606         523         15.9%        1,955         1,729         13.1%     
Interest income   151         168         -10.1%        424         616         -31.2%     
Interest expense, net   455         355         28.2%        1,531         1,113         37.6%     
Foreign exchange loss   158         45         251.1%        (272)        (61)        345.9%     
Loss (gain) on monetary position in Inflationary subsidiries   21         (34)        -161.8%        -         (61)        -100.0%     
Market value gain on ineffective portion of derivative instruments   (23)        (96)        -76.0%        (13)        138         -109.4%     
Comprehensive financing result   611         270         126.3%        1,246         1,129         10.4%     
Income before taxes   6,688         5,130         30.4%        20,172         16,880         19.5%     
Income taxes   2,175         1,795         21.2%        6,274         5,667         10.7%     
Consolidated net income   4,513         3,335         35.3%        13,898         11,213         23.9%     
Net controlling interest income   4,324    10.8%   3,211    8.9%   34.7%        13,333    9.0%   10,662    8.7%   25.1%     
Net non-controlling interest income   189         124         52.4%        565         551         2.5%     
Operating income (3)   7,224    18.1%   5,578    15.5%   29.5%   26.0%   21,956    14.9%   18,392    14.9%   19.4%   13.3%
Depreciation   1,244         1,098         13.3%        5,078         3,850         31.9%     
Amortization and other operative non-cash charges   205         546         -62.5%        889         981         -9.4%     
Operative cash flow (3)(4)   8,673    21.8%   7,222    20.0%   20.1%   16.1%   27,923    18.9%   23,223    18.8%   20.2%   12.9%

  

(1)Except volume and average price per unit case figures.
   
(2)Sales volume and average price per unit case exclude beer results
   
(3)The Operating income and Operative cash flow lines are presented as non-gaap measures for the convenience of the reader.
   
(4)Operative cash flow = Operating Income + depreciation, amortization & other operative non-cash charges.
   
(5)Excluding M&A Effects means, with respect to a year-over-year comparison, the increase in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability.

 

As of October 2012, Grupo Tampico completed a twelve month period since it´s respectively integration, consequently it is included in Mexico under organic basis for financial information purposes (3 months on a YTD basis).

 

As of December 2012, CIMSA completed a twelve month period since it´s respectively integration, consequently it is included in Mexico under organic basis for financial information purposes (1 month on a YTD basis)

 

As of May 2012, we integrated Grupo Fomento Queretano in the operations of Mexico.

 

As a result of the regular quarterly review procedures that we perform together with our external auditors, we identified certain adjustments that have been included in the financial information regarding 2011 figures presented in this press release. As such, this information differs from the financial information presented under International Financial Reporting Standards (“IFRS”) in the document released on March 29, 2012, which contained unaudited information.

 

 

February 27, 2013Page 17
 

 

  

 

 

Consolidated Balance Sheet
Expressed in millions of Mexican pesos.

 

Assets  Dec 12   Dec 11 
Current Assets          
Cash, cash equivalents and marketable securities  Ps.23,234   Ps.12,173 
Total accounts receivable   9,329    8,632 
Inventories   8,103    7,549 
Other current assets   5,231    4,370 
Total current assets   45,897    32,724 
Property, plant and equipment          
Property, plant and equipment   71,652    64,805 
Accumulated depreciation   (29,135)   (26,703)
Total property, plant and equipment, net   42,517    38,102 
Other non-current assets   77,689    70,912 
Total Assets  Ps.166,103   Ps.141,738 

 

Liabilities and Equity  Dec 12   Dec 11 
Current Liabilities          
Short-term bank loans and notes  Ps.5,139   Ps.5,540 
Suppliers   14,221    11,852 
Other current liabilities   10,190    8,383 
Total Current Liabilities   29,550    25,775 
Long-term bank loans   24,775    16,821 
Other long-term liabilities   6,950    6,061 
Total Liabilities   61,275    48,657 
Equity          
Non-controlling interest   3,179    3,053 
Total controlling interest   101,649    90,028 
Total equity   104,828    93,081 
Liabilities and Equity  Ps.166,103   Ps.141,738 

 

As a result of the regular quarterly review procedures that we perform together with our external auditors, we identified certain adjustments that have been included in the financial information regarding 2011 figures presented in this press release. As such, this information differs from the financial information presented under International Financial Reporting Standards (“IFRS”) in the document released on March 29, 2012, which contained unaudited information.

 

 

February 27, 2013Page 18
 

 

 

 

  

Mexico & Central America Division

Expressed in millions of Mexican pesos(1)

 

 

   4Q 12   % Rev   4Q 11   % Rev   Reported
Δ%		   Excluding M&A
Effects Δ%(4)		   2012   % Rev   2011   % Rev   Reported
Δ%		   Excluding M&A
Effects Δ%(4)		 
Volume (million unit cases)   476.3         410.3         16.1%   3.6%   1,871.5         1,510.8         23.9%   1.9%
Average price per unit case   35.71         35.04         1.9%   3.6%   35.11         34.06         3.1%   6.1%
Net revenues   17,010         14,377         18.3%        65,705         51,453         27.7%     
Other operating revenues   144         101         42.6%        436         209         108.6%     
Total revenues   17,154    100.0%   14,478    100.0%   18.5%   7.4%   66,141    100.0%   51,662    100.0%   28.0%   8.3%
Cost of goods sold   8,733    50.9%   7,888    54.5%   10.7%        34,498    52.2%   27,086    52.4%   27.4%     
Gross profit   8,421    49.1%   6,590    45.5%   27.8%        31,643    47.8%   24,576    47.6%   28.8%     
Operating expenses   5,007    29.2%   4,116    28.4%   21.6%        20,976    31.7%   15,891    30.8%   32.0%     
Other operative expenses, net   229    1.3%   76    0.5%   201.3%        244    0.4%   214    0.4%   14.0%     
Operating income (2)   3,185    18.6%   2,398    16.6%   32.8%   24.6%   10,423    15.8%   8,471    16.4%   23.0%   9.9%
Depreciation, amortization & other operative non-cash charges   725    4.2%   567    3.9%   27.9%        3,051    4.6%   2,113    4.1%   44.4%     
Operative cash flow (2)(3)   3,910    22.8%   2,965    20.5%   31.9%   22.1%   13,474    20.4%   10,584    20.5%   27.3%   11.3%

 

(1)Except volume and average price per unit case figures.
(2)The Operating income and Operative cash flow lines are presented as non-gaap measures for the convenience of the reader.
(3)Operative cash flow = Operating Income + Depreciation, amortization & other operative non-cash charges.
(4)Excluding M&A Effects means, with respect to a year-over-year comparison, the increase in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability.
As of October 2012, Grupo Tampico completed a twelve month period since it´s respectively integration, consequently it is included in Mexico under organic basis for financial information purposes (3 months on a YTD basis).
As of December 2012, CIMSA completed a twelve month period since it´s respectively integration, consequently it is included in Mexico under organic basis for financial information purposes (1 month on a YTD basis)
As of May 2012, we integrated Grupo Fomento Queretano in the operations of Mexico.

 

South America Division

Expressed in millions of Mexican pesos(1)

 

 

   4Q 12   % Rev   4Q 11   % Rev   Δ%   2012   % Rev   2011   % Rev   Δ% 
Volume (million unit cases) (2)   333.8         322.0         3.7%   1,174.7         1,137.9         3.2%
Average price per unit case (2)   64.51         63.11         2.2%   66.65         60.21         10.7%
Net revenues   22,602         21,520         5.0%   81,202         71,185         14.1%
Other operating revenues   104         92         13.0%   396         377         5.0%
Total revenues   22,706    100.0%   21,612    100.0%   5.1%   81,598    100.0%   71,562    100.0%   14.0%
Cost of goods sold   12,312    54.2%   11,760    54.4%   4.7%   44,611    54.7%   39,607    55.3%   12.6%
Gross profit   10,394    45.8%   9,852    45.6%   5.5%   36,987    45.3%   31,955    44.7%   15.7%
Operating expenses   6,255    27.5%   6,052    28.0%   3.4%   25,464    31.2%   21,342    29.8%   19.3%
Other operative expenses, net   100    0.4%   620    2.9%   -83.9%   (10)   0.0%   692    1.0%   -101.4%
Operating income (3)   4,039    17.8%   3,180    14.7%   27.0%   11,533    14.1%   9,921    13.9%   16.2%
Depreciation, amortization & other operative non-cash charges   724    3.2%   1,077    5.0%   -32.8%   2,916    3.6%   2,718    3.8%   7.3%
Operative cash flow (3)(4)   4,763    21.0%   4,257    19.7%   11.9%   14,449    17.7%   12,639    17.7%   14.3%

 

(1)Except volume and average price per unit case figures.
(2)Sales volume and average price per unit case exclude beer results
(3)The Operating income and Operative cash flow lines are presented as non-gaap measures for the convenience of the reader.
(4)Operative cash flow = Operating Income + depreciation, amortization & other operative non-cash charges.

 

As a result of the regular quarterly review procedures that we perform together with our external auditors, we identified certain adjustments that have been included in the financial information regarding 2011 figures presented in this press release. As such, this information differs from the financial information presented under International Financial Reporting Standards (“IFRS”) in the document released on March 29, 2012, which contained unaudited information.

 

 

February 27, 2013Page 19
 

 

 

 

 

 

SELECTED INFORMATION

 

For the three months ended December 31, 2012 and 2011

 

Expressed in millions of Mexican pesos.

 

  4Q 12     4Q 11
Capex 4,374.6   Capex 3,523.6
Depreciation 1,244.0   Depreciation 1,098.0
Amortization & Other non-cash charges 205.0   Amortization & Other non-cash charges 546.0

 

VOLUME

Expressed in million unit cases

 

  4Q 12   4Q 11
  Sparkling Water  (1) Bulk Water (2) Still Total   Sparkling Water  (1) Bulk Water (2) Still Total
Mexico 320.4 20.1 73.2 22.6 436.3   276.6 16.9 60.3 18.4 372.2
Central America 34.1 2.0 0.1 3.8 40.0   33.0 1.7 0.1 3.3 38.1
Mexico & Central America 354.5 22.1 73.3 26.4 476.3   309.6 18.6 60.4 21.7 410.3
Colombia 52.7 9.4 4.4 4.4 70.9   49.0 4.9 6.6 4.0 64.5
Venezuela 49.8 2.8 0.7 4.0 57.3   49.1 2.3 0.4 2.3 54.1
Brazil 128.6 8.2 0.9 6.4 144.1   126.9 7.1 0.8 6.1 140.9
Argentina 54.3 4.3 0.1 2.8 61.5   56.0 3.6 0.2 2.7 62.5
South America 285.4 24.7 6.1 17.6 333.8   281.0 17.9 8.0 15.1 322.0
Total 639.9 46.8 79.4 44.0 810.1   590.6 36.5 68.4 36.8 732.3

 

(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

 

 

 

Volume of Mexico, the Mexico & Central America division, and Consolidated for the fourth quarter 2012 results includes Grupo CIMSA’s and Grupo Fomento Queretano’s results, accounting for 51.1 million unit cases, of which 64.8% is Sparkling Beverages, 4.2% is Water, 26.7% is Bulk Water and 4.3% is Still Beverages.

 

SELECTED INFORMATION

 

For the twelve months ended December 31, 2012 and 2011

 

Expressed in millions of Mexican pesos.

 

  YTD 12     YTD 11
Capex 10,258.7   Capex 7,861.9
Depreciation 5,078.0   Depreciation 3,850.0
Amortization & Other non-cash charges 889.0   Amortization & Other non-cash charges 981.0

 

VOLUME

Expressed in million unit cases

 

  YTD 12   YTD 11
  Sparkling Water (1) Bulk Water (2) Still Total   Sparkling Water (1) Bulk Water (2) Still Total
Mexico 1,238.9 85.5 306.7 89.2 1,720.3   1,007.0 67.4 223.1 69.0 1,366.5
Central America 128.3 7.7 0.4 14.8 151.2   123.8 7.2 0.3 13.0 144.3
Mexico y Central America 1,367.2 93.2 307.1 104.0 1,871.5   1,130.8 74.6 223.4 82.0 1,510.8
Colombia 189.0 25.1 25.1 16.6 255.8   187.6 20.8 27.3 16.4 252.1
Venezuela 182.6 9.2 2.4 13.5 207.7   174.1 8.4 1.9 5.4 189.8
Brazil 437.9 29.5 3.2 23.6 494.2   437.5 23.4 2.6 21.8 485.3
Argentina 193.9 13.2 0.6 9.3 217.0   189.2 12.1 0.8 8.6 210.7
South America 1,003.4 77.0 31.3 63.0 1,174.7   988.4 64.7 32.6 52.2 1,137.9
Total 2,370.6 170.2 338.4 167.0 3,046.2   2,119.2 139.3 256.0 134.2 2,648.7

 

(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

 

 

 

Volume of Mexico, the Mexico & Central America division, and Consolidated for 2012 results includes Grupo Tampico’s, Grupo CIMSA’s and Grupo Fomento Queretano’s results, accounting for 332.7 million unit cases, of which 62.5% is Sparkling Beverages, 5.1% is Water, 27.9% is Bulk Water and 4.5% is Still Beverages.

  

 

February 27, 2013Page 20
 

 

 

 

 

 

December 2012

Macroeconomic Information

 

    Inflation (1)
    LTM 4Q 2012   2012
           
Mexico   3.57% 1.42%   3.57%
Colombia   2.43% 0.12%   2.43%
Venezuela   20.07% 7.70%   20.07%
Brazil   5.84% 1.99%   5.84%
Argentina   10.84% 2.85%   10.84%
           
(1) Source: inflation is published by the Central Bank of each country.

 

 

 

Average Exchange Rates for each Period

 

    Quarterly Exchange Rate (local currency per USD)   YTD Exchange Rate (local currency per USD)
    4Q 12   4Q 11 Δ%   2012 2011 Δ%
                   
Mexico   12.9479   13.6180 -4.9%   13.1677 12.4256 6.0%
Guatemala   7.8794   7.8236 0.7%   7.8341 7.7898 0.6%
Nicaragua   23.9797   22.8375 5.0%   23.5467 22.4243 5.0%
Costa Rica   504.5833   515.0143 -2.0%   508.3752 511.0512 -0.5%
Panama   1.0000   1.0000 0.0%   1.0000 1.0000 0.0%
Colombia   1,806.8509   1,920.8899 -5.9%   1,798.1253 1,847.5181 -2.7%
Venezuela   4.3000   4.3000 0.0%   4.3000 4.3000 0.0%
Brazil   2.0585   1.8000 14.4%   1.9546 1.6750 16.7%
Argentina   4.8025   4.2570 12.8%   4.5508 4.1297 10.2%

 

 

 

End of Period Exchange Rates

 

    Exchange Rate (local currency per USD)   Exchange Rate (local currency per USD)
    Dec 12   Dec 11 Δ%   Sep 12 Sep 11 Δ%
                   
Mexico   13.0101   13.9787 -6.9%   12.8521 13.4217 -4.2%
Guatemala   7.9023   7.8108 1.2%   7.9572 7.8686 1.1%
Nicaragua   24.1255   22.9767 5.0%   23.8314 22.6958 5.0%
Costa Rica   514.3200   518.3300 -0.8%   503.3100 519.8700 -3.2%
Panama   1.0000   1.0000 0.0%   1.0000 1.0000 0.0%
Colombia   1,768.2300   1,942.7000 -9.0%   1,800.5200 1,915.1000 -6.0%
Venezuela   4.3000   4.3000 0.0%   4.3000 4.3000 0.0%
Brazil   2.0435   1.8758 8.9%   2.0306 1.8544 9.5%
Argentina   4.9180   4.3040 14.3%   4.6970 4.2050 11.7%

 

 

February 27, 2013Page 21