Company Reports

We believe Coca-Cola Femsa deserves a wide moat rating, as we think brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from extensive manufacturing and distribution scale, should reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

Coca-Cola Femsa's comparable sales rose 7% in the second quarter, including South America up 14% and Mexico and Central America up 2%. Adjusted EBITDA was up 14% on a comparable basis as margin expanded 130 basis points. However, currency headwinds continued.

We believe Coca-Cola Femsa deserves a wide moat rating, as we think brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from extensive manufacturing and distribution scale, should reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

Coca-Cola Femsa's comparable sales rose 6% in the first quarter, with South America up 12% and Mexico up 1%. Adjusted EBITDA was up 6% on a comparable basis as margins were roughly flat. However, currency was a headwind, trimming reported sales and adjusted EBITDA growth to 1%.

We believe Coca-Cola Femsa deserves a wide moat rating, as we think brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from extensive manufacturing and distribution scale, should reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

We believe Coca-Cola Femsa deserves a wide moat rating, as we think brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from extensive manufacturing and distribution scale, should reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

Femsa grew organic sales by 5% in the fourth quarter, led by 6% increases in both Oxxo Americas and beverage bottling. Favorable sales mix and efficiency gains in the two segments also lifted EBITDA margin by 150 basis points to 18.1%.

Coca-Cola Femsa's organic sales rose 6% in the fourth quarter, on South America strength (up 10%) in both pricing and volume. Mexico improved to 3% growth from flat in the first nine months. Adjusted EBITDA grew 13%, and margins widened 210 basis points to 23.4% on expense leverage.

We believe Coca-Cola Femsa deserves a wide moat rating, as we think brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from extensive manufacturing and distribution scale, should reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

Led by Oxxo, Femsa grew sales by 9% in the third quarter, but operating profit rose only 4% due to margin contractions in drugstores and gas stations.

Coca-Cola Femsa's sales rose 3% in the third quarter, led by South America (up 9%) on increases in both prices and volume, but revenue in Mexico remained flat. Adjusted EBITDA grew 3% as margins were flat at 20.1%.

We believe Coca-Cola Femsa has a wide moat, as we think brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from extensive manufacturing and distribution scale, should reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

Femsa grew sales by 6% in the second quarter, but operating profits rose only 1% as Oxxo was a drag (profits down 3%) and the bottling business was flat. Marking its progress in digital, the firm posted user growth of 19% and 17% in its payment and loyalty programs, respectively.

Led by South America (up 13%), Coca-Cola Femsa's sales rose 5% in the second quarter on price increases and currency tailwinds. However, revenue was flat in Mexico, and adjusted EBITDA fell 4% as margin contracted 160 basis points to 18.4%.

We believe Coca-Cola Femsa has a wide moat, as we think brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from a massive manufacturing and distribution scale, should reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

Femsa grew sales by 11% to MXN 196 billion in the first quarter of 2025. Operating profits rose 5%, as a 7% increase in bottling subsidiary Coke Femsa more than offset a 12% fall in the retail business in the Americas dominated by the Oxxo chain.

Coca-Cola Femsa posted a 10% sales growth in the first quarter of 2025, despite a 2% volume decline led by Mexico (down 5%) and Colombia (down 8%). Operating profits rose 7%, but operating margins narrowed 30 basis points to 13.2%.

We award a wide moat to Coca-Cola Femsa. We expect brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, coupled with cost advantages from a massive manufacturing and distribution scale, will reinforce its durable competitive position and maintain excess investment returns for more than 20 years.

We plan to maintain our $92 fair value estimate for wide-moat Coca-Cola Femsa after digesting the company's solid 2024 results, including sales up 14% and operating profits up 17%. The shares have risen 4% following the Feb. 21 report and almost 20% since the trough in January but remain attractive at a discount to our intrinsic valuation. The resilient 2024 performance, despite macro headwinds and weather and logistical challenges in Mexico and Brazil, once again illustrates the strength of Coke’s brands and the bottler’s operational expertise that underpin our constructive view on the firm’s long-term outlook.

We award a wide moat to Coca-Cola Femsa. We expect brand affinity from its status as wide-moat Coca-Cola's largest bottler by volume, combined with cost advantages from a massive manufacturing and distribution scale, will reinforce its durable competitive position and maintain excess investment returns for more than 20 years.