Company Overview

Fomento Económico Mexicano, S.A.B. de C.V. (FEMSA), founded in 1890 and headquartered in Monterrey, Mexico, is a global leader in creating economic and social value. The company operates across multiple business segments, employing over 392,000 individuals in 18 countries. FEMSA is committed to being an exceptional employer and a responsible neighbor in all the communities it serves. It operates as a franchise bottler of Coca-Cola trademark beverages worldwide and has a significant presence in retail and digital financial services.

Business Segments

FEMSA operates through several key divisions, each contributing to its diversified business model:

Proximity Americas Division

This division manages small-box retail chain stores primarily under the OXXO brand across Mexico, Colombia, Peru, Chile, Brazil, and the United States. OXXO is a dominant player in Mexico's convenience store market, known for its attractive return profile and substantial growth potential.

Proximity Europe Division

Operating under brands like k kiosk, Brezelkönig, BackWerk, Ditsch, Press & Books, avec, Caffè Spettacolo, and ok., this division includes Valora, FEMSA's European retail unit. It focuses on convenience and foodvenience formats in Switzerland, Germany, Austria, Luxembourg, and the Netherlands.

Coca-Cola FEMSA

As the world's largest franchise bottler of Coca-Cola products by volume, Coca-Cola FEMSA produces, markets, and distributes Coca-Cola trademark beverages across a vast territory including Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil, Argentina, and Uruguay.

Health Division

FEMSA participates in the retail health sector through this division, operating drugstores in Chile, Colombia, Ecuador, and Mexico under various names such as Cruz Verde, Fybeca, Sana Sana, YZA, La Moderna, and Farmacon.

Fuel Division

This segment manages retail service stations under the OXXO GAS brand in Mexico, offering fuels, motor oils, lubricants, and car care products.

Digital Financial Services

Under the Spin brand, this division encompasses Spin by OXXO and Spin Premia, alongside other digital financial service initiatives. These platforms are experiencing rapid user growth and increasing average transaction values.

Recent Financial Performance

FEMSA has demonstrated strong financial performance across its diverse portfolio.

Full Year 2024 Results (as of February 27, 2025)

- Consolidated Revenues: Grew by 12.8% compared to 4Q23.

- Income from Operations: Increased by 31.5% compared to 4Q23.

- Key Contributors: Coca-Cola FEMSA and the OXXO chain accounted for 75% of total company revenue and over 90% of profits in 2024.

Key Business Segment Performance (Q4 2024):

- FEMSA Retail Proximity Americas: Total revenues grew 13.2% and income from operations increased 18.7% versus 4Q23.

- Coca-Cola FEMSA: Total revenues and income from operations grew 14.3% and 25.0%, respectively, against 4Q23.

Third Quarter 2024 Results (as of October 28, 2024)

- Consolidated Revenues: Grew by 8.3% compared to 3Q23.

- Income from Operations: Increased by 14.6% compared to 3Q23.

Quarterly Performance (Q3 2024):

- FEMSA Retail Proximity Americas: Total revenues grew 4.8% and income from operations increased 5.9% versus 3Q23.

- Coca-Cola FEMSA: Total revenues and income from operations grew 10.7% and 13.9%, respectively, against 3Q23.

- Spin by OXXO: Had 8.2 million active users (28.9% growth vs 3Q23).

- Spin Premia: Had 23.8 million active loyalty users (34.6% growth vs 3Q23).

Investment Profile

FEMSA holds a narrow economic moat rating, primarily attributed to the intangible assets and cost advantages present in its major subsidiaries: Coca-Cola FEMSA and the OXXO small-format retail chain. These two segments together represent 75% of the firm's total sales and over 90% of its operating profits.

Capital Allocation and Shareholder Returns

During 2024, FEMSA distributed ordinary dividends and announced extraordinary dividends.

- Ordinary Dividends: Ps. 3.6644 per FEMSAUB unit and Ps. 4.3972 per FEMSAUBD unit (Ps. 43.972 per ADS).

- Extraordinary Dividends: Ps. 2.5672 per FEMSAUB unit and Ps. 3.0804 per FEMSAUBD unit (Ps. 30.804 per ADS).

FEMSA also executed share repurchases, buying back 102,201,323 FEMSAUBD units, representing approximately 2.86% of total outstanding units as of December 31, 2024.

Strategic Transformation

In 2023, FEMSA divested its 15% stake in Heineken and its related distribution business. In 2024, the company strategically invested approximately USD$385 million in inorganic initiatives, largely focused on establishing a foundation for proximity operations in the United States.

Corporate Governance

The Corporate Practices and Nominations Committee of FEMSA's Board of Directors has initiated the formal succession process for the Chief Executive Officer position. FEMSA remains focused on strengthening its core retail and beverage operations, expanding its digital financial services, and maintaining robust market positions across its key geographic markets in Latin America and Europe.