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Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, reported fourth-quarter 2024 net majority earnings per ADS of 91 cents (Ps. 1.90 per FEMSA unit). The company posted adjusted net majority earnings per ADS of 46 cents, down from $1.70 in the year-ago quarter.
Net consolidated income was Ps. 10,961 million (US$525.6 million), reflecting a decline of 78.3% from the year-ago quarter.
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Total revenues were US$9.99 billion (Ps. 208,311 million), which improved 12.8% year over year in the local currency. Revenue growth was driven by gains across all business units and favorable currency rates due to the depreciation of the Mexican Peso against most of its operating currencies.
Shares of this Zacks Rank #4 (Sell) company have risen 5.3% in the past three months compared with the industry’s 2.5% growth.
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Peeking Into FMX’s Q4 Margin Details
FEMSA’s gross profit rose 16.7% year over year to Ps. 90,906 million (US$4.36 billion). The consolidated gross margin expanded 140 basis points (bps), owing to the gross margin expansion in Health, Proximity Americas and Coca-Cola FEMSA, offset by margin declines in Fuel and Proximity Europe.
The company’s gross margin expanded 230 bps at Proximity Americas, 200 bps at the Health division and 100 bps at the Coca-Cola FEMSA segments. The gross margin was down 70 bps year over year in the Fuel and 150 bps at the Proximity Europe segment.
FEMSA’s operating income (income from operations) improved 31.5% year over year to Ps. 22,634 million (US$1.09 billion). The consolidated operating margin increased 160 bps to 10.9%, driven by growth across the Proximity Americas, Coca-Cola FEMSA and Health segments, partially offset by steady margins in Fuel and contraction in the Proximity Europe division.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Fomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. Quote
FEMSA’s Q4 Segmental Performance
Proximity Americas: Total revenues for the segment rose 13.2% year over year to Ps. 80,992 million (US$3.9 billion). On an organic basis, revenues improved 8.1%. The company reported a 3.8% increase in same-store sales for Proximity Americas, driven by a 6.8% rise in average customer tickets, offset by a 2.8% store traffic decline.
The Proximity Americas division had 24,462 OXXO stores as of Dec. 31, 2024. Operating income improved 18.7% year over year. The segment's operating margin grew 50 bps to 11.7%, driven by a higher gross margin, slower growth in South America and controlled selling expenses due to cost containment and efficiency measures, along with more stable labor costs. However, this was partially offset by higher operating expenses from ongoing investments in commercial capabilities, including segmentation, revenue management and data analytics.
Proximity Europe: Total revenues for the segment grew 21.5% year over year to Ps. 13,870 million (US$665 million). The segment benefited from strong sales across all countries, driven by commercial capabilities and a significant boost from currency appreciation against the Mexican peso. The Proximity Europe division had 2,778 points of sale as of Dec. 31, 2024. Operating income for the segment rose 9.9% year over year and the operating margin contracted 50 bps to 4.7% on higher operating expenses, caused by elevated administrative expenses and challenging comparisons from the B2B foodservice business.
Health Division: The segment reported total revenues of Ps. 21,824 million (US$1.05 billion), up 13.3% year over year. Revenues were aided by growth in Colombia, Chile and Ecuador, partially offset by a challenging competitive landscape in Mexico. The segment’s store base reached 4,661 locations as of Dec. 31, 2024. Same-store sales rose 9.4% in the quarter. The operating income improved 109.7% year over year, while the operating margin expanded 250 bps to 5.5%.
Fuel Division: Total revenues rose 8% year over year to Ps. 16,331 million (US$783 million). Average same-station sales rose 9.7%, driven by a 4.4% increase in the average volume and a 5.1% rise in the average price per liter. The company had 571 OXXO Gas service stations as of Dec. 31, 2024. Operating income rose 6.9%, while the operating margin was flat at 4.6%.
Coca-Cola FEMSA: Total revenues for the segment advanced 14.3% year over year to Ps. 75,528 million (US$3.6 billion). Coca-Cola FEMSA’s consolidated operating income increased 25%. The segment’s operating margin expanded 140 bps to 16%.