Coca-Cola FEMSA Drives Growth Amidst Challenges: A Strong Second Quarter Performance
Coca-Cola FEMSA, one of the leading beverage companies in Latin America, reported a solid second quarter performance despite facing significant challenges. The company's CEO, Ian Craig, highlighted the importance of addressing the recent earthquakes that struck Venezuela and expressed the company's solidarity with those affected.
In a call to discuss the company's quarterly results, Craig noted that the earthquakes had resulted in loss of life, thousands of injuries, and significant displacement across affected communities. The company has contributed to the humanitarian response by donating over 100,000 liters of water and other essential emergency supplies. Despite this tragic event, Coca-Cola FEMSA remained focused on driving growth and implementing its sustainable long-term model.
The company's second quarter showed sequential improvement at the consolidated level, driven mainly by record volumes in Brazil, Colombia, and Guatemala. Craig attributed this success to the company's ability to gain share across markets and categories, while capitalizing on the FIFA World Cup opportunity. The FIFA World Cup represented a brand-building platform for the company, with a comprehensive 360-degree plan that included exclusive customer promotions, special edition cans, and Red Tide executions around stadiums.
The FIFA World Cup resulted in new highs in key Coca-Cola trademark brand engagement metrics across the company's operations. This reinforced the platform's role as a long-term brand-building investment, translating into incremental demand and positive momentum for the company's brands throughout the quarter.
Coca-Cola FEMSA reported consolidated volume growth of 3.5% to reach 1.1 billion unit cases in the second quarter, driven mainly by volume increases across most operations. Total revenues grew 4.7% to MXN 76.3 billion, with an increase of 6.6% on a currency-neutral basis. Gross profit increased 8.8% to MXN 35.9 billion, leading to a margin expansion of 180 basis points to reach 47.1%. This positive performance was driven mainly by favorable sweeteners and PET costs.
The company's disciplined hedging strategy and the appreciation of most operating currencies helped offset unfavorable mix and currency translation effects. As Craig noted, "The final tally of the FIFA World Cup resulted in new highs in key Coca-Cola trademark brand engagement metrics, such as reputation, positive buzz, purchase consideration, among others, across our operations."
