Coca-Cola FEMSA, S.A.B. de C.V.

Second-quarter consolidated volume increased 3.5% to 1.1 billion unit cases. Total revenues rose 4.7% to MXN 76.3 billion, or 6.6% on a currency-neutral basis. Gross profit increased 8.8% to MXN 35.9 billion, with gross margin expanding 180 basis points to 47.1%; operating income rose 9.1% to MXN 10.7 billion and operating margin expanded 60 basis points to 14.0%; adjusted EBITDA increased 12.1% to MXN 15.0 billion and EBITDA margin expanded to 19.7%; majority net income grew 16.9% to MXN 6.2 billion. Management noted MXN 265 million in recovered insurance claims in Brazil benefited operating results; excluding that, operating income would have increased 6.4% and EBITDA 10.1%. For division detail, Mexico and Central America revenues were flat at MXN 45.4 billion, with gross profit up 3.9% to MXN 22.2 billion and gross margin at 48.9%; South America revenue rose 11.8% to MXN 30.9 billion, gross profit rose 17.7% to MXN 13.7 billion and operating income jumped 46.5% to MXN 4.3 billion. Full-year 2026 CapEx is expected to be between 7% and 7.5% of revenues. Management said Mexico full-year volume guidance moved from slightly negative to flattish, pending August price adjustments, while South America should continue growing, with Colombia facing tougher comps in the second half.

Ian Craig framed the quarter as evidence of the company’s long-term sustainable growth model, highlighting record second-quarter volumes in Brazil, Colombia and Guatemala and strong brand-building from the FIFA World Cup campaign. He said Mexico is still challenged, but the company has built share cushion through a more conservative pass-through strategy after the excise tax increase, and that this should allow it to catch up with inflation later in the year. His tone was cautiously optimistic: improving trends in Mexico, strong momentum in South America, and a robust innovation pipeline, though he repeatedly stressed that competition and consumption remain challenging.

Gerardo Cruz highlighted margin improvement from favorable raw material costs, especially sweeteners and PET, plus currency appreciation against dollar-denominated inputs. He said the company hedged 65% of PET requirements, 96% of sugar, 98% of HFCS and 73% of aluminum, and is already taking 2027 hedges for 80% of sugar, 80% of HFCS and 54% of alumina. On capital allocation, he reiterated CapEx of 7% to 7.5% of revenues in 2026, selective investments such as the new PET line in Costa Rica and aluminum can line in Uruguay, and an ongoing review of shareholder return alternatives. He also said the MXN 1.3 billion comprehensive financing expense was higher than last year mainly due to new debt, lower financial instrument gains, and partly offset by FX gains from peso appreciation.

Analysts focused heavily on Mexico pricing, mix, and the pace of recovery after the excise tax increase. Management said Q2 volumes improved sequentially, June was up over 12%, and the company now expects full-year Mexico volumes to be flattish rather than slightly negative, with a planned August price catch-up to inflation. On mix, they said consumers are still shifting toward one-way multi-serve presentations, especially in a tough disposable-income environment, but that this is consistent with preserving household penetration and should help once the tax cycles. Other questions centered on Brazil’s Monster growth, where management said gains are driven more by household penetration and coverage than geography, and on capital returns, where management said the board review is ongoing and no decision has been announced.