Fomento Económico Mexicano, S.A.B. de C.V.

FEMSA reported first-quarter 2026 total revenues up 6.1% year over year and operating income up 5.5%; on a comparable and currency-neutral basis, revenue grew 8.5% and operating income grew 12.1%. Net consolidated income was 17.6 billion pesos, up 97.3%, but excluding a one-time non-cash accounting gain it would have been 5.7 billion pesos, down 36.4% year over year. For OXXO Mexico, revenue grew 8.3%, same-store sales rose 6%, gross margin was 46.2% (+140 bps), and operating margin reached 7.6% (+80 bps). Americas & Mobility posted 25 billion pesos of revenue (+12.9% reported, +10.5% comparable/currency-neutral) and operating income of 281 million pesos, while Europe delivered 12.9 billion pesos of revenue and 356 million pesos of operating income (+7.4%), Health generated 22.2 billion pesos of revenue and 657 million pesos of operating income (-14.9%), and Coca-Cola FEMSA reported revenue growth of 1.1% and operating income down 2.3% reported, but +6.3% revenue and +2.1% operating income on a comparable basis. CapEx was 6.2 billion pesos, about 3% of revenues and 29.5% lower than last year, with management expecting CapEx to trend toward 5% to 6% of sales later in the year. On capital returns, shareholders approved 15.2 billion pesos of ordinary dividends, a 25.8 billion peso extraordinary dividend, and the company said total expected capital distributions are about 41 billion pesos from March 2026 to March 2027, plus a 300 million share repurchase program expected to finish in Q2.

The CEO framed the quarter as evidence that FEMSA’s reorganization is sharpening execution and transparency, especially by separating OXXO Mexico and creating Americas & Mobility. He emphasized a recovery in OXXO traffic and same-store sales, stronger momentum in Latin America, and rising scale in Spin, while also acknowledging that traffic in Mexico is still not where he wants it to be. Strategically, he pointed to affordability, coffee and food, daily replenishment, and retail media as key initiatives to drive relevance and traffic beyond the World Cup.

The CFO highlighted the hard numbers: 6.1% revenue growth, 5.5% operating income growth, and 17.6 billion pesos of net income, with the latter inflated by a one-time non-cash gain. He walked through the main drivers of the earnings bridge, including a foreign exchange loss swing of 883 million pesos, a 189 million peso loss on financial instruments versus a 1.1 billion peso gain last year, lower interest income, and the absence of 2.5 billion pesos from discontinued operations that benefited last year. He also noted disciplined spending, with CapEx at 6.2 billion pesos and a plan to normalize toward a 5% to 6% sales ratio, while saying leverage should end the year slightly below 2x net debt to EBITDA, absent M&A.

Analysts pressed management on OXXO traffic weakness, the source and sustainability of gross margin expansion, new-store productivity, portfolio simplification, leverage, and Spin’s potential. Management said traffic is still a work in progress but is improving versus last year, with better trends in the North than in the South and some regional disruption in Jalisco and other areas affecting the quarter. They also said the 140 bps gross margin improvement in OXXO Mexico was helped by commercial income, supplier agreements, and distribution income, but cautioned that some of this may not repeat at the same level in the second half.