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

Reported Q2 consolidated volume was 1.1 billion unit cases, up 3.5% year over year. Total revenue increased 4.7% to MXN 76.3 billion, with currency-neutral revenue up 6.6%. Gross profit rose 8.8% to MXN 35.9 billion and gross margin expanded 180 bps to 47.1%; operating income increased 9.1% to MXN 10.7 billion and adjusted EBITDA grew 12.1% to MXN 15 billion. Majority net income increased 16.9% to MXN 6.2 billion. By division, Mexico and Central America revenue was flat at MXN 45.4 billion and South America revenue rose 11.8% to MXN 30.9 billion. For 2026, management still expects CapEx to be between 7% and 7.5% of revenues. In Mexico, management now expects full-year volume to be flattish, after earlier expectations had been slightly negative.

Ian Craig framed the quarter as sequentially better, with Brazil, Colombia and Guatemala setting the pace while Mexico remained pressured by the excise tax increase and soft consumer demand. He emphasized that the company’s long-term strategy is working: preserve affordability, protect household penetration, gain share, and use digital execution and innovation to support growth. He also highlighted the World Cup as a meaningful brand-building platform that boosted engagement metrics and demand across markets. His tone was cautiously optimistic on Mexico, but he repeatedly noted that the environment is still challenging and that the company is not assuming an easy recovery.

Gerardo Cruz highlighted the main financial drivers behind the quarter’s margin expansion: lower raw material costs, benefits from hedging, and currency appreciation against dollar-denominated inputs, partially offset by aluminum and higher freight and marketing expenses. He cited a 170 bps gross margin expansion in Mexico and Central America to 48.9%, and a 220 bps increase in South America to 44.4%; he also noted the MXN 265 million insurance claim recovery in Brazil that lifted operating income. On capital allocation, he reiterated 2026 CapEx of 7% to 7.5% of revenue, said the company is still pursuing selective capacity investments, and said shareholder-return alternatives are under review. He also detailed hedges of 65% of PET, 96% of sugar, 98% of HFCS and 73% of aluminum, with additional hedging already underway for next year.

Analysts focused heavily on Mexico pricing, volume trends, and mix, asking whether the company could raise prices after taking only about 85% of the tax-plus-inflation impact through and whether consumer mix was stabilizing. Management said volume improved sequentially within the quarter, with June up over 12%, and that the company now sees a flattish full-year volume outlook, though August pricing remains a key test. Questions also centered on Brazil Monster growth, Brazil/Colombia second-half sustainability, and capital allocation; management said Monster growth is coming from household penetration and coverage gains rather than geographic expansion, and that the Brazil/Colombia margin trajectory still has room to improve. On capital returns, management said discussions are ongoing but no decision has been made yet.