Fomento Económico Mexicano (FEMSAUBD) Q3 2025 earnings summary

Executive summary

• Leadership transition underway, with José Antonio Fernández Garza-Laguera set to become CEO effective November 1, 2025, emphasizing strategic continuity and long-term value creation through the FEMSA Forward plan and a focus on core verticals: retail and beverages, enabled by digital initiatives.

• Over the past 32 months, nearly $11 billion in non-core assets were divested, and a capital allocation framework was established to distribute $7.8 billion in dividends and buybacks from March 2024 to March 2027.

• OXXO Mexico remains a growth engine, with at least a decade of store expansion potential, while international operations (Brazil, Colombia, Bara) and digital platforms (Spin by OXXO) are highlighted as key long-term value drivers.

• The company is navigating a challenging macro environment in Mexico, but recent quarters show improving trends, especially in retail traffic and category performance.

• Total consolidated revenues grew 9.1% and income from operations increased 4.3% year-over-year in 3Q25, with broad-based growth across business units and favorable currency effects, especially from Europe.

Financial highlights

• 3Q25 total revenues: Ps. 214,638 million (+9.1% YoY); gross profit: Ps. 85,709 million (+8.0% YoY); income from operations: Ps. 18,126 million (+4.3% YoY).

• Net consolidated income fell 36.8% to $5.8 billion pesos, mainly due to a non-cash FX loss of $1.3 billion pesos versus a gain last year, linked to the appreciation of the Mexican peso.

• Gross margin contracted 40 bps to 39.9%; operating margin contracted 40 bps to 8.4%.

• Adjusted EBITDA rose 6.5% to Ps. 30,843 million; EBITDA margin was 14.4%.

• Effective tax rate for the quarter was 29.3%, down from 42.2% and 40% in the first two quarters, with guidance for a mid-30% range going forward.

Outlook and guidance

• Cautious optimism for 2026, with early signs of improvement in Mexico and expected tailwinds from the FIFA World Cup and Coca-Cola's 100th anniversary in Mexico.

• Continued focus on tactical and strategic initiatives to drive traffic, category performance, and cost efficiencies.

• Store expansion in Mexico and international markets (Brazil, Colombia, USA) expected to continue at a robust pace.