Fomento Económico Mexicano (FEMSAUBD) Q4 2024 earnings summary

Executive summary

• Achieved double-digit growth in earnings and margin expansion for full year 2024, driven by strong performances in Proximity Americas and Coca-Cola FEMSA, with solid delivery from other operations and favorable FX effects.

• Continued focus on profitable growth, leveraging data analytics, segmentation, and revenue management to adapt to diverse consumer environments and expand value propositions.

• Transferred capabilities across geographies and formats, with digital transformation supporting growth and leadership in key categories.

• Nearly completed planned divestitures under FEMSA Forward, monetizing $10.7 billion and simplifying the business structure, including the sale of Alpunto (Imbera and Torrey).

• CEO succession process initiated for 2025, with a special independent board committee overseeing the transition and leadership changes in Health and Multiformat divisions.

Financial highlights

• Q4 2024 total revenue grew 12.8% to Ps. 208,311 million, operating income rose 31.5% to Ps. 22,634 million, and net consolidated income increased 78.3% to Ps. 10,961 million, aided by non-cash FX gains and discontinued operations.

• Full-year 2024 revenues were Ps. 781,585 million (+11.2% YoY), gross profit Ps. 321,416 million (+15.0% YoY), and income from operations Ps. 70,668 million (+19.8% YoY).

• Proximity Americas revenues up 13.2% (8.1% organic), gross margin expanded 230 bps to 47.7%, and operating income increased 18.7%.

• OXXO added 205 net new stores in Q4, meeting annual growth objectives, with the store base reaching 24,462 (+1,596 YoY).

• SPIN by OXXO reached 8.6 million active users (+24.9% YoY), and SPIN Premia loyalty program hit 24.6 million users (+27.5% YoY), with strong transaction growth.

Outlook and guidance

• Plans to accelerate capital returns in 2025 and 2026 to reach a target leverage of 2x net debt/EBITDA (ex-corp), deploying MXN 66 billion ($3.2B) in 2025 and MXN 41.4 billion ($2B) in 2026.

• 2025 capital return includes MXN 14.8B ordinary dividends and MXN 51.2B in extraordinary dividends and buybacks, representing a 10.4% yield.

• 2026 plan includes at least MXN 26.6B in extraordinary dividends, with total two-year capital return of MXN 107.4B (~$5.3B), or 17% of market cap.

• Board proposes a 4.2% increase in ordinary dividends and further capital returns for 2025–2026.

• Expect continued macro uncertainty and softer consumer environment in Mexico, with Q1 2025 performance impacted by tough calendar and weather.