FEMSA Earnings Fall Short of Estimates in Q1, Segmental Revenues Aid

About this update from Fomento Economico Mexicano Sab De Cv Units Cons. Of 5 Shsb

Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, reported first-quarter 2025 net majority earnings per ADS of 79 cents (Ps. 1.62 per FEMSA unit). The company posted adjusted net majority earnings per ADS of 45 cents, down from 47 cents in the year-ago quarter and missed the Zacks Consensus Estimate 52 cents.Net consolidated income was Ps. 8,943 million (US$437.1 million), reflecting growth of 54.3% from the year-ago quarter.Total revenues were US$9.58 billion (Ps. 195,820 million), which improved 11.1% year over year in the local currency. Revenue growth was driven by gains across all business units and favorable currency rates due to the depreciation of the Mexican Peso against most of its operating currencies. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Shares of this Zacks Rank #4 (Sell) company have rallied 21.9% in the past three months compared with the industry’s 6.6% growth. Peeking Into FMX’s Q1 Margin DetailsFEMSA’s gross profit rose 15.8% year over year to Ps. 78,918 million (US$3.86 billion). The consolidated gross margin expanded 160 basis points (bps), owing to the gross margin expansion in Proximity Americas, Health, Fuel and Coca-Cola FEMSA, offset by margin declines in Proximity Europe.The company’s gross margin expanded 120 bps at Proximity Americas, 60 bps at the Health, and 30 bps in the Fuel segment. The gross margin was down 110 bps at the Proximity Europe and 80 bps at the Coca-Cola FEMSA segment.FEMSA’s operating income (income from operations) improved 4.9% year over year to Ps. 13,565 million (US$663.1 million). The consolidated operating margin declined 40 bps to 6.9%, driven by declines across the Proximity Americas, Proximity Europe, Fuel and Coca-Cola FEMSA segments, partially offset by margin growth in the Health division.Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS SurpriseFomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. QuoteFEMSA’s Q1 Segmental PerformanceProximity Americas: Total revenues for the segment rose 6.8% year over year to Ps. 74,886 million (US$3.7 billion). Excluding the addition of the U.S. operation to the division that it began consolidating on Oct. 1, 2024, as well as currency tailwinds, total revenues increased 1.4%. The company reported a 1.8% decline in same-store sales f...

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