FEMSA Q2 Earnings & Revenues Miss Estimates, Mexico Operations Hurt

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 second-quarter 2025 net majority earnings per ADS of 42 cents (Ps. 78 cents per FEMSA unit), down from $1.87 in the year-ago quarter and missed the Zacks Consensus Estimate of 91 cents.Net consolidated income was Ps. 5,593 million (US$297 million), reflecting growth of 64.3% from the year-ago quarter.Total revenues were US$10.84 billion (Ps. 211,364 million), which rose 6.3% year over year in the local currency. However, revenues missed the Zacks Consensus Estimate of $11.2 billion. Revenue growth was driven by gains across its business units outside Mexico and favorable currency rates due to the depreciation of the Mexican Peso against most of operating currencies. Including the currency effects and M&A, revenues grew 2.2% year over year. Shares of this Zacks Rank #3 (Hold) company have lost 12.6% in the past three months compared with the industry’s 2.5% decline.Peeking Into FMX’s Q2 Margin DetailsFEMSA’s gross profit rose 4.2% year over year to Ps. 85,922 million (US$4.56 billion). The consolidated gross margin contracted 80 basis points (bps) to 40.7%, caused by gross margin contractions in Proximity Europe, Health and Coca-Cola FEMSA divisions, and a greater mix of operations outside of Mexico in Proximity Americas, including acquisitions. This was partly offset by margin expansion in Fuel and OXXO Mexico. Including the currency effects and M&A, gross profit remained flat year over year.The company’s gross margin remained flat at Proximity Americas and contracted 190 bps at Proximity Europe, 60 bps at Health and 70 bps at the Coca-Cola FEMSA segment. However, the gross margin improved 70 bps at the Fuel segment.FEMSA’s operating income (income from operations) improved 1.2% year over year to Ps. 17,832 million (US$947 million). Including the currency effects and M&A, operating income declined 1.5% year over year. The consolidated operating margin decreased 50 bps to 8.4%, caused by declines across the Proximity Americas, Health and Coca-Cola FEMSA segments, mainly due to the higher-margin businesses in Mexico. This was partly negated by operating margin growth in the Proximity Europe and Fuel divisions.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....

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