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    KOF
    Earnings call· Jun 2026(Q2 FY26)

    COCA COLA FEMSA SAB DE CV Q2 FY26 earnings call KOF

    Jul 27, 2026 Source

    Executive summary

    Coca-Cola FEMSA Q2 FY26 — Strong South America Performance Offsets Mexico Headwinds

    Coca-Cola FEMSA delivered a mixed second quarter, with robust growth and margin expansion in South America, particularly Brazil and Colombia, driven by strong volumes and strategic execution. This performance largely offset persistent headwinds in Mexico from excise taxes and a subdued consumer environment, where the company focused on market share gains and affordability. The company is evaluating capital allocation alternatives and monitoring potential regulatory changes in Brazil.

    Highlights

    7

    • Consolidated volume grew 3.5% to 1.1 billion unit cases, driven by record volumes in Brazil, Colombia, and Guatemala.

    • Total revenues increased 4.7% to MXN 76.3 billion, or 6.6% on a currency-neutral basis.

    • Gross profit expanded 180 basis points to 47.1%, reaching MXN 35.9 billion, driven by favorable raw material costs and hedging.

    • Adjusted EBITDA grew 12.1% to MXN 15 billion, with a 130 basis point margin expansion to 19.7%.

    • Majority net income grew 16.9% to MXN 6.2 billion, reflecting higher operating income and a lower effective tax rate.

    • Mexico gained 0.5 points of NARTD share and 0.7 points of CSD share, with Coca-Cola Zero segment growing 24% year-on-year.

    • Guatemala's customer base grew 5.2% to 156,000 customers, and cooler coverage increased 40 basis points to 78.8%.

    Concerns

    4

    • Mexico volumes increased only 1% year-over-year, facing headwinds from excise tax increases and a softer consumer environment.

    • Argentina volume decreased 2.8% due to a truck driver strike and continued soft consumer demand.

    • Operating income in Mexico and Central America declined 7% to MXN 6.4 billion, with a 110 basis point margin contraction.

    • Comprehensive financial result expense increased to MXN 1.3 billion from MXN 1.2 billion in the prior year, mainly due to higher net interest expense.

    Guidance & targets

    2
    CategoryTargetConfidence
    Full-year Mexico Volume Growth
    flattish
    medium materiality
    Medium
    Full-year Capital Expenditure
    7% to 7.5% of revenues
    medium materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Mexico and Central America
    Volume growth across all territories in the division was offset by unfavorable mix and currency translation effects. Gross margin expanded due to lower raw material costs and currency appreciation. Operating income declined due to higher marketing and freight expenses and lower operating FX gain.
    Currency-neutral revenue growth: 2%Gross profit: MXN 22.2 billionGross margin: 48.9%Gross margin expansion: 170 bpsOperating income: MXN 6.4 billionOperating margin contraction: 110 bpsAdjusted EBITDA: MXN 9 billionAdjusted EBITDA margin: 19.7%
    		MXN 45.4 billionflat—14.1% operating margin
    Mexico
    Volumes faced headwinds from excise tax increase and softer consumer dynamics, but strong commercial execution and FIFA World Cup support delivered share gains. Sequential improvement observed, with June showing over 12% growth.
    NARTD market share gain: 0.5 pointsCSD market share gain: 0.7 pointsCoca-Cola Zero segment growth: 24% YoYJuntos+ digital sales: 38% of traditional tradeJuntos+ digital sales: 19% of total revenues
    		—1%——
    Guatemala
    Supported by a stronger consumer environment, disciplined execution, and resilient remittances. Strategy focused on unlocking volume opportunities through market development and expanding affordable price points.
    Customer base growth: 5.2%Total customers: 156,000Cooler coverage increase: 40 bpsCooler coverage: 78.8%Sparkling beverages share increase: 90 bps YoY
    		—3.4%——
    South America
    Driven mainly by volume growth in Brazil and Colombia, partially offset by Argentina. Revenue management initiatives more than offset unfavorable currency translation. Gross margin expanded due to favorable mix, lower raw material costs, and currency appreciation. Operating income benefited from MXN 265 million in insurance claims, operating leverage, and expense efficiencies.
    Volume growth: 6.9% to 426 million unit casesCurrency-neutral revenue growth: 14.1%Gross profit: MXN 13.7 billionGross margin: 44.4%Gross margin expansion: 220 bpsOperating income: MXN 4.3 billionOperating income growth: 46.5%Operating margin expansion: 330 bpsAdjusted EBITDA: MXN 6.1 billionAdjusted EBITDA growth: 35.6%Adjusted EBITDA margin: 19.6%Adjusted EBITDA margin expansion: 340 bps
    		MXN 30.9 billion11.8%—13.9% operating margin
    Brazil
    Outperformed the industry despite high interest rates, supported by low unemployment and real income growth. Gained share across key categories within the nonalcoholic ready-to-drink industry. Digital capabilities through Juntos Advisor improved commercial execution.
    Coca-Cola Zero growth: 15%Flavors growth: double-digitStill beverages growth: 23%Sparkling beverages single-serve mix: 28%Sparkling beverages single-serve mix improvement: 2.6 percentage points compared to March 2026
    		—5.2%——
    Colombia
    Supported by minimum wage increase, improving consumer environment, and strong execution. Affordability strategy in Colas delivered market share gains in the one-way portfolio. Digital capabilities through Juntos+ platform increased customer engagement.
    Unemployment rate: 8% in MayFlavors volume growth: 27.2%
    		—17.7%——
    Argentina
    Mainly reflected a truck driver strike and continued softness in consumer demand. Strategy focused on strengthening affordability and refining revenue growth management capabilities to preserve core sparkling portfolio affordability.
    CSD market share increase: 100 bps
    		—-2.8%——

    Operational metrics

    23
    Consolidated Volume
    1.1 billion+3.5%
    Q2 FY26

    Consolidated volume for the second quarter.

    Consolidated Revenue
    MXN 76.3 billion+4.7%
    Q2 FY26

    Total revenues for the quarter, driven by volume growth and revenue growth management initiatives, partially offset by unfavorable mix and currency translation.

    Consolidated Gross Margin
    47.1%+180 bps
    Q2 FY26

    Gross profit increased 8.8% to MXN 35.9 billion, leading to this margin expansion.

    Consolidated Operating Margin (reported)
    14%+60 bps
    Q2 FY26

    Operating income rose 9.1% to MXN 10.7 billion.

    Consolidated Operating Margin (ex-insurance recovery)
    13.6%+20 bps
    Q2 FY26

    Excluding the MXN 265 million insurance recovery in Brazil, operating income would have increased 6.4%.

    Consolidated Adjusted EBITDA (reported)
    MXN 15 billion+12.1%
    Q2 FY26

    Adjusted EBITDA for the quarter.

    Consolidated Adjusted EBITDA Margin (reported)
    19.7%+130 bps
    Q2 FY26

    Adjusted EBITDA margin for the quarter.

    Consolidated Adjusted EBITDA Margin (ex-insurance recovery)
    19.3%+90 bps
    Q2 FY26

    Excluding the effects of insurance claim, EBITDA margin expanded 90 basis points.

    Majority Net Income
    MXN 6.2 billion+16.9%
    Q2 FY26

    Majority net income grew 16.9%.

    Comprehensive Financial Result Expense
    MXN 1.3 billionvs MXN 1.2 billion expense in prior year
    Q2 FY26

    The increase was driven mainly by higher net interest expense and lower gain in financial instruments, partially offset by a higher foreign exchange gain.

    FY26 PET Hedging Coverage
    65%
    FY26

    Hedging coverage for PET requirements for the current year.

    FY26 Sugar Hedging Coverage
    96%
    FY26

    Hedging coverage for sugar requirements for the current year.

    FY26 HFCS Hedging Coverage
    98%
    FY26

    Hedging coverage for HFCS requirements for the current year.

    FY26 Aluminum Hedging Coverage
    73%
    FY26

    Hedging coverage for aluminum requirements for the current year.

    FY27 Sugar Hedging Coverage
    80%
    FY27

    Hedging coverage for sugar requirements for the upcoming year.

    FY27 HFCS Hedging Coverage
    80%
    FY27

    Hedging coverage for HFCS requirements for the upcoming year.

    FY27 Aluminum Hedging Coverage
    54%
    FY27

    Hedging coverage for aluminum requirements for the upcoming year.

    Mexico and Central America Operating FX Gain
    lowervs prior year
    Q2 FY26

    A lower operating foreign exchange gain compared with the prior year contributed to operating margin contraction in the division.

    Mexico and Central America Freight Expense
    20%increase vs prior year
    Q2 FY26

    Increase in freight expense impacting operating margin in the division.

    Mexico and Central America Marketing Expense
    9%higher
    Q2 FY26

    Higher marketing expense was the biggest factor impacting operating margin in the division, front-loaded to support World Cup initiatives.

    Colombia Unemployment Rate
    8%lowest since 2001
    May

    Unemployment declined to its lowest level for that month since 2001, indicating an improving consumer environment.

    Guatemala Remittances Growth
    7.5%YoY
    Q2 FY26

    Resilient remittances supported economic activity and household consumption in Guatemala.

    Guatemala Population Growth
    1.3%above broader Latin America average
    annually

    Favorable demographics with population increasing annually.

    Industry KPIs

    11
    MetricValueDetails
    Category brand share0.5 pointspoints
    EPS organic EPS growthMXN 6.2 billionMXN
    Gross operating margin47.1%%
    Organic revenue growth6.6%%
    Geographic regional mixMexico +1%%
    Unit case volume growth3.5%%
    Aluminum packaging cost impact—
    Freight logistics cost pressure20%%
    Energy functional category health23%%
    Pack architecture pricing actions28%%
    Cold drink equipment distribution reach78.8%%

    Product announcements

    2
    ProductTypeDetails
    Ciel as Frescaslaunch
    Monster new flavorslaunch

    Capital programs

    2
    New PET production lineinaugurated

    Benefit: enhanced manufacturing capabilities

    Recent inauguration of our new PET production line in Costa Rica, enhancing manufacturing capabilities and positioning to support future growth.

    New aluminum can lineinaugurated

    Benefit: enhanced manufacturing capabilities

    Recent inauguration of our new aluminum can line in Uruguay, enhancing manufacturing capabilities and positioning to support future growth.

    Risks & headwinds

    5
    Mexico excise tax increase and softer consumer environmentQ2 FY26, expected to remain subdued

    Mexico volumes increased only 1% YoY; operating margin contracted 110 bps in Mexico and Central America.

    Mitigation: Differentiated revenue management, reinforcing affordability (returnables), expanding Coca-Cola Zero, strengthening core flavors, innovation in underrepresented segments, digital execution (Juntos+).

    Argentina truck driver strike and soft consumer demandQ2 FY26

    Volume decreased 2.8% YoY.

    Mitigation: Strengthening affordability, refining revenue growth management capabilities, preserving core sparkling portfolio affordability, growing profitable NCB categories.

    Potential regulatory developments in Brazil (tax and labor law changes)2027

    Unquantified potential impact on costs and market dynamics.

    Mitigation: Closely monitoring developments; strategy will depend on magnitude of potential tax increase and labor law changes.

    Global commodity environment volatilityOngoing

    Spot prices for raw materials are very volatile, especially energy-related.

    Mitigation: Disciplined hedging strategy (e.g., 65% PET, 96% sugar, 98% HFCS, 73% aluminum hedged for FY26; 80% sugar, 80% HFCS, 54% aluminum for FY27).

    El Niño weather phenomenonAs the year progresses

    Historically positive for KOF overall, except for Southern Brazil and Argentina (more precipitation).

    Mitigation: No specific mitigation mentioned, but company notes historical impact and current lack of significant disruptions.

    What to watch in Q3 FY26

    5

    Mexico Volume Response to Price Adjustment

    Q3 FY26
    CurrentJune growth over 12%, full-year guidance moved to 'flattish'
    TargetPositive consumer digestion of inflation pass-through

    Why it matters

    This will indicate the effectiveness of the pricing strategy and the pace of recovery in the Mexican market.

    I would like to see the -- how volumes respond once we finished the August adjustment to recover inflation. So that's why I'm still keeping flattish, okay?

    Q&A highlights

    6

    How much of Monster's growth in Brazil is from household penetration versus geographic expansion, and how does it complement the portfolio?

    Monster's strong growth in Brazil is driven by portfolio innovation (new flavors) and capturing market share, complementing CSDs and sports drinks. Growth comes from improved coverage and household penetration, with tailwinds from GLP-1 and a shift to zero/no-cal offerings. Monster is performing well across all geographies.

    “Half of it volumes are now in so sure or no-cal offerings. So we only expect positive things from Monster. And it's really performing well across all geographies, not only in Brazil but everywhere.”

    asked by Alvaro Garcia · answered by Ian Marcel Craig García

    2 min read5 chapters

    Detailed Narrative

    01

    Venezuela Earthquake Response and FIFA World Cup Impact

    Coca-Cola FEMSA addressed the recent earthquakes in Venezuela, prioritizing support for employees and affected communities, including the donation of over 100,000 liters of water. The FIFA World Cup served as a significant brand-building platform across all territories, with a 360-degree plan that included promotions and special edition products. This initiative strengthened consumer engagement, translated into incremental demand, and reinforced brand momentum, achieving new highs in key Coca-Cola trademark brand engagement metrics.

    02

    Mexico's Strategic Response to Headwinds

    Despite headwinds from excise tax increases and a softer consumer environment, Mexico's strategy focused on sustainable growth and competitive positioning. Key pillars included a differentiated revenue management approach with improved relative pricing and expanded returnable/multi-serve presentations, continued expansion of the Coca-Cola Zero segment (24% growth), strengthening core flavors, and innovation in underrepresented segments like Ciel as Frescas. These efforts resulted in significant market share gains across all segments.

    03

    Digital Transformation Driving Commercial Execution

    The company's digital initiatives, particularly the Juntos+ platform in Mexico, maintained strong momentum, with digital sales representing 38% of traditional trade and 19% of total revenues. The Juntos Advisor platform, rolled out in Brazil and Mexico, is enhancing commercial execution by providing supervisors and frontline teams with better insights, suggested ordering capabilities, and improved assortment quality, leading to increased average ticket and stronger customer relationships.

    04

    Strong Performance and Margin Expansion in South America

    Brazil and Colombia delivered robust results, with Brazil's volumes increasing 5.2% and Colombia's by 17.7%. This growth was driven by disciplined commercial execution, digital capabilities, and capitalizing on opportunities like the FIFA World Cup. South America's gross margin expanded by 220 basis points and operating margin by 330 basis points, primarily due to operating leverage, expense efficiencies, and favorable raw material costs, indicating structural improvements in profitability.

    05

    Raw Material Hedging and Capital Allocation Priorities

    Coca-Cola FEMSA's disciplined hedging strategy for raw materials has provided stability, with 65% of PET, 96% of sugar, 98% of HFCS, and 73% of aluminum hedged for FY26. Initial hedges for FY27 are also in place for sugar, HFCS, and aluminum. The company's capital allocation priorities include investing in long-term profitable growth (CapEx 7-7.5% of revenues for FY26), pursuing M&A opportunities, and returning capital to shareholders, with a comprehensive review of alternatives underway.

    AI-generated summary of the company’s earnings call. Not investment advice.