Fomento Economico Mexicano S.A.B. de C.V. (FMX Quick QuoteFMX - Free Report) , alias FEMSA, reported fourth-quarter 2024 net majority earnings per ADS of 91 cents (Ps. 1.90 per FEMSA unit). The company posted adjusted net majority earnings per ADS of 46 cents, down from $1.70 in the year-ago quarter.

Net consolidated income was Ps. 10,961 million (US$525.6 million), reflecting a decline of 78.3% from the year-ago quarter.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Total revenues were US$9.99 billion (Ps. 208,311 million), which improved 12.8% 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.

Shares of this Zacks Rank #4 (Sell) company have risen 5.3% in the past three months compared with the industry’s 2.5% growth.

Image Source: Zacks Investment Research

Peeking Into FMX’s Q4 Margin Details

FEMSA’s gross profit rose 16.7% year over year to Ps. 90,906 million (US$4.36 billion). The consolidated gross margin expanded 140 basis points (bps), owing to the gross margin expansion in Health, Proximity Americas and Coca-Cola FEMSA, offset by margin declines in Fuel and Proximity Europe.

The company’s gross margin expanded 230 bps at Proximity Americas, 200 bps at the Health division and 100 bps at the Coca-Cola FEMSA segments. The gross margin was down 70 bps year over year in the Fuel and 150 bps at the Proximity Europe segment.

FEMSA’s operating income (income from operations) improved 31.5% year over year to Ps. 22,634 million (US$1.09 billion). The consolidated operating margin increased 160 bps to 10.9%, driven by growth across the Proximity Americas, Coca-Cola FEMSA and Health segments, partially offset by steady margins in Fuel and contraction in the Proximity Europe division.

FEMSA’s Q4 Segmental Performance

Proximity Americas: Total revenues for the segment rose 13.2% year over year to Ps. 80,992 million (US$3.9 billion). On an organic basis, revenues improved 8.1%. The company reported a 3.8% increase in same-store sales for Proximity Americas, driven by a 6.8% rise in average customer tickets, offset by a 2.8% store traffic decline.

The Proximity Americas division had 24,462 OXXO stores as of Dec. 31, 2024. Operating income improved 18.7% year over year. The segment's operating margin grew 50 bps to 11.7%, driven by a higher gross margin, slower growth in South America and controlled selling expenses due to cost containment and efficiency measures, along with more stable labor costs. However, this was partially offset by higher operating expenses from ongoing investments in commercial capabilities, including segmentation, revenue management and data analytics.

Proximity Europe: Total revenues for the segment grew 21.5% year over year to Ps. 13,870 million (US$665 million). The segment benefited from strong sales across all countries, driven by commercial capabilities and a significant boost from currency appreciation against the Mexican peso. The Proximity Europe division had 2,778 points of sale as of Dec. 31, 2024. Operating income for the segment rose 9.9% year over year and the operating margin contracted 50 bps to 4.7% on higher operating expenses, caused by elevated administrative expenses and challenging comparisons from the B2B foodservice business.

Health Division: The segment reported total revenues of Ps. 21,824 million (US$1.05 billion), up 13.3% year over year. Revenues were aided by growth in Colombia, Chile and Ecuador, partially offset by a challenging competitive landscape in Mexico. The segment’s store base reached 4,661 locations as of Dec. 31, 2024. Same-store sales rose 9.4% in the quarter. The operating income improved 109.7% year over year, while the operating margin expanded 250 bps to 5.5%.

Fuel Division: Total revenues rose 8% year over year to Ps. 16,331 million (US$783 million). Average same-station sales rose 9.7%, driven by a 4.4% increase in the average volume and a 5.1% rise in the average price per liter. The company had 571 OXXO Gas service stations as of Dec. 31, 2024. Operating income rose 6.9%, while the operating margin was flat at 4.6%.

Coca-Cola FEMSA: Total revenues for the segment advanced 14.3% year over year to Ps. 75,528 million (US$3.6 billion). Coca-Cola FEMSA’s consolidated operating income increased 25%. The segment’s operating margin expanded 140 bps to 16%.

FEMSA’s Financial Position

As of Dec. 31, 2024, FEMSA had cash and cash equivalents of Ps. 139,834 million (US$6.7 billion). The company’s long-term debt was Ps. 139,151 million (US$6.7 billion). In the fourth quarter of 2024, capital expenditure totaled Ps. 20,694 million (US$992.2 million), caused by increased investments in production and distribution capacity. In Proximity Americas, spending is focused on new store expansion, store remodeling and optimization, and enhancing commercial capabilities to improve the value proposition and customer experience.  

Stocks to Consider

We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Molson Coors Beverage Company (TAP Quick QuoteTAP - Free Report) , Primo Brands Corporation (PRMB Quick QuotePRMB - Free Report) and The Vita Coco Company Inc. (COCO Quick QuoteCOCO - Free Report) .

Molson Coors, a global manufacturer and seller of beer and other beverage products, has an impressive diverse portfolio of owned and partner brands. TAP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Molson Coors’ current financial-year sales and EPS indicates growth of 0.3% and 6.5%, respectively, from the prior-year levels. The company delivered a trailing four-quarter earnings surprise of 18.1%, on average.

Primo Brands is a branded beverage company with a focus on healthy hydration, delivering sustainably and domestically sourced diversified offerings across products, formats, channels, price points and consumer occasions, distributed primarily in every state and Canada. It presently flaunts a Zacks Rank #1.

The Zacks Consensus Estimate for Primo Brands’ current financial-year sales and EPS indicates growth of 147.2% and 54.5%, respectively, from the prior-year levels. PRMB delivered a trailing four-quarter earnings surprise of 7.2%, on average.

Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Vita Coco’s 2025 sales and EPS indicates growth of 11.3% and 18.6%, respectively, from the year-ago figures. COCO delivered a trailing four-quarter earnings surprise of 24.5%, on average.