Fomento Economico Mexicano S.A.
) first-quarter 2012 net income from continuing operation surged
13% to MXN 3,748 million ($288.2 million) from MXN 3,318 million
($274.4 million) in the year-ago period. The improved results were
primarily driven by an increase in comparable income from operation
and inclusion of 20% economic interest in Heineken Group.
Total revenue grew 25.2% year over year to MXN 53,746 million
($4,133.1 million). The increase was mainly attributable to revenue
growth at Coca-Cola FEMSA and FEMSA Comercio.
Total revenue at Coca-cola FEMSA grew 29.7% to MXN 33,542
million ($2,579.4 million) in the quarter, primarily driven by
increased per unit average price and volume growth in Venezuela,
Mexico and Argentina.
FEMSA Comercio registered a revenue growth of 18.1% to MXN
19,033 million ($1,463.6 million), mainly due to the opening of 138
net new stores in the quarter along with an increase of 8% in
same-store sales. Total net new stores came in at 1,078 in the past
FEMSA's gross profit recorded a growth of 26.3% year over year,
and gross margin expanded 30 basis points (bps) to 40.8%. The
increase was primarily driven by gross profit improvement at FEMSA
FEMSA posted a 10.1% year-over-year growth in operating income
to MXN 5,213 million ($400.9 million). However, operating income,
as a percentage of total revenue, decreased 90 basis points year
over year to 9.7%, primarily due to higher raw material cost
pressures at Coca-Cola Femsa.
At the end of the first quarter of fiscal 2012, the company had
cash and cash equivalents of MXN 27,249 million ($2,128.1 million)
compared with MXN 27,170 million ($1,940 million) at the end of
fiscal 2011. Long-term debt (including current maturities) at the
end of the quarter was MXN 23,929 million ($1,868.9 million),
reflecting a capitalization ratio of 11.7%.
FEMSA currently retains a Zacks #3 Rank, which translates into a
short-term 'Hold' rating. Moreover, we maintain a long-term
'Neutral' recommendation on the stock.
FOMENTO ECO-ADR (FMX): Free Stock Analysis
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