Fomento Economico Mexicano S.A.
) fourth-quarter 2011 net income from continuing operation surged
9.3% to MXN 7,111 million ($521.2 million) from MXN 6,503 million
($524.8 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 24.5% year over year to MXN 56,834 million
($4,165.9 million). The increase was mainly attributable to revenue
growth at Coca-Cola FEMSA and FEMSA Comercio.
Total revenue at Coca-cola FEMSA grew 29.3% to MXN 36,187
($2,625.5 million) million in the quarter, primarily driven by
increased per unit average price and volume growth in Brazil,
Mexico, Columbia and Argentina.
FEMSA Comercio registered a revenue growth of 1.6.9% to MXN
19,619 million ($1,438.1 million), mainly due to the opening of 413
net new stores in the quarter, reaching 1,135 net new stores in the
year 2011 along with an increase of 8% in same-store sales.
FEMSA's gross profit recorded a growth of 25.8% year over year,
and gross margin expanded 50 basis points (bps) to 43.1%. The
increase was primarily due to raw-material cost pressures at
Coca-Cola FEMSA, which was more than offset by the gross profit
improvement at FEMSA Comercio.
Operating expenses as a percentage of total revenue increased 50
basis points year over year to 27.5% primarily due to higher
expenses related to selling at Coca-Cola Femsa and FEMSA Comercio.
However, FEMSA posted a 24.9% year-over-year growth in operating
income to MXN 8,884 million ($651.2 million).
At the end of fiscal 2011, the company had cash and cash
equivalents of MXN 27,658 million ($2,232.0 million) compared with
MXN 27,163 million ($2,148.6 million) in the year-ago period.
Long-term debt (including current maturities) at the end of the
fiscal was MXN 28,129 million ($2,270.0 million), reflecting a
capitalization ratio of 12.8%.
FEMSA currently retains a Zacks #4 Rank, which translates to a
short-term 'Sell' rating. However, we maintain a long-term
'Neutral' recommendation on the stock.
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