SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2012

 

.

FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V.

(Exact name of Registrant as specified in its charter)

 

Mexican Economic Development, Inc.

(Translation of Registrant’s name into English)

 

United Mexican States

(Jurisdiction of incorporation or organization)

 

 

General Anaya No. 601 Pte.
Colonia Bella Vista
Monterrey, Nuevo León 64410
México

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports

under cover of Form 20-F or Form 40-F:

 

Form 20-F x     Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as

permitted by Regulation S-T Rule 101(b)(1): _______

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as

permitted by Regulation S-T Rule 101(b)(7): _______

 

Indicate by check mark whether by furnishing the information contained in this

Form, the registrant is also thereby furnishing the information to the

Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes ¨       No x

 

If "Yes" is marked, indicate below the file number assigned to the registrant in

connection with Rule 12g3-2(b): 82-_____________

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the

registrant has duly caused this report to be signed on its behalf of the

undersigned, thereunto duly authorized.

 

	FOMENTO ECONÓMICO MEXICANO, S.A. DE C.V.
	By:	/s/ Javier Astaburuaga
		Javier Astaburuaga Chief Financial Officer

 

Date: October 25, 2012

 

 

 

 

FEMSA Accelerates Double-Digit

Operating Income Growth in 3Q12

 

 

Monterrey, Mexico, October 25, 2012 — Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) announced today its operational and financial results for the third quarter of 2012 under International Financial Reporting Standards (“IFRS”).

  

Third Quarter 2012 Highlights:

 

·

FEMSA consolidated total revenues and income from operations grew 18.1% and 24.4%, respectively, compared to the third quarter of 2011, reflecting growth at Coca-Cola FEMSA and FEMSA Comercio. On an organic basis total revenues and income from operations grew 11.7% and 18.1%, respectively.

  

·

Coca-Cola FEMSA total revenues and income from operations increased 20.3% and 26.6%, respectively, compared to the third quarter of 2011. On an organic basis total revenues and income from operations grew 9.6% and 18.0%, respectively.

 

·

FEMSA Comercio achieved total revenues growth of 16.0% and income from operations growth of 24.3%, compared to the third quarter of 2011, driven by new store openings and 7.6% growth in same-store sales.

 

José Antonio Fernández Carbajal, Chairman and CEO of FEMSA, commented: “During the third quarter, we saw the performance trends for our two core operations converging in the best possible way. While Coca-Cola FEMSA experienced some margin pressure earlier in the year, in Q3 they were able to capitalize on stable volumes, solid pricing, and improving raw materials and foreign exchange dynamics that led them to achieve double-digit operating income growth. For its part, FEMSA Comercio maintained its brisk pace and grew operating income more than 24% on the back of consistent, balanced same-store sales growth and an ever-improving level of execution.

  

In terms of more strategic developments, we have made good progress in our analysis of the opportunity we face in the Philippines, and the process continues to move in the right direction.

 

And so, we are once more in the final stretch of a year that has brought us a combination of opportunities and challenges, and we are excited to approach the final couple of months of 2012 with strong momentum across our business units and across our markets.”

 

 

 

 

   

FEMSA Consolidated

  

Total revenues increased 18.1% compared to 3Q11 to Ps. 59.675 billion in 3Q12. Coca-Cola FEMSA and FEMSA Comercio drove the incremental consolidated revenues. On an organic basis total revenues increased 11.7% compared to 3Q11.

 

For the first nine months of 2012, consolidated total revenues increased 20.7% compared to the same period in 2011 to Ps. 173.178 billion. On an organic basis, total revenues for the first nine months of 2012 increased 14.7% compared to the same period in 2011.

 

Gross profit increased 20.5% compared to 3Q11 to Ps. 25.417 billion in 3Q12. Gross margin increased 90 basis points compared to the same period in 2011 to 42.6% of total revenues, driven by the margin expansion at Coca-Cola FEMSA and FEMSA Comercio.

 

For the first nine months of 2012, gross profit increased 22.2% compared to the same period in 2011 to Ps. 72.437 billion. Gross margin increased 50 basis points compared to the same period in 2011 to 41.8% of total revenues, driven by the margin expansion at FEMSA Comercio and Coca-Cola FEMSA.

 

Income from operations increased 24.4% as compared to 3Q11 to Ps. 7.383 billion in 3Q12. On an organic basis income from operations increased 18.1% compared to the same period in 2011. Consolidated operating margin increased 70 basis points compared to 3Q11 to 12.4% of total revenues in 3Q12, driven by the margin expansion at Coca-Cola FEMSA and FEMSA Comercio.

 

For the first nine months of 2012, income from operations increased 16.5% compared to the same period in 2011 to Ps. 19.313 billion. On an organic basis income from operations increased 11.0%. Our consolidated year-to-date operating margin was 11.2% as a percentage of total revenues, a decrease of 30 basis points as compared to the same period of 2011.

 

Net consolidated income increased 11.5% compared to 3Q11 to Ps. 6.654 billion in 3Q12, mainly as a result of growth in FEMSA’s income from operations and including the variation in FEMSA’s 20% participation in Heineken’s 3Q12 net income, versus the figure reported for 3Q11. These factors more than compensated for a swing from a significant foreign exchange gain in 3Q11 to a foreign exchange loss in 3Q12, mainly due to the effect of the devaluation of the Mexican Peso on the US Dollar-denominated component of our cash position in 3Q11. The effective income tax rate was 30.4% in 3Q12 compared to 32.1% in 3Q11.

 

For the first nine months of 2012, net consolidated income increased 16.5% to Ps. 15.869 billion compared to the same period of 2011, primarily as a result of growth in income from operations.

 

Net majority income for 3Q12 was Ps. 1.32 per FEMSA Unit¹. Net majority income per FEMSA ADS was US$ 1.03 for the third quarter of 2012. For the first nine months of 2012, net majority income per FEMSA Unit¹ was Ps. 3.07 (US$ 2.38 per ADS).

 

Capital expenditures amounted to Ps. 3.965 billion in 3Q12, reflecting incremental investments at Coca-Cola FEMSA and FEMSA Comercio.

 

Our consolidated balance sheet as of September 30, 2012 recorded a cash balance of Ps. 30.031 billion (US$ 2.335 billion), an increase of Ps. 2.861 billion (US$ 222.4 million) compared to December 31, 2011. Short-term debt was Ps. 1.663 billion (US$ 129.3 million), while long-term debt was Ps. 25.242 billion (US$ 1.962 billion). Our consolidated net cash balance was Ps. 3.126 billion (US$ 243.0 million).

 

_______________________

1

FEMSA Units consist of FEMSA BD Units and FEMSA B Units. Each FEMSA BD Unit is comprised of one Series B Share, two Series D-B Shares and two Series D-L Shares. Each FEMSA B Unit is comprised of five Series B Shares. The number of FEMSA Units outstanding as of September 30, 2012 was 3,578,226,270, equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

 

 

 

   

Coca-Cola FEMSA

 

Coca-Cola FEMSA’s financial results and discussion thereof are incorporated by reference from Coca-Cola FEMSA’s press release, which is attached to this press release or may be accessed by visiting www.coca-colafemsa.com.

 

 

FEMSA Comercio

 

Total revenues increased 16.0% compared to 3Q11 to Ps. 22.521 billion in 3Q12, mainly driven by the opening of 178 net new stores in the quarter, reaching 1,019 total net new store openings for the last twelve months. As of September 30, 2012, FEMSA Comercio had a total of 10,167 convenience stores. Same-store sales increased an average of 7.6% for the third quarter of 2012 over 3Q11, reflecting a 4.2% increase in average customer ticket and a 3.2% increase in store traffic.

 

For the first nine months of 2012, total revenues increased 17.0% compared to the same period in 2011 to Ps. 63.763 billion. FEMSA Comercio’s same-store sales increased an average of 7.8% compared to the same period in 2011, driven by a 4.2% increase in store traffic and a 3.4% increase in average customer ticket.

 

Gross profit increased by 18.4% in 3Q12 compared to 3Q11, resulting in a 70 basis point gross margin expansion to 34.9% of total revenues. This increase reflects (i) a positive mix shift due to the growth of higher margin categories, (ii) a more effective collaboration and execution with our key supplier partners, including our achievement of certain sales objectives with some of these partners, and the corresponding benefit accrued to us, (iii) a more efficient use of promotion-related marketing resources, and (iv) a better execution of segmented pricing strategies across markets.

 

For the first nine months of 2012, gross margin expanded by 70 basis points compared to the same period in 2011 to 34.0% of total revenues.

 

Income from operations increased 24.3% over 3Q11 to Ps. 1.758 billion in 3Q12. Operating expenses increased 16.7% in 3Q12 compared to 3Q11 to Ps. 6.104 billion, reflecting the growing number of stores as well as incremental expenses relating to, among other things, the continued strengthening of FEMSA Comercio’s organizational structure, and the development of specialized distribution routes aimed at enabling our prepared food initiatives. Operating margin expanded 50 basis points compared to 3Q11, to 7.8% of total revenues in 3Q12.

  

For the first nine months of 2012, income from operations increased 26.1% compared to the same period in 2011 to Ps. 4.388 billion, resulting in an operating margin of 6.9%, which represents a 50 basis point expansion from the same period in the prior year.

 

 

Recent Developments

 

• On September 24, 2012, FEMSA signed definitive agreements to sell its wholly-owned subsidiary Quimiproductos to Ecolab Inc. (NYSE: ECL). Quimiproductos manufactures and provides cleaning and sanitizing products and services related to food and beverage industrial processes, as well as water treatment. The transaction is consistent with FEMSA’s long-standing strategy to divest non-core assets. The operation is subject to certain conditions, including approval from the corresponding regulatory authorities, and is expected to close during the fourth quarter of 2012.

 

 

 

 

 

CONFERENCE CALL INFORMATION:
Our Third Quarter of 2012 Conference Call will be held on: Thursday October 25, 2012, 11:00 AM Eastern Time (10:00 AM Mexico City Time). To participate in the conference call, please dial: Domestic US: (888) 510-1765 International: (719) 457-2661, Conference Id: 6149810. The conference call will be webcast live through streaming audio. For details please visit www.femsa.com/investor.
If you are unable to participate live, the conference call audio will be available on http://ir.FEMSA.com/results.cfm

  

FEMSA is a leading company that participates in the beverage industry through Coca-Cola FEMSA, the largest bottler of Coca-Cola products in the world; in the retail industry through FEMSA Comercio, operating OXXO, the largest and fastest-growing chain of stores in Latin America, and in the beer industry, through its ownership of the second largest equity stake in Heineken, one of the world’s leading brewers with operations in over 70 countries.

 

The translations of Mexican Pesos into US Dollars are included solely for the convenience of the reader, using the noon day buying rate for Mexican Pesos as published by the Federal Reserve Bank of New York for September 30, 2012, which was 12.8630 Mexican Pesos per US Dollar.

 

 

FORWARD-LOOKING STATEMENTS

 

This report may contain certain forward-looking statements concerning our future performance that should be considered as good faith estimates made by us. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which could materially impact our actual performance.

  

Five pages of tables and Coca-Cola FEMSA’s press release follow.

 

 

 

 

FEMSA

Consolidated Income Statement

Millions of Pesos

 

		For the third quarter of:																								For the first nine months of:
		2012 (A)				% of rev.				2011				% of rev.				% Var.				% Org (B)				2012 (A)				% of rev.				2011				% of rev.				% Var.				% Org (B)
Total revenues			59,675				100.0				50,544				100.0				18.1				11.7				173,178				100.0				143,536				100.0				20.7				14.7
Cost of sales			34,258				57.4				29,446				58.3				16.3								100,741				58.2				84,261				58.7				19.6
Gross profit			25,417				42.6				21,098				41.7				20.5								72,437				41.8				59,275				41.3				22.2
Administrative expenses			2,258				3.8				1,990				3.9				13.5								7,253				4.2				5,883				4.1				23.3
Selling expenses			15,846				26.5				13,008				25.8				21.8								45,917				26.4				36,601				25.5				25.5
Other Operating expenses (income), net (1)			(70	)			(0.1	)			166				0.3				N.A.								(46	)			-				217				0.2				N.A.
Income from operations(2)			7,383				12.4				5,934				11.7				24.4				18.1				19,313				11.2				16,574				11.5				16.5				11.0
Other Non-Operating expenses (income)			(76	)							198								N.A.								187								347								(46.1	)
Interest expense			556								631								(11.9	)							1,743								1,648								5.8
Interest income			166								317								(47.6	)							530								779								(32.0	)
Foreign exchange loss (gain)			54								(1,158	)							N.A.								108								(871	)							N.A.
Other financial expenses (income), net.			22								272								(91.9	)							-								186								N.A.
Financing expenses, net			466								(572	)							N.A.								1,321								184								N.A.
Income before income tax an Participation in Heineken results			6,993								6,308								10.9								17,805								16,043								11.0
Income tax			2,127								2,022								5.2								5,042								5,198								(3.0	)
Participation in Heineken results(3)			1,788								1,682								6.3								3,106								2,780								11.7
Net consolidated income			6,654								5,968								11.5								15,869								13,625								16.5
Net majority income			4,725								4,639								1.9								10,970								9,782								12.1
Net minority income			1,929								1,329								45.1								4,899								3,843								27.5

 

		2012 (A)				% of rev.				2011				% of rev.				% Var.				% Org (B)				2012 (A)				% of rev.				2011				% of rev.				% Var.				% Org (B)
Operative Cash Flow & CAPEX
Income from operations			7,383				12.4				5,934				11.7				24.4				18.1				19,313				11.2				16,574				11.5				16.5				11.0
Depreciation			1,845				3.1				1,385				2.7				33.2								5,306				3.1				4,045				2.8				31.2
Amortization & other non-cash charges			300				0.5				309				0.7				(2.9	)							980				0.5				630				0.5				55.6
Operative Cash Flow (EBITDA)			9,528				16.0				7,628				15.1				24.9				17.8				25,599				14.8				21,249				14.8				20.5				13.9
CAPEX			3,965								2,944								34.7								9,273								7,257								27.8

 

Financial Ratios		2012 (A)				2011				Var. p.p.
Liquidity(4)			1.54				1.54				(0.00	)
Interest coverage(5)			24.43				24.29				0.14
Leverage(6)			0.37				0.36				0.01
Capitalization(7)			12.06	%			13.35	%			(1.29	)

 

 

(A)

We integrated the beverage divisions of Grupo Tampico, Grupo CIMSA and FOQUE in Coca-Cola FEMSA´s operations since October 2011, December 2011 and May 2012, respectively.

(B)

% Org. represents the variation in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability.

                             

(1)

Other Operating expenses (income), net = Other Operating expenses (income) +(-) Equity method from operated associates.

(2)

Income from operations = Gross profit - Administrative and selling expenses - Other operating expenses (income), net.

(3)

Represents the equity method participation in Heineken´s results, net.

(4)

Total current assets / total current liabilities.

(5)

Income from operations + depreciation + amortization & other / interest expense, net.

(6)

Total liabilities / total stockholders' equity.

(7)

Total debt / long-term debt + stockholders' equity.

Total debt = short-term bank loans + current maturities of long-term debt + long-term bank loans.

 

 

 

 

 

FEMSA

Consolidated Balance Sheet

Millions of Pesos

 

ASSETS		Sep-12				Dec-11				% Var.
Cash and cash equivalents			30,031				27,170				10.5
Accounts receivable			9,693				10,498				(7.7	)
Inventories			14,795				14,360				3.0
Other current assets			7,788				6,913				12.7
Total current assets			62,307				58,941				5.7
Investments in shares			76,943				78,643				(2.2	)
Property, plant and equipment, net			57,063				54,282				5.1
Intangible assets (1)			67,888				62,962				7.8
Other assets			7,831				7,054				11.0
TOTAL ASSETS			272,032				261,882				3.9
LIABILITIES & STOCKHOLDERS´ EQUITY
Bank loans			334				638				(47.7	)
Current maturities of long-term debt			1,329				4,935				(73.1	)
Interest payable			222				216				2.8
Operating liabilities			38,657				32,494				19.0
Total current liabilities			40,542				38,283				5.9
Long-term debt (2)			25,242				23,137				9.1
Labor liabilities			2,760				2,584				6.8
Other liabilities			5,594				5,885				(4.9	)
Total liabilities			74,138				69,889				6.1
Total stockholders’ equity			197,894				191,993				3.1
LIABILITIES AND STOCKHOLDERS’ EQUITY			272,032				261,882				3.9

 

		September 30, 2012
DEBT MIX (2)		% of Total				Average Rate
Denominated in:
Mexican pesos			57.8	%			6.8	%
Dollars			34.0	%			3.6	%
Colombian pesos			3.3	%			6.8	%
Argentine pesos			3.6	%			19.4	%
Brazilian Reais			1.3	%			9.0	%
Total debt			100.0	%			6.2	%
Fixed rate(2)			59.8	%
Variable rate(2)			40.2	%

 

% of Total Debt		2012				2013				2014				2015				2016				2017				2018+
DEBT MATURITY PROFILE			2.5	%			17.8	%			17.1	%			10.8	%			9.4	%			9.3	%			33.1	%

 

(1) Includes mainly the intangible assets generated by acquisitions.

(2) Includes the effect of derivative financial instruments on long-term debt.

 

 

 

 

 

Coca-Cola FEMSA

Results of Operations

Millions of Pesos

 

		For the third quarter of:																								For the first nine months of:
		2012 (A)				% of rev.				2011				% of rev.				% Var.				% Org (B)				2012 (A)				% of rev.				2011				% of rev.				% Var.				% Org (B)
Total revenues			36,193				100.0				30,077				100.0				20.3				9.6	%			106,202				100.0				85,894				100.0				23.6				13.6	%
Cost of sales			19,207				53.1				16,162				53.7				18.8								57,219				53.9				46,397				54.0				23.3
Gross profit			16,986				46.9				13,915				46.3				22.1								48,983				46.1				39,497				46.0				24.0
Administrative expenses			1,481				4.1				1,273				4.2				16.3								4,802				4.5				3,748				4.4				28.1
Selling expenses			10,102				27.8				8,136				27.1				24.2								29,733				28.0				22,848				26.6				30.1
Other Operating expenses (income), net			(84	)			(0.2	)			172				0.6				N.A.								(97	)			(0.1	)			211				0.2				N.A.
Income from operations			5,487				15.2				4,334				14.4				26.6				18.0	%			14,545				13.7				12,690				14.8				14.6				7.4	%
Depreciation			1,353				3.7				920				3.1				47.1								3,788				3.6				2,716				3.2				39.5
Amortization & other non-cash charges			150				0.4				244				0.8				(38.5	)							679				0.6				433				0.4				56.8
Operative Cash Flow			6,990				19.3				5,498				18.3				27.1				17.2	%			19,012				17.9				15,839				18.4				20.0				11.2	%
CAPEX			2,578								1,787								44.3								5,804								4,299								35.0
Sales volumes
(Millions of unit cases)
Mexico and Central America			478.1				63.0				366.7				56.8				30.4				1.5	%			1,395.0				62.5				1,100.5				57.4				26.8				1.2	%
South America			281.3				37.0				279.2				43.2				0.8				0.8	%			837.7				37.5				815.9				42.6				2.7				2.7	%
Total			759.4				100.0				645.9				100.0				17.6				1.2	%			2,232.7				100.0				1,916.4				100.0				16.5				1.8	%

 

(A)

We integrated the beverage divisions of Grupo Tampico, Grupo CIMSA and FOQUE in Coca-Cola FEMSA´s operations since October 2011, December 2011 and May 2012, respectively.

(B)

% Org. represents the variation in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability.

 

 

 

 

FEMSA Comercio

Results of Operations

Millions of Pesos

 

		For the third quarter of:																				For the first nine months of:
		2012				% of rev.				2011				% of rev.				% Var.				2012				% of rev.				2011				% of rev.				% Var.
Total revenues			22,521				100.0				19,410				100.0				16.0				63,763				100.0				54,493				100.0				17.0
Cost of sales			14,659				65.1				12,767				65.8				14.8				42,093				66.0				36,355				66.7				15.8
Gross profit			7,862				34.9				6,643				34.2				18.4				21,670				34.0				18,138				33.3				19.5
Administrative expenses			436				1.9				368				1.9				18.5				1,243				1.9				1,053				1.9				18.0
Selling expenses			5,661				25.2				4,821				24.8				17.4				16,012				25.2				13,559				24.9				18.1
Other Operating expenses (income), net			7				-				40				0.2				(82.5	)			27				-				45				0.1				(40.0	)
Income from operations			1,758				7.8				1,414				7.3				24.3				4,388				6.9				3,481				6.4				26.1
Depreciation			448				2.0				437				2.3				2.5				1,381				2.2				1,239				2.3				11.5
Amortization & other non-cash charges			90				0.4				79				0.3				13.9				207				0.3				157				0.2				31.8
Operative Cash Flow			2,296				10.2				1,930				9.9				19.0				5,976				9.4				4,877				8.9				22.5
CAPEX			1,296								1,133								14.4				3,143								2,774								13.3
			6,104								5,229								16.7	%
Information of OXXO Stores
Total stores																							10,167								9,148								11.1
Net new convenience stores			178								185								(3.8	)			1,019				(2	)			1,137				(2	)			(10.4	)
Same store data: (1)
Sales (thousands of pesos)			708.4								658.5								7.6				688.3								638.7								7.8
Traffic (thousands of transactions)			26.3								25.5								3.2				25.9								24.8								4.2
Ticket (pesos)			26.9								25.8								4.2				26.6								25.7								3.4

 

(1) Monthly average information per store, considering same stores with more than twelve months of operations.

(2) For the last twelve months for each period.

 

 

 

 

 

FEMSA

Macroeconomic Information

 

										End of period, Exchange Rates
		Inflation								Sep-12								Sep-11
		3Q 2012				LTM(1) September-12				Per USD				Per Mx. Peso				Per USD				Per Mx. Peso
Mexico			1.31	%			4.77	%			12.85				1.0000				13.42				1.0000
Colombia			0.31	%			3.08	%			1,800.52				0.0071				1,915.10				0.0070
Venezuela			3.71	%			18.02	%			4.30				2.9889				4.30				3.1213
Brazil			1.42	%			5.28	%			2.03				6.3292				1.85				7.2378
Argentina			2.59	%			10.01	%			4.70				2.7362				4.21				3.1918
Euro Zone			0.59	%			2.61	%			0.77				16.6300				0.73				18.3200

 

(1) LTM = Last twelve months

 

 

 

 

 

2012 SECOND-QUARTER AND FIRST SIX-MONTH RESULTS

			Third Quarter					YTD
			2012	2011	Reported Δ%	Excluding M&A Effects Δ%(5)		2012	2011	Reported Δ%	Excluding M&A Effects Δ%(5)
		Total Revenues	36,193	30,077	20.3%	9.6%		106,202	85,894	23.6%	13.6%
		Gross Profit	16,986	13,915	22.1%			48,983	39,497	24.0%
		Operating Income	5,487	4,334	26.6%	18.0%		14,545	12,690	14.6%	7.4%
		Net Controlling Interest Income	3,543	2,308	53.5%			8,923	7,364	21.2%
		Operative cash flow(1)	6,990	5,498	27.1%	17.2%		19,012	15,839	20.0%	11.2%
		Net Debt (2)	9,449	10,344	-8.7%
		Net Debt / Operative cash flow (3)	0.36	0.44
		Operative cash flow/ Interest Expense, net (3)	18.46	21.31
		Earnings per Share (3)	6.12	5.76
		Capitalization (4)	17.5%	20.5%
		Expressed in millions of Mexican pesos.
		(1)  Operative cash flow = Operating income + Depreciation + Amortization & Other operative Non-cash Charges.
		See reconciliation table on page 8 except for Earnings per Share
		(2)  Net Debt = Total Debt - Cash
		(3)  LTM figures
		(4)  Total debt / (long-term debt + shareholders' equity)
		(5)   Excluding M&A Effects means, with respect to a year-over-year comparison, the increase in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure,  management has used its best judgment, estimates and assumptions in order to maintain comparability.
		•  Reported total revenues reached Ps. 36,193 million in the third quarter of 2012, an increase of 20.3% as compared to the third quarter of 2011, mainly as a result of double-digit revenue growth in both divisions, including the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in our Mexican territories. Excluding the recently merged territories in Mexico, total revenues increased 9.6%.
		•  Reported consolidated operating income grew 26.6% to Ps. 5,487 million for the third quarter of 2012, driven by double-digit growth in both divisions and the integration of the new territories in Mexico. Our reported operating margin expanded 80 basis points to 15.2% in the third quarter of 2012. Excluding the recently merged territories, operating income grew 18.0%.
		•  The smooth integration of the recently merged territories in Mexico and the enhancement of the combined operational structure based on our integration plan have allowed us to increase the net synergy target from Ps. 800 million to Ps. 900 million, to be captured at the operative cash flow level as of 2014.
		•  Reported consolidated net controlling interest income grew 53.5% to Ps. 3,543 million in the third quarter of 2012.
		Mexico City (October 24, 2012), Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFL, NYSE: KOF) (“Coca-Cola FEMSA” or the “Company”), the largest franchise bottler in the world, announces results for the third quarter of 2012.
		"After facing a very tough commodity and volatile currency environment over the past several quarters, we look forward to a strong close of the year. Among our initiatives, we continue to introduce innovative products and packages, including the Fuze Tea brand, to build an even more robust non-carbonated beverage portfolio. We have rolled out our new commercial model across all of our franchise territories. We also continue to identify additional synergies in our newly merged territories, underscoring the proven capability of our operators to integrate new franchises efficiently and effectively. With our industry's increasing level of sophistication, our company continually develops new skills and abilities to rise to the occasion, transforming challenges into opportunities. Indeed, as we approach the final part of the year, we are confident that our company will continue to work towards meeting the business plan that we established at the beginning of the year, creating value for all of our shareholders," said Carlos Salazar Lomelin, Chief Executive Officer of the Company.

 

 

 

 

 

 

  

 

 

 

CONSOLIDATED RESULTS

 

Our reported total revenues increased 20.3% to Ps. 36,193 million in the third quarter of 2012, compared to the third quarter of 2011 as a result of double-digit total revenue growth in both divisions, including the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in our Mexican operations⁽¹⁾. Excluding the recently integrated territories in Mexico, total revenues grew 9.6%. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues grew 13.1%, driven by average price per unit case growth in every territory and volume growth mainly in Mexico, Venezuela, Brazil and Central America.

 

Reported total sales volume increased 17.6% to reach 759.4 million unit cases in the third quarter of 2012 as compared to the same period in 2011. Excluding the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico, volumes increased 1.2% to reach 653.6 million unit cases. On the same basis, the still beverage category grew 15.0%, mainly driven by the introduction of the Jugos del Valle line of business in Venezuela and a double-digit volume growth in this category in Mexico and Central America. In addition and excluding the newly merged territories, our sparkling beverage category grew low single-digits and our bottled water portfolio grew 7.4%. These increases compensated for a 2.4% decline in our bulk water business.

 

Our reported gross profit increased 22.1% to Ps. 16,986 million in the third quarter of 2012, as compared to the third quarter of 2011. Lower PET and sugar prices in most of our territories were partially compensated by the depreciation of the average exchange rate of the Brazilian real⁽²⁾, the Argentine peso⁽²⁾ and the Mexican peso⁽²⁾ as applied to our U.S. dollar-denominated raw material costs. Reported gross margin reached 46.9%, an expansion of 60 basis points as compared to the third quarter of 2011. Excluding the integration of the newly merged territories, gross margin expanded 90 basis points as compared with the third quarter of 2011.

 

Our reported operating income increased 26.6% to Ps. 5,487 million in the third quarter of 2012, driven by double-digit operating income growth in both divisions, and including the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico. Our reported operating margin reached 15.2% in the third quarter of 2012, as compared with 14.4% in the same period of 2011, an expansion of 80 basis points. Excluding the integration of the recently merged territories in Mexico, operating income increased 18.0%. On the same basis, operating expenses increased in the third quarter of 2012, mainly as a result of (i) higher labor costs in Venezuela, (ii) higher labor and freight costs in Argentina and Brazil, (iii) additional expenses related to the development of information systems and commercial capabilities in connection with our commercial models and (iv) certain investments related, among others, to the development of new lines of business and categories. Excluding the recently merged territories, operating margin expanded 110 basis points as compared with third quarter of 2011.

 

Our comprehensive financing result in the third quarter of 2012 recorded an expense of Ps. 20 million as compared to an expense of Ps. 355 million in the same period of 2011. This difference was mainly driven by a foreign exchange gain as a result of the quarterly appreciation⁽³⁾ of the Mexican peso as applied to a higher US dollar-denominated net debt position.

 

During the third quarter of 2012, income tax, as a percentage of income before taxes, was 31.8% as compared to 35.1% in the same period of 2011. The difference was mainly driven by the recording of a tax on shareholders equity in our Colombian subsidiary during the third quarter of 2011.

 

Our reported consolidated net controlling interest income grew 53.5% to Ps. 3,543 million in the third quarter of 2012. Earnings per share (EPS) in the third quarter of 2012 were Ps. 1.74 (Ps. 17.45 per ADS) computed on the basis of 2,030.5 million shares (each ADS represents 10 local shares).

 

 

 

 

 

 

 

 

(1) Our Mexican operations include Grupo Tampico’s results as of October, 2011, Grupo CIMSA’s results as of December, 2011 and Grupo Fomento Queretano’s results as of May, 2012

(2) See page 12 for average and end of period exchange rates for the third quarter and first nine months of 2012

(3) This calculation is performed using the end-of-period exchange rate as of September 2012 as compared with the end-of-period exchange rate as of June 2012

 

 

 

 

 

BALANCE SHEET

 

As of September 30, 2012, we had a cash balance of Ps. 11,163 million, including US$ 280 million denominated in U.S. dollars, a decrease of Ps. 1,010 million compared to December 31, 2011. This difference was mainly driven by the payment at maturity of one of our Certificados Bursátiles in the amount of Ps. 3,000 million during March, 2012 and the payment of our dividend in the amount of Ps. 5,625 million during May, 2012; net of the cash generated by our operations and debt assumed during the second quarter of 2012.

 

As of September 30, 2012, total short-term debt was Ps. 1,606 million and long-term debt was Ps. 19,006 million. Total debt decreased by Ps. 1,905 million, compared to year end 2011. Net debt decreased Ps. 895 million compared to year end 2011. The Company’s total debt balance includes U.S. dollar-denominated debt in the amount of US$ 715 million.

 

The weighted average cost of debt for the quarter was 6.1%. The following charts set forth the Company’s debt profile by currency and interest rate type and by maturity date as of September 30, 2012.

 

Currency		% Total Debt				% Interest Rate Floating(1)(2)
Mexican pesos			46.2	%			29.9	%
U.S. dollars			44.5	%			9.4	%
Colombian pesos			4.3	%			100.0	%
Brazilian reals			0.4	%			0.0	%
Argentine pesos			4.7	%			14.8	%

(1)

After giving effect to interest rate swaps

(2)

Calculated by weighting each year’s outstanding debt balance mix

 

Debt Maturity Profile

 

Maturity Date		2012				2013				2014				2015				2016				2017+
% of Total Debt			3.0	%			6.1	%			21.6	%			13.8	%			12.1	%			43.4	%

 

Consolidated Cash Flow

 

Starting the third quarter of 2012, Coca-Cola FEMSA encourages the reader to refer to the cash flow statement contained in our quarterly filing to the Mexican Stock Exchange (Bolsa Mexicana de Valores or BMV) for more detailed information. This cash flow is available at www.bmv.com.mx in the Información Financiera section for Coca-Cola FEMSA (KOF).

 

We would like to remind the reader that the cash flow statement is presented on a historical basis, whereas the balance sheet is presented in nominal terms. Certain differences resulting from calculations performed with the information contained in the balance sheet may differ from items shown in the cash flow statement. These differences are presented separately as a part of the Translation Effect in the cash flow statement in accordance with International Financial Reporting Standards.

 

 

 

 

  

MEXICO & CENTRAL AMERICA DIVISION OPERATING RESULTS (Mexico, Guatemala, Nicaragua, Costa Rica and Panama)

 

Coca-Cola FEMSA is including the results of Grupo Tampico as of October 2011, Grupo CIMSA as of December 2011and Grupo Fomento Queretano as of May 2012 in the Company’s Mexico & Central America divisions’ operating results.

 

Revenues

Reported total revenues from our Mexico and Central America division increased 34.8% to Ps. 16,899 million in the third quarter of 2012, as compared to the same period in 2011, supported by the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in our Mexican operations⁽¹⁾. Excluding the recently integrated territories in Mexico, total revenues grew 9.0%. On the same basis, increased average price per unit case, mainly reflecting selective price increases across our product portfolio, implemented over the past several months, accounted for almost 85% of incremental revenues. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues increased 8.0%.

 

Reported total sales volume increased 30.4% to 478.1 million unit cases in the third quarter of 2012, as compared to the third quarter of 2011. Excluding the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico, volumes increased 1.5% to 372.2 million unit cases. On the same basis, the sparkling beverage category grew 1.7% driven by a 2% growth of the Coca-Cola brand and the performance of the Sidral Mundet brand in Mexico. Still beverages grew 11.6% mainly driven by the Jugos del Valle line of products in Mexico, the performance of Powerade and Fuze Tea in the division and the incorporation of the Estrella Azul portfolio in Central America. Our bottled water portfolio grew 5.6%. These increases compensated for the 4.5% decline in the bulk water business.

 

Operating Income

 

Our reported gross profit increased 34.3% to Ps. 8,058 million in the third quarter of 2012 as compared to the same period in 2011. Lower PET and sugar prices were partially offset by the depreciation of the average exchange rate of the Mexican peso⁽²⁾ as applied to our U.S. dollar-denominated raw material costs. Reported gross margin reached 47.7% in the third quarter of 2012, as compared with 47.9% in the same period of the previous year. Excluding the integration of the newly merged territories, gross margin expanded 50 basis points as compared with the third quarter of 2011.

 

Reported operating income increased 44.0% to Ps. 2,694 million in the third quarter of 2012, compared to Ps. 1,871 million in the same period of 2011. Our reported operating margin was 15.9% in the third quarter of 2012, as compared with 14.9% in the same period of 2011, an expansion of 100 basis points. Excluding the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico, operating income increased 23.9%. On the same basis, operating expenses increased mainly as a result of (i) additional expenses related to the development of information systems and commercial capabilities in connection with our commercial models and (ii) certain investments related, among others, to the development of new lines of business and categories. Excluding the recently merged territories, operating margin expanded 210 basis points as compared with the third quarter of 2011.

 

 

 

 

 

 

(1) Our Mexican operations include Grupo Tampico’s results as of October, 2011, Grupo CIMSA’s results as of December, 2011 and Grupo Fomento Queretano’s results as of May, 2012

(2) See page 12 for average and end of period exchange rates for the third quarter and first nine months of 2012

  

 

 

 

 

SOUTH AMERICA DIVISION OPERATING RESULTS (Colombia, Venezuela, Brazil and Argentina)

  

Volume and average price per unit case exclude beer results.

 

Revenues

 

Reported total revenues were Ps. 19,294 million in the third quarter of 2012, an increase of 10.0% as compared to the same period of 2011 mainly as a result of double-digit total revenue growth in Venezuela, Argentina and Colombia, and despite the negative translation effect as a result of the devaluation of the Brazilian real⁽¹⁾. Excluding beer, which accounted for Ps. 963 million during the quarter, revenues increased 10.4% to Ps. 18,331 million. Excluding beer, higher average prices per unit case across our operations accounted for close to 95% of incremental revenues. On a currency neutral basis, total revenues increased 16.8%.

 

Reported total sales volume in our South America division increased 0.8% to 281.3 million unit cases in the third quarter of 2012 as compared to the same period of 2011, as a result of volume growth in Venezuela and Brazil, and flat volumes in Argentina and Colombia. The still beverage category grew 21.1%, mainly driven by the introduction of the Jugos del Valle line of business in Venezuela and its continued success in Brazil. Our water portfolio, including bulk water, grew 9.9%. This increases compensated for a slight decrease in our sparkling beverage category.

 

Operating Income

Reported gross profit reached Ps. 8,928 million, an increase of 12.8% in the third quarter of 2012, as compared to the same period of 2011. Lower cost of PET and sugar across the division were partially offset by the depreciation of the average exchange rate of the Brazilian real⁽¹⁾ and the Argentine peso⁽¹⁾ as applied to our U.S. dollar-denominated raw material costs. Reported gross margin reached 46.3% in the third quarter of 2012, an expansion of 120 basis points as compared to the same period of 2011.

 

Our reported operating income increased 13.4% to Ps. 2,793 million in the third quarter of 2012, compared to the same period of 2011. Reported operating expenses increased 14.7%, mainly as a result of higher labor costs in Venezuela, in combination with higher labor and freight costs in Argentina and Brazil. Our reported operating margin was 14.5% in the third quarter of 2012, an expansion of 50 basis points, as compared with the same period of 2011.

 

 

 

 

 

 

 

(1) See page 12 for average and end of period exchange rates for the third quarter and first nine months of 2012

  

 

 

 

 

SUMMARY OF NINE-MONTH RESULTS

 

Our reported consolidated total revenues increased 23.6% to Ps. 106,202 million in the first nine months of 2012, as compared to the same period of 2011, as a result of double-digit total revenue growth in both divisions, including the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in our Mexican operations.⁽¹⁾ Excluding the recently integrated territories in Mexico, total revenues grew 13.6%. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues increased 14.3% in the first nine months of 2012.

 

Reported total sales volume increased 16.5% to 2,232.7 million unit cases in the first nine months of 2012, as compared to the same period in 2011. Excluding the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico, volumes grew 1.8% to 1,950.9 million unit cases. On the same basis, the sparkling beverage category grew 1.7%, driven by growth of the Coca-Cola brand and a 4% growth in flavored sparkling beverages. In addition and excluding the newly merged territories, the still beverage category grew 13.3%, mainly driven by the performance of the Jugos del Valle line of business across our territories, the continued growth of Powerade, and the successful launch of Fuze Tea. Our bottled water portfolio grew 3.2%. These increases more than compensated for a 4.3% decline in our bulk water business.

 

Our reported gross profit increased 24.0% to Ps. 48,983 million in the first nine months of 2012, as compared to the same period of 2011. Lower PET costs were partially compensated by higher sweetener prices in most of our territories in combination with the depreciation of the average exchange rate of the Brazilian real,⁽²⁾ the Mexican peso⁽²⁾ and the Argentine peso⁽²⁾ as applied to our U.S. dollar-denominated raw material costs. Reported gross margin reached 46.1%, a 10 basis points expansion as compared to the same period of 2011.

 

Our reported consolidated operating income increased 14.6% to Ps. 14,545 million in the first nine months of 2012, as compared to the same period of 2011, mainly driven by double-digit operating income growth in both divisions, including the integration of Grupo Tampico, Grupo CIMSA and Grupo Fomento Queretano in Mexico. Our reported operating margin was 13.7% for the first nine months of 2012, as compared to 14.8% in the same period of 2011. Excluding the integration of the recently merged territories in Mexico, operating income grew 7.4%. On the same basis, operating expenses increased mainly as a result of (i) higher labor costs in Venezuela, and higher labor and freight costs in Argentina and Brazil, (ii) continued marketing investment to reinforce our execution in the marketplace, widen our cooler coverage and broaden our returnable base availability across our territories, (iii) additional expenses related to the development of information systems and commercial capabilities in connection with our commercial models and (iv) certain investments related, among others, to the development of new lines of business and categories.

 

Our consolidated net controlling interest income increased 21.2 % to Ps. 8,923 million in the first nine months of 2012 as compared to the same period of 2011. Earnings per share (EPS) in the first nine months of 2012 were Ps. 4.44 (Ps. 44.38 per ADS) computed on the basis of 2,010.5 million shares⁽³⁾ outstanding (each ADS represents 10 local shares).

 

 

 

 

 

 

 

 

(1) Our Mexican operations include Grupo Tampico’s results as of October, 2011, Grupo CIMSA’s results as of December, 2011 and Grupo Fomento Queretano’s results as of May, 2012

(2) See page 12 for average and end of period exchange rates for the third quarter and first nine months of 2012

(3) According to International Financial Reporting Standards (IFRS), Earnings Per Share is computed on the basis of the weighted-average number of shares outstanding during the period. The weighted average number of shares is calculated based on the number of days within a reporting period that each share was outstanding, divided by the full length of that reporting period

  

 

 

 

 

RECENT DEVELOPMENTS

 

•

As of September 3, 2012, as a consequence of the increased liquidity of the KOF series L shares in the Mexican market, Coca-Cola FEMSA was included in the IPC Index of the Bolsa Mexicana de Valores (“BMV”). The BMV, based on its new methodology, ranked KOF as number 11 out of the 35 companies included in this Index, with a weight of 2.84% of the new sample.

•

During the second quarter of 2012, as a consequence of a change in the Labor Law in Venezuela and its changes to labor tenure, among other areas, we registered a one-time provision, which was included in our other net non-operating expenses line. All corporations with operations in Venezuela and reporting under IFRS are in the process of calculating the potential liability as of December 31, 2012 based on an actuarial method determined by these accounting standards.

 

CONFERENCE CALL INFORMATION

 

Our third-quarter 2012 Conference Call will be held on October 24, 2012, at 12:00 P.M. Eastern Time (11:00 A.M. Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 800-299-6183 or International: 617-801-9713. We invite investors to listen to the live audiocast of the conference call on the Company’s website, www.coca-colafemsa.com

 

If you are unable to participate live, an instant replay of the conference call will be available through October 30, 2012. To listen to the replay, please dial: Domestic U.S.: 888-286-8010 or International: 617-801-6888. Pass code: 27299261.

 

 

 

v v v

 

 

 

Coca-Cola FEMSA, S.A.B. de C.V. produces and distributes Coca-Cola, Fanta, Sprite, Del Valle, and other trademark beverages of The Coca-Cola Company in Mexico (a substantial part of central Mexico, including Mexico City, as well as southeast and northeast Mexico), Guatemala (Guatemala City and surrounding areas), Nicaragua (nationwide), Costa Rica (nationwide), Panama (nationwide), Colombia (most of the country), Venezuela (nationwide), Brazil (greater São Paulo, Campiñas, Santos, the state of Mato Grosso do Sul, part of the state of Goias, and part of the state of Minas Gerais), and Argentina (Buenos Aires and surrounding areas), along with bottled water, juices, teas, isotonics, beer, and other beverages in some of these territories. The Company has 37 bottling facilities in Latin America and serves close to 1,800,000 retailers in the region.

 

 

 

v v v

 

 

 

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance, which should be considered as good faith estimates by Coca-Cola FEMSA. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, many of which are outside Coca-Cola FEMSA’s control, which could materially impact the Company’s actual performance.

 

References herein to “US$” are to United States dollars. This news release contains translations of certain Mexican peso amounts into U.S. dollars for the convenience of the reader. These translations should not be construed as representations that Mexican peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.

 

 

 

v v v

 

 

 

(5 pages of tables to follow)

 

 

 

 

 

 

 

Consolidated Income Statement

Expressed in millions of Mexican pesos(1)

 

		3Q 12				% Rev				3Q 11				% Rev				Reported Δ%				Excluding M&A Effects Δ%(5)				YTD 12				% Rev				YTD 11				% Rev				Reported Δ%				Excluding M&A Effects Δ%(5)
Volume (million unit cases) (2)			759.4								645.9								17.6	%			1.2	%			2,232.7								1,916.4								16.5	%			1.8	%
Average price per unit case (2)			46.18								44.89								2.9	%			8.5	%			46.01								43.22								6.4	%			11.7	%
Net revenues			36,033								29,936								20.4	%							105,621								85,500								23.5	%
Other operating revenues			160								141								13.5	%							581								394								47.5	%
Total revenues			36,193				100	%			30,077				100	%			20.3	%			9.6	%			106,202				100	%			85,894				100	%			23.6	%			13.6	%
Cost of goods sold			19,207				53.1	%			16,162				53.7	%			18.8	%							57,219				53.9	%			46,397				54.0	%			23.3	%
Gross profit			16,986				46.9	%			13,915				46.3	%			22.1	%							48,983				46.1	%			39,497				46.0	%			24.0	%
Operating expenses			11,583				32.0	%			9,409				31.3	%			23.1	%							34,535				32.5	%			26,596				31.0	%			29.9	%
Other operative expenses, net			(84	)			-0.2	%			172				0.6	%			-148.8	%							(97	)			-0.1	%			211				0.2	%			-146.0	%
Operating income (3)			5,487				15.2	%			4,334				14.4	%			26.6	%			18.0	%			14,545				13.7	%			12,690				14.8	%			14.6	%			7.4	%
Other non operative expenses, net			87								99								-12.1	%							576								211								173.0	%
Interest expense			425								460								-7.6	%							1,344								1,204								11.6	%
Interest income			68								201								-66.2	%							269								445								-39.6	%
Interest expense, net			357								259								37.8	%							1,075								759								41.6	%
Foreign exchange gain			(355	)							(188	)							88.8	%							(430	)							(107	)							301.9	%
(Gain) loss on monetary position in Inflationary subsidiries			(4	)							3								-233.3	%							(20	)							(22	)							-9.1	%
Market value loss on ineffective portion of
derivative instruments			22								281								-92.2	%							10								234								-95.7	%
Comprehensive financing result			20								355								-94.4	%							635								864								-26.5	%
Income before taxes			5,380								3,880								38.7	%							13,334								11,615								14.8	%
Income taxes			1,712								1,362								25.7	%							4,036								3,823								5.6	%
Consolidated net income			3,668								2,518								45.7	%							9,298								7,792								19.3	%
Net controlling interest income			3,543				9.8	%			2,308				7.7	%			53.5	%							8,923				8.4	%			7,364				8.6	%			21.2	%
Net non-controlling interest income			125								210								-40.5	%							375								428								-12.4	%
Operating income (3)			5,487				15.2	%			4,334				14.4	%			26.6	%			18.0	%			14,545				13.7	%			12,690				14.8	%			14.6	%			7.4	%
Depreciation			1,353								920								47.1	%							3,788								2,716								39.5	%
Amortization and other operative non-cash charges			150								244								-38.5	%							679								433								56.8	%
Operative cash flow (3)(4)			6,990				19.3	%			5,498				18.3	%			27.1	%			17.2	%			19,012				17.9	%			15,839				18.4	%			20.0	%			11.2	%

 

(1)

Except volume and average price per unit case figures

(2)

Sales volume and average price per unit case exclude beer results

(3)

The Operating income and Operative cash flow lines are presented as non-gaap measures for the convenience of the reader

(4)

Operative cash flow = Operating Income + depreciation, amortization & other operative non-cash charges

(5)

Excluding M&A Effects means, with respect to a year-over-year comparison, the increase in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability

As of October 2011, we integrated Grupo Tampico in the operations of Mexico

As of December 2011, we integrated Grupo CIMSA in the operations of Mexico

As of May 2012, we integrated Grupo Fomento Queretano in the operations of Mexico

 

 

 

 

 

Consolidated Balance Sheet

Expressed in millions of Mexican pesos.

 

Assets		Sep 12				Dec 11
Current Assets
Cash, cash equivalents and marketable securities		Ps.	11,163			Ps.	12,173
Total accounts receivable			7,814				8,631
Inventories			8,143				7,549
Other current assets			4,161				3,685
Total current assets			31,281				32,038
Property, plant and equipment
Property, plant and equipment			66,909				64,514
Accumulated depreciation			(27,868	)			(26,703	)
Total property, plant and equipment, net			39,041				37,811
Other non-current assets			75,825				70,467
Total Assets		Ps.	146,147			Ps.	140,316
Liabilities and Equity			Sep 12				Dec 11
Current Liabilities
Short-term bank loans and notes		Ps.	1,606			Ps.	5,541
Suppliers			12,189				11,852
Other current liabilities			9,193				7,697
Total Current Liabilities			22,988				25,090
Long-term bank loans			19,006				16,976
Other long-term liabilities			5,098				5,354
Total Liabilities			47,092				47,420
Equity
Non-controlling interest			2,712				3,053
Total controlling interest			96,343				89,843
Total equity			99,055				92,896
Liabilities and Equity		Ps.	146,147			Ps.	140,316

 

The financial information regarding 2011 figures may differ from the financial information

presented under International Financial Reporting Standards (“IFRS”) in the document released

on March 29, 2012, which contained unaudited information.

 

 

 

 

 

Mexico & Central America Division

Expressed in millions of Mexican pesos(1)

 

		3Q 12				% Rev				3Q 11				% Rev				Reported Δ%				Excluding M&A Effects Δ%(4)				YTD 12				% Rev				YTD 11				% Rev				Reported Δ%				Excluding M&A Effects Δ%(4)
Volume (million unit cases)			478.1								366.7								30.4	%			1.5	%			1,395.0								1,100.5								26.8	%			1.2	%
Average price per unit case			35.18								34.05								3.3	%			7.3	%			34.91								33.69								3.6	%			7.1	%
Net revenues			16,822								12,486								34.7	%							48,695								37,077								31.3	%
Other operating revenues			77								46								67.4	%							290								108								168.5	%
Total revenues			16,899				100.0	%			12,532				100.0	%			34.8	%			9.0	%			48,985				100.0	%			37,185				100.0	%			31.7	%			8.6	%
Cost of goods sold			8,841				52.3	%			6,533				52.1	%			35.3	%							25,764				52.6	%			19,197				51.6	%			34.2	%
Gross profit			8,058				47.7	%			5,999				47.9	%			34.3	%							23,221				47.4	%			17,988				48.4	%			29.1	%
Operating expenses			5,385				31.9	%			4,004				32.0	%			34.5	%							15,963				32.6	%			11,763				31.6	%			35.7	%
Other operative expenses, net			(21	)			-0.1	%			124				1.0	%			-116.9	%							15				0.0	%			138				0.4	%			-89.1	%
Operating income (2)			2,694				15.9	%			1,871				14.9	%			44.0	%			23.9	%			7,243				14.8	%			6,087				16.4	%			19.0	%			3.9	%
Depreciation, amortization & other operative non-cash charges			841				5.0	%			606				4.8	%			38.8	%							2,327				4.8	%			1,547				4.2	%			50.4	%
Operative cash flow (2)(3)			3,535				20.9	%			2,477				19.8	%			42.7	%			20.8	%			9,570				19.5	%			7,634				20.5	%			25.4	%			7.0	%

 

(1)

Except volume and average price per unit case figures

(2)

The Operating income and Operative cash flow lines are presented as non-gaap measures for the convenience of the reader

(3)

Operative cash flow = Operating Income + Depreciation, amortization & other operative non-cash charges

(4)

Excluding M&A Effects means, with respect to a year-over-year comparison, the increase in a given measure excluding the effects of mergers, acquisitions and divestitures. We believe this measure allows us to provide investors and other market participants with a better representation of the performance of our business. In preparing this measure, management has used its best judgment, estimates and assumptions in order to maintain comparability

As of October 2011, we integrated Grupo Tampico in the operations of Mexico

As of December 2011, we integrated Grupo CIMSA in the operations of Mexico

As of May 2012, we integrated Grupo Fomento Queretano in the operations of Mexico

 

  

South America Division

Expressed in millions of Mexican pesos(1)

 

		3Q 12				% Rev				3Q 11				% Rev				Δ%								YTD 12				% Rev				YTD 11				% Rev				Δ%
Volume (million unit cases) (2)			281.3								279.2								0.8	%							837.7								815.9							2.7%
Average price per unit case (2)			64.87								59.14								9.7	%							64.49								56.08							15.0%
Net revenues			19,211								17,450								10.1	%							56,926								48,423							17.6%
Other operating revenues			83								95								-12.6	%							291								286							1.7%
Total revenues			19,294				100.0	%			17,545				100.0	%			10.0	%							57,217				100.0	%			48,709				100.0	%		17.5%
Cost of goods sold			10,366				53.7	%			9,629				54.9	%			7.7	%							31,455				55.0	%			27,200				55.8	%		15.6%
Gross profit			8,928				46.3	%			7,916				45.1	%			12.8	%							25,762				45.0	%			21,509				44.2	%		19.8%
Operating expenses			6,198				32.1	%			5,405				30.8	%			14.7	%							18,572				32.5	%			14,833				30.5	%		25.2%
Other operative expenses, net			(63	)			-0.3	%			48				0.3	%			-231.3	%							(112	)			-0.2	%			73				0.1	%		-253.4%
Operating income (3)			2,793				14.5	%			2,463				14.0	%			13.4	%							7,302				12.8	%			6,603				13.6	%		10.6%
Depreciation, amortization & other operative non-cash charges			662				3.4	%			558				3.2	%			18.6	%							2,140				3.7	%			1,602				3.3	%		33.6%
Operative cash flow (3)(4)			3,455				17.9	%			3,021				17.2	%			14.4	%							9,442				16.5	%			8,205				16.8	%		15.1%

 

⁽¹⁾ Except volume and average price per unit case figures

⁽²⁾ Sales volume and average price per unit case exclude beer results

⁽³⁾ The Operating income and Operative cash flow lines are presented as non-gaap measures for the convenience of the reader  

⁽⁴⁾ Operative cash flow = Operating Income + depreciation, amortization & other operative non-cash charges

  

 

 

 

 

SELECTED INFORMATION

For the three months ended September 30, 2012 and 2011

Expressed in millions of Mexican pesos

 

					3Q 12						3Q 11
	Capex				2,578.0		Capex				1,786.7
	Depreciation				1,353.0		Depreciation				920.0
	Amortization & Other non-cash charges				150.0		Amortization & Other non-cash charges				244.0
				581.9

 

VOLUME

Expressed in million unit cases

 

	3Q 12						3Q 11
	Sparkling	Water (1)	Bulk Water (2)	Still	Total		Sparkling	Water (1)	Bulk Water (2)	Still	Total
Mexico	318.8	20.6	79.7	22.7	441.8		248.0	15.1	52.0	16.2	331.3
Central America	30.8	1.8	0.1	3.6	36.3		30.5	1.6	0.1	3.2	35.4
Mexico & Central America	349.6	22.4	79.8	26.3	478.1		278.5	16.7	52.1	19.4	366.7
Colombia	46.8	5.4	7.5	4.2	63.9		48.3	4.7	7.1	4.1	64.2
Venezuela	45.8	2.4	0.7	3.4	52.3		47.2	2.2	0.5	1.2	51.1
Brazil	103.0	6.2	0.7	5.7	115.6		103.3	5.5	0.4	5.3	114.5
Argentina	44.7	2.5	0.2	2.1	49.5		44.3	2.7	0.2	2.2	49.4
South America	240.3	16.5	9.1	15.4	281.3		243.1	15.1	8.2	12.8	279.2
Total	589.9	38.9	88.9	41.7	759.4		521.6	31.8	60.3	32.2	645.9

 

(1) Excludes water presentations larger than 5.0 Lt ; includes flavored water

(2) Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations; includes flavored water

 

 

SELECTED INFORMATION

For the nine months ended September 30, 2012 and 2011

Expressed in millions of Mexican pesos

 

					YTD 12						YTD 11
	Capex				5,803.7		Capex				4,299.2
	Depreciation				3,788.0		Depreciation				2,716.0
	Amortization & Other non-cash charges				679.0		Amortization & Other non-cash charges				433.0
				203.6					978.5

 

VOLUME

Expressed in million unit cases

 

	YTD 12						YTD 11
	Sparkling	Water (1)	Bulk Water (2)	Still	Total		Sparkling	Water (1)	Bulk Water (2)	Still	Total
Mexico	918.5	65.3	233.4	66.7	1,283.9		730.3	50.5	162.9	50.6	994.3
Central America	94.5	5.7	0.3	10.6	111.1		90.9	5.5	0.2	9.6	106.2
Mexico & Central America	1,013.0	71.0	233.7	77.3	1,395.0		821.2	56.0	163.1	60.2	1,100.5
Colombia	136.3	15.7	20.8	12.2	185.0		139.5	15.0	20.9	12.2	187.6
Venezuela	132.8	6.4	1.6	9.5	150.3		125.4	5.7	1.5	3.1	135.7
Brazil	308.8	18.4	2.2	17.3	346.7		309.7	17.3	1.7	15.7	344.4
Argentina	139.6	9.1	0.5	6.5	155.7		133.3	8.3	0.6	6.0	148.2
South America	717.5	49.6	25.1	45.5	837.7		707.9	46.3	24.7	37.0	815.9
Total	1,730.5	120.6	258.8	122.8	2,232.7		1,529.1	102.3	187.8	97.2	1,916.4

 

(1) Excludes water presentations larger than 5.0 Lt ; includes flavored water

(2) Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations; includes flavored water

  

 

 

 

 

	September 2012
	Macroeconomic Information
					Inflation (1)
					LTM	3Q 2012		YTD
			Mexico		4.77%	1.31%		2.12%
			Colombia		3.08%	0.31%		2.31%
			Venezuela		18.02%	3.71%		11.48%
			Brazil		5.28%	1.42%		3.77%
			Argentina		10.01%	2.59%		7.78%
			(1) Source: inflation is published by the Central Bank of each country.

 

	Average Exchange Rates for each Period
			Quarterly Exchange Rate (local currency per USD)					YTD Exchange Rate (local currency per USD)
			3Q 12		3Q 11	Δ%		YTD 12	YTD 11	Δ%
	Mexico		13.1932		12.2647	7.6%		13.2410	12.0281	10.1%
	Guatemala		7.8913		7.8159	1.0%		7.8190	7.7785	0.5%
	Nicaragua		23.6885		22.5593	5.0%		23.4023	22.2865	5.0%
	Costa Rica		504.6911		512.5221	-1.5%		509.6392	509.7301	0.0%
	Panama		1.0000		1.0000	0.0%		1.0000	1.0000	0.0%
	Colombia		1,797.9857		1,794.2610	0.2%		1,795.2168	1,823.0609	-1.5%
	Venezuela		4.3000		4.3000	0.0%		4.3000	4.3000	0.0%
	Brazil		2.0287		1.6369	23.9%		1.9200	1.6333	17.6%
	Argentina		4.6110		4.1666	10.7%		4.4669	4.0873	9.3%

 

	End of Period Exchange Rates
					Exchange Rate (local currency per USD)
					Sep 12	Sep 11		Δ%
			Mexico		12.8521	13.4217		-4.2%
			Guatemala		7.9572	7.8686		1.1%
			Nicaragua		23.8314	22.6958		5.0%
			Costa Rica		503.3100	519.8700		-3.2%
			Panama		1.0000	1.0000		0.0%
			Colombia		1,800.5200	1,915.1000		-6.0%
			Venezuela		4.3000	4.3000		0.0%
			Brazil		2.0306	1.8544		9.5%
			Argentina		4.6970	4.2050		11.7%