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 April 2019

 

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-_____________

 

 

 

 

 

 

 

FEMSA Presents 2018 Results under IFRS 16- “Leases”

 

Monterrey, Mexico, April 5, 2019 — Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA” or “The Company”) (NYSE: FMX; BMV: FEMSAUBD) presents a best efforts retroactive estimation of the effect that the adoption of the International Financial Reporting Standards (IFRS) 16 - “Leases” would have had on the 2018 financial results of the Company. This exercise was performed to provide investors and other market participants an estimated base reflecting the significant effects of the IFRS in the Proximity, Health and Fuel Divisions of FEMSA Comercio. IFRS 16 has a material effect in the Financial Statements of the Company, particularly on the aforementioned divisions, due to the number of existing leases at January 1, 2019, the IFRS adoption date.

 

The information in this document is not audited but is based on the 2018 audited reported results, adjusted by the impact related to IFRS 16 if the Company would have adopted IFRS 16 at January 1, 2018. We used our best reasonable estimates to replicate the dispositions of the adoption, considering the conditions of 2018 during each period.

 

####

 

This report may contain certain statements about the expectations with respect to the development of FEMSA and should be considered as best effort estimates made by the Company. These statements reflect the management’s opinions based on current available information.

 

About FEMSA

FEMSA is a leading company that participates in the beverage industry through Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world by volume; 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. In the retail industry, it participates through FEMSA Comercio, comprising a Proximity Division operating OXXO, a small-format store chain, a Health Division, which includes all drugstores and related operations, and a Fuel Division, which operates the OXXO GAS chain of retail service stations. Additionally, through its Strategic Businesses unit, FEMSA provides logistics, point-of-sale refrigeration solutions and plastics solutions to FEMSA's business units and third-party clients.

 

Five pages of tables are included as appendices

 

April 5, 2019  

 

 

 

 

FEMSA

Consolidated Income Statement

Millions of Pesos

 

   For the twelve months of: 
   2018           2018       
   As Reported   % of rev.   Adj. (A)   IFRS 16 (A)   % of rev.   
Total revenues   469,744    100.0         469,744    100.0   
Cost of sales   294,574    62.7    (135)   294,439    62.7  (B)
Gross profit   175,170    37.3    135    175,305    37.3  (B)
Administrative expenses   17,313    3.7    (53)   17,260    3.7  (B)
Selling expenses   114,573    24.4    (2,429)   112,144    23.9  (B)
Other operating expenses (income), net (1)   1,708    0.4         1,708    0.4   
Income from operations(2)   41,576    8.9    2,617    44,193    9.4  (B)
Other non-operating expenses (income)   874              874        
Interest expense   9,825         4,315    14,140       (C)
Interest income   2,832              2,832        
Interest expense, net   6,993         4,315    11,308       (C)
Foreign exchange loss (gain)   248         (14)   234       (D)
Other financial expenses (income), net.   139              139        
Financing expenses, net   7,380         4,301    11,681       (C) (D)
                            
Income before income tax and participation in associates results   33,322         (1,684)   31,638       (B) (C) (D)
Income tax   10,169         (515)   9,654       (E)
Participation in associates results(3)   6,560         -    6,560        
Net income from continuing operations   29,713         (1,168)   28,545       (B) (C) (D) (E)
Net income from discontinued operations   3,366         -    3,366        
Net consolidated income   33,079         (1,168)   31,911        
Net majority income   23,990         (1,098)   22,891        
Net minority income   9,089         (70)   9,019        

 

Operative Cash Flow & CAPEX  2018
As Reported		   % of rev.   Adj. (A)   2018
IFRS 16		   % of rev.   
Income from operations   41,576    8.9    2,617    44,193    9.4  (B)
Depreciation   14,698    3.1    7,562    22,260    4.7  (F)
Amortization & other non-cash charges   4,184    0.9         4,184    0.9   
Operative Cash Flow (EBITDA)   60,458    12.9    10,179    70,637    15.0  (B) (F)
CAPEX   24,266              24,266        

 

(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)Mainly represents the equity method participation in Heineken´s results, net.

 

(A)Unaudited consolidated financial information.
(B)Elimination of lease payment expense, partially offset by depreciation of right-of-use asset.
(C)Interest expense related to lease liability.
(D)Foreign Exchange gains or losses from lease liabilities denominated in foreign currency.
(E)Deferred taxes due to differences between lease assets and lease liabilities throughout lease term.
(F)Depreciation of right-of-use asset.

 

April 5, 2019  

 

 

 

 

FEMSA

Consolidated Balance Sheet

Millions of Pesos

 

ASSETS  Dic-18
As Reported		   Adj. (A)   Dic-18
IFRS 16 (A)		   
Cash and cash equivalents   62,047         62,047   
Investments   30,924         30,924   
Accounts receivable   28,164         28,164   
Inventories   35,686         35,686   
Other current assets   20,786         20,786   
Total current assets   177,607         177,607   
Investments in shares   94,315         94,315   
Property, plant and equipment, net   108,602         108,602   
Right of use   -    51,220    51,220  (B)
Intangible assets   145,610         145,610   
Other assets   50,247    515    50,762  (C)
TOTAL ASSETS   576,381    51,735    628,116   
                  
LIABILITIES & STOCKHOLDERS´ EQUITY                 
Bank loans   2,436         2,436   
Current maturities of long-term debt   11,238         11,238   
Interest payable   964         964   
Current maturities of leases long-term debt   -    5,860    5,860  (D)
Operating liabilities   86,826         86,826   
Total current liabilities   101,464    5,860    107,324   
Long-term debt   108,161         108,161   
Long-term leases   -    47,056    47,056  (E)
Laboral obligations   4,699         4,699   
Other liabilities   26,515         26,515   
Total liabilities   240,839    52,916    293,755   
Total stockholders’ equity   335,542    (1,181)   334,361  (F)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   576,381    51,735    628,116   

 

(A)Unaudited consolidated financial information.
(B)Right-of-use asset related to leases longer than 12 months and underlying asset value greater than US$5,000.
(C)Deferred taxes due to differences between lease assets and lease liabilities throughout lease term.
(D)Long term leases maturing within 12 months.
(E)Net present value of unavoidable future lease payments.
(F)Recalculation for adjustments related to adoption of IFRS 16, mainly net income.

 

April 5, 2019  

 

 

 

 

FEMSA Comercio - Proximity Division

Results of Operations

Millions of Pesos

 

   For the three months of: 
   1Q 2018   2Q 2018   3Q 2018   4Q 2018   
   As Reported (A)   Adj. (B)   IFRS 16 (B)   As Reported (A)   Adj. (B)   IFRS 16 (B)   As Reported   Adj. (B)   IFRS 16 (B)   As Reported   Adj. (B)   IFRS 16 (B)   
Total revenues   37,747         37,747    42,387         42,387    43,967         43,967    43,357         43,357   
Cost of sales   24,286         24,286    26,279         26,279    26,917         26,917    24,446         24,446  (C)
Gross profit   13,461         13,461    16,108         16,108    17,050         17,050    18,911         18,911  (C)
Administrative expenses   845    (1)   844    885    (2)   884    1,046    (2)   1,044    810    (2)   808  (C)
Selling expenses   10,596    (397)   10,199    11,540    (410)   11,130    12,325    (422)        13,130    (431)   12,699  (C)
Other operating expenses (income), net   65         65    80         80    69         69    63         63   
Income from operations   1,956    398    2,354    3,603    411    4,014    3,610    424    4,034    4,908    433    5,341  (C)
Depreciation   1,116    866    1,982    1,144    884    2,028    1,262    904    2,166    1,295    918    2,213  (D)
Amortization & other non-cash charges   112         112    129         129    126         126    154         154   
Operative Cash Flow (EBITDA)   3,184    1,265    4,448    4,876    1,295    6,172    4,998    1,328    6,327    6,357    1,351    7,708  (C) (D)
CAPEX   1,476         1,476    2,394         2,394    2,654         2,654    2,917         2,917   

 

   For the twelve months of: 
   2018 
   As Reported   % of rev.   Adj. (B)   IFRS 16 (B)   % of rev.   
Total revenues   167,458    100.0         167,458    100.0   
Cost of sales   101,929    60.9         101,929    60.9  (C)
Gross profit   65,529    39.1         65,529    39.1  (C)
Administrative expenses   3,587    2.1    (7)   3,580    2.1  (C)
Selling expenses   47,589    28.4    (1,659)   45,930    27.4  (C)
Other operating expenses (income), net   276    0.2         276    0.2   
Income from operations   14,077    8.4    1,667    15,744    9.4  (C)
Depreciation   4,817    2.9    3,572    8,389    5.0  (D)
Amortization & other non-cash charges   521    0.3         521    0.3   
Operative Cash Flow (EBITDA)   19,415    11.6    5,239    24,654    14.7  (C) (D)
CAPEX   9,441              9,441        

 

(A)1Q18 and 2Q18 adjusted to reflect change from Commercial Division to Proximity Division implemented in 3Q18.
(B)Unaudited financial information.
(C)Elimination of lease payment expense, partially offset by depreciation of right-of-use asset.
(D)Depreciation of right-of-use asset.

 

April 5, 2019  

 

 

 

 

FEMSA Comercio - Health Division

Results of Operations

Millions of Pesos

 

   For the three months of: 
   1Q 2018   2Q 2018   3Q 2018   4Q 2018   
   As Reported   Adj. (A)   IFRS 16 (A)   As Reported   Adj. (A)   IFRS 16 (A)   As Reported   Adj. (A)   IFRS 16 (A)   As Reported   Adj. (A)   IFRS 16 (A)   
Total revenues   12,454         12,454    13,380         13,380    12,562         12,562    13,343         13,343   
Cost of sales   8,758         8,758    9,287         9,287    8,750         8,750    9,080         9,080   (B)
Gross profit   3,696         3,696    4,093         4,093    3,812         3,812    4,263         4,263   (B)
Administrative expenses   485         485    514         514    514         514    541         541   (B)
Selling expenses   2,910    (49)   2,861    2,923    (50)   2,873    2,732    (52)   2,680    2,992    (53)   2,939   (B)
Other operating expenses (income), net   21         21    22         22    26         26    69         69   
Income from operations   280    49    329    634    50    684    540    52    592    661    53    714   (B)
Depreciation   166    424    590    166    430    596    169    436    605    176    442    618   (C)
Amortization & other non-cash charges   85         85    86         86    80         80    76         76   
Operative Cash Flow (EBITDA)   531    473    1,004    886    480    1,366    789    488    1,277    913    494    1,407   (B) (C)
CAPEX   351         351    229         229    376         376    206         206   
                                                               

 

   For the twelve months of: 
   2018 
   As Reported   % of rev.   Adj. (A)   IFRS 16 (A)   % of rev.   
Total revenues   51,739    100.0         51,739    100.0   
Cost of sales   35,874    69.3         35,874    69.3  (B)
Gross profit   15,865    30.7         15,865    30.7  (B)
Administrative expenses   2,055    4.0         2,055    4.0  (B)
Selling expenses   11,557    22.3    (204)   11,353    21.9  (B)
Other operating expenses (income), net   138    0.3         138    0.3   
Income from operations   2,115    4.1    204    2,319    4.5  (B)
Depreciation   676    1.3    1,732    2,408    4.7  (C)
Amortization & other non-cash charges   329    0.6         329    0.6   
Operative Cash Flow (EBITDA)   3,120    6.0    1,936    5,056    9.8  (B) (C)
CAPEX   1,162              1,162        

 

(A)Unaudited financial information.
(B)Elimination of lease payment expense, partially offset by depreciation of right-of-use asset.
(C)Depreciation of right-of-use asset.

 

April 5, 2019  

 

 

 

 

FEMSA Comercio - Fuel Division

Results of Operations

Millions of Pesos 

 

   For the three months of: 
   1Q 2018   2Q 2018   3Q 2018   4Q 2018   
   As Reported   Adj. (A)   IFRS 16 (A)   As Reported   Adj. (A)   IFRS 16 (A)   As Reported   Adj. (A)   IFRS 16 (A)   As Reported   Adj. (A)   IFRS 16 (A)   
Total revenues   10,593         10,593    11,511         11,511    12,196         12,196    12,636         12,636   
Cost of sales   9,706         9,706    10,595         10,595    11,136         11,136    11,268         11,268  (B)
Gross profit   887         887    916         916    1,060         1,060    1,368         1,368  (B)
Administrative expenses   52    (0)   52    61    (0)   61    42    (0)   42    87    (0)   87  (B)
Selling expenses   697    (125)   572    771    (131)   640    884    (134)   750    1,173    (141)   1,032  (B)
Other operating expenses (income), net   1         1    2         2    1         1    1         1   
Income from operations   137    126    263    82    131    213    133    135    268    107    142    249  (B)
Depreciation   30    148    178    32    154    186    36    157    193    38    163    201  (C)
Amortization & other non-cash charges   7         7    8         8    6         6    7         7   
Operative Cash Flow (EBITDA)   174    274    448    122    285    407    175    291    466    152    305    457  (B) (C)
CAPEX   64         64    129         129    123         123    204         204   

 

   For the twelve months of: 
   2018 
   As Reported   % of rev.   Adj. (A)   IFRS 16 (A)   % of rev.   
Total revenues   46,936    100.0         46,936    100.0   
Cost of sales   42,705    91.0         42,705    91.0  (B)
Gross profit   4,231    9.0         4,231    9.0  (B)
Administrative expenses   242    0.5    (2)   240    0.5  (B)
Selling expenses   3,526    7.5    (532)   2,994    6.4  (B)
Other operating expenses (income), net   5    0.0         5    0.0   
Income from operations   458    1.0    534    992    2.1  (B)
Depreciation   137    0.3    621    758    1.6  (C)
Amortization & other non-cash charges   27    0.1         27    0.1   
Operative Cash Flow (EBITDA)   622    1.3    1,155    1,777    3.8  (B) (C)
CAPEX   520              520        

 

(A)Unaudited financial information.
(B)Elimination of lease payment expense, partially offset by depreciation of right-of-use asset.
(C)Depreciation of right-of-use asset.

 

April 5, 2019  

 

 

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/ Gerardo Estrada Attolini
    Gerardo Estrada Attolini
    Director of Corporate Finance

Date: April, 05, 2019