Edgar Filing: MEXICAN ECONOMIC DEVELOPMENT INC

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 2005

FOMENTO ECONÓMICO MEXICANO, S.A. 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

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

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/ Federico Reyes

		Federico Reyes
		Chief Financial Officer
Date: October 28, 2005

Message

Latin America’s Beverage Leader

FEMSA Continues to Deliver
Steady Growth in 3Q05

Monterrey, Mexico, October 28, 2005 — Fomento Económico Mexicano, S.A. de C.V. (“FEMSA”) today announced its operational and financial results for the third quarter and nine months of 2005.

Third Quarter 2005 Highlights

FEMSA:

•	Total revenues increased 8.1% to Ps. 26.625 billion (US$ 2.5 billion), led by 21% growth at Oxxo, combined with strong performance at FEMSA Cerveza and Coca-Cola FEMSA.

•	Income from operations increased 10.7% to Ps. 4.144 billion (US$ 383 million), driven by growth of 17% at FEMSA Cerveza and 18% at Oxxo.

•	Net majority income increased 9.5% to Ps. 1.641 billion (US$ 152 million).

•	Net debt of Ps. 28.017 billion (US$ 2.6 billion) in 3Q05, a reduction of US$ 273 million from 2Q05.

Business Units:

•	Coca-Cola FEMSA increased its consolidated volumes by 3%, while offsetting pressures in raw material costs, maintaining stable operating margins at 17.3% of total revenues.

•	FEMSA Cerveza total beer sales volume increased 6.7% (5.5% domestic and 18.7% exports) and expanded its operating margin by 160 basis points to 25% of total revenues.

•	Oxxo increased its total revenues by 20.7%, driven by the opening of 122 net new stores and a 7.4% increase in same-store sales during the quarter. Oxxo remains on track to open approximately 600 net new stores for the full year.

“In the third quarter we continued to deliver solid growth, demonstrating the strength of our integrated beverage strategy. I am very pleased with the performance at FEMSA Cerveza this quarter, which contributed to our consolidated year-to-date operating income growth of 11% in real peso terms, or 18% expressed in US dollars. We are very focused on continuously improving our business while maintaining our vision of responsible leadership for the beverage industry in Latin America. This approach has proven to create long-term value for our shareholders and we believe it will continue to do so well into the future”, commented José Antonio Fernández, Chairman and CEO of FEMSA.

FEMSA Consolidated

Total revenues increased 8.1% to Ps. 26.625 billion in 3Q05. This increase was driven by revenue growth in every one of our business divisions, with 20.7% total revenue growth at the Oxxo retail chain, 8.7% at FEMSA Cerveza, and 4.9% at Coca-Cola FEMSA.

For the nine months of 2005, consolidated total revenues increased 9.4% to Ps. 77.396 billion.

Gross profit increased 7.6% to Ps. 12.533 billion in 3Q05, resulting in a 20 basis point decline in the gross margin, reaching 47.1% of total revenues. Gross margin improvements of 160 basis points at FEMSA Cerveza and 20 basis points at Coca-Cola FEMSA were offset by the greater contribution of lower margin Oxxo retail operations, which declined 70 basis points in the quarter.

For the nine months of 2005, gross profit increased 8.2% to Ps. 36.080 billion. Gross margin decreased 50 basis points from the same period of 2004 to 46.6% of total revenues primarily due to the greater contribution of lower margin Oxxo retail operations in FEMSA’s consolidated results.

Income from operations increased 10.7% to Ps. 4.144 billion in 3Q05, resulting in a 40 basis point improvement in the operating margin, reaching 15.6%. The operating margin growth was attributable to the margin expansion at FEMSA Cerveza, which compensated for the greater contribution of Oxxo retail operations, which have a lower margin than FEMSA consolidated.

For the nine months of 2005, income from operations increased 9.7% to Ps. 11.235 billion. The consolidated operating margin remained stable to 2004 levels, reaching 14.5% of total revenues.

Net income decreased 4.5% to Ps. 2.268 billion in 3Q05. The decline in net income was due to the net effect of (1) a 21.5% increase in net interest expense to Ps. 848 million due to an increase in the total weighted average interest rate, at 9.3% versus 7.5% in 3Q04, despite the reduction in overall debt, (2) a 46.9% decrease in monetary position reaching a gain of Ps. 322 million reflecting the lower inflationary impact on our lower net liabilities during the quarter, and (3) a foreign exchange loss of Ps. 97 million, due to a slight devaluation of the peso from 2Q05 against our net dollar liabilities. The effective tax rate for the quarter was 33.5%.

For the nine months of 2005, net income decreased 16.9% to Ps. 5.581 billion primarily as a result of a one-time tax credit at Coca-Cola FEMSA recognized in 2Q04 and an increase in the integral result of financing during 2005.

Net majority income per FEMSA Unit¹ was Ps. 1.376 in 3Q05. Net majority income per FEMSA ADS, using an exchange rate of Ps. 10.81 per dollar, was US$ 1.272 in the quarter.

Capital expenditures decreased 12.1% to Ps. 1.595 billion in 3Q05, mainly reflecting conservative investment levels in all of our business units. At FEMSA Comercio this was due to a reduction in the pace of store growth during the quarter, as more store openings were back-end loaded to the fourth quarter. FEMSA Cerveza and Coca-Cola FEMSA’s lower level of investment during the quarter reflects successful de-bottlenecking and continuous improvement of processes.

Consolidated net debt. As of September 30, 2005, FEMSA recorded a cash balance of Ps. 8.533 billion (US$ 789 million), short-term debt of Ps. 1.127 billion (US$ 104 million) and long-term debt of Ps. 35.423 billion (US$ 3.276 billion), for a net debt balance of Ps. 28.017 billion (US$ 2.591 billion), a reduction of US$ 273 million from June 30, 2005.

¹FEMSA 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, 2005 was 1,192,742,090 equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

October 28, 2005

Soft Drinks – Coca-Cola FEMSA

Coca-Cola FEMSA’s financial results and discussion are incorporated by reference from Coca-Cola FEMSA’s press release attached to this press release.

Beer – FEMSA Cerveza

Domestic sales volume increased 5.5% to 6.381 million hectoliters in 3Q05 due to increased sales throughout all of Mexico led once again by our Tecate Light, Sol, and Indio brands. This was achieved while lapping a strong 3Q04 in terms of volume growth.

For the nine months of 2005, domestic sales volume increased 4.5% to 18.234 million hectoliters.

Export sales volume increased 18.7% to 0.723 million hectoliters in 3Q05, fueled by double-digit volume growth in the United States from our Dos Equis, Tecate, and Sol brands. In the US market, we are increasing the overall availability of our brands and improving our performance across the entire US with accelerated growth in the Eastern and Central regions.

For the nine months of 2005, export sales volume increased 8.5% to 1.941 million hectoliters, primarily due to the strong volume growth in the US market in the second and third quarters.

Total revenues increased 8.7% to Ps. 7.181 billion in 3Q05. This was driven by a 7.0% increase in domestic beer sales, and a 43.2% increase in export beer sales due to the new agreement with Heineken USA. As mentioned in the second quarter release, export beer sales in 2005 is not comparable to the previous year due to the differences between our commercial agreement with Heineken USA versus the equity partnership with our previous US importer. The domestic price per hectoliter increased 1.4% in real terms from 3Q04, reflecting a stable pricing environment that has allowed for some tactical revenue management. For the quarter, domestic beer sales volume represented 89.8% of total beer sales volume, with the remaining 10.2% from exports.

For the nine months of 2005, total revenues increased 6.3% to Ps. 20.352 billion due to a 6.9% increase in beer sales.

Cost of sales increased 4.5% to Ps. 2.839 billion in 3Q05. Gross profit increased 11.6% to Ps. 4.342 billion in 3Q05, resulting in 160 basis points of gross margin expansion, reaching 60.5% of total revenues for the quarter. This improvement was due to the net effect of operating efficiencies combined with the strengthening of the Mexican peso versus the US dollar in real terms, which more than compensated for the price increases of certain important raw materials such as aluminum, energy, and steel.

For the nine months of 2005, cost of sales increased 4.1% to Ps. 8.217 billion. The gross margin improved by 80 basis points, reaching 59.6% of total revenues.

Income from operations (before deduction of management fees) increased 16.6% to Ps. 1.769 billion in 3Q05. Operating margin improved 160 basis points to 24.6% of total revenues resulting from increased prices in the domestic market and decreased cost of sales as a percentage of total revenues, which more than offset stable selling and administrative expenses as a percentage of sales.

For the nine months of 2005, income from operations increased 5.1% to Ps. 4.381 billion, reaching 21.5% of total revenues.

October 28, 2005

Recent Developments – FEMSA Cerveza

New malting facility in Mexico

FEMSA Cerveza is now operating a newly constructed malt production facility in Puebla, Mexico. This facility is one of the largest and most technologically advanced in the world and covers an area of 18,000 square meters (approximately 194,000 sq. ft.). The new malting facility increases Cerveza’s malting capacity by 16% to 154,000 tons per year and will support more than 12,000 Mexican farmers through its annual consumption of 250,000 tons of barley. Total investment in the new facility was US$ 40 million.

Partnership with Molson Coors for the UK

On October 1, we began a new sales, marketing and distribution agreement with Molson Coors for the UK. This export market has become our second most important after the U.S., and Molson Coors provides us with the right platform to continue growing as we leverage their powerful brand portfolio and distribution capabilities.

Partnership with Sleeman for Canadian market

In September, we entered into a national sales, marketing and distribution agreement with Sleeman Breweries, a nationwide leading premium brewer in the Canadian market. The agreement will be effective January 1, 2006, and is for the Sol and Dos Equis brands. The Canadian market holds significant potential for strengthening our brands and we are looking to achieve significant growth going forward.

Oxxo Stores – FEMSA Comercio

Total revenues increased 20.7% to Ps. 7.466 billion in 3Q05. The primary reason for the increase was the opening of 122 net new Oxxo stores in the quarter, and a total of 523 net new Oxxo stores since 3Q04 for a total of 3,782 Oxxos nationwide. Oxxo remains on track to open approximately 600 net new stores for the full year.

For the nine months of 2005, total revenues increased 23.2% to Ps. 20.762 billion.

Oxxo same-store sales increased an average of 7.4% in 3Q05, reflecting an increase in store traffic of 6.9% and an increase in the average ticket of 0.5%. This increased traffic reflects stronger promotional activity and category management practices that are enabling Oxxo to drive more traffic into the store. Oxxo’s scale and pace of growth are allowing us to develop unique promotions with our suppliers on a nationwide basis that are proving to be effective traffic drivers.

For the nine months of 2005, Oxxo same store sales increased an average of 7.6%. This reflects an increase in store traffic of 7.6% combined with a stable average ticket.

Income from operations (before deduction of management fees) increased 18.4% to Ps. 302 million in 3Q05. Operating margin remained virtually flat to 3Q04, reaching 4.0% of total revenues during the quarter. The stable margin reflects two offsetting factors: increased cost of sales and decreased operating expenses relative to total revenue growth. Cost of sales increased 21.8% to Ps. 5.533 billion in 3Q05, resulting in a gross margin contraction of 70 basis points reaching 25.9% of total revenues. Given the lower level of store growth achieved during the quarter compared to 2Q05, expansion-related incentives received from suppliers also decreased.

October 28, 2005

Operating expenses increased 17.6%, below total revenue growth, reaching Ps. 1.631 billion in 3Q05. The lower level of operating expense growth relative to total revenues was primarily due to better absorption of fixed expenses due to economies of scale.

For the nine months of 2005, income from operations increased 21.6% contributing to a stable operating margin of 4.0%, in-line with the previous year.

CONFERENCE CALL INFORMATION:
Our Third Quarter and Nine Months 2005 Conference Call will be held on: Thursday October 28, 2005, 2:00 P.M. New York Time (1:00 PM Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 1-800-819-9193, International: 913-981-4911. This Conference Call will also be transmitted through live webcast at www.femsa.com/investor.

If you are unable to participate live, an instant replay of the conference call will be available through November 3, 2005. To listen to the replay please dial: Domestic U.S.: 1-888-203-1112; International: 719-457-0820, Passcode: 7655455.

Set forth in this press release is certain unaudited financial information for FEMSA for the third quarter and nine months of 2005 compared to the third quarter and nine months of 2004. We are a holding company whose principal activities are grouped under the following sub-holding companies and carried out by their respective operating subsidiaries: Coca-Cola FEMSA, S.A. de C.V., which engages in the production, distribution and marketing of non-alcoholic beverages; FEMSA Cerveza, S.A. de C.V., which engages in the production, distribution and marketing of beer; and FEMSA Comercio, S.A. de C.V., which engages in the operation of convenience stores.

All of the figures in this report were prepared in accordance with Mexican generally accepted accounting principles (Mexican GAAP) and have been restated in constant Mexican pesos (“Pesos” or “Ps.”) with purchasing power as of September 30, 2005. As a result, all percentage changes are expressed in real terms.

The translations of Mexican pesos into US dollars are included solely for the convenience of the reader, using the exchange rate provided by the company in the tables that accompany this release. The exchange rate used for this purpose is 10.8131 Mexican pesos per US dollar, which is as of the end of the reporting period.

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.

Six pages of tables and Coca-Cola FEMSA’s press release to follow

October 28, 2005

FEMSA

Consolidated Income Statement
Expressed in Millions of Pesos

	For the third quarter of:													For the nine months of:

	2005			% Integration		2004			% Integration		% Increase			2005			% Integration		2004			% Integration		% Increase

Net sales		26,437			99.3		24,548			99.7		7.7			77,007			99.5		70,430			99.6		9.3
Other operating revenues		188			0.7		72			0.3		N.S.			389			0.5		296			0.4		31.4

Total revenues		26,625			100.0		24,620			100.0		8.1			77,396			100.0		70,726			100.0		9.4
Cost of sales		14,092			52.9		12,974			52.7		8.6			41,316			53.4		37,384			52.9		10.5

Gross profit		12,533			47.1		11,646			47.3		7.6			36,080			46.6		33,342			47.1		8.2

Administrative expenses		1,686			6.3		1,693			6.9		(0.4	)		5,071			6.6		5,078			7.2		(0.1	)
Selling expenses		6,703			25.2		6,208			25.2		8.0			19,774			25.5		18,020			25.4		9.7

Operating expenses		8,389			31.5		7,901			32.1		6.2			24,845			32.1		23,098			32.6		7.6

Income from operations		4,144			15.6		3,745			15.2		10.7			11,235			14.5		10,244			14.5		9.7

Interest expense		(1,026	)				(982	)				4.5			(3,456	)				(2,694	)				28.3
Interest income		178					284					(37.3	)		464					491					(5.5	)

Interest expense, net		(848	)				(698	)				21.5			(2,992	)				(2,203	)				35.8
Foreign exchange (loss) gain		(97	)				65					N.S.			389					(110	)				N.S.
Gain (loss) on monetary position		322					606					(46.9	)		610					1,163					(47.5	)

Integral result of financing		(623	)				(27	)				N.S.			(1,993	)				(1,150	)				73.3
Other (expenses) income		(109	)				80					N.S.			(347	)				(399	)				(13.0	)

Income before taxes		3,412					3,798					(10.2	)		8,895					8,695					2.3
Taxes		(1,144	)				(1,422	)⁽¹⁾				(19.5	)		(3,314	)				(1,979	)				N.S.

Net income		2,268					2,376					(4.5	)		5,581					6,716					(16.9	)

Net majority income		1,641					1,499					9.5			3,853					4,052					(4.9	)
Net minority income		627					877					(28.5	)		1,728					2,664					(35.1	)

EBITDA & CAPEX

Income from operations		4,144			15.6		3,745			15.2		10.7			11,235			14.5		10,244			14.5		9.7
Depreciation		941			3.5		836			3.4		12.6			2,628			3.4		2,495			3.5		5.3
Amortization & other		760			2.9		730			3.0		4.1			2,462			3.2		2,348			3.3		4.9

EBITDA		5,845			22.0		5,311			21.6		10.1			16,325			21.1		15,087			21.3		8.2
CAPEX		1,595					1,815					(12.1	)		4,119					4,882					(15.6	)

FINANCIAL RATIOS

2005

2004

Var. p.p.

Liquidity⁽²⁾

1.51

0.83

0.68

Interest coverage⁽³⁾

5.46

6.85

(1.39

)

Leverage⁽⁴⁾

0.92

1.43

(0.51

)

Capitalization⁽⁵⁾

36.05

49.39

(13.33

)

⁽¹⁾Includes the norecurrent fiscal benefit of Ps. 1,334 million of Coca-Cola FEMSA, obtained in the second quater of 2004.

⁽²⁾Total current assets / total current liabilities.

⁽³⁾Income from operations + depreciation + amortization & other / interest expense, net.

⁽⁴⁾Total liabilities / total stockholders’ equity.

⁽⁵⁾Total debt / long-term debt + stockholders´ equity.

Total debt = short-term bank loans + current maturities long-term debt + long-term bank loans and notes payable.

Long-term debt = long-term bank loans and notes payable.

October 28, 2005

FEMSA
Consolidated Balance Sheet
As of September 30:
(Expressed in Millions of Pesos as of September 30, 2005)

*ASSETS*	2005		2004		% Increase

Cash and cash equivalents		8,533		8,048		6.0
Accounts receivable		4,818		4,432		8.7
Inventories		7,937		7,521		5.5
Prepaid expenses and other		1,744		1,085		60.7

Total current assets		23,032		21,086		9.2
Property, plant and equipment, net		44,021		45,435		(3.1	)
Intangible assets⁽¹⁾		47,917		45,936		4.3
Deferred assets		6,107		6,714		(9.0	)
Other assets		3,171		2,619		21.1

TOTAL ASSETS		124,248		121,790		2.0

*LIABILITIES & STOCKHOLDERS´ EQUITY*

Bank loans		1,127		8,301		(86.4	)
Current maturities long-term debt		630		3,857		(83.7	)
Interest payable		469		482		(2.7	)
Operating liabilities		13,011		12,645		2.9

Total current liabilities		15,237		25,285		(39.7	)
Bank loans and notes payable		34,793		36,817		(5.5	)
Deferred income taxes		3,498		4,251		(17.7	)
Other liabilities		5,894		5,249		12.3

Total liabilities		59,422		71,602		(17.0	)
Total stockholders’ equity		64,826		50,188		29.2

LIABILITIES AND STOCKHOLDERS’ EQUITY		124,248		121,790		2.0

⁽¹⁾Includes mainly the intangible assets generated by the acquisition of Panamco and 30% of FEMSA Cerveza.

				September 30, 2005									June 30, 2005

*DEBT MIX*				*Ps.*			*% Integration*			*Average Rate*			*Ps.*			*% Integration*			*Average Rate*

Nominated in:
Mexican pesos					29,145			79.8	%		9.9	%		33,301			80.3	%		10.0	%
Dollars					6,690			18.3	%		7.2	%		7,109			17.1	%		7.0	%
Colombian pesos					375			1.0	%		9.2	%		674			1.6	%		9.6	%
Argentine pesos					299			0.8	%		7.1	%		307			0.8	%		6.7	%
Guatemalan Quetzals					41			0.1	%		6.5	%		53			0.1	%		6.8	%
Venezuelan bolivars					—			0.0	%		0.0	%		39			0.1	%		11.8	%

Total debt					36,550			100.0	%		9.3	%		41,483			100.0	%		9.5	%


Fixed rate ⁽¹⁾					32,061			87.7	%					32,025			77.2	%
Variable rate ⁽¹⁾					4,489			12.3	%					9,458			22.8	%


*% of Total Debt*	2005			2006			2007			2008			2009			2010			2011+

*DEBT MATURITY PROFILE*		4.8	%		10.2	%		6.7	%		19.4	%		18.7	%		16.4	%		23.8	%

⁽¹⁾Includes the effect of interest rate swaps.

October 28, 2005

Coca-Cola FEMSA

Results of Operations
Expressed in Millions of Pesos

	For the third quarter of:											For the nine months of:

	2005		% Integration		2004		% Integration		% Increase			2005		% Integration		2004		% Integration		% Increase

Net sales		12,427		99.3		11,878		99.5		4.6			36,680		99.3		34,672		99.3		5.8
Other revenues		92		0.7		60		0.5		53.3			263		0.7		253		0.7		3.8

Total revenues		12,519		100.0		11,938		100.0		4.9			36,943		100.0		34,925		100.0		5.8
Cost of sales		6,336		50.6		6,062		50.8		4.5			18,816		50.9		17,838		51.1		5.5

Gross profit		6,183		49.4		5,876		49.2		5.2			18,127		49.1		17,087		48.9		6.1

Administrative expenses		682		5.4		699		5.9		(2.5	)		2,043		5.5		2,098		6.0		(2.7	)
Sales expenses		3,334		26.7		3,114		26.0		7.1			9,886		26.8		9,394		26.9		5.2

Operating expenses		4,016		32.1		3,813		31.9		5.3			11,929		32.3		11,492		32.9		3.8

Income from operations		2,167		17.3		2,063		17.3		5.0			6,198		16.8		5,595		16.0		10.8
Depreciation		317		2.5		303		2.5		4.6			951		2.6		644		1.8		47.7
Amortization & other		281		2.3		229		1.9		22.7			855		2.3		1,131		3.3		(24.4	)

EBITDA		2,765		22.1		2,595		21.7		6.6			8,004		21.7		7,370		21.1		8.6
Capital expenditures		502				530				(5.3	)		1,085				1,299				(16.5	)


Sales volumes (Millions of unit cases)

Mexico		262.3		55.6		256.3		55.9		2.3			768.7		55.0		741.6		55.6		3.7
Central America		26.9		5.7		27.4		6.0		(1.8	)		81.0		5.8		80.8		6.1		0.3
Colombia		45.4		9.6		40.5		8.8		12.1			132.0		9.4		122.0		9.2		8.2
Venezuela		44.3		9.4		45.2		9.9		(2.0	)		129.9		9.3		126.7		9.5		2.5
Brazil		59.0		12.5		55.1		12.0		7.1			179.7		12.9		159.4		12.0		12.7
Argentina		34.3		7.3		33.9		7.4		1.2			105.6		7.6		102.5		7.6		2.9

Total Coca-Cola FEMSA		472.2		100.0		458.4		100.0		3.0			1,396.9		100.0		1,333.0		100.0		4.8

October 28, 2005

FEMSA Cerveza
Results of Operations
Expressed in Millions of Pesos

	For the third quarter of:											For the nine months of:

	2005		% Integration		2004		% Integration		% Increase			2005		% Integration		2004		% Integration		% Increase

Domestic beer sales		5,759		80.2		5,384		81.5		7.0			16,253		79.9		15,601		81.5		4.2
Export beer sales		716		10.0		500		7.6		43.2			1,999		9.8		1,469		7.7		36.1

Beer sales		6,475		90.2		5,884		89.1		10.0			18,252		89.7		17,070		89.2		6.9
Packaging sales		679		9.4		661		10.0		2.7			1,991		9.8		1,917		10.0		3.9

Net sales		7,154		99.6		6,545		99.1		9.3			20,243		99.5		18,987		99.2		6.6
Other revenues		27		0.4		60		0.9		(55.0	)		109		0.5		156		0.8		(30.1	)

Total revenues		7,181		100.0		6,605		100.0		8.7			20,352		100.0		19,143		100.0		6.3
Cost of sales		2,839		39.5		2,716		41.1		4.5			8,217		40.4		7,896		41.2		4.1

Gross profit		4,342		60.5		3,889		58.9		11.6			12,135		59.6		11,247		58.8		7.9

Administrative expenses		747		10.4		672		10.2		11.2			2,183		10.7		2,020		10.6		8.1
Sales expenses		1,826		25.5		1,700		25.7		7.4			5,571		27.4		5,060		26.4		10.1

Operating expenses		2,573		35.9		2,372		35.9		8.5			7,754		38.1		7,080		37.0		9.5

Income from operations before management fee		1,769		24.6		1,517		23.0		16.6			4,381		21.5		4,167		21.8		5.1
Management fee		114		1.6		125		1.9		(8.8	)		307		1.5		400		2.1		(23.3	)

Income from operations		1,655		23.0		1,392		21.1		18.9			4,074		20.0		3,767		19.7		8.1

Depreciation		366		5.1		376		5.7		(2.7	)		1,097		5.4		1,117		5.8		(1.8	)
Amortization & other		512		7.2		502		7.6		2.0			1,582		7.8		1,557		8.1		1.6

EBITDA		2,533		35.3		2,270		34.4		11.6			6,753		33.2		6,441		33.6		4.8
Capital expenditures		658				787				(16.4	)		1,994				2,258				(11.7	)

Sales volumes (Thousand hectoliters)

Domestic		6,381.0		89.8		6,048.0		90.9		5.5			18,234.0		90.4		17,443.0		90.7		4.5
Exports		722.5		10.2		608.8		9.1		18.7			1,940.8		9.6		1,788.0		9.3		8.5

Total		7,103.5		100.0		6,656.8		100.0		6.7			20,174.8		100.0		19,231.0		100.0		4.9

Price per hectoliter

Domestic		902.5				890.2				1.4			891.4				894.4				(0.3	)
Exports		991.0				821.3				20.7			1,030.0				821.6				25.4

Total		911.5				883.9				3.1			904.7				887.6				1.9

Total presentation mix (%)

Returnable		4,379.9		61.7		4,304.8		64.7		1.7			12,607.4		62.5		12,588.2		65.5		0.2
Non Returnable		714.4		10.0		647.5		9.7		10.3			2,046.1		10.1		1,874.2		9.7		9.2
Cans		2,009.2		28.3		1,704.5		25.6		17.9			5,521.3		27.4		4,768.6		24.8		15.8

Total		7,103.5		100.0		6,656.8		100.0		6.7			20,174.8		100.0		19,231.0		100.0		4.9

October 28, 2005

FEMSA Comercio

Results of Operations
Expressed in Millions of Pesos

	For the third quarter of:											For the nine months of:

	2005		% Integration		2004		% Integration		% Increase			2005		% Integration		2004		% Integration		% Increase

Net sales		7,466		100.0		6,184		100.0		20.7			20,762		100.0		16,848		100.0		23.2
Other revenues		—		—		—		—		—					—		—

Total revenues		7,466		100.0		6,184		100.0		20.7			20,762		100.0		16,848		100.0		23.2
Cost of sales		5,533		74.1		4,542		73.4		21.8			15,397		74.2		12,426		73.8		23.9

Gross profit		1,933		25.9		1,642		26.6		17.7			5,365		25.8		4,422		26.2		21.3

Administrative expenses		125		1.7		114		1.8		9.6			353		1.7		329		2.0		7.3
Sales expenses		1,506		20.2		1,273		20.7		18.3			4,190		20.1		3,417		20.2		22.6

Operating expenses		1,631		21.9		1,387		22.5		17.6			4,543		21.8		3,746		22.2		21.3

Income from operations before management fee		302		4.0		255		4.1		18.4			822		4.0		676		4.0		21.6
Management fee		30		0.4		31		0.5		(3.2	)		78		0.4		88		0.5		(11.4	)

Income from operations		272		3.6		224		3.6		21.4			744		3.6		588		3.5		26.5

Depreciation		82		1.1		57		0.9		43.9			237		1.1		153		0.9		54.9
Amortization & other		71		1.0		61		1.0		16.4			203		1.0		173		1.0		17.3

EBITDA		425		5.7		342		5.5		24.3			1,184		5.7		914		5.4		29.5
Capital expenditures		375				495				(24.2	)		826				1,269				(34.9	)

Information of Convenience Stores

Total stores

3,782

3,259

16.0

New convenience stores:

122

243

⁽²⁾

(49.8

)

316

461

(31.5

)

Same store data: ⁽¹⁾

Sales (thousands of pesos)

607.0

565.1

7.4

579.6

538.6

7.6

Traffic

22.9

21.5

6.9

21.9

20.3

7.6

Ticket

26.4

26.3

0.5

26.5

(0.0

)


⁽¹⁾	Monthly average information per store, considering same stores with at least 13 months of operations.
⁽²⁾	Includes 70 Oxxo stores previously reported in the second quarter of 2004.

October 28, 2005

FEMSA

Other Financial Information

MACROECONOMIC INFORMATION

	Inflation						Exchange Rate

	September 04 - September 05			June 05 - September 05			Per USD		Per Mx. Peso

Mexico		3.51	%		0.91	%		10.8131		1.0000
Colombia		5.00	%		0.77	%		2,289.6100		0.0047
Venezuela		15.96	%		3.34	%		2,150.0000		0.0050
Brazil		4.80	%		-0.11	%		2.2222		4.8659
Argentina		9.59	%		2.21	%		2.9100		3.7158

October 28, 2005

Message


2005
THIRD-QUARTER AND NINE-MONTHS RESULTS

	Third quarter							Nine Months

	2005		2004		(Delta) %			2005		2004		(Delta) %

Total Revenues		12,519		11,938		4.9	%		36,943		34,925		5.8	%

Gross Profit		6,183		5,876		5.2	%		18,127		17,087		6.1	%

Operating Income		2,167		2,063		5.0	%		6,198		5,595		10.8	%

Majority Net Income		1,135		1,321		-14.1	%		3,146		4,048		-22.3	%

EBITDA⁽¹⁾		2,765		2,595		6.5	%		8,004		7,370		8.6	%


Net Debt ^{(2) (3)}		19,075		21,697					19,075		21,697

EBITDA ⁽¹⁾/ Interest Expense		4.05		4.21					4.42		3.88

Earnings per Share		0.61		0.72					1.70		2.19

Average Shares Outstanding		1,846.5		1,846.4					1,846.5		1,846.4

Expressed in million of Mexican pesos with purchasing power as of September 30, 2005, except for per share amount.


(1)	EBITDA = Operating income + Depreciation + Amortization & Other Non-cash Charges. See reconciliation table on page 11.

(2)	Figures for 2004 are as of December 31, 2004

(3)	Net Debt = Total Debt - Cash

•	Total revenues increased 4.9% to Ps. 12,519 million in the third quarter of 2005.

•	Consolidated operating income grew 5.0% to Ps. 2,167 million, and operating margin remained stable at 17.3% in the third quarter of 2005.

•	Consolidated majority net income decreased 14.1% to Ps. 1,135 million, resulting in earnings per share of Ps. 0.61 for the third quarter of 2005.

Mexico City (October 28, 2005), Coca-Cola FEMSA, S.A. de C.V. (BMV: KOFL, NYSE: KOF) (“Coca-Cola FEMSA” or the “Company”), the largest Coca-Cola bottler in Latin America and the second-largest Coca-Cola bottler in the world in terms of sales volume, announces results for the third quarter 2005.

“Overall, our performance continued to benefit from the development and implementation of our multi-segmentation models, our shared commercial knowledge and best practices, and our optimization of the value chain.

Operationally, Mexico and Brazil accounted for the bulk of our top- and bottom-line growth in the third quarter. The strength of the Coca-Cola brand and our initial multi-segmentation strategy fostered growth year over year in Mexico. And our new business model—including our redesigned “go-to-market” strategy, reintroduction of returnable packages and better coordination with the Coca-Cola Bottling System fueled our continued growth in Brazil.” said Carlos Salazar, Chief Executive Officer of the Company.

Consolidated Results

CONSOLIDATED RESULTS

Our consolidated revenues increased 4.9% to Ps. 12,519 million in the third quarter of 2005 as a result of increases in all of our territories with the exception of Central America. Over 85% of our revenues growth came from Mexico, Brazil and Colombia. Consolidated average price per unit case was 1.6% higher in the third quarter of 2005 than in the same period of the previous year, at Ps. 26.32 (US$ 2.43)², driven by average price increases across all of our territories except Central America and Colombia.

Total sales volume increased 3.0% to 472.2 million unit cases in the third quarter of 2005 as compared with the same period of 2004. Sales volume growth in Mexico, Colombia and Brazil more than compensated for volume decline in Venezuela and Central America. Carbonated soft drinks (“CSD”) sales volume grew 2.6% to 399.3 million unit cases, driven by incremental volume in Mexico, Colombia and Brazil.

Our gross profit rose 5.2% to Ps. 6,183 million in the third quarter of 2005, as compared with the third quarter of 2004; Mexico represented over 80% of our growth. Gross margin increased 20 basis points to 49.4% in the third quarter of 2005 from 49.2% in the same period of 2004.

Our consolidated operating income grew 5.0% to Ps. 2,167 million in the third quarter of 2005, mainly driven by operating income growth in Mexico and Brazil, which more than offset declines in Central America, Colombia and Argentina. Our operating margin remained stable at 17.3% in the third quarter of 2005 as compared with the same period of 2004.

During the third quarter of 2005, our integral cost of financing totaled Ps. 351 million, reflecting i) a decrease in interest income resulting from a reduction in our cash balances, ii) an increase in interest expenses mainly derived from a higher proportion of debt in Mexican pesos, carrying higher interest rates, iii) a depreciation of the Mexican peso versus the U.S. dollar from June to September 2005, compared with an appreciation during the same period in 2004 and iv) a lower inflation rate applied to our monetary position.

During the third quarter of 2005, income tax, tax on assets and employee profit sharing as a percentage of income before taxes was 33.6%, reflecting a reduction in income tax rate in Mexico during this year.

Our consolidated majority net income was Ps. 1,135 million in the third quarter of 2005, a decrease of 14.1% compared to the same period of 2004, which was mainly driven by an increase in the integral cost of financing during 2005. Earnings per share (“EPS”) were Ps. 0.61 (US$ 0.56 per ADR) computed on the basis of 1,846.5 million shares outstanding (each ADR represents 10 local shares).

² Using a foreign exchange rate of Ps. 10.8131 per U.S. dollar

October 28, 2005

Balance Sheet and Consolidated Statement of Changes in Financial Position

BALANCE SHEET

As of September 30, 2005, Coca-Cola FEMSA had a cash balance of Ps. 2,678 million (US$ 248 million), a decrease of Ps. 1,103 million (US$ 102 million) compared with December 31, 2004, as a result of cash used to reduce debt levels in connection to maturities of one of our “Certificados Bursatiles”, as mentioned in the previous quarter press release, and bank debt prepayments. The decrease in cash from working capital is due to the seasonality of our business and tax payments, which were provisioned at the end of last year.

Total short-term debt was Ps. 1,109 million (US$ 103 million) and long-term debt was Ps. 20,644 million (US$ 1,909 million). During the first nine-months of 2005 the effective net debt reduction was Ps. 1,880 million (US$ 174 million). Gross debt payments amounted to Ps. 2,983 million (US$ 276 million), and our cash balance was reduced by Ps. 1,103 million (US$ 102 million).

The weighted average cost of debt for the third quarter was 8.8%, the following chart sets forth the Company’s debt profile by currency and interest rate type as of September 30, 2005:


Currency	% Total Debt⁽²⁾		% Interest Rate Floating⁽²⁾⁽³⁾

U.S. dollars		22%		10%
Mexican pesos		72%		5%
Colombian pesos		4%		39%
Other⁽¹⁾		1%		100%


⁽¹⁾	Includes the equivalent of US$ 27.7 million denominated in Argentine pesos, and US$ 3.8 million denominated in Guatemalan quetzales.
⁽²⁾	After giving effect to cross-currency swaps.
⁽³⁾	After giving effect to interest rate swaps.

Consolidated Statement of Changes in Financial Position

Expressed in million of Mexican pesos and U.S. dollars as of September 30, 2005


	*Jan - Sept. 2005*

		*Ps.*		*USD⁽¹⁾*

Net income		3,166		292
Non cash charges to net income		1,596		148

		4,762		440

Change in working capital		(589	)	(54	)

NRGOA⁽²⁾ before change in accounting principles		4,173		386

NRGOA⁽²⁾		4,173		386

Total investments		(1,124	)	(104	)
Dividend payments		(626	)	(58	)
Debt payments		(2,983	)	(276	)
Financial transactions		(543	)	(50	)

Increase in cash and cash equivalents		(1,103	)	(102	)

Cash and cash equivalents at begining of period		3,781		350
Cash and cash equivalents at end of period		2,678		248


⁽¹⁾	Expressed in US$ millions assuming a foreign exchange rate of Ps. 10.8131 per US Dollar
⁽²⁾	Net Resources Generated by Operating Activities

October 28, 2005

Mexican Operating Results

MEXICAN OPERATING RESULTS

Revenues

Revenues from our Mexican territories increased 4.6% to Ps. 7,225 million in the third quarter of 2005, as compared with the same period of the previous year. Sales volume growth and average price increase each contributed around 50% of the incremental revenues. Average price per unit case grew 1.9% to Ps. 27.33 (US$ 2.53) during the third quarter of 2005. Higher average prices resulted from incremental volume from the Coca-Cola brand in single-serve presentations, which carry a higher price per unit case. Excluding Ciel water volume in 5.0, 19.0 and 20.0-liter packaging presentations, our average price per unit case was Ps. 31.45 (US$ 2.91).

Total sales volume increased 2.3% to 262.3 million unit cases in the third quarter of 2005, as compared with the third quarter of 2004. The increase in carbonated soft drinks sales volume and the non-carbonated beverage segment, including single-serve bottled water, represented over 65% of our incremental volume; the balance was mainly comprised of incremental jug water sales volume. Carbonated soft drinks sales volume grew 1.5% compared with the same period of the previous year, mainly driven by the Coca-Cola brand. Excluding bottled water, the non-carbonated beverage segment grew 33.3% in the third quarter of 2005 from a low base as a result of volume growth in Ciel Aquarius and Powerade.

Operating Income

Our gross profit grew 7.6% to Ps. 3,898 million in the third quarter of 2005, as compared with the same period of 2004, resulting in a 140 basis-point expansion of our gross margin to 53.9%. This growth was driven by a decrease in sweetener costs, as a result of lower sugar prices combined with usage of high fructose corn syrup, which carries a lower price than sugar, and an appreciation of the Mexican peso year over year, as applied to our U.S. dollar-denominated costs, both of which more than compensated for higher polyethylene terephtalate (“PET”) resin costs year over year.

Operating expenses as a percentage of total revenues increased 110 basis points to 31.9% in the third quarter of 2005, from 30.8% in the same period of 2004, as a result of an increase in breakage expenses of returnable bottles and expenses related to ongoing value creation initiatives. Operating income increased 6.6% to Ps. 1,594 million in the third quarter of 2005, an improvement in operating income margin of 50 basis points in the quarter.

October 28, 2005

Central American and Colombian Operating Results

CENTRAL AMERICAN OPERATING RESULTS (Guatemala, Nicaragua, Costa Rica and Panama)

Revenues

Revenues decreased 3.5% to Ps. 820 million in the third quarter of 2005, as compared with the same period of the previous year, mainly driven by lower average price per unit case. Average price per unit case declined 2.6% to Ps. 30.18 (US$ 2.79), mainly as a result of a more competitive environment in Nicaragua and Costa Rica, and a shift in our multi-serve packaging mix towards larger presentations.

Total sales volume in our Central American territories declined 1.8% to 26.9 million unit cases in the third quarter of 2005, as compared with the same period of 2004. Volume decline came from a 2.7% decrease in carbonated soft drinks due to a more competitive environment, which more than offset a 13.3% increase in bottled water and non-carbonated beverages.

Operating Income

Gross profit declined 2.3% in the third quarter of 2005, as compared with the same period of 2004, to Ps. 375 million. However, as a percentage of total revenues gross margin increased 50 basis points mainly due to lower costs per unit case driven by the standardization in accounting practices related to breakage expenses, which are now recorded as operating expenses.

Our operating income decreased 14.9% to Ps. 86 million in the third quarter of 2005, compared with the same period of 2004, driven by lower fixed cost absorption resulting from lower revenues and a slight increase in operating expenses. Operating income margin was 10.5% in the third quarter of 2005, a decrease of 140 basis points.

COLOMBIAN OPERATING RESULTS

Revenues

Total revenues increased 8.0% to Ps. 1,202 million in the third quarter of 2005, as compared with the third quarter of 2004. Higher volume more than offset average price reduction. Despite of price increases implemented during the third quarter of 2005, we were not able to offset last twelve months inflation, resulting in an average price per unit case decline of 3.5% to Ps. 26.53 (US$ 2.45)

Total sales volume grew 12.1%, as compared with the same period of 2004, to 45.4 million unit cases in the third quarter of 2005. Carbonated soft drinks posted a strong volume growth of 14.7%, more than compensating for a slight volume decline in other categories. The carbonated soft drink flavor brand Crush accounted for almost 75% of incremental volume, and the Coca-Cola brand for the majority of the balance.

Operating Income

Gross profit declined 1.5% to Ps. 544 million in the third quarter of 2005, as compared with the same period of the previous year, resulting in a gross margin of 45.2%. The gross margin decline of 440 basis points resulted from the combined effect of lower average price per unit case and higher cost per unit case due to a packaging mix shift to non-returnable presentations, which grew as a percentage of our total sales volume to 47.6% from 41.8% in the third quarter of 2004.

In spite of our higher marketing expenses and higher expenses resulting from the introduction of returnable bottles, both related to the introduction of the Crush brand, our operating expenses declined as a percentage of total sales and on a per unit case basis in the third quarter of 2005, driven by better execution practices, which resulted in a reduction in freight costs and breakage expenses. Our operating income declined by 7.3% to Ps. 153 million, mainly due to lower gross profit, resulting in a margin reduction of 210 basis points.

October 28, 2005

Venezuelan and Argentine Operating Results

VENEZUELAN OPERATING RESULTS

Revenues

Revenues from our Venezuelan operations increased 6.5% to Ps. 1,224 million in the third quarter of 2005, as compared with the same period of 2004, this increase was driven by higher average price per unit case, which more than offset a 2.0% volume decline. Our average price grew 8.3% to Ps. 27.53 (US$ 2.55) as a result of price increases implemented during the last twelve months.

Total sales volume decreased 2.0% to 44.3 million unit cases during the third quarter of 2005, as compared with the same quarter of 2004, driven by flavored carbonated soft drinks decline which more than offset volume growth of the Coca-Cola brand.

Operating Income

Gross profit decreased 1.4% to Ps. 479 million in the third quarter of 2005, as compared with the same period of the previous year. As a percentage of sales, our gross margin decreased to 39.1% in the third quarter of 2005 from 42.3% in the same period of 2004. This decline was a result of higher raw material prices and a shift in packaging mix to non-returnable presentations, which grew as a percentage of our total sales volume to 71.6% from 66.3% in the third quarter of 2004.

Operating expenses decreased 1.8% to Ps. 425 million in the third quarter of 2005, driven by the progress made in the standardization of administrative and commercialization processes, which more than offset salary increases. Operating income increased 1.9% to Ps. 54 million in the third quarter of 2005; however, the decline in operating expenses was partially offset by higher cost per unit case, resulting in a 20 basis-point operating margin decline to 4.4% in the third quarter of 2005 compared to the same period of 2004.

ARGENTINE OPERATING RESULTS

Revenues

In the third quarter of 2005, our total revenues increased by 2.4% to Ps. 639 million, compared with same period of 2004. Average price per unit case increased 3.1% to Ps. 18.05 (US$ 1.67), as a result of i) a positive product shift mix towards single-serve presentations form our core and premium brands, which carry higher average price per unit case ii), incremental volume from our carbonated soft drink premium and core segments combined with the strong performance of our non-carbonated portfolio, and iii) price increases implemented during the quarter.

Total volume increased by 1.2% to 34.3 million unit cases, resulting from volume growth in our carbonated soft drinks core and premium segments, which more than offset volume decline of our value protection brands. Non-carbonated beverages and bottled water doubled in size, representing 3.2% of total sales volume.

Operating Income

Our gross profit increased 1.6% to Ps. 257 million, as compared with the third quarter of 2004. Gross margin was 40.3%, declining from 40.6% in the same period of previous year, due to higher PET resin prices and labor costs.

Operating expenses increased 9.3% due to higher freight costs and salaries in the third quarter of 2005 as compared to the same period of 2004. As a result, higher top-line growth partially compensated for higher cost and expenses resulting in an operating income decline of 9.7% to Ps. 93 million in the third quarter of 2005.

October 28, 2005

Brazilian Operating Results

BRAZILIAN OPERATING RESULTS

Beginning with second quarter, we will no longer include beer that we distribute in Brazil in our sales volumes and net sales. Instead, the amount we receive for distributing beer in Brazil is included in other revenues. We have reclassified prior periods presented in this press release for comparability purposes. We believe this presentation better reflects the performance of our core operations.

Revenues

Our total revenues improved by 7.6% to Ps. 1,434 million in the third quarter of 2005, as compared with the same period of 2004, mainly driven by sales volume growth since average price per unit remained stable in real terms at Ps. 23.67 (US$ 2.19).

Total sales volume increased 7.1% to 59.0 million unit cases in the third quarter of 2005. The increase included 6.8% growth in carbonated soft drinks, mainly driven by the Coca-Cola and Fanta brands, accounting for over 85% of incremental volume during the quarter. Bottled water sales volume grew 11.8% in the quarter, driven by an increased focus on the Crystal brand, both in marketing and execution.

Operating Income

In the third quarter of 2005, our gross profit increased 15.9% to Ps. 685 million, as compared with the same period of the previous year. Gross margin increased 350 basis points to 47.8%; manufacturing efficiencies and the appreciation of the Brazilian real against the U.S. dollar as applied to our raw material costs more than offset raw material price increases.

Our operating expenses as a percentage of total revenues decreased 70 basis points in the third quarter of 2005 from 33.4% in the same period of 2004 as a result of higher revenues and operating improvements such as presale efficiency. Operating income was Ps. 217 million in the third quarter of 2005, resulting in a 410 basis-point expansion in operating margin to 15.1% in the third quarter of 2005 from 11.0% in the same period in 2004.

October 28, 2005

Summary of Nine Month Results and Recent Developments

SUMMARY OF NINE-MONTH RESULTS

Our consolidated revenues increased 5.8% to Ps. 36,943 million in the first nine months of 2005, as compared with the first nine months of 2004, as a result of growth in all of our territories, with the exception of Central America. Over 80% of our revenues growth came from Mexico, Brazil and Colombia. Consolidated average price per unit case increased 1.0% to Ps. 26.26 (US$ 2.43) in the first nine months of 2005. Average price increased in all of our territories except for Central America.

Total sales volume increased 4.8% to 1,396.9 million unit cases in the first nine months of 2005, as compared with the same period of the previous year. Sales volume growth in Mexico and Brazil accounted for over 75% of our incremental volume. Carbonated soft-drink sales volume grew 4.1% to 1,177.1 million unit cases, driven by incremental volume across all of our territories, except for Central America.

Our gross profit increased 6.1% to Ps. 18,127 million in the first nine months of 2005, as compared with the first nine months of the previous year, driven by gross profit growth across all of our territories, except Central America. Brazil and Mexico accounted for over 85% of this increase. Gross margin increased to 49.1% during the first nine months of 2005 from 48.9% in the first nine months of 2004, driven by higher revenues in all of our territories except Central America.

Our consolidated operating income increased 10.8% to Ps. 6,198 million in the first nine months of 2005, as compared with the first nine months of 2004. Brazil and Mexico accounted for more than 90% of our growth. Our operating margin improved 80 basis points to 16.8% in the first nine months of 2005.

Our consolidated majority net income was Ps. 3,146 million in the first nine months of 2005, a decrease of 22.3% compared to the first nine months of 2004, driven by a one-time effect that increased net income during 2004³ and a one-time effect that decreased net income in the first quarter of 2005⁴. EPS were Ps. 1.70 (US$ 1.57 per ADR) computed on the basis of 1,846.5 million shares outstanding (each ADR represents 10 local shares). Excluding the above-mentioned effects of non-recurring items majority net income would have grown by 16.2%.

RECENT DEVELOPMENTS

	•	The Coca-Cola Company has informed us that in a three year period, it will gradually increase concentrate prices for carbonated soft drinks in Mexico and Brazil. In Mexico, the increase will raise the cost for all carbonated soft drinks in non-returnable presentations.

		Based on our internal estimates for revenues and sales volume mix the incremental cost in Mexico represents approximately US$20 million in 2007, increasing gradually by a similar amount during the following two years, reaching around US$60 million by the end of 2009. In Brazil, the increase will affect all carbonated soft-drink presentations, and, based on such estimates, will raise our costs by approximately US$1.0 million in 2006, increasing gradually by a similar amount the following two years, reaching around US$3.8 million by the end of 2008.

		We have informed The Coca-Cola Company that in order to offset the impact to our profitability that such concentrate prices represent, we intend to reduce our contribution to marketing expenditures of its soft drink brands in Mexico and Brazil, effective the same dates as the cost increases.

³ During the second quarter of 2004, we obtained a tax reimbursement in connection with a deduction of losses arising from a sale of shares during 2002 in the amount of Ps. 1,325 million; additionally there was a charge to income in the amount of Ps. 88 million related to interests and adjustments resulting from a change in the tax deduction criteria on coolers in Mexico. The net effect of these two transactions was Ps. 1,237 million.

⁴ As we disclosed in the first quarter of 2005, the tax authorities reviewed the payments in connection with the change in criteria that requires refrigerators to be treated as fixed assets with finite useful lives, which resulted in an additional one-time payment in Mexico in the amount of Ps. 119 million.

October 28, 2005

Conference Call Information and Disclaimer

CONFERENCE CALL INFORMATION

Our third-quarter 2005 Conference Call will be held on: October 28, 2005, 11:00 A.M. Eastern Time (10:00 A.M. Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 800-561-2601 and International: 617-614-3518. 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 November 4, 2005. To listen to the replay, please dial: Domestic U.S.: 888-286-8010 or International: 617-801-6888. Pass code: 98344233.

* * *

Coca-Cola FEMSA, S.A. de C.V. produces and distributes Coca-Cola, Sprite, Fanta, Lift and other trademark beverages of The Coca-Cola Company in Mexico (a substantial part of central Mexico, including Mexico City and southeast 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 and part of the state of Goias) and Argentina (federal capital of Buenos Aires and surrounding areas), along with bottled water, beer and other beverages in some of these territories. The Company has 30 bottling facilities in Latin America and serves approximately 1,500,000 retailers in the region. The Coca-Cola Company owns a 39.6% equity interest in Coca-Cola FEMSA.

* * *

Figures for the Company’s operations in Mexico and its consolidated international operations were prepared in accordance with Mexican generally accepted accounting principles (Mexican GAAP). All figures are expressed in constant Mexican pesos with purchasing power at September 30, 2005. For comparison purposes, 2004 and 2005 figures from the Company’s operations have been restated taking into account local inflation of each country with reference to the consumer price index and converted from local currency into Mexican pesos using the exchange rate at the end of the period. In addition, all comparisons in this report for the third quarter of 2005, which ended on September 30, 2005, are made against the figures for the comparable period in 2004, unless otherwise noted.

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance and 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, that 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.

* * *

(7 pages of tables to follow)

October 28, 2005

Consolidated Balance Sheet

Consolidated Balance Sheet
Expressed in million of Mexican pesos with purchasing power as of September 30, 2005


Assets	Sep-05		Dec-04

Current Assets
Cash and cash equivalents	Ps.	2,678	Ps.	3,781
Total accounts receivable		1,769		2,226
Inventories		2,623		2,585
Prepaid expenses and other		822		880

Total current assets		7,892		9,472

Property, plant and equipment
Property, plant and equipment		30,700		31,164
Accumulated depreciation		-13,393		-13,018
Bottles and cases		951		1,071

Total property, plant and equipment, net		18,258		19,217

Investment in shares and other		539		445
Deferred charges, net		1,416		1,552
Intangibles		38,725		38,246

Total Assets	Ps.	66,830	Ps.	68,932


Liabilities and Stockholders’ Equity	Sep-05		Dec-04

Current Liabilities
Short-term bank loans and notes	Ps.	1,109	Ps.	3,346
Interest payable		400		319
Suppliers		3,725		4,268
Other current liabilities		2,606		3,145

Total Current Liabilities		7,840		11,078

Long-term bank loans		20,644		22,132
Pension plan and seniority premium		672		658
Other liabilities		4,395		4,203

Total Liabilities		33,551		38,071

Stockholders’ Equity
Minority interest		725		734
Majority interest:
Capital stock		2,841		2,841
Additional paid in capital		12,157		12,157
Retained earnings of prior years		17,108		12,209
Net income for the period		3,146		5,525
Cumulative results of holding non-monetary assets		-2,698		-2,605

Total majority interest		32,554		30,127

Total stockholders’ equity		33,279		30,861

Total Liabilities and Equity	Ps.	66,830	Ps.	68,932

October 28, 2005

Consolidated Income Statement

Consolidated Income Statement
Expressed in million of Mexican pesos⁽¹⁾ with purchasing power as of September 30, 2005


	3Q 05			3Q 04			YTD 05			YTD 04

Sales Volume (million unit cases)		472.2			458.4			1,396.9			1,333.0
Average price per unit case		26.32			25.91			26.26			26.01

Net revenues		12,427			11,878			36,680			34,672
Other operating revenues		92			60			263			253

Total revenues		12,519			11,938			36,943			34,925
Cost of sales		6,336			6,062			18,816			17,838

Gross profit		6,183			5,876			18,127			17,087

Operating expenses		4,016			3,813			11,929			11,492

Operating income		2,167			2,063			6,198			5,595

Interest expense		682			616			1,812			1,898
Interest income		76			190			224			285
Interest expense, net		606			426			1,588			1,613
Foreign exchange loss (gain)		4			(107	)		(236	)		106
Loss (gain) on monetary position		(259	)		(469	)		(416	)		(984	)

Integral cost of financing		351			(150	)		936			735
Other (income) expenses, net		96			(121	)		311			285

Income before taxes		1,720			2,334			4,951			4,575
Taxes		578			1,001			1,785			515

Consolidated net income before ext. items		1,142			1,332			3,166			4,060

Consolidated net income		1,142			1,332			3,166			4,060

Majority net income		1,135			1,321			3,146			4,048

Minority net income		7			12			20			13

Operating income		2,167			2,063			6,198			5,595
Depreciation		317			303			951			960
Amortization and Other non-cash charges ⁽²⁾		281			229			855			815

EBITDA ⁽³⁾		2,765			2,595			8,004			7,370


(1)	Except volume and average price per unit case figures.
(2)	Includes returnable bottel breakage expense.
(3)	EBITDA = Operating Income + Depreciation +Amortization & Other non-cash charges.

October 28, 2005

Mexican and Central American operations

Mexican operations
Expressed in million of Mexican pesos⁽¹⁾ with purchasing power as of September 30, 2005


	3Q 05		% Rev			3Q 04		% Rev			YTD 05		% Rev			YTD 04		% Rev

Sales Volume (million unit cases)		262.3					256.3					768.7					741.6
Average price per unit case		27.33					26.83					27.26					27.26

Net revenues		7,172					6,876					20,951					20,217
Other operating revenues		53					31					180					110

Total revenues		7,225		100.0	%		6,907		100.0	%		21,131		100.0	%		20,327		100.0	%
Cost of sales		3,327		46.1	%		3,283		47.5	%		9,883		46.8	%		9,625		47.4	%

Gross profit		3,898		53.9	%		3,624		52.5	%		11,248		53.2	%		10,702		52.6	%

Operating expenses		2,304		31.9	%		2,129		30.8	%		6,805		32.2	%		6,531		32.1	%

Operating income		1,594		22.1	%		1,495		21.6	%		4,443		21.0	%		4,171		20.5	%
Depreciation, Amortization & Other non-cash charges ⁽²⁾		359		5.0	%		299		4.3	%		1,056		5.0	%		1,000		4.9	%

EBITDA ⁽³⁾		1,953		27.0	%		1,794		26.0	%		5,499		26.0	%		5,171		25.4	%


(1)	Except volume and average price per unit case figures.
(2)	Includes returnable bottle breakage expense.
(3)	EBITDA = Operating Income + Depreciation + Amortization & Other non-cash charges.

Central American operations
Expressed in million of Mexican pesos⁽¹⁾ with purchasing power as of September 30, 2005


	3Q 05		% Rev			3Q 04			% Rev			YTD 05		% Rev			YTD 04		% Rev

Sales Volume (million unit cases)		26.9					27.4						81.0					80.8
Average price per unit case		30.18					30.98						31.00					31.92

Net revenues		818					852						2,511					2,579
Other operating revenues		2					(2	)					3					3

Total revenues		820		100.0	%		850			100.0	%		2,514		100.0	%		2,582		100.0	%
Cost of sales		445		54.3	%		466			54.8	%		1,315		52.3	%		1,360		52.7	%

Gross profit		375		45.7	%		384			45.2	%		1,199		47.7	%		1,222		47.3	%

Operating expenses		289		35.3	%		283			33.3	%		890		35.4	%		937		36.3	%

Operating income		86		10.5	%		101			11.9	%		309		12.3	%		285		11.1	%
Depreciation, Amortization & Other non-cash charges ⁽²⁾		53		6.5	%		41			4.8	%		162		6.4	%		182		7.1	%

EBITDA ⁽³⁾		139		17.0	%		142			16.8	%		471		18.7	%		467		18.1	%


(1)	Except volume and average price per unit case figures.
(2)	Includes returnable bottle breakage expense.
(3)	EBITDA = Operating Income + Depreciation + Amortization & Other non-cash charges.

October 28, 2005

Colombian and Venezuelan operations

Colombian operations
Expressed in million of Mexican pesos⁽¹⁾ with purchasing power as of September 30, 2005


	3Q 05		% Rev			3Q 04		% Rev			YTD 05		% Rev			YTD 04		% Rev

Sales Volume (million unit cases)		45.4					40.5					132.0					122.0
Average price per unit case		26.53					27.48					26.16					25.68

Net revenues		1,202					1,113					3,451					3,133
Other operating revenues		—					—					—					—

Total revenues		1,202		100.0	%		1,113		100.0	%		3,451		100.0	%		3,133		100.0	%
Cost of sales		658		54.8	%		561		50.4	%		1,910		55.4	%		1,680		53.6	%

Gross profit		544		45.2	%		552		49.6	%		1,541		44.7	%		1,453		46.4	%

Operating expenses		391		32.6	%		387		34.8	%		1,185		34.3	%		1,148		36.6	%

Operating income		153		12.8	%		165		14.9	%		356		10.3	%		305		9.7	%
Depreciation, Amortization & Other non-cash charges⁽²⁾		62		5.1	%		70		6.3	%		210		6.1	%		236		7.5	%

EBITDA ⁽³⁾		215		17.9	%		235		21.1	%		566		16.4	%		541		17.3	%


(1)	Except volume and average price per unit case figures.
(2)	Includes returnable bottle breakage expense.
(3)	EBITDA = Operating Income + Depreciation + Amortization & Other non-cash charges.

Venezuelan operations
Expressed in million of Mexican pesos⁽¹⁾ with purchasing power as of September 30, 2005


	3Q 05		% Rev			3Q 04		% Rev			YTD 05		% Rev			YTD 04		% Rev

Sales Volume (million unit cases)		44.3					45.2					129.9					126.7
Average price per unit case		27.53					25.42					27.84					26.00

Net revenues		1,217					1,149					3,616					3,295
Other operating revenues		7					—					10					2

Total revenues		1,224		100.0	%		1,149		100.0	%		3,626		100.0	%		3,297		100.0	%
Cost of sales		745		60.8	%		663		57.7	%		2,154		59.4	%		1,943		58.9	%

Gross profit		479		39.1	%		486		42.3	%		1,472		40.6	%		1,354		41.1	%

Operating expenses		425		34.7	%		433		37.7	%		1,292		35.6	%		1,152		35.0	%

Operating income		54		4.4	%		53		4.6	%		180		5.0	%		202		6.1	%
Depreciation, Amortization & Other non-cash charges ⁽²⁾		61		5.0	%		55		4.8	%		178		4.9	%		169		5.1	%

EBITDA ⁽³⁾		115		9.4	%		108		9.4	%		358		9.9	%		371		11.2	%


(1)	Except volume and average price per unit case figures.
(2)	Includes returnable bottle breakage expense.
(3)	EBITDA = Operating Income + Depreciation + Amortization & Other non-cash charges.

October 28, 2005

Argentine and Brazilian operations

Argentine operations
Expressed in million of Mexican pesos⁽¹⁾ with purchasing power as of September 30, 2005


	3Q 05		% Rev			3Q 04		% Rev			YTD 05		% Rev			YTD 04		% Rev

Sales Volume (million unit cases)		34.3					33.9					105.6					102.5
Average price per unit case		18.05					17.50					18.24					17.32

Net revenues		619					595					1,927					1,774
Other operating revenues		20					29					74					87

Total revenues		639		100.0	%		624		100.0	%		2,001		100.0	%		1,861		100.0	%
Cost of sales		382		59.9	%		371		59.4	%		1,223		61.1	%		1,131		60.8	%

Gross profit		257		40.3	%		253		40.6	%		778		38.9	%		730		39.2	%

Operating expenses		164		25.6	%		150		24.1	%		485		24.3	%		439		23.6	%

Operating income		93		14.5	%		103		16.5	%		293		14.6	%		291		15.6	%
Depreciation, Amortization & Other non-cash charges⁽²⁾		32		4.9	%		32		5.1	%		97		4.9	%		98		5.3	%

EBITDA ⁽³⁾		125		19.6	%		135		21.6	%		390		19.5	%		389		20.9	%


(1)	Except volume and average price per unit case figures.
(2)	Includes returnable bottle breakage expense.
(3)	EBITDA = Operating Income + Depreciation + Amortization & Other non-cash charges.

Brazilian operations
Expressed in million of Mexican pesos⁽¹⁾ with purchasing power as of September 30, 2005


	3Q 05		% Rev			3Q 04		% Rev			YTD 05		% Rev			YTD 04		% Rev

Sales Volume (million unit cases)		59.0					55.1					179.7					159.4
Average price per unit case		23.67					23.60					23.51					23.08

Net revenues		1,399					1,298					4,224					3,679
Other operating revenues		35					35					114					115

Total revenues		1,434		100.0	%		1,333		100.0	%		4,338		100.0	%		3,794		100.0	%
Cost of sales		749		52.2	%		742		55.7	%		2,305		53.1	%		2,124		56.0	%

Gross profit		685		47.8	%		591		44.3	%		2,033		46.9	%		1,670		44.0	%

Operating expenses		468		32.7	%		445		33.4	%		1,389		32.0	%		1,332		35.1	%

Operating income		217		15.1	%		146		11.0	%		644		14.8	%		338		8.9	%
Depreciation, Amortization & Other non-cash charges⁽²⁾		32		2.3	%		36		2.7	%		104		2.4	%		92		2.4	%

EBITDA ⁽³⁾		249		17.4	%		182		13.7	%		748		17.2	%		429		11.3	%


(1)	Except volume and average price per unit case figures.
(2)	Includes returnable bottle breakage expense.
(3)	EBITDA = Operating Income + Depreciation + Amortization & Other non-cash charges.

October 28, 2005

Selected Information

SELECTED INFORMATION

For the three months ended September 30, 2005

Expressed in million of Mexican pesos as of September 30, 2005

	3Q 04		3Q 05

Capex		530.0		502.0
Depreciation		303.4		317.0
Amortization & Other non-cash charges		228.9		281.6

VOLUME
Expressed in million unit cases

	3Q 04								3Q 05

	CSD		Water		Other		Total		CSD		Water		Other		Total

Mexico		205.1		49.1		2.1		256.3		208.2		51.3		2.8		262.3
Central America		25.9		1.1		0.4		27.4		25.2		1.1		0.6		26.9
Colombia		34.8		5.6		0.1		40.5		39.9		5.4		0.1		45.4
Venezuela		38.8		3.8		2.6		45.2		38.1		4.0		2.2		44.3
Brazil		51.2		3.4		0.5		55.1		54.7		3.8		0.5		59.0
Argentina		33.4		0.3		0.2		33.9		33.2		0.7		0.4		34.3

Total		389.2		63.3		5.9		458.4		399.3		66.3		6.6		472.2

PACKAGE MIX BY PRESENTATION
Expressed as a Percentage of Total Volume

	3Q 04								3Q 05

	Ret		Non-Ret		Fountain		Jug		Ret		Non-Ret		Fountain		Jug

Mexico		28.6		55.6		1.2		14.6		26.6		57.2		1.2		15.0
Central America		48.3		48.0		3.7		—		41.6		54.3		4.1		—
Colombia		51.4		38.5		3.3		6.8		46.4		44.1		3.5		6.0
Venezuela		30.1		63.3		3.0		3.6		25.1		67.9		3.7		3.3
Brazil		5.6		90.4		4.0		—		8.6		87.7		3.7		—
Argentina		27.1		69.1		3.8		—		25.7		70.5		3.8		—

For the nine months ended September 30, 2005

Expressed in million of Mexican pesos as of September 30, 2005

	YTD 04		YTD 05

Capex		1,299.4		1,084.6
Depreciation		960.0		951.0
Amortization & Other non-cash charges		815.0		855.0

VOLUME
Expressed in million unit cases

	YTD 04								YTD 05

	CSD		Water		Other		Total		CSD		Water		Other		Total

Mexico		591.7		144.3		5.6		741.6		605.2		156.1		7.4		768.7
Central America		76.0		3.5		1.3		80.8		75.9		3.5		1.6		81.0
Colombia		104.9		16.7		0.4		122.0		115.7		16.1		0.2		132.0
Venezuela		108.2		11.0		7.5		126.7		111.8		11.7		6.4		129.9
Brazil		148.9		9.2		1.3		159.4		165.8		12.3		1.6		179.7
Argentina		100.7		1.3		0.5		102.5		102.7		1.8		1.1		105.6

Total		1,130.4		186.0		16.6		1,333.0		1,177.1		201.5		18.3		1,396.9

PACKAGE MIX BY PRESENTATION
Expressed as a Percentage of Total Volume

	YTD 04								YTD 05

	Ret		Non-Ret		Fountain		Jug		Ret		Non-Ret		Fountain		Jug

Mexico		28.5		55.5		1.3		14.7		26.9		56.5		1.2		15.4
Central America		49.8		46.5		3.7		—		43.5		52.9		3.6		—
Colombia		52.0		38.1		3.3		6.6		47.5		43.0		3.4		6.1
Venezuela		31.0		62.2		2.8		4.0		25.2		68.4		3.1		3.3
Brazil		5.3		90.8		3.9		—		7.6		88.9		3.5		—
Argentina		27.3		69.0		3.7		—		26.7		69.8		3.5		—

October 28, 2005

Macroeconomic Information

September 2005

Macroeconomic Information

	Inflation									Foreign Exchange Rate (local currency) per US Dollar.

	LTM			YTD			3Q 05			Sep 05		Dec 04		Sep 04

Mexico		3.51	%		1.72	%		0.91	%		10.8131		11.1460		11.3759
Colombia		5.00	%		4.61	%		0.77	%		2,289.6100		2,389.7500		2,595.1700
Venezuela		15.96	%		11.57	%		3.34	%		2,150.0000		1,920.0000		1,920.0000
Brazil		4.80	%		3.79	%		-0.18	%		2.2222		2.6544		2.8586
Argentina		9.59	%		8.61	%		2.21	%		2.9100		2.9800		2.9800

October 28, 2005