FEMSA Q4 Earnings Miss, Revenues Top Estimates on Segment Strength

Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, reported fourth-quarter 2025 adjusted net majority earnings per ADS of 92 cents, up from 46 cents in the year-ago quarter, but missed the Zacks Consensus Estimate of $1.50. The company reported net majority earnings per ADS of $1.36 (Ps. 2.46 per FEMSA unit).

Net consolidated income was Ps. 12,709 million (US$705.8 million), reflecting growth of 33.6% from the year-ago quarter.

Total revenues were US$12.22 billion (Ps. 220,091 million), rising 5.7% year over year in the local currency and beating the Zacks Consensus Estimate of $12.14 billion. Revenue growth was driven by gains across all its business units. Excluding the currency effects and M&A, comparable revenues grew 5.2% year over year.

Shares of this Zacks Rank #3 (Hold) company have rallied 19.7% in the past three months compared with the industry’s 13% growth.

Peeking Into FMX’s Q4 Margin Details

FEMSA’s gross profit rose 0.5% year over year to Ps. 91,422 million (US$5.08 billion). The consolidated gross margin contracted 220 basis points (bps) to 41.5%, driven by gross margin contractions of 60 bps in Coca-Cola FEMSA, 550 bps in Proximity Europe, 1,170 bps in Health, and 20 bps in Fuel. These were partly offset by a gross margin expansion of 40 bps in Proximity Americas. The declines in Proximity Europe and Health were primarily due to the reclassification of distribution expenses from selling expenses to cost of goods sold, and had no impact on income from operations. Comparable gross profit rose 1.3% year over year, while the comparable gross margin contracted 70 bps to 43%.

FEMSA’s operating income (income from operations) improved 8.5% year over year to Ps. 24,546 million (US$1.36 billion), driven by growth across all business units, except for the Health division. Comparable operating income increased 9.6% year over year. The consolidated operating margin expanded 30 bps to 11.2%, driven by margin expansion of 30 bps in Proximity Americas, 160 bps in Coca-Cola FEMSA, 40 bps in Proximity Europe and 20 bps in Fuel. This was partly negated by an operating margin contraction of 300 bps in the Health division.

Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise

 

Fomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. Quote

FEMSA’s Q4 Segmental Performance

Proximity Americas: Total revenues for the segment rose 5.3% year over year to Ps. 85,257 million (US$4.7 billion). The company reported 4.4% growth in same-store sales for Proximity Americas, driven by a 5% rise in average customer ticket, offset by a 0.6% decline in store traffic. On a comparable basis, revenues at Proximity Americas rose 6.3% year over year and same-store sales were up 14.5%. The strong top-line performance reflects continued execution of its affordability strategy in Mexico, which strengthened competitiveness across key categories. The company’s initiatives remain closely aligned with evolving consumer needs, delivering positive results and reinforcing market positioning despite ongoing consumer softness and a challenging economic environment.

The Proximity Americas division had 25,587 OXXO stores as of Dec. 31, 2025. Operating income improved 7.7% year over year, and 8.4% on a comparable basis. The segment's operating margin expanded 30 bps to 12%, driven by gross margin expansion across all operations, supported by a more measured pace of store expansion in Latin America. Operating expenses rose 5.6%, reflecting disciplined cost management and ongoing efficiency initiatives that enabled tighter alignment between expense growth and the top-line performance.

Proximity Europe: Total revenues for the segment grew 10.8% year over year to Ps. 14,217 million (US$789.6 million). The segment benefited from modest tailwinds from the appreciation of the Swiss franc against the Mexican peso. Comparable revenues for the segment were up 2.3% year over year, aided by improved retail sales, mainly in Swiss operations, partly offset by lower sales in its B2B and B2C foodservice businesses. Operating income for the segment rose 10.8% year over year. The operating margin expanded 40 bps to 5.1%, driven by higher retail sales in Switzerland and effective cost management.

Health Division: The segment reported total revenues of Ps. 22,824 million (US$1.27 billion), up 4.6% year over year and 6.7% on a comparable basis. Revenues were aided by growth in Colombia retail and Ecuador, partially offset by a challenging competitive landscape in Mexico. The segment’s store base reached 4,503 locations as of Dec. 31, 2025. Same-store sales rose 4.7% in Mexican pesos and 9.2% on a comparable basis. The operating income declined 52.3% year over year, whereas the operating margin contracted 300 bps to 2.5%.

Fuel Division: Total revenues rose 3.6% year over year to Ps. 16,924 million (US$939.9 million). Average same-station sales grew 8.7%, driven by a 10% increase in the average volume and a 1.2% decline in the average price per liter, as well as an increase in the wholesale business volume. The company’s OXXO Gas retail network had 552 points of sale as of Dec. 31, 2025. Operating income rose 8.4%, with the operating margin expanding 20 bps to 4.8%.

Coca-Cola FEMSA: Total revenues for the segment advanced 2.9% year over year to Ps. 77,750 million (US$4.3 billion). On a comparable basis, revenues moved up 6%. Coca-Cola FEMSA’s consolidated operating income increased 13.3% year over year and 16.7% on a comparable basis. The segment’s operating margin expanded 160 bps to 17.6%.

FEMSA’s Financial Position

As of Dec. 31, 2025, FEMSA had cash and cash equivalents of Ps. 107,980 million (US$6 billion). The company’s long-term debt was Ps. 126,992 million (US$7.05 billion). 

In the fourth quarter of 2025, capital expenditure totaled Ps. 14,200 million (US$788.6 million), a 31.4% decline from the prior year, reflecting lower investments across all businesses. The reduction underscores a disciplined and more selective approach to growth across the portfolio. 

Lower spending in the quarter within Proximity Americas was partly attributable to the normalization of the store expansion curve in Mexico, where a larger number of openings had already been completed earlier in the year. It also reflects the ongoing refinement of the value proposition in Colombia, where expansion became more selective and underperforming stores were closed. Additionally, the company maintained a flat to moderate pace of expansion in OXXO Chile and Peru, while significantly scaling back investment in Health Mexico.

Stocks to Consider

We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Keurig Dr Pepper Inc. KDP, Anheuser-Busch InBev BUD and Carlsberg CABGY.

Keurig Dr Pepper is a prominent integrated brand owner, manufacturer and distributor of beverages across the United States, Canada, Mexico and the Caribbean. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for KDP’s 2026 EPS indicates growth of 6.3% from the previous year’s reported figures. Keurig Dr Pepper delivered a trailing four-quarter average earnings surprise of 3.1%.

Anheuser-Busch InBev, alias AB InBev, is a global brewing company with more than 500 iconic brands. It presently carries a Zacks Rank #2.

The Zacks Consensus Estimate for AB InBev’s 2026 sales and EPS indicates growth of 6.3% and 12.9%, respectively, from the prior-year reported levels. AB InBev delivered a trailing four-quarter average earnings surprise of 4%.

Carlsberg is a brewing company and has operations in Northern and Western Europe, Eastern Europe, and Asia. CABGY currently has a Zacks Rank #2.

The Zacks Consensus Estimate for Carlsberg’s 2026 sales and EPS implies growth of 34.9% and 17.8%, respectively, from the previous year’s reported numbers.

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This article originally published on Zacks Investment Research (zacks.com).

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