SEC Form 6-K filed by Coca Cola Femsa S.A.B. de C.V.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 July 2024
Commission File Number 1-12260

COCA-COLA FEMSA, S.A.B. de C.V.

(Translation of registrant’s name into English)

United Mexican States

(Jurisdiction of incorporation or organization)

Calle Mario Pani No. 100,
Santa Fe Cuajimalpa,
Cuajimalpa de Morelos,
05348, Ciudad de México,

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)

Yes    No  X 

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)

Yes    No  X 

Indicate by check mark whether the registrant by furnishing the information contained in this Form 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-__.

Mexico City, July 19, 2024, Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOFUBL, NYSE: KOF) (“Coca-Cola FEMSA”, “KOF” or the “Company”), the largest Coca-Cola franchise bottler in the world by sales volume, announces results for the second quarter of 2024.

Ian Craig, Coca-Cola FEMSA’s CEO, commented:

"As we close a positive first half of the year, I am encouraged by the progress we are making in implementing a long-term sustainable growth model. For the second quarter, we delivered solid volume growth in Mexico, Central America, and Brazil, achieving double-digit consolidated revenue and operating income growth. We also continued progressing towards becoming our customers’ preferred commercial platform, completing the rollout of Juntos+ version 4.0 in Mexico and Brazil, while beginning its implementation in Guatemala, Panama, and Colombia. This version features advanced analytics and a more user-friendly interface. Now more than half of our total customer base are digital buyers.

Last May, our resilience and ability to respond to challenges was put to the test by the severe flooding that impacted the south of Brazil. I want to take a moment to express our heartfelt support to all of the people affected by this flooding and to recognize the leadership and swift actions taken by our team to ensure the wellbeing of our Brazilian collaborators as well as their families and to provide effective community support while also mitigating operational disruptions.

Looking ahead, our priorities for the year remain clear: continue building on the growth momentum of our core business, take Juntos+ to the next level, continue developing our customer-centric culture, and implementing initiatives to foster a sustainable future.”

RECENT DEVELOPMENTS

CONFERENCE CALL INFORMATION

CONSOLIDATED SECOND QUARTER RESULTS

Volume increased 7.5% to 1,095.8 million unit cases, driven by volume growth in most of our territories, including a strong performance in Mexico, Brazil, Guatemala, and our Central America South territories, partially offset by a decrease in Argentina and Uruguay.

Total revenues increased 13.1% to Ps. 69,456 million. This increase was driven mainly by solid volume growth, partially offset by unfavorable currency translation effects of most of our operating currencies into Mexican Pesos. Excluding currency translation effects, total revenues increased 17.9%.

Gross profit increased 17.2% to Ps. 31,961 million, and gross margin increased 160 basis points to 46.0%. This expansion was driven mainly by our top-line growth, coupled with favorable packaging costs and favorable hedging initiatives. These effects were partially offset by higher sweetener costs across our territories and the depreciation of the Argentine Peso. Excluding currency translation effects, gross profit increased 22.0%

Operating income increased 13.8% to Ps. 9,746 million, and operating margin increased 10 basis points to 14.0%. This resilient margin performance was driven mainly by operating leverage and operating expense efficiencies, offsetting a non-cash operating foreign exchange loss driven by the depreciation of the Mexican Peso, increases in operating expenses such as labor, freight, and maintenance, and non-recurring expenses related to the flooding in the South of Brazil. Excluding currency translation effects, operating income increased 17.5%.

Comprehensive financing result recorded an expense of Ps. 885 million, compared to an expense of Ps. 1,377 million in the previous year. This decrease was driven mainly by a foreign exchange gain of Ps. 177 million as compared to a loss of Ps. 437 million, as our net cash exposure in U.S. dollars was positively impacted by the depreciation of the Mexican Peso and the Brazilian Real.

In addition, we recognized a gain of Ps. 61 million in financial instruments as compared to a loss of Ps. 68 million as compared to the same period of the previous year related to an increase in the long-term interest rates in Brazil.

These effects were partially offset by higher interest expenses, net, of Ps. 1,157 million as compared to Ps. 935 million in the same period of the previous year, mainly as a result of (i) lower interest income, and (ii) a slight increase in our interest expense.

Additionally, we recorded a lower gain in monetary positions in inflationary subsidiaries as compared to the same period of the previous year.

Income tax as a percentage of income before taxes was 34.9% as compared to 27.2% during the same period of 2023. This increase was driven mainly by inflationary effects, deferred taxes, and the recognition of a one-time effect related to previous acquisitions in Brazil.

Net income attributable to equity holders of the company was Ps. 5,608 million as compared to Ps. 4,926 million during the same period of the previous year. This increase was driven mainly by operating income growth and a decrease in our comprehensive financing result that was partially offset by an increase in our effective tax rate. Earnings per share¹ were Ps. 0.33 (Earnings per unit were Ps. 2.67 and per ADS were Ps. 26.69.).

CONSOLIDATED FIRST six months RESULTS

Volume increased 7.5% to 2,104.4 million unit cases, driven by volume growth in most of our territories, including a strong performance in Mexico, Brazil, Colombia, Guatemala, and our Central America South territories, partially offset by a decrease in Argentina and Uruguay.

Total revenues increased 12.7% to Ps. 133,685 million. This increase was driven mainly by solid volume growth, partially offset by unfavorable currency translation effects of most of our operating currencies into Mexican Pesos. Excluding currency translation effects, total revenues increased 18.0%.

Gross profit increased 15.0% to Ps. 60,561 million, and gross margin expanded 90 basis points to 45.3%. This gross profit increase was driven mainly by our top-line growth, coupled with favorable packaging costs and hedging initiatives. These effects were partially offset by higher sweetener costs across our territories and the depreciation of the Argentine Peso. Excluding currency translation effects, gross profit increased 20.4%.

Operating income increased 13.0% to Ps. 18,380 million, and operating margin remained flat at 13.7%. This stable margin performance was driven by i) increases in operating expenses such as labor, freight, and maintenance, ii) a tough comparison base that included a non-cash operating foreign exchange gain in Mexico, as compared to a loss during the second quarter of this year, and iii) non-recurring expenses related to the flooding in the South of Brazil. These effects were offset by top-line growth and operating expense efficiencies. Excluding currency translation effects, operating income increased 18.1%.

Comprehensive financing result recorded an expense of Ps. 2,080 million, compared to an expense of Ps. 2,774 million in the previous year. This decrease is explained mainly by a foreign exchange gain of Ps. 204 million as compared to a loss of Ps. 1,066 million, as our net cash exposure in U.S. dollars was positively impacted by the depreciation of the Mexican Peso and the Brazilian Real during the first six months of 2024.

Additionally, we recorded a gain of Ps. 15 million in financial instruments as compared to a loss of Ps. 15 million as compared to the same period of the previous year.

In addition, we recognized an interest expense of Ps. 3,648 million as compared to an expense of Ps. 3,678 million in the same period of the previous year, mainly as a result of a lower interest expense related to the maturity of a Mexican Peso denominated bond, partially offset by new financing in Mexico and Argentina.

These effects were partially offset by a lower interest income of Ps. 1,307 million as compared to Ps. 1,866 million during the same period of the previous year, mainly as a result of a decrease in interest rates in Brazil and Mexico. Additionally, we recorded a lower gain in monetary positions in inflationary subsidiaries of Ps. 42 million, as compared to a gain of Ps. 120 million during the same period of the previous year.

Income tax as a percentage of income before taxes was 32.9% as compared to 29.6% during the same period of 2023. This increase was driven mainly by inflationary effects and deferred taxes.

Net income attributable to equity holders of the company increased 19.8% to reach Ps. 10,598 million during the first six months of 2024, as compared to Ps. 8,837 million during the same period of the previous year. This increase was driven mainly by operating income growth, coupled with a decrease in our comprehensive financing result. Earnings per share¹ were Ps. 0.63 (Earnings per unit were Ps. 5.04 and per ADS were Ps. 50.45.).

MEXICO & CENTRAL AMERICA DIVISION SECOND QUARTER RESULTS

(Mexico, Guatemala, Costa Rica, Panama, and Nicaragua)

Volume increased 8.1% driven by growth across our territories in the division. Mexico volumes grew 7.9%, volumes in Guatemala grew 12.6%, and volumes in Central America South grew 6.2%.

Total revenues increased 15.3% to Ps. 45,067 million, driven mainly by volume growth. These effects were partially offset by unfavorable currency translation effects from most of our operating currencies in Central America. Excluding currency translation effects, total revenues increased 15.6%.

Gross profit increased 17.8% to Ps. 21,948 million, and gross margin expanded 100 basis points to 48.7%. This margin expansion was driven mainly by our top-line growth, favorable packaging costs, and hedging initiatives. These effects were partially offset by an increase in sweetener costs. Excluding currency translation effects, gross profit increased 18.1%.

Operating income increased 12.0% to Ps. 7,291 million, and operating margin contracted 50 basis points to 16.2%. This growth was driven mainly by our top-line growth and expense efficiencies. These effects were partially offset by a non-cash operating foreign exchange loss driven by the depreciation of the Mexican Peso, coupled with increases in operating expenses such as labor, freight, and maintenance. Excluding currency translation effects, operating income increased 12.3%.

SOUTH AMERICA DIVISION SECOND QUARTER RESULTS

(Brazil, Argentina, Colombia, and Uruguay)

Volume increased 6.5%, driven mainly by 12.1% growth in Brazil and 1.0% growth in Colombia. This growth was partially offset by a 9.9% decline in Argentina and a 12.1% decline in Uruguay.

Total revenues increased 9.2% to Ps. 24,389 million. This increase was driven mainly by volume growth, partially offset by unfavorable currency translation effects from most of our operating currencies in the division into Mexican pesos. Excluding currency translation effects, total revenues increased 22.3%.

Gross profit increased 16.0% to Ps. 10,014 million, and gross margin expanded 250 basis points to 41.1%. This increase was driven mainly by our top-line growth, declining packaging costs, and favorable hedging strategies. This growth was partially offset by increases in sweeteners costs and the depreciation of most of our operating currencies as applied to our U.S. dollar-denominated raw material costs. Excluding currency translation effects, gross profit increased 31.4%.

Operating income increased 19.6% to Ps. 2,455 million in the second quarter of 2024, resulting in an operating margin expansion of 90 basis points to 10.1%. This increase was driven mainly by operating leverage resulting from top-line growth, partially offset by higher fixed costs and expenses; non-recurring expenses related to the flooding in the South of Brazil; and the top-line contraction from Argentina. Excluding currency translation effects, operating income increased 36.3%.

DEFINITIONS

Volume is expressed in unit cases. Unit case refers to 192 ounces of finished beverage product (24 eight-ounce servings) and, when applied to soda fountains, refers to the volume of syrup, powders, and concentrate that is required to produce 192 ounces of finished beverage product.

Transactions refers to the number of single units (e.g., a can or a bottle) sold, regardless of their size or volume or whether they are sold individually or in multipacks, except for soda fountains, which represent multiple transactions based on a standard 12 oz. serving.

Operating income is a non-GAAP financial measure computed as “gross profit – operating expenses – other operating expenses, net + operative equity method (gain) loss in associates.”

Adjusted EBITDA is a non-GAAP financial measure computed as “operating income + depreciation + amortization & other operating non-cash charges.”

Earnings per share are equal to “quarterly earnings / outstanding shares.” Earnings per share (EPS) for all periods are adjusted to give effect to the stock split resulting in 16,806,658,096 shares outstanding. For the convenience of the reader, as a KOFUBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares), earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOFUBL Units.

COMPARABILITY

Our “comparable” term means, with respect to a year-over-year comparison, the change of a given measure excluding the effects of: (i) mergers, acquisitions, and divestitures; and (ii) translation effects resulting from exchange rate movements. In preparing this measure, management has used its best judgment, estimates, and assumptions in order to maintain comparability.

ABOUT THE COMPANY

Stock listing information: Mexican Stock Exchange, Ticker: KOFUBL | NYSE (ADS), Ticker: KOF | Ratio of KOFUBL to KOF = 10:1

Coca-Cola FEMSA, S.A.B. de C.V. is the largest franchise bottler in the world by sales volume. The Company produces and distributes trademark beverages of The Coca-Cola Company, offering a wide portfolio to more than 272 million consumers. With over 104,000 employees, the company markets and sells approximately 4 billion unit cases through more than 2.1 million points of sale a year. Operating 56 manufacturing plants and 252 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain. The Company is a member of the Dow Jones Sustainability Index MILA Pacific Alliance, FTSE4Good Emerging Index, and the S&P/BMV Total Mexico ESG Index, among others. Its operations encompass certain territories in Mexico, Brazil, Guatemala, Colombia, and Argentina and, nationwide, in Costa Rica, Nicaragua, Panama, Uruguay and, in Venezuela, through an investment in KOF Venezuela. For further information, please visit www.coca-colafemsa.com

ADDITIONAL INFORMATION

All of the financial information presented in this report was prepared under International Financial Reporting Standards (IFRS).

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance, which should be considered as good faith estimates by Coca-Cola FEMSA. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, many of which are outside Coca-Cola FEMSA’s control, which could materially impact the Company’s actual performance. References herein to “US$” are to United States dollars. This news release contains translations of certain Mexican peso amounts into U.S. dollars for the convenience of the reader. These translations should not be construed as representations that Mexican peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.

(6 pages of tables to follow)

COCA-COLA FEMSA
CONSOLIDATED BALANCE SHEET
Millions of Pesos
Assets		Jun-24	Dec-23	% Var.		Liabilities & Equity		Jun-24	Dec-23	% Var.
Current Assets						Current Liabilities
Cash, cash equivalents and marketable securities						Short-term bank loans and notes payable		622	140	345%
		38,271	31,060	23%		Suppliers		25,653	27,351	-6%
Total accounts receivable		16,803	17,749	-5%		Short-term leasing Liabilities		756	752	1%
Inventories		12,413	11,880	4%		Other current liabilities		38,782	26,673	45%
Other current assets		7,290	7,049	3%		Total current liabilities		65,813	54,916	20%
Total current assets		74,777	67,738	10%		Non-Current Liabilities		-	-
Non-Current Assets		-	-			Long-term bank loans and notes payable		67,929	65,074	4%
Property, plant and equipment		142,619	133,406	7%		Long Term Leasing Liabilities		2,138	1,769	21%
Accumulated depreciation		(58,855)	(54,676)	8%		Other long-term liabilities		17,255	18,056	-4%
Total property, plant and equipment, net		83,764	78,730	6%		Total liabilities		153,136	139,815	10%
Right of use assets		2,738	2,388	15%		Equity		-	-
Investment in shares		9,458	9,246	2%		Non-controlling interest		6,751	6,680	1%
Intangible assets and other assets		100,283	101,162	-1%		Total controlling interest		128,141	127,025	1%
Other non-current assets		17,007	14,256	19%		Total equity		134,892	133,705	1%
Total Assets		288,028	273,520	5%		Total Liabilities and Equity		288,028	273,520	5%
		June 30, 2024
Debt Mix		% Total Debt (1)	% Interest Rate Floating (1) (2)	Average Rate		Debt Maturity Profile
Currency
Mexican Pesos		60.9%	3.7%	8.8%
U.S. Dollars		17.1%	53.2%	4.6%
Colombian Pesos		1.3%	0.0%	6.3%
Brazilian Reals		20.0%	18.8%	9.2%
Argentine Pesos		0.7%	0.0%	50.8%
Total Debt		100%	22.8%	8.4%
(1) After giving effect to cross- currency swaps.
(2) Calculated by weighting each year´s outstanding debt balance mix.
Financial Ratios		2Q 2024	FY 2023	Δ%
Net debt including effect of hedges (1)(3)		31,218	37,794	-17.4%
Net debt including effect of hedges / Adj. EBITDA (1)(3)		0.62	0.81
Adj. EBITDA/ Interest expense, net (1)		11.09	11.86
Capitalization (2)		33.8%	32.8%
(1) Net debt = total debt - cash
(2) Total debt / (total debt + shareholders' equity)
(3)  After giving effect to cross-currency swaps.

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 by the undersigned, thereunto duly authorized.