FMX — Fomento Económico Mexicano, S.A.B. de C.V.

Summary of FEMSA Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Revenues: Increased by 5.7% year-over-year, driven by improved performance in Proximity Americas and growth outside Mexico.
• Operating Income: Rose by 8.5%, aided by cost containment despite gross margin pressures.
• Net Consolidated Income: Reached MXN 12.7 billion, a 33.6% increase from Q4 2024, primarily due to higher operating income and reduced nonoperating expenses.
• Proximity Americas: Revenues grew by 5.3% (6.3% on a comparable basis), with same-store sales in Mexico at 4.4%.
• Gross Margin: Improved to 48.1%, reflecting better scale and supplier negotiations.
• CapEx: Totaled MXN 45.3 billion for the year, with a focus on strategic growth and infrastructure.

2. Strategic Updates and Business Highlights

• OXXO Mexico: Experienced a recovery in same-store sales and traffic trends, with a focus on affordability and value propositions. Initiatives included expanding low-price SKUs and enhancing coffee offerings.
• OXXO Colombia: Achieved positive EBITDA for the first time and nearly breakeven EBIT in Q4.
• Bara: Showed strong momentum with double-digit same-store sales growth and increased private label offerings.
• Coca-Cola FEMSA: Continued focus on driving volume and enhancing customer-centric strategies.
• Restructuring: Implemented a leaner organizational structure across divisions, aiming for significant cost savings and operational efficiencies.

3. Forward Guidance and Outlook

• 2026 Goals: Aim for mid-single-digit growth in same-store sales at OXXO Mexico and a focus on recovering traffic. Plans to expand the store base by approximately 1/3 in Mexico and 20% in Colombia.
• Strategic Priorities: Continued emphasis on cash flow management, disciplined capital allocation, and enhancing the value propositions across all business units.
• Long-Term Vision: Targeting significant growth in OXXO Brazil and Bara, with expectations of increased store openings and market share gains.

4. Bad News, Challenges, or Points of Concern

• Health Division: Registered a provision for uncollectible accounts of MXN 487 million, reflecting ongoing struggles in the Colombian institutional market.
• Traffic Decline: Despite improvements, OXXO Mexico's traffic remains a concern, with management emphasizing the need to regain market share.
• Economic Environment: A soft consumer environment in Mexico continues to pose challenges, although recent trends show signs of stabilization.
• Competitive Pressures: Ongoing competition in the discount space and the need to adapt to changing consumer preferences for convenience and affordability.

5. Notable Q&A Insights

• Balance Between Growth and Profitability: Management emphasized the importance of recovering traffic and market share over short-term profitability, with a focus on enhancing the customer experience.
• Efficiency Initiatives: Questions about the magnitude of restructuring efforts revealed expectations for significant cost savings, with a renewed focus on cash flow and operational discipline.
• M&A Strategy: Management expressed caution regarding M&A opportunities in the U.S., citing high seller expectations and a focus on finding value-creating opportunities.
• Future of Spin: Spin will remain a distinct operating unit but will align more closely with OXXO to leverage synergies and improve performance.

This summary encapsulates the key points discussed during the earnings call, providing a clear overview of FEMSA's financial performance, strategic initiatives, and outlook for the future.