Q1 2024 Coca-Cola FEMSA SAB de CV Earnings Call
Operator: Hello, and thank you for joining today's call. We'll be starting in a few moments to allow other participants to join. Please stay on the line.
Hello, and thank you for joining today's call will be starting in a few moments to allow other participants to join please stay on the line.
Melissa: Hello, and welcome to the Coca-Cola FEMSA first quarter 2024 conference call. My name is Melissa, and I will be your coordinator for today's event. Please note this conference is being recorded, and for the duration of the call, your lines will be in a listen-only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you'll be connected to an operator. I'll now turn the call over to Mr. Jorge Collazo, Investor Relations Director. Please go ahead.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Hum.
Yes.
Okay.
Mhm.
[music].
Yes.
Hum.
[music].
Jorge Alejandro Collazo Pereda: Good morning to you all and welcome to this webcast and conference call to review our first quarter 2024 results. Joining me this morning is Ian Craig, our Chief Executive Officer, and Gerardo Cruz, our Chief Financial Officer.
Jorge Alejandro Collazo Pereda: As usual, after prepared remarks, we will open up the call for a question and answer session. Before we proceed, just a reminder for all participants to take note of our cautionary statement included in the earnings release that went out this morning. This conference call may include forward-looking statements that should be considered as good faith estimates made by the company. These forward-looking statements reflect management's expectations and are based upon currently available data. However, actual results are subject to future events and uncertainties that can materially impact the company's performance. With that, I will turn the call over to our CEO. Please go ahead, Ian.
Melissa: Hello, and welcome to Coca Cola FEMSA first quarter 'twenty 'twenty four conference call. My name is Melissa and I will be your coordinator for today's event.
Melissa: Please note. This conference is being recorded and for the duration of the call. Your lines will be in a listen only mode. However, you will have the opportunity to ask questions at the end of the presentation that can be done by pressing star one on your telephone keypad to budget for your question.
Melissa: If you require assistance at any point, please press star zero and you'll be connected to an operator I'll now turn the call over to Mr. Jorge <unk> Investor Relations Director. Please go ahead.
Okay.
Jorge: Good morning to you all and welcome to this webcast and conference call to review, our first quarter 2024 results.
Ian Marcel Craig Garca: Thank you, Jorge. Good morning, everyone.
Jorge: Joining me. This morning is Greg <unk>, our Chief Executive Officer, and set up across our Chief Financial Officer.
Ian Marcel Craig Garca: Thank you for joining us this morning. Coca-Cola FEMSA showed another strong performance on top of the positive results achieved in 2023. As we mentioned in our previous earnings call, in 2024, we are focusing on three key drivers. First, build on the growth momentum of our core business. Second, take Juntos Plus version 4.0 to the next level with the deployment of advanced AI capabilities. And third, continue fostering a customer-centric and psychologically safe culture for Coca-Cola FEMSA.
Speaker Change: As usual after our prepared remarks, we will open up the call for a question and answer session.
Before we proceed just a reminder for all participants to take note of our cautionary statement included in the earnings release that went out this morning.
Speaker Change: This conference call May include forward looking statements and should be considered as good faith estimates made by the company.
Speaker Change: These forward looking statements reflect management's expectations and are based upon currently available data.
Speaker Change: Actual results are subject to future events and uncertainties.
Speaker Change: Can materially impact the company's performance.
Speaker Change: With that let me turn the call over to our CEO. Please go ahead Ian.
Ian Marcel Craig Garca: During today's call, I will provide you with an update on the main developments in our business, our views on the operating environment, and our strategic progress, focusing on the three key drivers. Then Jerry will walk you through each of our divisions' performance and provide updates on our progress regarding sustainability.
Ian: Thank you good morning, everyone. Thank you for joining us this morning.
Ian: Well get Cola FEMSA showed another strong performance on top of the positive results achieved in 2023.
Ian: As we mentioned in our previous earnings call.
Ian: <unk> talked before we are focusing on three key drivers first build on the growth momentum of our core business.
Ian Marcel Craig Garca: With that, let me begin by summarizing our consolidated results for the first quarter. Our volumes have accelerated sequentially to increase 7.3% year-on-year, surpassing 1 billion unit cases. This increase was driven mainly by the strong performance achieved in Mexico, Brazil, Guatemala, Colombia, and most of our Central America South Territories, which offset volume declines in Argentina, Uruguay, and Panama. We continue to report volume growth across all beverage categories. Sparkling beverage volumes grew 7.5%, driven mainly by the brand Coca-Cola, which achieved 7.9% growth. Filled beverages grew 5.4%, and bottled water grew 12.1%.
Ian: Exactly.
Ian: Four point, though to the next level with the deployment of advanced AI capabilities.
Ian: Third continue fostering a customer centric and psychologically state closer for Coca Cola FEMSA.
Ian: During today's call I will provide you with an update on the main developments of our business our views on the operating environment and our strategic progress focusing on the three key drivers.
Then Jerry will walk you through each of our division's performance and provide updates on our progress regarding sustainability.
Jerry: With that let me begin by summarizing our consolidated results for the first quarter.
Jerry: Our volumes accelerated sequentially to increased seven 3% year on year, surpassing 1 billion unit cases.
Jerry: This increase was driven mainly by the strong performance achieved in Mexico, Brazil, Guatemala, Colombia, and most of our Central America, South territory, which offset volume declines in Argentina, Uruguay and Panama.
Ian Marcel Craig Garca: Total revenues for the quarter grew 11.2%, reaching 63.8 billion pesos. This was driven mainly by solid volume growth, offsetting an unfavorable currency translation related to the appreciation of the Mexican peso as compared to most of our operating currencies. On a currency neutral basis, our total revenues increased a solid 17.7%. Gross profit increased 11.7% to 28.4 billion pesos, leading to a slight margin expansion of 20 basis points to 44.6%. This increase was driven mainly by operating leverage resulting from our solid top-line performance and the appreciation of most of our operating currencies as compared with the US dollar. However, these effects were partially offset by higher sweetener costs across our operations and a significant depreciation of the Argentine peso as compared with the previous year.
Jerry: We continue to report volume growth across all beverage categories.
Jerry: Sparkling beverage volumes grew seven 5% driven mainly by brand Coca Cola, which achieved seven 9% growth.
Jerry: Field beverages grew five 4% and bottled water grew 12, 1%.
Jerry: Total revenues for the quarter grew 11.2%, reaching 53 8 billion pesos, driven mainly by solid volume growth offsetting an unfavorable currency translation related to the appreciation of the Mexican peso as compared to most of our operating.
Jerry: Guarantees.
Jerry: On a currency neutral basis, our total revenues increased a solid 17, 7%.
Jerry: Gross profit increased 11 point, 10% to $28 4 billion pesos, leading to a slight margin expansion of 20 basis points to 44, 6%.
Ian Marcel Craig Garca: Our operating income increased 11.6% to 8.6 billion pesos, with operating margin remaining flat at 13.5%. Our operating leverage, top-line growth, and cost and expense efficiencies enabled us to maintain flat margins despite increases in operating expenses such as labor, freight, and maintenance. Notably, our comparison base includes a larger non-cash foreign exchange gain due to the significant depreciation of the Mexican peso during the same period of the previous year. Adjusted EBTA for the quarter increased 13.5% to reach $11.9 billion pesos, and EBTA margin expanded 40 basis points to 18.7.
Jerry: This increase was driven mainly by the operating leverage resulting from our solid topline performance and the appreciation of most of our operating currencies as compared with a U S. Dollar.
Jerry: These effects were partially offset by higher sweetener costs across our operations.
Jerry: And the significant depreciation of the Argentine peso as compared with the previous year.
Jerry: Our operating income increased 11, 6% to eight 6 billion pesos.
Jerry: With operating margin remaining flat at 13, 5%.
Jerry: Our operating leverage topline growth and cost and expense efficiencies enabled us to maintain flat margins. Despite increases in operating expenses, such as labor freight and maintenance.
Jerry: Notably our comparison base includes a larger noncash foreign exchange gain due to the significant depreciation of the Mexican peso during the same period of the previous year.
Ian Marcel Craig Garca: Finally, our majority net income increased 37.8% to reach 5 billion pesos. This increase was driven mainly by the operating income growth I previously described coupled with a decrease in our comprehensive financing results. This decrease in comprehensive financing results was driven mainly by the significant depreciation of the Mexican peso during the first quarter of 2023, which generated a non-cash foreign exchange loss of 640 million pesos in the year earlier period.
Jerry: Okay.
Jerry: Adjusted EBITDA for the quarter increased 13, 5%.
Jerry: <unk> 11, 9 billion pesos and EBITDA margin expanded 40 basis points to 18, 7%.
Jerry: Finally, our majority net income increased 27, 8% to reach 5 billion peso.
Jerry: This increase was driven mainly by the operating income growth I previously described.
Jerry: Buffalo with a decrease in our comprehensive financing results.
This decrease in comprehensive financing financial result was driven mainly by the significant depreciation of the Mexican peso during the first quarter of 2023, which generated a noncash foreign exchange loss of 640 million pesos.
Ian Marcel Craig Garca: Now, standing on our operations highlight for the first quarter. In Mexico, our volumes increased 6.9%, reaching 490.4 billion unit cases. We continue to see a favorable macroeconomic backdrop driven by structural and demographic tailwinds such as decreasing unemployment and continuously improving payroll. For instance, Mexico's unemployment rate declined from 5.5% in June 2020 to 2.6% in February 2024, while average wage in real terms has increased by almost 18% in five years.
Year earlier period.
Jerry: Now expanding on our operational guidance for the first quarter in Mexico, our volumes increased six 9%, reaching 494 billion unit cases, we continue to see a favorable macroeconomic backdrop driven by structural and demographics.
Jerry: Irwin such as decreasing unemployment on continuously improving payrolls.
Jerry: Or is that Mexico's unemployment rate has declined from five 5% in June 2020, 226% in February 'twenty 'twenty four.
Jerry: While average wage in real terms, Scott increased by almost 18% in five years.
Ian Marcel Craig Garca: This environment, coupled with favorable weather and our initiatives to grow our core business, is driving strong demand across our Mexico Territory. Regarding share, we continue with gains in cola but have seen impact in flavors due to unavailability. Additionally, we saw shared gains in water, energy, and sports.
Jerry: Is the environment, coupled with favorable weather and our initiatives to grow our core business are driving strong demand across our Mexico. There your story.
Jerry: Regarding share we continue with gains in Cola broadcasting impacting flavors do two on availability.
Jerry: Additionally, we saw share gains in water energy and sports drinks.
Ian Marcel Craig Garca: To give you a sense of the strong demand we are seeing in Mexico, we achieved historic production records of 186 million unit cases in March. However, despite our supply chain team's effort to add capacity, productivity, and improve our customer service metrics, we still identified unserved demand during the quarter, mainly in the flavors category in the Southeast region of the country. To address this situation, and consistent with our priorities, we are on track with our ambitious capacity build-up plan. On March 22, a new PET one-way line started production, and only three days later, a new distribution center began operations in the Valley of Maine.
Jerry: We'll give you a sense of the strong demand we're seeing in Mexico, We achieved historic production record of 186 million unit cases in March.
Jerry: However, despite our supply chain teams airports capacity productivity and improve our customer service metrics, we still in the fight on serve demand during the quarter, mainly in the flavors category in the southeast region of the country.
Jerry: To address these situations and consistent with our priorities we're on track with our ambitious capacity buildup plan.
Jerry: On March 22nd a new.
Jerry: B B one way line started production in only three days later, our new distribution center began operations in the value of mix.
Ian Marcel Craig Garca: Finally, as we mentioned on our previous earnings call, we began the rollout of our version 4.0 Juntos Plus in Mexico during the first quarter of 2024, and our customers' adoption and feedback have exceeded expectations. In just the second month after its launch, we have more than 214,000 active buyers in this new version from a total of 490,000 monthly active purchasers in the fund. Importantly, 36% of our traditional trade orders are already done digitally. We are confident that with these capacity expansions coupled with our commercial plans and our customer-centric culture, we will continue driving positive results in Mexico. Moving on to Guatemala.
Jerry: Finally, as we mentioned on our previous earnings calls we began the rollout of our version four <unk> Dot plot in Mexico during the first quarter of 2024.
Jerry: Our customers' adoption and feedback has exceeded expectations in just a second month. After its launch we have more than 214000 active buyers in this new version from a total of 490000 monthly active purchasers in the country.
Importantly, 36% of our traditional trade orders are already done digitally.
Jerry: We are confident that with these capacity expansions, coupled with our commercial plan and our customer centric culture. We will continue driving positive results in Mexico.
Jerry: Moving onto what the Mueller.
Ian Marcel Craig Garca: Our volume increased 17% as we continue to outperform with the brand Coca-Cola Energy & Juice. During the previous earnings call, we mentioned that on a comparable basis, volume in the country has doubled since 2017, and we continue to see plenty of opportunities for continued strong growth. Regarding B2B, Guatemala is growing its monthly active buyers with the rollout of Juntos Plus, strengthening our digital relevance in the traditional trade. For instance, we have reached 68,000 monthly active purchasers, representing 50% penetration of our customer base, to continue supporting growth.
Jerry: Our volume increased 17% as we continue outperforming with brand Coca Cola energy in juices.
Jerry: During the previous earnings call, we mentioned that on a comparable basis volume in the country has doubled since 2017, and we continue to see plenty of opportunities for continued strong growth.
Jerry: Regarding b to B, what the malaise growing its monthly active buyers with a rollout of users plus strengthening our digital relevance in the traditional trade for instance, we have reached 68000 monthly active purchasers, representing 50% penetration of our customer base.
Jerry: To continue supporting growth.
Ian Marcel Craig Garca: We're also adding capacity in Guatemala. During the quarter, a new one-way bottling line started production, and we are on track to switch on a new returnable bottling line next. Now, moving on to our South America division. In Brazil, a resilient macroenvironment with controlled inflation and declining interest rates, coupled with favorable weather, drove 10.4% volume growth during the quarter to reach 288.2 million unit cases.
Jerry: Also adding capacity in Guatemala during the quarter, our new one way bought in line started production and we are on track to switch on our new returnable bottling lines next year.
Jerry: Now moving on to our South America Division.
Jerry: In Brazil, our resilient microenvironment with controlling inflation.
Jerry: And declining interest rates, coupled with favorable weather growth 10, 4% volume growth during the quarter to reach 288 2 million unit cases.
Ian Marcel Craig Garca: We continue strengthening our competitive positions across key beverage categories. For instance, we reached record levels of share in the sparkling beverage category, driven mainly by gains in the Coca-Cola brand. Notably, Coca-Cola Zero Sugar continues its impressive rate of growth in Brazil, growing 49.2% year-over-year.
Jerry: We continue strengthening our competitive positions across key beverage categories. For instance, we reached record levels of share in the sparkling beverage category.
Jerry: Mainly by gains in brand Coca Colas, notably Coca Cola Zero Sugar continues its impressive rate of growth in Brazil, growing 49, 2% year over year.
Ian Marcel Craig Garca: As we continue to focus on growing the core, our single-serve mix increased 0.4 percentage points versus the previous year, reaching 24.2%, while profitable emerging beverage categories accelerated, driven mainly by power rates, which grew 39.5% year-on-year. Similar to Mexico, strong demand tailwinds are putting our infrastructure under significant stress. And our supply chain team is taking both short-term and long-term actions, aligned with our strategic priority to de-bottleneck our infrastructure to support our growth ambitions. Finally, on the digital front, we continued to scale version 4.0 of the Juntos Plus app in Brazil, with more than 65% of traditional trade orders now done digitally in Colombia.
Jerry: As we continue to focus on growing the core our single serve mix increased 0.4 percentage points versus the previous year, reaching 24, 2% was profitable emerging beverage categories accelerated driven mainly by Powerade, which grew 39, 5% year on year.
Jerry: Similar to Mexico strong demand tailwind to our board in our infrastructure under significant stress and our supply chain team is taking both short term and long term actions aligned with our strategic priority to debottleneck, our infrastructure to support our growth ambitions.
Finally on the digital front, we continued scaling version for <unk>, plus <unk> in Brazil with more than 65% of traditional trade orders now done digitally.
Jerry: In Colombia this.
Ian Marcel Craig Garca: Despite a challenging environment driven mainly by stubborn inflation, our volumes increased 9.7% to reach 88.3 million unit cases. Our team's focus on improving service and availability. Coupled with our commercial initiatives, this is resulting in share gains across categories and channels. Among the initiatives to grow the core, we're expanding our refillable platform while focusing on single-serve mix growth and our zero-sugar portfolio. As in other high-potential markets, we are increasing capacity and streamlining our value chain.
Jerry: Site at challenging environment, driven mainly by stubborn inflation, our volumes increased nine 7% to reach $88 3 million unit cases, our team's focus on improving service and availability.
Jerry: Coupled with our commercial initiatives is resulting in share gains across categories and channels.
Jerry: Among the initiatives to grow the core we're expanding our refillable platform, while focusing on single serve mix growth on our zero sugar portfolio.
Jerry: As in other high potential markets, we're increasing capacity and streamlining our value chain.
Ian Marcel Craig Garca: We expect to install two new lines this year; one will be in production during the first half of the year and the other before year-end. Finally, Argentina. As anticipated, the consumer environment during the first quarter worsened significantly, leading to a 28% contraction in disposable income. This challenging start to the year, coupled with unfavorable weather, led our volumes in the country to decline 16.9%.
Jerry: We expect to install two new lines. This year, one will begin production in the first half of the year and the other before year end.
Jerry: Finally, Argentina.
Jerry: As anticipated the consumer environment during the first quarter worsened significantly leading to a 28% contraction in disposable equal.
Jerry: This challenging start to the year, coupled with unfavorable weather led our volumes in the country to declined 16, 9%.
Ian Marcel Craig Garca: However, despite the many uncertainties ahead, the team remains focused on the objective set for the year, leveraging affordability, driving cost and expense controls, and increasing productivity. We're focused on protecting the short-term to emerge stronger in the long-term. Although hard to predict, we continue to expect gradual sequential improvements as the year progresses. As I previously mentioned, we are encouraged to start the year with positive momentum. We have robust plans for the year, and most importantly, we have the right team to execute them across our market. Together with our partners at the Coca-Cola Company, we are prioritizing long-term sustainable growth. With that, I will hand the call over to Gerardo.
Jerry: However, despite the many uncertainties ahead that team remains focused on the objectives set for the year leverage upward of value affordability drive cost and expense controls and increased royalties were focused on protecting the short term to emerge stronger in the long term and those are hard to predict we continue.
Jerry: To expect gradual sequential improvement as the year progresses.
Jerry: As I previously mentioned, we are encouraged to start the year with positive momentum we have robust plans for the year and most importantly, we have the right team to execute them across our markets.
Jerry: Together with our partner the Coca Cola Company, we are prioritizing long term sustainable growth.
Jerry: With that I will hand, the call over to Jeff.
Gerardo Cruz: Thank you, Ian. And good morning to you all. As usual, let me summarize our division's results for the first quarter. In Mexico and Central America, volumes increased 7.9% to reach 579.8 million unit cases. Accelerating sequentially, driven by positive performance across most of the division's territory, revenues increased 12.6% to 37.8 billion pesos, driven mainly by volume growth and partially offset by unfavorable translation effects into Mexican pesos. Excluding these effects, revenues increased 14.1%.
Jeff: Thank you Ian and good morning to you all as usual, let me summarize our divisions results for the first quarter.
Jeff: In Mexico, and Central America volumes increased seven 9% to reach $579 8 million unit cases, accelerating sequentially driven by positive performance across most of the divisions territories.
Jeff: Revenues increased 12, 6% to $37 8 billion vessels, driven mainly by volume growth and partially offset by unfavorable translation effects into Mexican pesos.
Jeff: Excluding these effects revenues increased 14, 1%.
Gerardo Cruz: Our gross profit increased 12.4% to reach 17.9 billion pesos, resulting in a gross margin of 47.3%, a 10 basis point contraction year on year. We are offsetting higher sugar prices in the division with top line growth, the appreciation of the Mexican peso, and favorable raw material hedging. Operating income increased 13.4% to 5.7 billion pesos driven mainly by our gross profit performance and variable expense efficiency. Our operating margin expanded 10 basis points to 15% as our gross profit growth was offset by an increase in operating expenses such as labor, marketing, and freight.
Jeff: Our gross profit increased 12, 4% to reach $17 9 billion vessels, resulting in a gross margin of 47, 3%, a 10 basis point contraction year on year.
Jeff: We are offsetting higher sugar prices in the division with topline growth the appreciation of the Mexican peso and favorable raw material hedging initiatives.
Jeff: Operating income increased 13, 4% to $5 7 billion pesos, driven mainly by our gross profit performance and variable expense efficiencies.
Jeff: Our operating margin expanded 10 basis points to 15% as our gross profit growth was offset by an increase in operating expenses, such as labor marketing and freight.
Gerardo Cruz: Importantly, our comparison base includes a larger non-cash foreign exchange gain driven by the significant appreciation of the Mexican peso during the first quarter of 2020. Finally, our adjusted EVDA in the division grew 15.5% with a 60 basis point margin expansion to 20.5%. Moving on to South America,
Jeff: Importantly, our comparison base includes a larger noncash foreign exchange gain driven by the significant depreciation of the Mexican peso during the first quarter of 2023.
Jeff: Finally, our adjusted EBITDA in the Division grew 15, 5% with a 60 basis point margin expansion to 25%.
Jeff: Moving on to South America.
Gerardo Cruz: Volumes increased 6.6% to 428.8 million unit cases. We continue to see solid volume growth in Brazil and Colombia, increasing 10.4% and 9.7%, respectively. As Ian previously mentioned, this volume growth was partially offset by a 16.9% volume contraction in Argentina and a 3.6% decline in Uruguay. Our revenues for the division increased 9.3% to 25.9 billion pesos as our volumes and revenue management initiatives were partially offset by unfavorable currency translation effects into Mexican pesos, especially driven by the depreciation of the Argentine peso.
Volumes increased six 6% to $428 8 million unit cases, we continue to see solid volume growth in Brazil, and Colombia, increasing 10, 4% and nine 7% respectively.
Jeff: As <unk> previously mentioned this volume growth was partially offset by a 16, 9% volume contraction in Argentina, and a three 6% decline in Norway.
Our revenues for the division increased nine 3% to $25 9 billion pesos as our volumes and revenue management initiatives were partially offset by unfavorable currency translation effects into Mexican pesos, especially driven by the depreciation of the Argentine peso.
Gerardo Cruz: When excluding currency translation, our total revenues in South America increased 23.4%; gross profit in South America increased 10.5% or 27.4% on a currency neutral basis, leading to a margin expansion of 40 basis points to reach 40.6%. This increase was driven mainly by operating leverage resulting from top line growth and a favorable raw material hedging strategy. However, these effects were partially offset by increases in raw material costs, such as sweeteners, and the depreciation of the Argentine peso as applied to our U.S. dollar-denominated raw material.
Jeff: When excluding currency translation, our total revenues in South America increased 23, 4%.
Jeff: Gross profit in South America increased 10, 5% or 27, 4% on a currency neutral basis, leading to a margin expansion of 40 basis points to reach 46%.
Jeff: This increase was driven mainly by the operating leverage resulting from top line growth and favorable raw material hedging strategies.
Jeff: However, these effects were partially offset by increases in raw material costs, such as sweeteners and the depreciation of the Argentine peso as applied to our U S dollar denominated raw material costs.
Gerardo Cruz: Operating income for the division increased 8.2% to 2.9 billion pesos. On a currency-neutral basis, operating income increased 27%, and operating margin contracted 10 basis points to 11.3%. This margin performance was driven mainly by gross profit growth, coupled with cost and expense efficiencies that were offset by margin pressures in Argentina. Finally, adjusted EBITDA in South America increased 10.1% to 4.2 billion pesos, or 30.7% on a currency-neutral day. Regarding our comprehensive financial results for the quarter, as Ian previously mentioned, we recorded an expense of 1.2 billion pesos as compared to an expense of 1.4 billion pesos during the same period of the previous year.
Jeff: Operating income for the division increased eight 2% to $2 9 billion pesos on a currency neutral basis operating income increased 27% and operating margin contracted 10 basis points to 11, 3%.
Jeff: This margin performance was driven mainly by our gross profit growth coupled with cost and expense efficiencies that were offset by margin pressures in Argentina.
Jeff: Finally, adjusted EBITDA in South America increased 10, 1% to $4 2 billion pesos or 37% on a currency neutral basis.
Jeff: Regarding our comprehensive financial results for the quarter as Ian previously mentioned, we recorded an expense of $1 2 billion pesos as compared to an expense of $1 4 billion pesos. During the same period of the previous year.
Gerardo Cruz: This decline was driven mainly by a foreign exchange loss of 640 million pesos registered during the same period of the previous year as compared to a 26 million peso gain registered this year. In addition, we registered a decrease in interest expense driven mainly by the payment at maturity of a 7.5 billion Mexican peso denominated bond. These effects were partially offset by a decline in interest income, driven mainly by a decline in interest rates, a loss in market value and financial instruments, and a lower gain in monetary position and inflationary subsidies.
Jeff: This decline was driven mainly by a foreign exchange loss of 640 million pesos registered during the same period of the previous year as compared to 26 million peso gain registered this year.
Jeff: In addition, we registered a decrease in interest expense driven mainly by the payment at maturity of our seven 5 billion Mexican peso denominated bonds.
Jeff: These effects were partially offset by a decline in interest income driven mainly by a decline in interest rates a loss in market value and financial instruments, and a lower gain on monetary position in inflationary subsidiaries.
Gerardo Cruz: Finally, I want to take a moment to comment on sustainability. As we have mentioned in previous calls, one of our six strategic priorities is to foster a sustainable future. To this end, we are pleased to report that we have successfully allocated the proceeds from the $705 million green bond issued in September 2020. In accordance with its framework, these proceeds were allocated across eligible categories such as climate action, water stewardship, and circular economy.
Jeff: Finally, I want to take a moment to comment about sustainability as.
Jeff: As we have mentioned in previous calls one of our six strategic priorities is to foster a sustainable future.
Jeff: And we are pleased to report that we have successfully allocated the proceeds from the $705 million Green bond issued in September 2020.
In accordance with its framework. These proceeds were allocated across eligible categories and climate action water stewardship and circular economy.
Gerardo Cruz: Moreover, we continue making efforts to enhance our sustainability reporting with our 2023 integrated annual report. We adopted the SASB standards and the new integrated format that includes the Global Reporting Initiative Table, or GRI, disclosures recommended by the Task Force on Climate-Related Financial Disclosures, and the Performance in Detail section. Among other report highlights regarding the world without waste targets, we published a 33% usage rate of recycled resin on track to achieve our goal of incorporating 50% recycled resin in our PET bottles by 2030.
Jeff: Moreover, we continue making efforts to enhance our sustainability reporting with our 2023 integrated annual report.
Jeff: We adopted the FASB standards and the new integrated format that includes the global reporting initiative tables or GRE.
Jeff: Disclosures recommended by the task force on climate related financial disclosures and the performance in detail section.
Jeff: Among other report highlights regarding world without waste targets, we published a 33% usage of recycled resin on track to achieve our goal of incorporating 50% recycled resin in RP bottles by 2030.
Jeff: In terms of water stewardship, we reported an industry, leading water use ratio of 142 liters per liter of beverage produced demonstrating our commitment to efficient water management.
Gerardo Cruz: In terms of water stewardship, we reported an industry-leading water use ratio of 1.42 liters per liter of beverage produced, demonstrating our commitment to efficient water management. As you all know, social initiatives are also an integral part of our sustainability strategy, as we have benefited more than 359,000 people through our Community Development Action Plan. Finally, regarding diversity and inclusion, we continue progressing towards our 2030 goal of including 40% of women in leadership positions, advancing to 29% in 2022.
Jeff: As you all know social initiatives are also an integral part of our sustainability strategy as we have benefited more than 359000 people through our community development actions.
Jeff: Finally regarding diversity and inclusion we continue progressing towards our 2030 goal of including 40% of women in leadership positions advancing to 29% and planning 'twenty three.
Jeff: For more detailed information on our sustainability efforts and achievements I encourage you to refer to our 2023 integrated annual report, which is available on our website.
Speaker Change: With that operator, we are ready to open the call for questions.
Gerardo Cruz: For more detailed information on our sustainability efforts and achievements, I encourage you to refer to our 2023 Integrated Annual Report, which is available on our website. With that operator, we are ready to open the call for questions.
Speaker Change: Thank you very much as a reminder, if he would like to ask a question on today's call. You May Press Star one on your telephone keypad to register your question to withdraw your question for any reason you May press star two.
Speaker Change: We'll be advised when to ask your question.
Speaker Change: And our first question.
Speaker Change: I'm, sorry, just a moment.
Operator: Thank you very much. As a reminder, if you would like to ask a question on today's call, you may press star one on your telephone keypad to register your question. To withdraw your question for any reason, you may press star two. You will be advised when to ask your question. And our first question. Our first question is from Ben Theurer of Barclays. Please go ahead.
Speaker Change: Our first question is from Ben <unk> of Barclays. Please go ahead.
Speaker Change: Ed.
Ben: Hi, Yes, good morning, and thank you very much for taking my question I actually have just one very general question I wanted to get your thoughts around.
Ben: <unk> in Mexico and to a degree as well.
Ben: The other markets. It has been very strong in terms of volume momentum and growth would you have been delivering over the last couple of quarters and just wanted to understand if you could share a little more detail how much of that is around specific.
Benjamin M. Theurer: Yeah, good morning. And thank you very much for taking my question. I actually have just one very general question.
Ian Marcel Craig Garca: I wanted to get your thoughts on the performance in Mexico to a degree as well as in other markets. What you've been delivering over the last couple of quarters has been very strong in terms of volume, momentum, and growth. And just wanted to understand if you could share a little more detail, how much of that is around specific strategic initiatives as to marketing, etc., or what, on the other hand, is maybe just gaining back share that now you have the capacity you've been investing in, and you have a very long list of capital projects. So just to kind of conceptualize where the strong volume growth is coming from, particularly in markets like Mexico, which are to a degree saturated from per capita consumption but still grow mid-single digits.
Ben: Strategic initiatives is to marketing et cetera, or what are the other hand is maybe just gaining back share that now that you have the capacity you've been investing on it you had a very long list.
Ben: Capital projects, so just to kind of conceptualize, where does stroke volume volume growth is coming from.
Ben: Particularly in markets like Mexico, which are two degrees saturated from our per capita consumption, but still grow mid single digits. Thank you.
Speaker Change: Hello, Ben.
Ben: How are you thanks for the question.
Ben: We've also around three axes.
Speaker Change: First of all our very favorable structural headwinds in our territories in Mexico.
Ben: We always had a lot of people in our territories, but we.
Ben: Didn't necessarily have all of the disposable income and now we've got full employment.
Ian Marcel Craig Garca: Hello, Ben. How are you?
Ian Marcel Craig Garca: Thanks for the question. I think it revolves around three axes. First of all, our very favorable structural headwinds in our territories in Mexico. We always had a lot of people in our territories, but we didn't necessarily have all of the disposable income with people having real gains in disposable income. And these people are driving big increases in any RTD per capita consumption.
Ben: With people, having real gains in disposable income.
These people are driving big increases in any RTD.
Ben: Per capita consumptions.
Ben: Same time as you correctly recalls we have revamped.
Ben: Revamped our Ob BPC strategy in the Cola family sizes segments, we adjusted again.
Benjamin M. Theurer: At the same time, as you correctly recall, we have revamped our OB-PPC strategy in the colas and family-sized segments. We adjusted, again, our pricing and pack strategy in flavors as well, and all of these strategies are starting to bear fruit over the last year and we're carrying on the momentum to this year. And finally, we also had favorable weather. So I would stress the fact that we continue to increase per capita consumption in Mexico.
Ben: Our pricing.
Ben: On Fox strategy, and flavors as well and all of these studies are.
Starting to show the fruits over the last year Im carrying on the momentum to this year and finally, we also had favorable weather so I would.
Ben: Stress the fact that we can.
Ben: Du to increase per capita consumption in Mexico. So as you recall last year. We increased our per capita is around 263% and we continued to increase weekly plus consumption. So I understand the feeling that that Mexico cost hybrid capital I mean, it's true but in our regions.
Benjamin M. Theurer: So if you recall last year, we increased our per capita around 2.6%, 3%, and we continue to increase weekly plus consumption. So I understand the feeling that Mexico has a high per capita, and it's true, but in our region, there's a lot of increase in disposable income, and that is translating into NARDD consumption, coupled with our share gains, and that explains the strong volumes right there. And, of course, there's the weather, right? It was also a quarter with favorable weather the weekend before... We have to mention that impact as well. Well, thank you very much. Yes, it does. Thank you very much and congratulations on those outstanding results.
Ben: There is a lot of increase in disposable income and that is and that is translating into <unk> consumption, coupled with our share gains and that explains the strong volumes right there.
Ben: And of course, they are take or whether it was also a quarter with favorable weather.
Ben: Kent.
Ben: Yes.
Kent: We have to mentioned that impact us positively.
Kent: Okay. Thank.
Speaker Change: Thank you very much yes. It does thank you very much and congratulations on those outstanding results.
Speaker Change: Thank you Bill.
Speaker Change: Thank you very much. Our next question is from Rodrigo Alcantara with UBS. Please go ahead.
Speaker Change: Okay.
Rodrigo Alcantara: Mr. <unk>. Your line is open. Please go ahead.
Rodrigo Alcantara: Hi, guys, sorry, Washington, yet.
Rodrigo Alcantara: Thanks for taking my question Gary.
Operator: Thank you very much. Our next question is from Rodrigo Alcantara with UBS. Please go ahead. Mr. Alcantara, your line is open. Please go ahead.
Rodrigo Alcantara: Gary.
Speaker Change: Well first of all would be for.
Gary: Mobile was a great quarter in terms of volume growth.
Gary: Mexico, and Brazil, particularly right.
Rodrigo Alcantara: Hi guys, sorry, I wasn't mute. Thanks for taking my questions, Ian and Gary. Well, the first one would be for Ian. No doubt it was a great quarter in terms of volume growth in Mexico and Brazil, particularly, right? Just curious about 2024, what would be your priorities, or if you can give us any update on your plans regarding multi-category efforts in Mexico and Brazil. That would be one question. And the other one, perhaps for Gary, would be the potential for, you know, KOF, perhaps in paying extraordinary dividends.
Gary: Also 2024.
Gary: The priorities for <unk>.
Gary: <unk> updated plans.
Gary: Regarding.
Gary: Absolutely.
Gary: Mexico.
Speaker Change: Thank you.
Speaker Change: That would be one question.
Speaker Change: Perhaps Gary.
With me on the book.
Gary: Financial tools.
Gary: Okay.
Gary: Perhaps.
In <unk>.
Gary: Extraordinary.
Gary: <unk> <unk>.
Gary: The absence of M&A.
Gary: Hey.
Gary: The potential for Youtube.
Speaker Change: Hey al.
Speaker Change: You are generating a lot of cash and what that Jordan.
Speaker Change: I'm cautious on each one but just your share regarding June latest.
Rodrigo Alcantara: I mean, we already know the ordinary, right? But in the absence of M&A, the potential for you to increase the payouts, you know, you are generating a lot of cash, that you are very, very cautious on this line, but just choose here regarding your latest thoughts on increasing the payouts to the shareholders. Thank you very much.
Speaker Change: Please.
Speaker Change: Shareholders. Thank you very much.
Speaker Change: Hello, Rodrigo Thank you for your questions.
Speaker Change: Quantify that our priority number one is we stated is still to continue leveraging on the growth momentum of <unk>.
Speaker Change: Our core business multi category is important and it continues to grow.
Speaker Change: Very high double digits year over year, but it's still under 1.5% in Mexico, and Brazil, excluding gear. So it's still a small segment. Although it is growing very well. So I would say that the driver continues to be the growth in our core business.
Ian Marcel Craig Garca: Hello Rodrigo, thank you for your question. I would add that our priority, number one, as we stated, is still to continue leveraging on the growth momentum of our core business. Multi-category is important, and it continues to grow very high double digits year over year, but it's still under one and a half percent in Mexico and Brazil, excluding beer. So it's still a small segment, although it's growing very well. So I would say that the driver continues to be the growth in our core business.
Speaker Change: For this year, we're very excited about the deployment of our advanced AI capabilities.
Speaker Change: We're still in a small scale format in both Brazil, and Mexico, where we're testing these out but we're getting very good uplifts, we're getting very good uplift in the rollout of those plus four in Mexico. So I would say that the main focus for the year is still continuing to grow leverage the momentum.
Ian Marcel Craig Garca: And for this year, we're very excited about the deployment of our advanced AI capabilities. And we're still in a small-scale format in both Brazil and Mexico where we're testing these out, but we're getting very good uplifts. We're getting very good uplifts in the rollout of Juntos Plus 4.0 in Mexico. So I would say that the main focus for the year is still continuing to grow, leverage the momentum of our core business, and taking Juntos Plus 4.0 to the next level in these two territories. So it would be more on that side rather than the multi-category. Although that's growing very well, it is still a ways until we get to the level where we need it.
Speaker Change: All of our core business on taking dual dose plus four point, though to the next level in these two territories. So it would be more on that side rather than the multi category. Although that is growing very well. It still has a ways until we get to the level, where we need to be in multi category.
Gerry: Hey, Gerry regarding that.
Gerry: <unk> priorities.
Gerry: I would just like to highlight our priorities are the same as we've been discussing we are prioritizing reinvesting in our business as you have been seeing for the past few quarters, we're growing significantly.
Gerry: We're trying to.
Gerry: Just solve.
Gerry: The issues that we have with being able to supply growing market demand. So we're allocating our excess cash and expect to consume our excess cash position and building this capacity to support our operations.
Gerardo Cruz: Regarding capital allocation priorities, I would just like to highlight our priorities are the same as we've been discussing. We are prioritizing reinvesting in our business. As you have been seeing for the past few quarters, we're growing significantly, and we're trying to just solve the issues that we have with being able to supply growing market demand. So we're allocating our excess cash and expect to consume our excess cash position, and building this capacity to support our operation.
Gerry: Secondly, also one of our strategic priorities is to continue to look for opportunities for M&A operations to look to consolidate further.
Gerry: The region.
Gerry: As you know.
Gerry: The market is performing quite well. So this is a challenging situation, but we will.
Gerry: Obviously keep the market posted and let you know when we have it.
Gerry: What we're going to do in terms of dividends and capital allocation.
Speaker Change: Okay, That's fair Gary Thanks for the update.
Gerardo Cruz: Secondly, one of our strategic priorities is to continue to look for opportunities for M&A operations to look to consolidate the region further. As you know, the market is performing quite well, so this is a challenging situation, but we will obviously keep the market informed and let you know when we have an idea of what we're going to do in terms of dividends and capital gains.
Speaker Change: Thank you. Our next question is from Felipe <unk> from Scotia Bank. Please go ahead.
Felipe: Thanks, operator, good morning, Gary and team thanks for the space for questions.
I'll Echo what my peer set.
Felipe: Impressive on the volume side.
Felipe: You already talked a little bit about Mexico.
Felipe: But I had it.
Or kind of deeper question on Guatemala.
Felipe: Shrinking all of that all of that product.
Whoa.
Felipe: And you've been growing in the double digits for six years in a row. So obviously, you're executing incredibly well, but are there any other factors in play here that are equally important our consumer preferences changing.
Rodrigo Alcantara: Okay, that's it, Jerry. Thanks for the update.
Operator: Thank you. Our next question is from Felipe Opros from Scotiabank. Please go ahead.
Felipe Opros: Thanks, operator. And good morning, Ian, Jerry, and team.
Felipe: Maybe the competition asleep at the wheel like whats going on in Guatemala that allows you to grow volumes.
Felipe: At that kind of level for such a prolonged time.
Felipe Opros: Thanks for the space for questions. I'll echo what my peers said was very impressive on the volume side. You already talked a little bit about Mexico, but I had a kind of deeper question about Guatemala: who's drinking all that all that product? Growth. And you've been growing in the double digits for six years in a row. So obviously, you're executing incredibly well. But are there any other factors in play here that are equally important?
Felipe: Yes.
Speaker Change: Yes, I can do a follow up on the distribution agreements.
Speaker Change: Hi, Felipe Thank you.
Felipe: You're right what the malaise.
Felipe: Jewel of a dairy story.
Felipe: <unk> has many things that are working in our favor.
Speaker Change: If you remember what the manner. When we took over that market was probably around 2017, we must have been selling our own 70 million unit cases.
Speaker Change: <unk> was a leader.
Speaker Change: It has been.
Speaker Change: Really.
Unknown Executive: I mean, are consumer preferences changing? Is maybe the competition asleep at the wheel? Like, what's going on in Guatemala that allows you to grow volumes at that kind of level for such a prolonged time? And I can follow up on the distribution agreements.
Speaker Change: Several effects going on there number one a very stable environment of over 3%.
Speaker Change: And a 5% GDP growth year over year with very low inflation stable currencies, increasing foreign exchange reserves, increasing remittances urbanization. So all of these strengths and a very young population the youngest one in Latin America.
Ian Marcel Craig Garca: Hi Felipe, thank you. You're right, Guatemala is a jewel of a territory. It has many things that are working in our favor. If you remember Guatemala, when we took over that market, it was probably around 2017, we must have been selling around 70 million unique cases, and Pepsi was the leader. And there were really several effects going on there.
Speaker Change: Just make the Guatemalan consumer all the time more at depth, increasing there any RTD consulta that lost the fact that we were under indexed in share and now we're getting two to where we need to be in sharecrop driven over the seven years, you were right to remember a double digit growth.
Ian Marcel Craig Garca: Number one, a very stable environment of over 3%, and 3.5% GDP growth year over year, with very low inflation, stable currencies, increasing foreign exchange reserve, increasing remittances, and urbanization. So all of these trends and a very young population, the youngest in Latin America, just made the Guatemalan consumer all the time more adept at increasing their NARTD consumption. That plus the fact that we were under indexed in shares, and now we're getting to where we need to be in share cap driven over the next seven years.
Speaker Change: It doesn't.
Speaker Change: Don't have a sense of.
Speaker Change: Of Guatemala is slowing down at all.
Speaker Change: <unk> seen what the MLR still way below Mexico.
Speaker Change: Even way below job classes are broadly around.
Speaker Change: Maybe two thirds of the way or a little less of where it could be next to next to our chocolate territory right across the border.
Speaker Change: You don't see any differences between between those consumers under what the Muslim consumers.
Speaker Change: At all so it's a very young country I think is around 17 million more or less.
With increasing incomes driving where renovation on just <unk>.
Ian Marcel Craig Garca: You were right to remember double-digit growth, and it doesn't we don't have a sense of Guatemala slowing down at all per capita in Guatemala is still way below Mexico, even way below Chiapas. They're probably around. Maybe two-thirds of the way or a little less of where it could be next to our Chiapas territory, right across the border. And you don't see any differences between those consumers and Guatemalan consumers at all.
Speaker Change: People their law Coca Cola as always it should continue to to give us very positive results.
Speaker Change: In the foreseeable future, which is why we've continued to invest heavily in capacity there.
Speaker Change: With these growth rates that we're getting even with that we still have an availability issue. So theres a lot of unmet demand. So only good news coming out of what the myeloma, we expect that to continue.
Speaker Change: The other question.
Speaker Change: He is going to follow up you're going to have I don't know if that answers.
Ian Marcel Craig Garca: So it's a very young country, I think it's around 17 million, more or less, with increasing incomes, driving urbanization, and just people there love Coca-Cola. So it should continue to give us very positive results in the foreseeable future, which is why we continue to invest heavily in capacity there. And with these growth rates that we're getting, even with that, we still have an availability issue. So there's a lot of unmet demand. So there is only good news coming out of Guatemala, and we expect that to continue.
Speaker Change: One last one last point, there and what the money. It's a very high single served markets and what their model.
Speaker Change: The almost nearly 40% of the volumes there are single serve it's an incredible market.
Speaker Change: Very interesting just wondering before I do my other follow up on Guatemala anything you can comment on the competitive environment in Guatemala, because as you mentioned, it's one of the very few markets in Latin America.
Speaker Change: It was not the Super dominant force and you've completely flipped that around in such a short amount of time, so what what's.
Speaker Change: Whats the competitive environment there Mike.
Mike: Well I mean, we have two very tough competitor of CVC with Pepsi portfolio.
Unknown Executive: He's going to follow up. You can go ahead.
Ian Marcel Craig Garca: I don't know if that answers the question. One last point there in Guatemala. It's a very high single-serve market in Guatemala. Almost, almost 40% of the volumes there are single-serve. It's an incredible market.
Mike: On.
Mike: The brewers value with our mix of proprietary portfolio on some.
Mike: Cadbury brands.
Mike: They are both very good competitors fully that the market is expanding on although we continue gaining shares.
Unknown Executive: Very interesting. And just wondering, before I do my other follow-up on Guatemala, anything you can comment on the competitive environment in Guatemala? Because, as you mentioned, it's one of the very few markets in Latin America where Coke was not the super dominant force. And you've completely flipped that around in such a short amount of time. So what's the competitive environment there like?
Mike: The economy in the market as a whole continues to expand for everyone.
Speaker Change: Got it.
Speaker Change: Distribution agreements question I had.
Speaker Change: Globally speaking how is the process is moving from from pilots into agreements and then in particular I was hoping you could hone in a little bit on Panama.
Our brewing peer has been having a lot of trouble in that country and I wonder how that may be related to your distribution agreement of appeal in Panama and how Youre performing there. Thank you.
Ian Marcel Craig Garca: Well, I mean, we have two very tough competitors, CBC with the Pepsi portfolio and Brewery Gallo with a mix of proprietary portfolio and some Cadbury brands. And they're both very good competitors. Thankfully, the market is expanding. And although we continue gaining share, the economy and the market as a whole continue to expand forever.
Speaker Change: In Panama weak Hep B earrings.
Speaker Change: With Heineken in certain territories, it's not in all of the territories with that.
Speaker Change: It takes our revenues to around 5%. So it still is small for us.
Speaker Change: In terms of distribution agreements trade terms partnerships, we continue to evolve.
Speaker Change: Across all of our data is I mean multi category revenues overall I mean, they are growing very very high it's just still.
Speaker Change: A small portion that we're growing 46% so still.
Unknown Executive: Got it. And then the distribution Agreements question I had, you know, globally speaking, how is the process moving from pilots to agreements. And then, in particular, I was hoping you could hone in a little bit on Panama. You know, a brewing peer has been having a lot of trouble in that country, and I wonder how that may be related to your distribution agreement for beer in Panama and how you're performing there. Thank you.
Speaker Change: Very high growth, but very small felipe.
Speaker Change: I would caution that we need that.
Speaker Change: We're working to get up to 5% of revenues until it's a relevant piece of the business.
Speaker Change: It will still be very small.
Speaker Change: <unk> Corp.
Speaker Change: Coca Cola company beverage portfolio.
Speaker Change: Understood. Thanks, a lot for the color guys and congrats again.
Speaker Change: Okay.
Speaker Change: Thank you as a reminder, if you would like to ask a question on today's call you May Press Star one on your telephone keypad to register your question.
Speaker Change: Our next question is from Ricardo Alves with Morgan Stanley. Please go ahead.
Hi, everyone. Thanks, so much for the call I also wanted to explore the remarkable volume performance, but now perhaps going a little bit deeper in Brazil.
Ian Marcel Craig Garca: In Panama, we have beer with Heineken in certain territories; it's not in all of the territories. With that, it takes our revenues to around 5%, so it's still small for us. In terms of distribution agreements, trade terms, partnerships, and we continue to evolve across all of our territories, I mean, multi-category revenues overall, I mean, they're growing very, very high. It's just still, you know, a small portion. We're growing 46%, so it's still... Very high growth, but very small, Felipe.
Speaker Change: <unk>.
Ricardo L. Alves: I mean, your volumes up 10% or so.
Ricardo L. Alves: I mean, not only if you can provide what's the outlook for the rest of the year when you take into consideration comps going forward, but when we look back in the first quarter January and February soft drink production in Brazil, similar to what you had I mean, it's not clear what March was but so far 10% so kind of in line with.
Ricardo L. Alves: There are a number which would imply a similar performance to the industry, but I'm not I'm not sure if I listened to the to the preliminary remarks correctly, but it seems that you made reference to gaining share in Brazil, I think that I heard colas for instance, so.
Ian Marcel Craig Garca: I would caution that we need that. We're working to get that to five percent of revenues until it's a relevant piece of the business. It'll still be very small, but continue to our core Coca-Cola company beverage portfolio.
Ricardo L. Alves: It seems to be a case, where industry is very strong but are you also gaining share here and there. So if you could expand in Brazil, but in particular competition the competitive environment. The shared dynamics, where exactly are grabbing share for us to have a better idea of how much is the industry. How much is your execution.
Unknown Executive: Understood. Thanks a lot for the call, guys, and congrats again.
Operator: As a reminder, if you would like to ask a question on today's call, you may press star one on your telephone keypad to register your question. Our next question is from Ricardo Alves with Morgan Stanley. Please go ahead.
Ricardo L. Alves: That's the first question and then the second question.
Ricardo L. Alves: On <unk>.
Ricardo L. Alves: Think that you.
Ricardo L. Alves: You made reference to.
Ricardo L. Alves: I will remark and also in one of the questions, but the 4.0 version of the App if I'm not mistaken you already had that rolled out.
Ricardo L. Alves: Hi everyone. Thanks so much for the call.
Ricardo L. Alves: I also wanted to explore the remarkable volume performance, but now perhaps going a little bit deeper in Brazil. I mean, your volume is up 10% or so. I mean, not only if you can provide what, you know, the outlook for the rest of the year when you take into consideration comps going forward, but when we look back in the first quarter, January and February soft drink production in Brazil was similar to what you had. I mean, it's not clear what March was, but so far, 10%.
In Brazil, again, if I'm not mistaken for a couple of months before Mexico. So I'm not sure. If you have some learnings already from what you got in Brazil, and what you can potentially achieve in Mexico. So just go into a little bit deeper on why these new version in particular could be a game changer in nature.
Ricardo L. Alves: And then on that topic, perhaps if you can talk about integrating the app with other digital platforms. I think that this is an angle that could be very interesting, particularly when you were talking about loyalty program and premium I think that you already have that in Brazil, but now going to Mexico. So.
Ricardo L. Alves: A little bit deeper on <unk> would be helpful. Thank you so much.
Ricardo L. Alves: So kind of in line with your number, which would imply a similar performance to the industry. But I'm not sure if I listened to the preliminary remarks correctly, but it seems that you made reference to gaining share in Brazil. I think that I heard Colas, for instance.
Speaker Change: Hello, Ricardo Thank you for the questions. So I think the first one was regarding how we show up in Brazil in terms of our relative competitive position I don't know what.
Speaker Change: Other companies reported they probably reported national numbers.
Ricardo L. Alves: So it seems to be a case where the industry is very strong, but you're also gaining share here and there. So if you could expand in Brazil, but in particular the competition, the competitive environment, the share dynamics, where exactly you're grabbing share, for us to have a better idea of how big the industry is, how big your execution is. That's the first question. And then the second question on Juntos Plus, I think that you made reference to it in the preliminary remark and also in one of the questions, but the 4.0 version of the app, if I'm not mistaken, you already had that rolled out in Brazil. Again, if I'm not mistaken, for a couple of months before Mexico.
What we can say in our territories, we are gaining share.
Speaker Change: Guinea sharing <unk>, mainly driven by a share in colas and expansion of the Cola category.
Speaker Change: We're not gaining share in flavors, so we're gaining share in colas and expanding that got deliveries than in Ntv's, we're really gaining share across the board every statement of Mtv's, we're gaining share and I think where we have pressure you're seeing in water.
Speaker Change: Slightly down in the year, so it's a very positive.
Speaker Change: Feature in share in Brazil with records in Carlos Records in <unk>. So overall, a very positive share featuring in Brazil in our territories I cant I don't have a sense of the national figures regardless.
Ricardo L. Alves: So I'm not sure if you have some learnings already from what you got in Brazil and what you can potentially achieve in Mexico. So just going a little bit deeper on why this new version, in particular, could be a game changer in nature. And then on that topic, perhaps if you can talk about integrating the app with other digital platforms, I think that this is an angle that could be very interesting, particularly when we're talking about loyalty programs and premium. I think that you already have that in Brazil, but now it will go to Mexico. So a little bit deeper on Juntos Plus would be helpful, too. Thank you so much.
Speaker Change: Regarding new stores plus you are right.
Speaker Change: Mexico, and the rest of the <unk> countries always benefit from Brazil.
Speaker Change: Lifting the heavy berthing of rolling out all of the digital strategies for Coca Cola FEMSA. So it's always stop to be the first want to rollout a new version in Brazil.
Speaker Change: We collected a lot of Eric learnings, there, which is why in Mexico, just went with very smooth sailing a 19th three key things explains a big uplift in Mexico.
Speaker Change: Number one version four point, though closest any gaps that we saw versus solar platforms out there in terms of both user experience and performance. So it close those gaps and needs brought along a loyalty program that did not exist in Mexico and that loyalty program is generating a lot of buzz on the interest.
Ian Marcel Craig Garca: Hello, Ricardo. Thank you for the question. So, I think the first one was regarding how we stand up in Brazil in terms of our relative competitive position. I don't know what other companies reported. They probably reported national numbers.
Ian Marcel Craig Garca: What we can say in our territories is that we are gaining share. We're gaining share in CSDs, mainly driven by growth in colas and expansion of the cola category. We're not gaining share in flavors, so we're gaining share in colas and expanding that category. Then, in NCBs, we're really gaining share across the board. In every segment of NCBs, we're gaining share. And I think where we have pressure is in water, and we're slightly down in beer.
Speaker Change: And repurchase from our clients. So anytime we know our clients are very savvy merchants.
Speaker Change: The digitally compared to what's out there in wholesalers and such.
Speaker Change: Fact that we now give them a loyalty program always intense debate them to stay within our platform because they generate points. So we've been very pleasantly surprised on the loyalty program.
Speaker Change: Then finally with regards to the eight capabilities I would say that we're just in the desktop space both in Brazil.
Ian Marcel Craig Garca: So, it's a very positive picture in share in Brazil, with records in colas and records in CSDs. So, overall, a very positive share picture in Brazil in our territories. I don't have a sense of the national figures, Ricardo.
Speaker Change: On Mexico, and that's what.
Speaker Change: <unk>.
Speaker Change: It makes it very exciting for me because the results we're getting on those stores are very good so I think.
Speaker Change: Once we deploy these out in a more massive way.
Speaker Change: Wait we will continue to see an uplift from the version four point, though that does not mean that we are not getting a novelist ICD is we're already getting a lot based on when you see the clients that use our version four point, though even versus that chart, both or the sales force, we see an increase in the average ticket.
Ian Marcel Craig Garca: Regarding Juntos Plus, you're right. Mexico and the rest of the KOF countries always benefit from Brazil lifting the heavy burden of rolling out all of the digital strategies for Coca-Cola Pemsa. So, it's always tough to be the first one to roll out a new version in Brazil. So, anytime our clients are very savvy merchants and they digitally compare to what's out there in wholesalers and such, the fact that we now give them a loyalty program always incentivizes them to stay within our platform because they generate points.
Speaker Change: And we see an increase in the number of Skus. So overall, regardless, it's very positive for us to continue rolling out this version.
Speaker Change: And the final piece is working for the fourth quarter end of the third.
Speaker Change: We started the ports to rollout our two test out really our new Salesforce, our dementia automation engine in Brazil, and that probably the final pillar of our digital strategy that still needed to be upgraded and that should start to be showing results at the end of the year on a broadly four four.
Ian Marcel Craig Garca: So, we've been very pleasantly surprised by the loyalty program. And then, finally, with regard to the 8 capabilities, I would say that we're just in that test-out phase, both in Brazil and Mexico. And that's what we're working on, and it makes it very exciting for me, because the results we're getting on those tests are very good.
Speaker Change: 2025, it will be a big difference for for our physical sales force.
Ian Marcel Craig Garca: So I think once we deploy this out in a more massive way, we will continue to see an uplift from version 4.0. But that does not mean that we are not getting an uplift as it is. We're already getting an uplift, and when you see the clients that use our version 4.0, even versus that chat bot or that Salesforce, we see an increase in the average ticket, and we see an increase in the number of SKUs.
I hope that helps it go.
Speaker Change: It does helps thank you so much again this quarter.
Speaker Change: Just to complement one thing because you asked about the outlook for Brazil, I would just say that definitely the first quarter was as you pointed out and Ian mentioned very strong.
We have a tailwind from temperatures no, especially in January it was a strong start of the year.
Ian Marcel Craig Garca: So overall, Ricardo, it's very positive for us to continue rolling out this version. And the final piece is we're working for the fourth quarter, end of the third, start of the fourth, to roll out or to test out, really, our new Salesforce automation engine in Brazil. And that's probably the final pillar of our digital strategy that still needs to be upgraded, and it should start to show results at the end of the year. And probably for 2025, it would make a big difference for our physical sales.
But we maintain our outlook for the rest of the year, we are optimistic about Brazil, but the outlook remains to be around the mid single digit volumes for the full year in Brazil. So we maintain that outlook, but definitely a positive start for Brazil. This year, yes, I would say it is clear that Brazil is back on moving along.
Speaker Change: Positive.
Speaker Change: Thank you so much thank you for any follow up as well Jorge.
Jorge: Thanks Kim.
Speaker Change: Thank you. Our next question is from Fernando Olvera with Bank of America. Please go ahead.
Fernando Olvera Espinosa de los Monteros: Hi, good morning, and thanks for taking my question.
Ricardo L. Alves: It does help. Thank you so much, Ian.
Fernando Olvera Espinosa de los Monteros: The first one is related to volumes. If you can comment what has been the performance so far in April in your in your different markets.
Jorge Alejandro Collazo Pereda: Just to complement one thing, Ricardo, that you asked about the outlook for Brazil, I would just say that definitely, the first quarter was, as you pointed out and Ian mentioned, very strong. We had a tailwind from temperatures, especially in January. It was a strong start to the year, but we maintained our outlook for the rest of the year. We are optimistic about Brazil, but the outlook remains to be around mid-single-digit volumes for the full year in Brazil. So we maintain that outlook, but definitely a positive start for Brazil this year.
Fernando Olvera Espinosa de los Monteros: And the second question can you give us some color of how margins performed by country in South America.
Speaker Change: Thank you.
Speaker Change: Hi, how are you.
It's quarter regarding to your first question I would say April pretty much a continuation of the performance we have seen which is.
Speaker Change: Encouraging obviously, giving intra month performance as challenging, though we have information floor.
Speaker Change: A little over 20 days, but so far we haven't seen any significant changes to what the quarter was no. So we continue to see positive performance.
Jorge Alejandro Collazo Pereda: Sponsored ADR Class L
Ricardo L. Alves: Thank you so much. Thank you for the follow up as well, Jorge.
Speaker Change: <unk> that we are executing across our territories are are coming along well. So we see no nothing really to flag with regards to April performance at this point in time.
Operator: Thank you. Our next question is from Fernando Olvera with Bank of America.
Fernando Olvera Espinosa de los Monteros: Please go ahead. Hi. Good morning.
Fernando Olvera Espinosa de los Monteros: Hi, good morning. And thanks for taking my question. The first one is related to volumes. Can you comment on what the performance has been so far in April in your different markets? And, and on the second question, can you give us some color on how margins perform by country in South America?
Speaker Change: Regarding margins Fernando.
Speaker Change: The pressure since our budget that we see in margins comes from Mexico, given increased labor maintenance and freight expenses that we have been seen.
Speaker Change: Sure.
Okay.
<unk>. This is not only in Mexico, but in all of our territories. So we are seeing especially.
Jorge Alejandro Collazo Pereda: Hi Fer, how are you? It's Jorge.
Jorge Alejandro Collazo Pereda: Regarding your first question, I would say April is pretty much a continuation of the performance we have seen, which is... You know, encouraging. Obviously, giving inter-month performance is challenging. You know, we have information for a little over 20 days. But so far, we haven't seen any, you know, significant changes to what the quarter was. No, so we continue to see positive performance. The plans that we're executing across our territories are coming along well. So we see nothing really to flag with regard to April's performance at this point in time, Fernando.
Speaker Change: Our specialty Mexico to try to close any margin.
Speaker Change: Thanks, <unk> for the year.
Speaker Change: Looking for savings initiatives, mainly but the rest of our operations were.
Speaker Change: Okay.
Speaker Change: In terms of profit expecting to achieve our budget.
Speaker Change: We have.
Speaker Change: Projected.
Speaker Change: Okay. Thanks, Eric I Couldnt hear the last part.
Eric: Thanks for the comment about Mexico about Intel of America, how margins performed.
Eric: Colombia after.
Eric: The solid top line growth.
Eric: We had.
Eric: Very good performance in South America margins, excluding Argentina, and we made those remarks in the prepared remarks of the call.
Gerardo Cruz: Regarding margins, Fernando, the pressure since our budget that we see in margins comes from Mexico, given the increased labor, maintenance, and freight expenses that we have been seeing. This is not only in Mexico but in all of our territories. So we are working, especially in Mexico, to try to close any margin for the year, looking for savings initiatives mainly, but the rest of our operations were, in terms of profit, expecting to achieve our budget as we have projected.
Eric: Argentina is a drag or for margins as could be expected, but the rest of South America showed great performance in margins during the first quarter.
Speaker Change: Okay great.
Speaker Change: Yeah.
Speaker Change: Thank you very much as we have no further questions left in the queue I would like to turn the call back over to Mr. <unk> for any closing remarks.
Speaker Change: Okay.
Well. Thank you very much everyone for your interest in Coca Cola FEMSA and for joining us on today's call as always myself.
Speaker Change: Myself and the rest of the Investor Relations team, we are available to answer any remaining questions and we look forward to speaking to all of you again very soon.
Fernando Olvera Espinosa de los Monteros: Okay, thanks, Jerry. I couldn't hear the last part. And thanks for the comment about Mexico, but in South America, how margins perform in Brazil and Colombia after the solid top line growth.
Speaker Change: And have a great day.
Speaker Change: Okay.
Speaker Change: Thank you very much that concludes today's conference you may now disconnect.
Speaker Change: Stay on the line.
Speaker Change: [music].
Gerardo Cruz: We had very good performance in South America margins, excluding Argentina, and we made those remarks in the prepared remarks of the call. So Argentina is a dragger for margins, as can be expected, but the rest of South America showed great performance in margins during the first quarter.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Fernando Olvera Espinosa de los Monteros: OK.
Speaker Change: Okay.
Gerardo Cruz: Okay, great. Thank you, Gary.
Speaker Change: Okay.
Speaker Change: Okay.
Jorge Alejandro Collazo Pereda: Thank you very much. As we have no further questions left in the queue, I would like to turn the call back over to Mr. Coriazo for any closing remarks.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Hum.
Speaker Change: Okay.
Jorge Alejandro Collazo Pereda: Well, thank you very much, everyone, for your interest in Coca-Cola FEMSA and for joining us on today's call. As always, myself and the rest of the Investor Relations team are available to answer any remaining questions. And we look forward to speaking to all of you again very soon. Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Operator: Thank you very much. That concludes today's conference. You may now disconnect. I hope you may stay on. [inaudible]
Speaker Change: Okay.
Speaker Change: [music].