Q4 2026 Coca Cola Femsa SAB de CV Earnings Call

February 24, 2026

Speaker #1: Moderator for today's event. Please note that this conference is being recorded. For the duration of the call, all participants will be in a listen-only mode.

Speaker #1: You will have the opportunity to ask questions at the end of the presentation. To do so, please use the raise hand feature in Zoom, and it will open your line.

Speaker #2: Notably, our Sprite Zero playbook is following a similar script as Coke Zero, as a result, Sprite Zero now represents more than 20% of our total Sprite volume.

Speaker #1: If you experience any technical issues during the call, please use the chat function to request assistance. I would now like to hand the call over to Jorge Coyaso, Investor Relations Director at Coca-Cola Femsa.

Speaker #2: Regarding steels, we have leveraged our portfolio and commercial capabilities to achieve growth across all categories. For instance, energy drinks continue seeing double-digit growth from Monster, driven by portfolio innovation, execution, and availability.

Speaker #1: Jorge, please go ahead.

Speaker #2: Thank you, Sofía. Good morning and welcome to this conference call to review our fourth quarter and full year 2025 results. Before we begin, let me remind all participants that today's conference call may include forward-looking statements, and should be considered as good faith estimates made by the company.

Speaker #2: In line with this positive performances, juices grew 9%, and power rate grew mid-single digits. Finally, within the alcoholic ready-to-drink category, we achieved more than 50% growth year-on-year, driven by Jack and Coke and Absolute Sprite.

Speaker #2: These forward-looking statements reflect management's expectations and are based upon currently available data. Actual results are subject to future events and uncertainties that can materially impact the company's performance.

Speaker #2: Our digital enablers Juntos Plus monthly active user base continues expanding. Surpassing our goal of 303,000 monthly active users. While continuing to increase average ticket size.

Speaker #2: For more details, please refer to the full disclaimer in the earnings release. That was published earlier today. Joining me this morning are Ian Craig, our Chief Executive Officer, Gerardo Cruz, our Chief Financial Officer, and the rest of the investor relations team.

Speaker #2: Importantly, our Juntos Plus premier loyalty customer base increased 73% year-on-year. Juntos Plus advisor, which is a game changer for our Salesforce, and is supporting Brazil's positive share performance, increased its efficiency by more than 9.2 percentage points to reach 95.6%.

Speaker #2: After preparing remarks, we will open the call for Q&A. As Sofía just mentioned, to do so, please signal for questions using the raise hand feature in your Zoom toolbar.

Speaker #2: Finally, on the supply chain front, we increased our manufacturing capacity by 8.2% year-on-year, supported by five new production lines. In addition, our warehouse capacity increased by more than 25,000 pallet positions.

Speaker #2: With that, let me turn the call over to Ian, our CEO, to begin our presentation. Ian, please go ahead.

Speaker #3: Thank you, Jorge. Good morning, everyone. We appreciate you joining us for today's call. 2025 tested our business in multiple ways, which provided the opportunity to learn and adjust to changing conditions.

Speaker #2: Representing a 6% increase year-on-year. This was achieved through state-of-the-art projects such as a vertical automated warehouse, located next to our Itaberito plant in the state of Minas Gerais.

Speaker #3: It also underscored the resilience of our core business and reinforced our conviction in our strategy of following a sustainable, long-term growth model. Throughout the year, we implemented decisive measures to react to the short term, while ensuring we continue progressing towards our long-term objectives.

Speaker #2: As we look to 2026, we are encouraged by the growth rate at which we closed the year. We anticipate that election-related spending, social programs, and the FIFA World Cup will represent important tailwinds for our operation in Brazil.

Speaker #3: Among other actions, in Mexico, we adjusted our promotional grid and strengthened our affordability initiatives to address a weaker-than-expected consumer and the effects of temporary unfavorable brand sentiment early in the year.

Speaker #2: In this environment, we expect to continue executing against our strategic priorities, striving to outperform the industry, leveraging our digital initiatives and our customer-centric culture.

Speaker #3: We focused on recovering our competitive position and protecting profitability with swift and decisive actions that became a best practice within the global Coca-Cola system.

Speaker #2: Now, moving on to Colombia. Our volumes grew 4.5% as the macroeconomic environment gradually recovers and we cycle the effects of the excess tax increase in the country.

Speaker #3: On the other hand, our markets in South America enjoyed more favorable consumer dynamics that, coupled with market execution, investments behind capacity, and a full reopening of our plant in Puerto Alegre, resulted in volume growth across most of our territories and an improved competitive position.

Speaker #2: As was the case in Mexico, we implemented portfolio initiatives to adjust our price pack architecture in brand Coca-Cola. Providing attractive price points aimed at growing transactions.

Speaker #2: In addition, we're managing price gaps in multi-serve presentations to provide affordability and an attractive value proposition. At the same time, Coke Zero, which achieved double-digit growth during the quarter, remains a growth engine with ample headroom.

Speaker #3: Notably, gradual sequential improvements during the last quarter of the year led to consolidated volume growth year on year. Indeed, volume performance in December marked the strongest month in our company's history.

Speaker #2: As I mentioned during our last earnings call, Quattro, our grapefruit flavor, is now the number one flavored sparkling beverage in the country, and we aim to continue expanding our competitive position in flavors with increased innovation and availability.

Speaker #3: Despite the many headwinds faced, our full year 2025 results demonstrate top and bottom line growth with resilient operating and adjusted EBITDA margins. We were also successful in reinforcing our relative scale across our markets, supported by progress in installed capacity and the rollout of our digital initiatives.

Speaker #2: On the digital front, Colombia closed the year with more than 320,000 monthly active buyers. Importantly, average ticket grew more than 4%, and digital orders increased more than 50% year-on-year.

Speaker #3: As we look to 2026, we are confident that you will deliver both opportunities and challenges, including the impact on our consumers and customers of the excise tax increase in Mexico.

Speaker #2: We anticipate that our premier loyalty plan will continue driving adoption and frequency as its use expands during 2026. Finally, I want to recognize our team in Colombia for their cost control measures and the cost-to-serve reductions.

Speaker #3: This makes it more important than ever that we adhere to our sustainable growth model to best navigate these challenges and emerge with a stronger, relative competitive position.

Speaker #2: They have achieved, aided by our capacity investments in the country, which have enabled us to reduce primary freight costs and third-party warehouse expenses. As we look to 2026, we expect to add another distribution center in Medellín, which will alleviate warehouse saturation and bring additional efficiencies.

Speaker #3: We expect to follow the same strategic playbook, leveraging Coca-Cola Femsa's differentiated strengths of an unmatched portfolio of brands, the largest distribution footprint, consistency in investment above-the-line and below-the-line, relentless execution, and leading-edge digital enablers.

Speaker #2: In Argentina, our volumes increased 3%. Our agile response to a volatile environment ensured our sustained positive performance throughout the year. Despite the heterogeneous recovery across different sectors of the economy, we have remained consistent with our strategy, enhancing our affordability plans and accelerating our single-serve mix.

Speaker #3: For the year, our key priorities remain unchanged. First, to continue growing our core business by leveraging our big bets accelerating Coke Zero, improving our competitive position in flavors, and developing profitable non-carbonated beverages.

Speaker #3: Second, to capitalize on Juntos Plus AA capabilities and continue to roll out and leverage Juntos Plus Advisor, across our four largest markets. And third, to continue fostering a customer-centric and psychologically safe culture for Coca-Cola Femsa.

Speaker #2: All while maintaining a lean and flexible cost structure. This strategy resulted in an improved competitive position and single-serve mix that reached 26.3%, a 2.3 percentage point increase year-on-year.

Speaker #3: With that, let's review in detail our consolidated results for the fourth quarter. Our consolidated volume increased 1.3% in the quarter to reach 1.09 billion unit cases, gradual sequential improvements in Mexico, coupled with solid volume growth in the rest of our territories, supported this positive performance.

Speaker #2: Regarding our digital initiatives, we continue driving digital client adoption with a rollout of the latest versions of Juntos Plus, resulting in a 71% increase in digital orders year-on-year.

Speaker #2: As we look to 2026 for Argentina, we expect to continue executing against the strategy that has been successful thus far. Sustained and affordable value proposition in brand Coca-Cola and flavors, boost single-serve and power it by leveraging the FIFA World Cup, and unlock Juntos Plus and premier Juntos Plus full potential while keeping a lean and flexible cost and expense structure.

Speaker #3: Total revenues for the quarter grew 2.9% to 77.7 billion pesos, led by revenue management initiatives that were partially offset by unfavorable mixed effects and headwinds, related to currency translation from most of our operating currencies into Mexican pesos.

Speaker #3: On a currency-neutral basis, our total revenues increased 6%. Gross profit increased 1.8% to 36.3 billion pesos, leading to a margin contraction of 60 basis points to 46.7%.

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Speaker #2: Let me close by emphasizing that we are encouraged to be a part of a vibrant beverage industry within a region with positive growth prospects.

Speaker #2: The support of our long-term sustainable growth model, from our strategic shareholders, FEMS and The Coca-Cola Company, is one of our fundamental strengths. With that in mind, I would like to take a moment to recognize and thank José Antonio Fernández Carvajal and James Quincey for their exceptional vision, leadership, and partnership as CEOs of FEMSA and The Coca-Cola Company, respectively.

Speaker #3: This margin performance was driven mainly by an unfavorable mixed and hedging positions coupled with fixed costs such as labor and depreciation. On the other hand, these effects were partially offset by better sweetener and PET costs.

Speaker #3: Our operating income increased 13.3% to reach 13.7 billion pesos, with operating margin expanding 160 basis points to 17.6%. This increase is positively impacted by the recognition of insurance claims recovered in Brazil and Mexico, net of expenses for pesos 1.1 billion pesos.

Speaker #2: Their vision to grow the Coca-Cola system combining the unique strengths of both the Coca-Cola company and the bottlers has been fundamental to our company's success.

Ian: ... To continue growing our core business by leveraging our big bets, accelerating Coke Zero, improving our competitive position in flavors, and developing profitable non-carbonated beverages. Second, to capitalize on Juntos Plus AI capabilities and continue to roll out and leverage Juntos Plus Advisor across our four largest markets. Third, to continue fostering a customer-centric and psychologically safe culture for Coca-Cola FEMSA. Let's review in detail our consolidated results for Q4. Our consolidated volume increased 1.3% in the quarter to reach 1.09 billion unit cases. Gradual sequential improvements in Mexico, coupled with solid volume growth in the rest of our territories, supported this positive performance.

Ian Craig: ... To continue growing our core business by leveraging our big bets, accelerating Coke Zero, improving our competitive position in flavors, and developing profitable non-carbonated beverages. Second, to capitalize on Juntos Plus AI capabilities and continue to roll out and leverage Juntos Plus Advisor across our four largest markets. Third, to continue fostering a customer-centric and psychologically safe culture for Coca-Cola FEMSA. Let's review in detail our consolidated results for Q4. Our consolidated volume increased 1.3% in the quarter to reach 1.09 billion unit cases. Gradual sequential improvements in Mexico, coupled with solid volume growth in the rest of our territories, supported this positive performance.

Speaker #2: Additionally, both José Antonio and James have personally taken a stake in the system's talent development, leaving a legacy of a deep management bench. We're grateful for the transformational impact they have had over the years, and wish them both continued success in their roles as chairman.

Speaker #3: By excluding insurance recovery and related expenses in both the fourth quarter of 2024 and 2025, our operating income would have declined by 2.1%, resulting in an operating income margin contraction of 90 basis points to reach 16.1%.

Speaker #3: This normalized operating margin contraction is explained by higher depreciation and labor expenses that were partially offset by expense controls such as maintenance and freight, coupled with an operating foreign exchange gain.

Speaker #2: We're equally excited to welcome José Antonio Fernández Garza-Lagüera to the role of CEO at FEMSA and Enrique Brown to the role of CEO at the Coca-Cola company.

Speaker #2: Their leadership marks the beginning of a new growth chapter in our strategic partnership, and we look forward to continuing to transform the beverage industry and create long-term value together.

Speaker #3: Adjusted EBITDA for the quarter, including insurance recoveries, increased 12.8% to 18.2 billion pesos, an EBITDA margin expanded 210 basis points to 23.4%. Excluding insurance effects and related expenses at the EBITDA level, normalized adjusted EBITDA grew 4.4%, with a margin expansion of 30 basis points to 21.9%.

Speaker #2: With that, I will hand the call over to Jerry. Thank you, Ian. And good morning, everyone. I appreciate you joining us today. I will begin by summarizing our division's results for the quarter.

Ian: Total revenues for the quarter grew 2.9% to 77.7 billion Mexican pesos, led by revenue management initiatives that were partially offset by unfavorable mix effects and headwinds related to currency translation from most of our operating currencies into Mexican pesos. On a currency-neutral basis, our total revenues increased 6%. Gross profit increased 1.8% to 36.3 billion Mexican pesos, leading to a margin contraction of 60 basis points to 46.7%. This margin performance was driven mainly by an unfavorable mix and hedging positions, coupled with fixed costs such as labor and depreciation. On the other hand, these effects were partially offset by better sweetener and PET costs. Our operating income increased 13.3% to reach 13.7 billion Mexican pesos, with operating margin expanding 160 basis points to 17.6%.

Ian Craig: Total revenues for the quarter grew 2.9% to 77.7 billion Mexican pesos, led by revenue management initiatives that were partially offset by unfavorable mix effects and headwinds related to currency translation from most of our operating currencies into Mexican pesos. On a currency-neutral basis, our total revenues increased 6%. Gross profit increased 1.8% to 36.3 billion Mexican pesos, leading to a margin contraction of 60 basis points to 46.7%. This margin performance was driven mainly by an unfavorable mix and hedging positions, coupled with fixed costs such as labor and depreciation. On the other hand, these effects were partially offset by better sweetener and PET costs. Our operating income increased 13.3% to reach 13.7 billion Mexican pesos, with operating margin expanding 160 basis points to 17.6%.

Speaker #2: In Mexico and Central America, our volumes were even, as a slight volume decline in Mexico was offset by growth in Guatemala, Nicaragua, Panama, and Costa Rica.

Speaker #3: Finally, our majority net income increased 3% to reach 7.5 billion pesos, this increase was driven by operating income growth that was partially offset by an increase in comprehensive finance and results and in the effective tax rate.

Speaker #2: Revenues increased 1.6% to 42.2 billion pesos, driven mainly by revenue growth management initiatives that were partially offset by unfavorable mix and currency translation effects into Mexican pesos.

Speaker #3: Now, let me expand on the main operational and strategic highlights across key markets. In Mexico, despite facing what is still a soft consumer environment, our volumes improved sequentially, resulting in a 0.9% contraction year on year, aided by adjustments to our price architecture coupled with revamped affordability initiatives in multi-serve refillable packs.

Speaker #2: On a currency-neutral basis, revenues increased 3.3%. Gross profit increased 2.6% to reach 20.8 billion pesos, resulting in a gross margin of 49.2%, a 40 basis point expansion year-on-year.

Speaker #2: This margin increase was driven mainly by lower raw material costs, such as sugar and PET, coupled with the appreciation of the Mexican peso as applied to our US dollar-denominated raw material costs.

Speaker #3: Regarding categories, Coke Zero maintained its solid growth pace with 14% volume growth year on year, our initiatives to recover share allowed us to fully recover our competitive position and enter 2026 with positive share momentum in both colas and sparkling flavor segments.

Speaker #2: These effects were partially offset by unfavorable mix effects and fixed costs. Operating income in the division declined 1.1% to 6.9 billion pesos, and our operating margin contracted 40 basis points to 16.3%.

Ian: This increase is positively impacted by the recognition of insurance claims recovered in Brazil and Mexico, net of expenses for pesos, 1.1 billion pesos. By excluding insurance recovery and related expenses in both the Q4 2024 and 2025, our operating income would have declined by 2.1%, resulting in an operating income margin contraction of 90 basis points to reach 16.1%. This normalized operating margin contraction is explained by higher depreciation and labor expenses that were partially offset by expense controls such as maintenance and freight, coupled with an operating foreign exchange gain. Adjusted EBITDA for the quarter, including insurance recoveries, increased 12.8% to 18.2 billion pesos, and EBITDA margin expanded 210 basis points to 23.4%.

Ian Craig: This increase is positively impacted by the recognition of insurance claims recovered in Brazil and Mexico, net of expenses for pesos, 1.1 billion pesos. By excluding insurance recovery and related expenses in both the Q4 2024 and 2025, our operating income would have declined by 2.1%, resulting in an operating income margin contraction of 90 basis points to reach 16.1%. This normalized operating margin contraction is explained by higher depreciation and labor expenses that were partially offset by expense controls such as maintenance and freight, coupled with an operating foreign exchange gain. Adjusted EBITDA for the quarter, including insurance recoveries, increased 12.8% to 18.2 billion pesos, and EBITDA margin expanded 210 basis points to 23.4%.

Speaker #3: Notably, our stills portfolio grew 7.4% year on year. Driven mainly by the solid performance achieved in Monster, Fusti, and Santa Clara, which grew 41%, 33%, and 28% respectively.

Speaker #2: As described in our earnings release, our operating income includes the recognition of insurance recoveries in Mexico, net of expenses for 116 million pesos. By excluding this effect and related expenses in the same period of the previous year, normalized operating income would have declined 8.1%, resulting in an operating margin contraction of 170 basis points.

Speaker #3: We also positioned our Mexico operation for significant market execution improvements in 2026, with more than 100,000 new cooler doors installed by year-end 2026. Regarding digital as I mentioned last October, we began the rollout of our state-of-the-art Salesforce tool Juntos Plus Advisor in Mexico.

Speaker #2: This contraction was driven mainly by an increase in marketing, depreciation, and labor coupled with a lower operative foreign exchange gain, as compared to the previous year.

Speaker #3: We are encouraged to share that with a strong focus on usability, we have completed its rollout and today it's overall performance is improving geo-efficiency or visitation as is also known by 5.5 percentage points from 91% to 96.5%.

Speaker #2: These effects were partially offset by operating expense efficiencies such as maintenance and distribution. Finally, our adjusted EBITDA in the division increased 1.3%, with a flat margin as compared to the previous year to reach 22.9%.

Ian: Excluding insurance effects and related expenses at the EBITDA level, normalized adjusted EBITDA grew 4.4%, with a margin expansion of 30 basis points to 21.9%. Finally, our majority net income increased 3% to reach MXN 7.5 billion. This increase was driven by operating income growth that was partially offset by an increase in comprehensive financial results and in the effective tax rate. Now, let me expand on the main operational and strategic highlights across key markets. In Mexico, despite facing what is still a soft consumer environment, our volumes improved sequentially, resulting in a 0.9% contraction year on year, aided by adjustments to our price pack architecture, coupled with revamped affordability initiatives in multi-serve refillable packs. Regarding categories, Coke Zero maintained its solid growth pace with 14% volume growth year on year.

Ian Craig: Excluding insurance effects and related expenses at the EBITDA level, normalized adjusted EBITDA grew 4.4%, with a margin expansion of 30 basis points to 21.9%. Finally, our majority net income increased 3% to reach MXN 7.5 billion. This increase was driven by operating income growth that was partially offset by an increase in comprehensive financial results and in the effective tax rate. Now, let me expand on the main operational and strategic highlights across key markets. In Mexico, despite facing what is still a soft consumer environment, our volumes improved sequentially, resulting in a 0.9% contraction year on year, aided by adjustments to our price pack architecture, coupled with revamped affordability initiatives in multi-serve refillable packs. Regarding categories, Coke Zero maintained its solid growth pace with 14% volume growth year on year.

Speaker #3: And offering value-added functionalities to our Salesforce that are helping them strengthen consumer relationship customer relationships and increase sales. I also want to underscore that SWIFT and decisive nature of our Mexico team's reaction to a difficult first half of the year, by implementing top-line productivity and cost control measures that reversed a negative trend in volume and profitability.

Speaker #2: Importantly, by normalizing insurance claims and related expenses at the EBITDA level, normalized adjusted EBITDA increased 0.5% year-on-year, and EBITDA margin contraction was 20 basis points.

Speaker #2: Moving on to South America. Volumes increased 3% to 504.1 million unit cases. This increase was driven by volume growth across all territories in the division.

Speaker #3: As we enter 2026, we are well positioned to navigate the challenges related to the excise tax increase and continued soft economic growth. We have bolstered our portfolio with key affordability initiatives and are in the process of increasing our returnable pack offerings to capture key price points and defend household penetration.

Speaker #2: Revenues in South America increased 4.6% to 35.4 billion pesos, driven mainly by our revenue management initiatives offsetting unfavorable currency translation effects into Mexican pesos from most operating currencies in the division.

Speaker #3: We have also developed an ambitious plan together with the Coca-Cola company to capitalize on being a host country for the FIFA World Cup. Additionally, we continue with a keen focus on productivity and cost control initiatives together with a prudent CapEx x investment level to navigate the short-term while we gain visibility on how the year develops.

Ian: Our initiatives to recover share allowed us to fully recover our competitive position and enter 2026 with positive share momentum in both the colas and sparkling flavor segments. Notably, our stills portfolio grew 7.4% year-on-year, driven mainly by the solid performance achieved in Monster, Fuze Tea, and Santa Clara, which grew 41%, 33%, and 28%, respectively. We also positioned our Mexico operation for significant market execution improvements in 2026, with more than 100,000 new cooler doors installed by year-end 2026. Regarding digital, as I mentioned last October, we began the rollout of our state-of-the-art salesforce tool, Juntos+ Advisor, in Mexico. We are encouraged to share that with a strong focus on usability.

Ian Craig: Our initiatives to recover share allowed us to fully recover our competitive position and enter 2026 with positive share momentum in both the colas and sparkling flavor segments. Notably, our stills portfolio grew 7.4% year-on-year, driven mainly by the solid performance achieved in Monster, Fuze Tea, and Santa Clara, which grew 41%, 33%, and 28%, respectively. We also positioned our Mexico operation for significant market execution improvements in 2026, with more than 100,000 new cooler doors installed by year-end 2026. Regarding digital, as I mentioned last October, we began the rollout of our state-of-the-art salesforce tool, Juntos+ Advisor, in Mexico. We are encouraged to share that with a strong focus on usability.

Speaker #2: On a currency-neutral basis, total revenues in South America increased 9.5%. Gross profit in the division increased 0.6%, and gross margin contracted by 170 basis points to 43.7%.

Speaker #3: Moving on to Guatemala, where our volumes increased 3.5% to reach 48.9 million unit cases. During the quarter, we continued seeing a macro environment that decelerated versus the previous years, driven by shifts in consumer behaviors, as consumers increased their savings from remittances from 11% up to 40% on average.

Speaker #2: Driven mainly by an unfavorable mix and higher fixed costs such as labor and depreciation. On a currency-neutral basis, gross profit increased 5%. Operating income in South America rose 32.8% to 6.8 billion pesos, with operating margin up 410 basis points to 19.2%.

Speaker #3: Coupled with reductions in mobility because of rising insecurity in the country, which is now the number one public concern in Guatemala. Amid this backdrop, we were able to continue growing volumes and share, although at a lower than anticipated pace.

Speaker #2: As Ian previously mentioned, this margin expansion was positively impacted by insurance recovery in Brazil, for approximately 1 billion pesos. By normalizing insurance effects and related expenses in 2024 and 2025, our operating income increased 6%, resulting in an operating margin expansion of 20 basis points to reach 16.3%.

Ian: We have completed its rollout, and today its overall performance is improving geo-efficiency or visitation, as it's also known, by 5.5 percentage points, from 91% to 96.5%, and offering value-added functionalities to our salesforce that are helping them strengthen consumer relationship, customer relationships, and increase sales. I also want to underscore the swift and decisive nature of our Mexico team's reaction to a difficult first half of the year, by implementing top-line productivity and cost control measures that reversed a negative trend in volume and profitability. As we enter 2026, we are well positioned to navigate the challenges related to the excise tax increase and continued soft economic growth. We have bolstered our portfolio with key affordability initiatives and are in the process of increasing our returnable pack offerings to capture key price points and defend household penetration.

Ian Craig: We have completed its rollout, and today its overall performance is improving geo-efficiency or visitation, as it's also known, by 5.5 percentage points, from 91% to 96.5%, and offering value-added functionalities to our salesforce that are helping them strengthen consumer relationship, customer relationships, and increase sales. I also want to underscore the swift and decisive nature of our Mexico team's reaction to a difficult first half of the year, by implementing top-line productivity and cost control measures that reversed a negative trend in volume and profitability. As we enter 2026, we are well positioned to navigate the challenges related to the excise tax increase and continued soft economic growth. We have bolstered our portfolio with key affordability initiatives and are in the process of increasing our returnable pack offerings to capture key price points and defend household penetration.

Speaker #3: In addition, during the second half of the year, we implemented productivity initiatives to put in place a leaner operating model. As we enter a new year, we aim to accelerate top-line growth with initiatives to continue our colas momentum, while capturing share opportunities in flavors.

Speaker #2: This improvement was driven by expense efficiencies such as freight, marketing, and maintenance. Finally, adjusted EBITDA in the division increased 29.5% to 8.5 billion pesos, for a margin expansion of 460 basis points to 23.9%.

Speaker #3: In colas, we continue to have opportunities to gain share through entry price points, leveraging the FIFA World Cup and increasing availability, while we doubled down on efforts to boost sprite.

Speaker #3: We continue to have ample space to develop profitable stills categories with Powerade and Monster, as well as continuing to bolster our Juntos Plus platform by unlocking new clients and improving executions.

Speaker #2: Excluding the effects of insurance recoveries and related expenses in 2024 and 2025, at the EBITDA level, normalized adjusted EBITDA increased 9.6% year-on-year, and EBITDA margin expansion of 90 basis points.

Speaker #3: With the ambition the ambitious investments that we have completed in Guatemala, capacity constraints are no longer a concern, our priority now is to continue optimizing our cost structure to discipline expense management and operational excellence.

Speaker #2: Now let me expand on our comprehensive financing results. Which recorded an expense of 1.4 billion pesos as compared to an expense of 980 million pesos during the same period of the previous year.

Ian: We have also developed an ambitious plan together with The Coca-Cola Company, to capitalize on being a host country for the FIFA World Cup. Additionally, we continue with a keen focus on productivity and cost control initiatives, together with a prudent CapEx investment level, to navigate the short term while we gain visibility on how the year develops. Moving on to Guatemala, where our volumes increased 3.5% to reach 48.9 million unit cases. During the quarter, we continued seeing a macro environment that decelerated versus the previous years, driven by shifts in consumer behaviors as consumers increased their savings from remittances from 11% up to 40% on average, coupled with reductions in mobility because of rising insecurity in the country, which is now the number one public concern in Guatemala.

Ian Craig: We have also developed an ambitious plan together with The Coca-Cola Company, to capitalize on being a host country for the FIFA World Cup. Additionally, we continue with a keen focus on productivity and cost control initiatives, together with a prudent CapEx investment level, to navigate the short term while we gain visibility on how the year develops. Moving on to Guatemala, where our volumes increased 3.5% to reach 48.9 million unit cases. During the quarter, we continued seeing a macro environment that decelerated versus the previous years, driven by shifts in consumer behaviors as consumers increased their savings from remittances from 11% up to 40% on average, coupled with reductions in mobility because of rising insecurity in the country, which is now the number one public concern in Guatemala.

Speaker #3: Now, moving on to our South America division. In Brazil, our quarterly volumes increased 2.6%, driven mainly by our historic month of December, outstanding market execution on the back of our digital enablers, coupled with higher average temperatures, and significantly lower precipitation drove this growth.

Speaker #2: This increase was driven mainly by a reduction in interest income, resulting from a lower cash position in key markets and lower interest rates in Mexico, coupled with higher interest expenses driven by the issuance of a U.S. dollar-denominated bond through 2035 and its related derivative instruments.

Speaker #3: Notably, this is the highest fourth-quarter volume on record for our second-largest operation. It has been the case throughout the year we continued gaining share in all relevant categories, within the non-alcoholic ready-to-drink industry, importantly we have recovered the vast majority of the share that was lost in Rio Grande do Sul due to the temporary closure of our plant, which fully reopened last May.

Speaker #2: These effects were partially offset by, first, a gain in financial instruments of 162 million pesos as compared to a loss of 33 million pesos in the fourth quarter of '24, second, a higher foreign exchange gain, and third, a higher gain in monetary positions from inflationary subsidiaries.

Speaker #3: Aligned with our strategic intent to accelerate growth in non-caloric and single-serve beverages, we delivered strong growth with Coca-Cola Zero, which grew 44% during 2025, and Sprite Zero, which achieved accelerated growth of 93% year-on-year in 2025.

Speaker #2: I would like to briefly comment on our recent financing activity that further reinforces our balance sheet with attractive funding conditions. On February 12, we successfully priced the bond issuance in the Mexican market for a total amount of 10 billion pesos.

Ian: Amid this backdrop, we were able to continue growing volumes and share, although at a lower than anticipated pace. In addition, during the second half of the year, we implemented productivity initiatives to put in place a linear operating model. As we enter a new year, we aim to accelerate top-line growth with initiatives to continue our colas momentum while capturing share opportunities in flavors. In colas, we continue to have opportunities to gain share through entry price points, leveraging the FIFA World Cup and increasing availability, while we double down on efforts to boost Sprite. We continue to have ample space to develop profitable stills categories with Powerade and Monster, as well as continuing to bolster our Juntos+ platform by unlocking new clients and improving executions. With the ambition, the ambitious investments that we have completed in Guatemala, capacity constraints are no longer a concern.

Ian Craig: Amid this backdrop, we were able to continue growing volumes and share, although at a lower than anticipated pace. In addition, during the second half of the year, we implemented productivity initiatives to put in place a linear operating model. As we enter a new year, we aim to accelerate top-line growth with initiatives to continue our colas momentum while capturing share opportunities in flavors. In colas, we continue to have opportunities to gain share through entry price points, leveraging the FIFA World Cup and increasing availability, while we double down on efforts to boost Sprite. We continue to have ample space to develop profitable stills categories with Powerade and Monster, as well as continuing to bolster our Juntos+ platform by unlocking new clients and improving executions. With the ambition, the ambitious investments that we have completed in Guatemala, capacity constraints are no longer a concern.

Speaker #2: The transaction was executed through a dual-tranche structure, allowing us to balance duration and interest rate exposure. The first tranche consisted of 7 billion pesos with a 10-year maturity, priced at a fixed rate of 9.12%, equivalent to MEBONO plus 43 basis points.

Speaker #3: Notably, our Sprite Zero playbook is following a similar script as Coke Zero, as a result, Sprite Zero now represents more than 20% of our total Sprite volume.

Speaker #3: Regarding stills, we have leveraged our portfolio and commercial capabilities to achieve growth across all categories. For instance, energy drinks continue seeing double-digit growth from Monster, driven by portfolio innovation, execution, and availability.

Speaker #2: The second tranch amounted to 3 billion pesos with a 3-year term priced at a floating rate of funding TF plus 38 basis points. This structure reflects both strong investor demand and our disciplined approach to liability management.

Speaker #3: In line with this positive performances, juices grew 9% and Powerade grew mid-single digits. Finally, within the alcoholic ready-to-drink category, we achieved more than 50% growth year-on-year, driven by Jack and Coke and Absolute Sprite.

Speaker #2: Importantly, the transaction received the highest national credit ratings from S&P and Moody's, reaffirming our solid credit profile and the confidence that the local capital markets continue to place in Coca-Cola Femsa.

Speaker #3: Our digital enablers Juntos Plus monthly active user base continues expanding. Surpassing our goal of 303,000 monthly active users. While continuing to increase average ticket size.

Ian: Our priority now is to continue optimizing our cost structure through disciplined expense management and operational excellence. Now, moving on to our South America division. In Brazil, our quarterly volumes increased 2.6%, driven mainly by a historic month of December. Outstanding market execution on the back of our digital enablers, coupled with higher average temperatures and significantly lower precipitation, drove this growth. Notably, this is the highest Q4 volume on record for our second-largest operation. As has been the case throughout the year, we continued gaining share in all relevant categories within the non-alcoholic, ready-to-drink industry. Importantly, we have recovered the vast majority of the share that was lost in Rio Grande do Sul due to a temporary closure of our plant, which fully reopened last May.

Ian Craig: Our priority now is to continue optimizing our cost structure through disciplined expense management and operational excellence. Now, moving on to our South America division. In Brazil, our quarterly volumes increased 2.6%, driven mainly by a historic month of December. Outstanding market execution on the back of our digital enablers, coupled with higher average temperatures and significantly lower precipitation, drove this growth. Notably, this is the highest Q4 volume on record for our second-largest operation. As has been the case throughout the year, we continued gaining share in all relevant categories within the non-alcoholic, ready-to-drink industry. Importantly, we have recovered the vast majority of the share that was lost in Rio Grande do Sul due to a temporary closure of our plant, which fully reopened last May.

Speaker #2: Overall, this issuance strengthens our financial position, extends our debt maturity profile, and provides us with continued financial flexibility. Finally, I'd like to take a moment to comment on sustainability, which remains a core element of our long-term value creation strategy.

Speaker #3: Importantly, our Juntos Plus premier loyalty customer base increased 73% year-on-year. Juntos Plus advisor, which is a game changer for our Salesforce, and is supporting Brazil's positive share performance increases your efficiency by more than 9.2 percentage points to reach 95.6%.

Speaker #2: Our disciplined and consistent execution translated into tangible improvements across the main sustainability benchmarks used to assess our performance. Most notably, our S&P Global Corporate Sustainability Assessment Score increased by 11 points year over year, reaching an all-time high of 81.

Speaker #3: Finally, on the supply chain front, we increased our manufacturing capacity by 8.2% year-on-year, supported by five new production lines. In addition, our warehouse capacity increased by more than 25,000 pallet positions, representing a 6% increase year-on-year.

Speaker #2: As a result, we were included in the 2026 Sustainability Yearbook as the highest-scoring company in our sector in the Americas. An achievement that underscores the strength of our sustainability strategy and governance practices.

Speaker #3: This was achieved through state-of-the-art projects such as a vertical automated warehouse, located next to our Itaberito plant in the state of Minas Gerais. As we look to 2026, we are encouraged by the growth rate at which we close the year.

Speaker #2: In addition, we achieved a record score of 4.1 out of 5 in the FTSE for Good Assessment, while also posting improvements across our key evaluations, including MSCI, ISS/ESG, Bloomberg ESG, and CDP.

Ian: Aligned with our strategic intent to accelerate growth in non-caloric and single-serve beverages, we delivered strong growth with Coca-Cola Zero, which grew 44% during 2025, and Sprite Zero, which achieved accelerated growth of 93% year-on-year in 2025. Notably, our Sprite Zero playbook is following a similar script as Coke Zero. As a result, Sprite Zero now represents more than 20% of our total Sprite volume. Regarding stills, we have leveraged our portfolio and commercial capabilities to achieve growth across all categories. For instance, energy drinks continue seeing double-digit growth from Monster, driven by portfolio innovation, execution, and availability. In line with these positive performances, juices grew 9% and Powerade grew mid-single digits. Finally, within the alcoholic ready-to-drink category, we achieved more than 50% growth year-on-year, driven by Jack and Coke and Absolut Sprite.

Ian Craig: Aligned with our strategic intent to accelerate growth in non-caloric and single-serve beverages, we delivered strong growth with Coca-Cola Zero, which grew 44% during 2025, and Sprite Zero, which achieved accelerated growth of 93% year-on-year in 2025. Notably, our Sprite Zero playbook is following a similar script as Coke Zero. As a result, Sprite Zero now represents more than 20% of our total Sprite volume. Regarding stills, we have leveraged our portfolio and commercial capabilities to achieve growth across all categories. For instance, energy drinks continue seeing double-digit growth from Monster, driven by portfolio innovation, execution, and availability. In line with these positive performances, juices grew 9% and Powerade grew mid-single digits. Finally, within the alcoholic ready-to-drink category, we achieved more than 50% growth year-on-year, driven by Jack and Coke and Absolut Sprite.

Speaker #3: We anticipate that election-related spending, social programs, and the FIFA World Cup will represent important tailwinds for our operation in Brazil. In this environment, we expect to continue executing against our strategic priorities, striving to outperform the industry, leveraging our digital initiatives and our customer-centric culture.

Speaker #2: These results reflect particularly strong performance across climate action, water stewardship, and supplier management. Taken together, these recognitions reinforce our conviction that the disciplined integration of environmental and social factors, along with robust risk management across our operations and value chain, is a critical enabler of sustainable, long-term growth.

Speaker #3: Now, moving on to Colombia. Our volumes grew 4.5% as the macroeconomic environment gradually recovers and we cycle the effects of the excess tax increase in the country.

Speaker #2: With that, Operator, we're ready to open the floor for questions.

Speaker #1: Thank you. At this time, we are going to open it up for questions and answers. If you have a question, please click on raise hand for audio questions, or write it down in the Q&A section for written questions.

Speaker #3: As was the case in Mexico, we implemented portfolio initiatives to adjust our price pack architecture in brand Coca-Cola. Providing attractive price points aimed at growing transactions.

Speaker #3: In addition, we're managing price gaps in multi-serve presentations to provide affordability and an attractive value proposition. At the same time, Coke Zero, which achieved double-digit growth during the quarter, remains a growth engine with ample headroom.

Speaker #1: Please remember that your company's name should be visible for your question to be taken. We do ask that when you pose your question, that you pick up your headset to provide optimum sound quality.

Ian: Our digital enablers, Juntos+ monthly active user base continues expanding, surpassing our goal of 303,000 monthly active users, while continuing to increase average ticket size. Importantly, our Juntos+ Premier loyalty customer base increased 73% year-on-year. Juntos+ Advisor, which is a game changer for our sales force and is supporting Brazil's positive share performance, increased its year efficiency by more than 9.2 percentage points to reach 95.6%. Finally, on the supply chain front, we increased our manufacturing capacity by 8.2% year-on-year, supported by 5 new production lines. In addition, our warehouse capacity increased by more than 25,000 pallet positions, representing a 6% increase year-on-year. This was achieved through state-of-the-art projects, such as a vertical automated warehouse located next to our Itabirito plant in the state of Minas Gerais.

Ian Craig: Our digital enablers, Juntos+ monthly active user base continues expanding, surpassing our goal of 303,000 monthly active users, while continuing to increase average ticket size. Importantly, our Juntos+ Premier loyalty customer base increased 73% year-on-year. Juntos+ Advisor, which is a game changer for our sales force and is supporting Brazil's positive share performance, increased its year efficiency by more than 9.2 percentage points to reach 95.6%. Finally, on the supply chain front, we increased our manufacturing capacity by 8.2% year-on-year, supported by 5 new production lines. In addition, our warehouse capacity increased by more than 25,000 pallet positions, representing a 6% increase year-on-year. This was achieved through state-of-the-art projects, such as a vertical automated warehouse located next to our Itabirito plant in the state of Minas Gerais.

Speaker #1: Please hold while we pull for questions. Our first question comes from Ben Thurer with Barclays. You can open your microphone.

Speaker #3: As I mentioned during our last earnings call, Quattro, our grapefruit flavor, is now the number one flavored sparkling beverage in the country, and we aim to continue expanding our competitive position in flavors with increased innovation and availability.

Speaker #3: Yeah, good morning. Ian, Gerardo, Jorge, thank you very much for taking my question. I wanted to get some incremental color, if you can, as to the performance, particularly in Mexico over the course of the fourth quarter and then heading into the first quarter.

Speaker #3: On the digital front, Colombia closed the year with more than 320,000 monthly active buyers. Importantly, average ticket grew more than 4% and digital orders increased more than 50% year-on-year.

Speaker #3: What have you seen in regards to the volume behavior October through December, and in particular now with taxes being in place early on? What are the early signs of sensitivities that you've been seeing among key customers, and how have you been reacting to that as it relates to the tax and then ultimately your pricing strategy throughout the year?

Speaker #3: We anticipate that our premier loyalty plan will continue driving adoption and frequency as its use expands during 2026. Finally, I want to recognize our team in Colombia for their cost control measures and the cost-to-serve reductions they have achieved, aided by our capacity investments in the country, which have enabled us to reduce primary freight costs and third-party warehouse expenses.

Speaker #3: That would be my question. Thank you very much.

Speaker #4: Hi, Ben. So what you saw during the last year, if you remember, I think in Mexico in the first quarter was around 5% decline; then the second quarter when we really had the impact of the consumer sentiment around the 15% decline, no, sorry, around 10%, if I remember more or less.

Ian: As we look to 2026, we are encouraged by the growth rate at which we closed the year. We anticipate that election-related spending, social programs, and the FIFA World Cup will represent important tailwinds for our operation in Brazil. In this environment, we expect to continue executing against our strategic priorities, striving to outperform the industry, leveraging our digital initiatives and our customer-centric goals. Now, moving on to Colombia. Our volumes grew 4.5% as the macroeconomic environment gradually recovers, and we cycle the effects of the excise tax increase in the country. As well as the case in Mexico, we implemented portfolio initiatives to adjust our price pack architecture in brand Coca-Cola, providing attractive price points aimed at growing transactions. In addition, we're managing price gaps in multi-serve presentations to provide affordability and an attractive value proposition.

Ian Craig: As we look to 2026, we are encouraged by the growth rate at which we closed the year. We anticipate that election-related spending, social programs, and the FIFA World Cup will represent important tailwinds for our operation in Brazil. In this environment, we expect to continue executing against our strategic priorities, striving to outperform the industry, leveraging our digital initiatives and our customer-centric goals. Now, moving on to Colombia. Our volumes grew 4.5% as the macroeconomic environment gradually recovers, and we cycle the effects of the excise tax increase in the country. As well as the case in Mexico, we implemented portfolio initiatives to adjust our price pack architecture in brand Coca-Cola, providing attractive price points aimed at growing transactions. In addition, we're managing price gaps in multi-serve presentations to provide affordability and an attractive value proposition.

Speaker #3: As we look to 2026, we expect to add another distribution center in Medellín, which will alleviate warehouse saturation and bring additional efficiencies. In Argentina, our volumes increased 3%.

Speaker #3: Our agile response to a volatile environment ensured our sustained positive performance throughout the year. Despite the heterogeneous recovery across different sectors of the economy, we have remained consistent with our strategy, enhancing our affordability plans and accelerating our single-serve mix, all while maintaining a lean and flexible cost structure.

Speaker #4: And then the third quarter, 3.7, and finally by the fourth quarter, it was almost flat, declining 0.9%. So you saw sequential improvement. And I mentioned in the prepared remarks that December was the strongest December on record for Mexico in terms of volume growth.

Speaker #4: So you can see how the underlying trend was improving to the point of having a December that was the highest on record in terms of volume.

Speaker #3: This strategy resulted in an improved competitive position and single-serve mix that reached 26.3%, a 2.3 percentage point increase year-on-year. Regarding our digital initiatives, we continue driving digital client adoption with a rollout of the latest versions of Juntos Plus, resulting in a 71% increase in digital orders year-on-year.

Speaker #4: That being said, we continue with the same guidance for 2026, which is a low-to-mid single-digit decline in Mexico simply because we had to transfer the impacts of the EF's excise tax.

Ian: At the same time, Coca-Cola Zero, which achieved double-digit growth during the quarter, remains a growth engine with ample headroom. As I mentioned during our last earnings call, Quatro, our grapefruit flavor, is now the number one flavored sparkling beverage in the country, and we aim to continue expanding our competitive position in flavors with increased innovation and availability. On the digital front, Colombia closed the year with more than 320,000 monthly active buyers. Importantly, average ticket grew more than 4%, and digital orders increased more than 15% year-on-year. We anticipate that our premier loyalty plan will continue driving adoption and frequency as its use expands during 2026.

Ian Craig: At the same time, Coca-Cola Zero, which achieved double-digit growth during the quarter, remains a growth engine with ample headroom. As I mentioned during our last earnings call, Quatro, our grapefruit flavor, is now the number one flavored sparkling beverage in the country, and we aim to continue expanding our competitive position in flavors with increased innovation and availability. On the digital front, Colombia closed the year with more than 320,000 monthly active buyers. Importantly, average ticket grew more than 4%, and digital orders increased more than 15% year-on-year. We anticipate that our premier loyalty plan will continue driving adoption and frequency as its use expands during 2026.

Speaker #4: And that was a large price increase that we had to transfer through for the EF's tax. So we're not changing our guidance there, and we are seeing the impacts of that tax increase in the first quarter.

Speaker #3: As we look to 2026 for Argentina, we expect to continue executing against the strategy that has been successful thus far. Sustained and affordable value proposition in brand Coca-Cola and flavors, boost single-serve and Powerade, by leveraging the FIFA World Cup, and unlock Juntos Plus and premier Juntos Plus full potential while keeping a lean and flexible cost and expense structure.

Speaker #3: But as expected, the volume declines or the very much basically in line?

Speaker #4: I think so.

Speaker #3: Okay. Perfect. I'll pass it on. Thank you very much. I'll pass it on. Thanks.

Speaker #3: Let me close by emphasizing that we are encouraged to be a part of a vibrant beverage industry within a region with positive growth prospects.

Speaker #1: Our next question comes from Ricardo Alves with Morgan Stanley. You can open your microphone.

Speaker #3: The support of our long-term sustainable growth model. From our strategic shareholders, FEMSA and the Coca-Cola company, is one of our fundamental strengths. With that in mind, I would like to take a moment to recognize and thank José Antonio Fernández Carvajal, and James Quincy, for their exceptional vision, leadership, and partnership as CEOs of FEMSA and the Coca-Cola company respectively.

Speaker #5: Hello, Ian, Jerry, Jorge. Thanks for the opportunity. Ian, I remember the cycle of investments in 2024—the focus on growth, and then you have 2025 with all the challenges and one-offs.

Ian: Finally, I want to recognize our team in Colombia for their cost control measures and the cost-to-serve reductions they have achieved, aided by our capacity investments in the country, which have enabled us to reduce primary freight costs and third-party warehouse expenses. As we look to 2026, we expect to add another distribution center in Medellín, which will alleviate warehouse saturation and bring additional efficiencies. In Argentina, our volumes increased 3%. Our agile response to a volatile environment ensured our sustained positive performance throughout the year. Despite the heterogeneous recovery across different sectors of the economy, we have remained consistent with our strategy, enhancing our affordability plans and accelerating our single-serve mix, all while maintaining a lean and flexible cost structure. This strategy resulted in an improved competitive position and single-serve mix that reached 26.3%, a 2.3 percentage point increase year-on-year.

Ian Craig: Finally, I want to recognize our team in Colombia for their cost control measures and the cost-to-serve reductions they have achieved, aided by our capacity investments in the country, which have enabled us to reduce primary freight costs and third-party warehouse expenses. As we look to 2026, we expect to add another distribution center in Medellín, which will alleviate warehouse saturation and bring additional efficiencies. In Argentina, our volumes increased 3%. Our agile response to a volatile environment ensured our sustained positive performance throughout the year. Despite the heterogeneous recovery across different sectors of the economy, we have remained consistent with our strategy, enhancing our affordability plans and accelerating our single-serve mix, all while maintaining a lean and flexible cost structure. This strategy resulted in an improved competitive position and single-serve mix that reached 26.3%, a 2.3 percentage point increase year-on-year.

Speaker #5: Yes, came through. And I think that to credit Coke Femsa the company was very fast in adjusting the cost structure as needed, the price hikes, so when you think about the question is your strategic views into 2026.

Speaker #3: Their vision to grow the Coca-Cola system combining the unique strengths of both the Coca-Cola company and the bottlers has been fundamental to our company's success.

Speaker #3: Additionally, both José Antonio and James have personally taken a stake in the system's talent development, leaving a legacy of a deep management bench. We're grateful for the transformational impact they have had over the years and wish them both continued success in the roles as chairman.

Speaker #5: When you think about everything that you have in place, right, I think that since 2024, all the investments, or the major investments at least, were made.

Speaker #5: Even rebuilding plans. The costs were adjusted in Mexico, a big discussion that we had in the first half of last year. You priced through the tax issues or EF's issues into 2026.

Speaker #3: We're equally excited to welcome José Antonio Fernández Garza-Lagüera to the role of CEO at FEMSA and Enrique Brown to the role company. Their leadership marks the beginning of a new growth chapter in our strategic partnership, and we look forward to continuing to transform the beverage industry and create long-term value together.

Speaker #5: So, with assuming that all of that is kind of behind you, what would be, for this year and the next two years, your main strategic ambitions for 2026?

Ian: Regarding our digital initiatives, we continued driving digital client adoption with the rollout of the latest version of Juntos+, resulting in a 71% increase in digital orders year-on-year. As we look to 2026 for Argentina, we expect to continue executing against a strategy that has been successful thus far. Sustain an affordable value proposition in brand Coca-Cola and flavors, boost Single Serve and Powerade by leveraging the FIFA World Cup, and unlock Juntos+ and Premia Juntos+ full potential while keeping a lean and flexible cost and expense structure. Let me close by emphasizing that we are encouraged to be a part of a vibrant beverage industry within a region with positive growth prospects. The support of our long-term sustainable growth model from our strategic shareholders, FEMSA and The Coca-Cola Company, is one of our fundamental strengths.

Ian Craig: Regarding our digital initiatives, we continued driving digital client adoption with the rollout of the latest version of Juntos+, resulting in a 71% increase in digital orders year-on-year. As we look to 2026 for Argentina, we expect to continue executing against a strategy that has been successful thus far. Sustain an affordable value proposition in brand Coca-Cola and flavors, boost Single Serve and Powerade by leveraging the FIFA World Cup, and unlock Juntos+ and Premia Juntos+ full potential while keeping a lean and flexible cost and expense structure. Let me close by emphasizing that we are encouraged to be a part of a vibrant beverage industry within a region with positive growth prospects. The support of our long-term sustainable growth model from our strategic shareholders, FEMSA and The Coca-Cola Company, is one of our fundamental strengths.

Speaker #5: Not necessarily Mexico only, but across the board. What is keeping you awake as the big opportunities ahead? And then just one other question for Jerry: just a quick update on the shareholder remuneration would be much appreciated, given the below one-times EBITDA leverage. So, I think that an update on shareholder distribution would be appreciated.

Speaker #3: With that, I will hand the call over to Jerry.

Speaker #2: Thank you, Ian. And good morning, everyone. I appreciate you joining us today. I will begin by summarizing our division's results for the quarter. In Mexico and Central America, our volumes were even, as a slight volume decline in Mexico was offset by growth in Guatemala, Nicaragua, Panama, and Costa Rica.

Speaker #5: Thank you so much, guys.

Speaker #4: Thank you, Ricardo. Well, just to be clear, as you mentioned, we're very proud of the adjustment that our Mexico team or the reaction, let's say, the rapid reaction that our Mexico team had when we were facing the changing consumer sentiment and the sluggish demand that coupled together with weather, by the way, so it was a quick and swift reaction.

Speaker #2: On a currency-neutral basis, revenues increased 3.3%. Gross profit increased 2.6% to reach 20.8 billion pesos, resulting in a gross margin of expansion year-on-year. This margin increase was driven mainly by lower raw material costs, such as sugar and PET, coupled with the appreciation of the Mexican peso as applied to our US dollar denominated raw material costs.

Speaker #4: And that’s behind us. Going into 2026, we are already with a lean structure, and we adjusted our CAPEX primarily in Mexico because the rest of the territories are growing as expected.

Ian: With that in mind, I would like to take a moment to recognize and thank José Antonio Fernández Carbajal and James Quincey for their exceptional vision, leadership, and partnership as CEOs of FEMSA and The Coca-Cola Company, respectively. Their vision to grow the Coca-Cola system, combining the unique strengths of both The Coca-Cola Company and the bottlers, has been fundamental to our company's success. Additionally, both José Antonio and James have personally taken a stake in the system's talent development, leaving a legacy of a deep management bench. We're grateful for the transformational impact they have had over the years and wish them both continued success in their roles as chairman. We're equally excited to welcome José Antonio Fernández Garza Lagüera to the role of CEO at FEMSA, and Enrique Brown to the role of CEO at The Coca-Cola Company.

Ian Craig: With that in mind, I would like to take a moment to recognize and thank José Antonio Fernández Carbajal and James Quincey for their exceptional vision, leadership, and partnership as CEOs of FEMSA and The Coca-Cola Company, respectively. Their vision to grow the Coca-Cola system, combining the unique strengths of both The Coca-Cola Company and the bottlers, has been fundamental to our company's success. Additionally, both José Antonio and James have personally taken a stake in the system's talent development, leaving a legacy of a deep management bench. We're grateful for the transformational impact they have had over the years and wish them both continued success in their roles as chairman. We're equally excited to welcome José Antonio Fernández Garza Lagüera to the role of CEO at FEMSA, and Enrique Brown to the role of CEO at The Coca-Cola Company.

Speaker #4: So we adjusted our CAPEX there. And our key priorities remain the same. I mean, we want to continue growing our core business. It's amazing what's happening with Coke Zero.

Speaker #4: Even within this environment in Mexico, even with the tax, we're continuing to accelerate Coke Zero. There are opportunities to improve our position in flavors.

Speaker #4: What I'm seeing with Sprite Zero in Brazil is nothing short of amazing. What we have done with Quattro in Colombia is very positive. And that's something that we want with what we're doing with the Heritage brands in Mexico.

Speaker #4: So that's something that we want to continue to leverage this year. And also, on profitability and CVs, which continue to gain mix and grow at very attractive rates.

Speaker #4: So that would be my first priority. The second one is we will have Juntos Plus Advisor in our four largest markets this year. We already have it in Mexico and Brazil where it's maturing, where it's giving us improved visitation, improved combined coverages, and those things are growing 3 to 2 percentage points.

Ian: Their leadership marks the beginning of a new growth chapter in our strategic partnership. We look forward to continuing to transform the beverage industry and create long-term value together. With that, I will hand the call over to Gerry.

Ian Craig: Their leadership marks the beginning of a new growth chapter in our strategic partnership. We look forward to continuing to transform the beverage industry and create long-term value together. With that, I will hand the call over to Gerry.

Speaker #2: This contraction was driven mainly by an increase in marketing, depreciation, and labor coupled with a lower operative foreign exchange gain, as compared to the previous year.

Speaker #4: And those translate directly to increases in share. You see that in Brazil. More compliance on the guided missions. So I think we expect to continue to scale that and leverage those enablers.

Gerardo Cruz: Thank you, Ian. Good morning, everyone. I appreciate you joining us today. I will begin by summarizing our divisions results for the quarter. In Mexico and Central America, our volumes were even, as a slight volume decline in Mexico was offset by growth in Guatemala, Nicaragua, Panama, and Costa Rica. Revenues increased 1.6% to MXN 42.2 billion, driven mainly by revenue growth management initiatives that were partially offset by unfavorable mix and currency translation effects into Mexican pesos. On a currency-neutral basis, revenues increased 3.3%. Gross profit increased 2.6% to reach MXN 20.8 billion, resulting in a gross margin of 49.2%, a 40 basis point expansion year-on-year.

Speaker #4: And finally, we continue working on the culture piece. It's very important for us that we continue improving on our customer centricity journey, improving our customer-centric measures.

Speaker #4: We believe that's key to the fundamental long-term health of the business. And that's what we're driving, Ricardo. We've talked about this in our conversations.

Speaker #2: Moving on to South America. Volumes increased 3% to 504.1 million unit cases. This increase was driven by volume growth across all territories in the division.

Speaker #4: This is a scale business. It's important that we continue growing relative scale. It's a year that we need to be prudent because of the tax, increasing Mexico.

Speaker #4: It's not a minor tax; it's a very large tax increase. So we need to be prudent. But that only reaffirms our commitment to our sustainable, long-term growth model.

Gerardo Cruz: This margin increase was driven mainly by lower raw material costs, such as sugar and PET, coupled with the appreciation of the Mexican peso as applied to our US dollar-denominated raw material costs. These effects were partially offset by unfavorable mix effects and fixed costs. Operating income in the division declined 1.1% to 6.9 billion Mexican pesos. Our operating margin contracted 40 basis points to 16.3%. As described in our earnings release, our operating income includes the recognition of insurance recoveries in Mexico, net of expenses for 116 million Mexican pesos. By excluding this effect and related expenses in the same period of the previous year, normalized operating income would have declined 8.1%, resulting in an operating margin contraction of 170 basis points.

Speaker #4: We need to come out of this stronger. And continue accelerating what all of our territories outside of South America. Jerry, yeah. Thank you, Ricardo.

Speaker #2: On a currency-neutral basis, total revenues in South America increased 9.5%. Gross profit in the division increased 0.6%, and gross margin contracted by 170 basis points to 43.7%.

Speaker #4: And to briefly complement Ian, I would like to just connect a few of the points that Ian mentioned regarding first grow the core strategic initiative as well as our digital enablers as our second most important growth strategic priority.

Speaker #2: Driven mainly by an unfavorable mix and higher fixed costs such as labor and depreciation. On a currency-neutral basis, gross profit increased 5%. Operating rose 32.8% to 6.8 billion pesos, with operating margin up 410 basis points to 19.2%.

Speaker #4: Because it came or it's coming at the right precise moment that we can leverage those digital capabilities and the AI-enabled capabilities that our platforms have to take the best advantage of our revenue growth management initiatives at a moment where specifically in Mexico, we're facing important challenges with the EFS tax coming online.

Gerardo Cruz: This contraction was driven mainly by an increase in marketing, depreciation, and labor, coupled with a lower operative foreign exchange gain as compared to the previous year. These effects were partially offset by operating expense efficiencies, such as maintenance and distribution. Finally, our adjusted EBITDA in the division increased to 1.3%, with a flat margin as compared to the previous year, to reach 22.9%. Importantly, by normalizing insurance claims and related expenses at the EBITDA level, normalized adjusted EBITDA increased 0.5% year-on-year, and EBITDA margin contraction of 20 basis points. Moving on to South America. Volumes increased 3% to 504.1 million unit cases. This increase was driven by volume growth across all territories in the division.

Speaker #4: Going to Capital Allocation Ricardo, I think we are very or following very closely our capital structure situation. We understand that we are pending to give information to the market regarding what we're doing.

Speaker #4: With our dividend strategy, given that we're facing this challenge in Mexico with the EFS, we're holding on a little bit to see how cash flow behaves during the year.

Speaker #4: We'll certainly try to do our best to have the less disruption possible from this effect in our cash flow generation. But we're being a bit cautious just waiting out and see how the first half of the year develops with the World Cup coming on.

Speaker #4: And see how our projection for cash flow for the remainder of the year progresses. So we'll give you a bit more information as the year moves on.

Gerardo Cruz: Revenues in South America increased 4.6% to 35.4 billion Mexican pesos, driven mainly by our revenue management initiatives, offsetting unfavorable currency translation effects into Mexican pesos from most operating currencies in the division. On a currency-neutral basis, total revenues in South America increased 9.5%. Gross profit in the division increased 0.6%, and gross margin contracted by 170 basis points to 43.7%, driven mainly by an unfavorable mix and higher fixed costs, such as labor and depreciation. On a currency-neutral basis, gross profit increased 5%. Operating income in South America rose 32.8% to 6.8 billion Mexican pesos, with operating margin up 410 basis points to 19.2%.

Speaker #5: Thank you very much, Ian and Jerry, for the complete answers. Appreciate it.

Speaker #4: Thank you.

Speaker #2: This increase was driven mainly by a reduction in interest income, resulting from a lower cash position in key markets, and lower interest rates in Mexico coupled with higher interest expenses driven by the issuance of a US dollar denominated bond due 2035 and its related derivative instruments.

Speaker #6: Our next question comes from Thiago Bortolucci with Goldman Sachs. Sir, you can open your microphone. We are going to move on to the next question that comes from Rodrigo Alcântara with UBS.

Speaker #7: Hello. Can you hear me?

Speaker #4: Yes, Rodrigo. Hello.

Gerardo Cruz: As Ian previously mentioned, this margin expansion was positively impacted by insurance recovery in Brazil for approximately 1 billion pesos. By normalizing insurance effects and related expenses in 2024 and 2025, our operating income increased 6%, resulting in an operating margin expansion of 20 basis points to reach 16.3%. This improvement was driven by expense efficiencies such as freight, marketing, and maintenance. Finally, adjusted EBITDA in the division increased 29.5% to 8.5 billion pesos, for a margin expansion of 460 basis points to 23.9%. Excluding the effects of insurance recoveries and related expenses in 2024 and 2025, at the EBITDA level, normalized adjusted EBITDA increased 9.6% year-on-year, and EBITDA margin expansion of 90 basis points.

Speaker #7: Awesome. Hello. Hello, Jorge. Ian and Jerry, nice to hear from you. One question for Ian: To elaborate on the very encouraging momentum observed in Brazil, right?

Speaker #2: The transaction was executed through a dual-tran structure allowing us to balance duration and interest rate exposure. The first tranche consisted of 7 billion pesos with a 10-year maturity priced at a fixed rate of 9.12% equivalent to MEBONO plus 43 basis points.

Speaker #7: I mean, we discussed here in terms of the zero concepts momentum but also judging on competitors' performance. Looking your performance quite strong as well.

Speaker #7: So not sure if it's a matter also of price relativity allowing you guys to give better performance digital tools. Just wanted to understand the drivers behind not only the strong category growth momentum but also the relative performance versus competitors in Brazil.

Speaker #2: The second tranche amounted to 3 billion pesos with a 3-year term priced at a floating rate of funding TF plus 38 basis points. This structure reflects both strong investor demand and our disciplined approach to liability management.

Speaker #2: Importantly, the transaction received the highest national credit ratings from S&P and Moody's. Reaffirming our solid credit profile and the confidence that the local capital markets continue to place in Coca-Cola Femsa.

Speaker #7: That would be for NAV. For non-alcoholic beverage. And the other question for Jerry and this is a topic that to tell you the truth, I mean, we were asked as writing the review today.

Gerardo Cruz: Now let me expand on our comprehensive financing results, which recorded an expense of MXN 1.4 billion, as compared to an expense of MXN 980 million during the same period of the previous year. This increase was driven mainly by a reduction in interest income, resulting from a lower cash position in key markets and lower interest rates in Mexico, coupled with higher interest expenses driven by the issuance of a US dollar-denominated bond through 2035 and its related derivative instruments. These effects were partially offset by, first, a gain in financial instruments of MXN 162 million, as compared to a loss of MXN 33 million in Q4 2024. Second, a higher foreign exchange gain, and third, a higher gain in monetary positions from inflationary subsidiaries.

Speaker #7: What happened to cash flow? I mean, there was a meaningful outflow in working capital, Jerry, that actually burned all the gains that we saw at the EBITDA level.

Speaker #7: So I just wanted to—I mean, investors wanted to understand precisely this, on what happened to working capital. And if I recall correctly, I mean, it's something to do with payables and stuff like that.

Speaker #7: But it's a topic that we have previously discussed in the past, so I thought that we had turned the page on that. So just curious on this, and when can we expect some sort of normalization on working capital?

Speaker #2: Reaching an all-time high of 81. As a result, we were included in the 2026 Sustainability Yearbook as the highest scoring company in our sector in the Americas.

Speaker #2: An achievement that underscores the strength of our sustainability strategy and governance practices. In addition, we achieved a record score of 4.1 out of 5 in the FTSE for Good assessment, while also posting improvements across our key evaluations, including MSCI, ISS, ESG, Bloomberg ESG, and CDP.

Speaker #7: Those would be my two questions. Thank you very much.

Speaker #4: Hi, Rodrigo. So, just in terms of the market performance, Brazil is the perfect example of having decided to adopt a long-term, sustainable growth model.

Gerardo Cruz: I would like to briefly comment on our recent financing activity that further reinforces our balance sheet with attractive funding conditions. On 12 February, we successfully priced the bond issuance in the Mexican market for a total amount of MXN 10 billion. The transaction was executed through a dual tranche structure, allowing us to balance duration and interest rate exposure. The first tranche consisted of MXN 7 billion, with a 10-year maturity, priced at a fixed rate of 9.12%, equivalent to Mbono plus 43 basis points. The second tranche amounted to MXN 3 billion, with a 3-year term, priced at a floating rate of TIIE de Fondeo plus 38 basis points. This structure reflects both strong investor demand and our disciplined approach to liability management.

Speaker #2: These results reflect particularly strong performance across climate action, water stewardship, and supplier management. Taken together, these recognitions reinforce our conviction that the disciplined integration of environmental and social factors along with robust risk management across our operations and value chain is a critical enabler of sustainable long-term growth.

Speaker #4: We are leveraging top-notch portfolio brands, with consistent investment year over year—above the line and below the line. With the widest distribution and network, we are focusing on expanding our customers and improving our customer service metrics.

Speaker #4: And also rolling out digital enablers. So it's a combination of that consistency year over year, and you end up improving your relative competitive position. That fits into more scale; it fits into a more orderly market.

Speaker #2: With that, Operator, we're ready to open the floor for questions.

Gerardo Cruz: Importantly, the transaction received the highest national credit ratings from S&P and Moody's, reaffirming our solid credit profile and the confidence that the local capital markets continue to place in Coca-Cola FEMSA. Overall, this issuance strengthens our financial position, extends our debt maturity profile, and provides us with continued financial flexibility. Finally, I'd like to take a moment to comment on sustainability, which remains a core element of our long-term value creation strategy.

Speaker #4: You can end up continuing to leverage again your scale and you see it on where we have decided to focus. I mean, the Coke Zero Playbook worldwide for the system is called the Brazil Playbook.

Speaker #4: For a reason. So it was developed there. It's working for Coke Zero. It continues to work. And now we brought it out across other geographies and it's working as well.

Speaker #1: Please hold while we poll for questions. Our first question comes from Ben Thurer with Barclays. You can open your microphone.

Speaker #4: Sprite Zero, nothing short of amazing. What we're doing there, the growth that we saw in Sprite Zero last year—and that has continued again into this year—which is also, by the way, great news when we think of the impact that is going to at some point start to flow through on the GLP once.

Speaker #3: Yeah, good morning. Ian Gerardo, Jorge. Thank you very much for taking my question. I wanted to get some incremental color if you can, as to the performance, particularly in Mexico over the course of the fourth quarter and then heading into the first quarter.

Ian: Our disciplined and consistent execution translated into tangible improvements across the main sustainability benchmarks used to assess our performance. Most notably, our S&P Global Corporate Sustainability Assessment Score increased by 11 points year-over-year, reaching an all-time high of 81. As a result, we were included in the 2026 Sustainability Yearbook as the highest scoring company in our sector in the Americas, an achievement that underscores the strength of our sustainability strategy and governance practices. In addition, we achieved a record score of 4.1 out of 5 in the FTSE4Good assessment, while also posting improvements across our key evaluations, including MSCI, ISS, ESG, Bloomberg ESG, and CDP. These results reflect particularly strong performance across climate action, water stewardship, and supplier management.

Gerardo Cruz: Our disciplined and consistent execution translated into tangible improvements across the main sustainability benchmarks used to assess our performance. Most notably, our S&P Global Corporate Sustainability Assessment Score increased by 11 points year-over-year, reaching an all-time high of 81. As a result, we were included in the 2026 Sustainability Yearbook as the highest scoring company in our sector in the Americas, an achievement that underscores the strength of our sustainability strategy and governance practices. In addition, we achieved a record score of 4.1 out of 5 in the FTSE4Good assessment, while also posting improvements across our key evaluations, including MSCI, ISS, ESG, Bloomberg ESG, and CDP. These results reflect particularly strong performance across climate action, water stewardship, and supplier management.

Speaker #4: It's great for us to improve our non-caloric mixes. So in Brazil, I would say it's a story of consistency behind our strengths that I mentioned in the prepare remarks.

Speaker #3: What have you seen in regards to the volume behavior October through December, and in particularly now with taxes being in place early on? What are the early signs of sensitivities that you've been seeing amongst key customers, and how have you been reacted on that as it relates to the tax and then ultimately your pricing strategy throughout the year?

Speaker #4: And it's just fitting through. And we're very fortunate to now be at a stage where we have very advanced AI enablers. All rolled out and scaled in Brazil.

Speaker #3: That would be my question. Thank you very much.

Speaker #4: And we just continue to fine-tune them. And that continues to show through. I mean, when you look at the share that we are winning and exclude the effects of Rio Grande do Sul.

Speaker #4: Hi, Ben. So what you saw during the last year, if you remember, I think in Mexico in the first quarter was around 5% decline, then the second quarter when we really had the impact of the consumer sentiment around the 15% decline, no, sorry, around 10% if I remember more or less.

Speaker #4: So if you look at mature territories such as São Paulo and Minas, I mean, these are very large share gains. And they come from that consistency.

Speaker #4: Hi, Rodrigo, and thank you for your questions and for your time. Regarding working capital, it’s exactly accounts payable, the effect that you’re seeing. And it’s an effect in the base. Just to remind everyone on the call, we are in the process of rolling out and deploying the implementation of our new ERP, SAP, for Hanna.

Ian: Taken together, these recognitions reinforce our conviction that the disciplined integration of environmental and social factors, along with robust risk management across our operations and value chain, is a critical enabler of sustainable long-term growth. With that, operator, we're ready to open the floor for questions.

Gerardo Cruz: Taken together, these recognitions reinforce our conviction that the disciplined integration of environmental and social factors, along with robust risk management across our operations and value chain, is a critical enabler of sustainable long-term growth. With that, operator, we're ready to open the floor for questions.

Speaker #4: And then third quarter, 3.7, and finally by the fourth quarter, it was almost flat declining 0.9%. So you saw sequential improvement. And I mentioned in the prepared remarks that December was the strongest December on record for Mexico in terms of volume growth.

Operator: Thank you. At this time, we are going to open it up for questions and answers. If you have a question, please click on Raise Hand for audio questions, or write it down in the Q&A section for written questions. Please remember that your company's name should be visible for your question to be taken. We do ask that when you pose your question, that you pick up your headset to provide optimum sound quality. Please hold while we poll for questions. Our first question comes from Ben Theurer with Barclays. You can open your microphone.

Speaker #4: So you can see how the underlying trend was improving to the point of having a December that was the highest on record in terms of volume.

Speaker #4: Due to delays last year, we had significant increase in accounts payable that were a big effect in fourth quarter of '24. So when you compare to a normalized fourth quarter of '25, you see that large reduction in accounts payable, which basically is the whole effect that you're seeing in working capital.

Speaker #4: We have normalized that for the year. And don't expect to see any further disruptions coming from accounts payables or receivables for 2026.

Ben Theurer: Yeah, good morning, Ian, Gerardo, Jorge. Thank you very much for taking my question. Wanted to get some incremental color, if you can, as to the performance, particularly in Mexico, over the course of Q4 and then heading into Q1. What have you seen in regards to the volume behavior, October through December, and then particularly now with taxes being in place early on, what are like the early signs of sensitivities that you've been seeing amongst key customers? How have you been reacted on that as it relates to the tax and then ultimately your pricing strategy throughout the year? That would be my question. Thank you very much.

Speaker #4: So we're not changing our guidance there and we are seeing the impacts of that tax increase in the first quarter.

Speaker #7: Awesome. And so just to confirm, starting 1Q26, we should go back to normal on those outflows, inflows on working capital.

Speaker #3: But as expected, the volume declines or the very much basically implied.

Speaker #4: As expected.

Speaker #3: Okay. Perfect. I'll pass it on. Thank you very much. I'll pass it on. Thanks.

Speaker #4: That's correct. Even since fourth quarter '25, I would say is the normal. The disruption comes from the base fourth quarter '24, when we had an unusual increase in accounts payable back then.

Speaker #1: Our next question comes from Ricardo Alves with Morgan Stanley. You can open your microphone.

Speaker #5: Hello, Ian, Gerry, Jorge. Thanks for the opportunity. Ian, I remember the cycle of investments in 2024. The focus on growth, and then you have 2025 with all the challenges and one-offs.

Speaker #7: Okay. No, that's encouraging. I mean, it's—excluding—I mean, that said, it was a great quarter, guys. Congrats. Thank you.

Speaker #4: Thanks, Rodrigo.

Ian: Hi, Ben. What you saw during last year, if you remember, I think in Mexico, in Q1, was around a 5% decline. Then Q2, when we really had the impact of the consumer sentiment, around the 15% decline. No, sorry, around 10%, if I remember, more or less. Then Q3, 3.7, and finally, by Q4, it was almost flat, declining 0.9%. You saw a sequential improvement. I mentioned in the prepared remarks that December was the strongest December on record for Mexico in terms of volume growth. You can see how the underlying trend was improving to the point of having a December that was the highest on record in terms of volume.

Ian Craig: Hi, Ben. What you saw during last year, if you remember, I think in Mexico, in Q1, was around a 5% decline. Then Q2, when we really had the impact of the consumer sentiment, around the 15% decline. No, sorry, around 10%, if I remember, more or less. Then Q3, 3.7, and finally, by Q4, it was almost flat, declining 0.9%. You saw a sequential improvement. I mentioned in the prepared remarks that December was the strongest December on record for Mexico in terms of volume growth. You can see how the underlying trend was improving to the point of having a December that was the highest on record in terms of volume.

Speaker #1: Our next question comes from Tiago Bortolucci with Goldman Sachs. You can open your microphone.

Speaker #5: Yeps came through. And I think that to credit Coke Femsa the company was very fast in adjusting the cost structure as needed. The price hikes so when you think about the question is your strategic views into 2026.

Speaker #8: Good morning, everyone. Can you hear me now?

Speaker #4: Hi, Tiago. Yes.

Speaker #8: Yes.

Speaker #7: Ian. Thank you very much. And sorry for the back and forth. I would just like to move the conversation back into Mexico with two follow-ups.

Speaker #7: The first one, I know you mentioned January moving in line with expectations. And it's still too early to call for a more aggressive capital allocation.

Speaker #5: When you think about everything that you have in place, right, I think that since 2024, all the investments or the major investments at least were made.

Speaker #7: But I remember having prior conversations on pricing. Obviously, the industry as a whole has been pretty clear in passing the yeps. But we had some diverging views on whether to go for a second round of increase to cover the underlying raw materials inflation, right?

Speaker #5: Even rebuilding plans. The costs were adjusted in Mexico, a big discussion that we had in the first half of last year. You priced through the tax issues or YAPS issues into 2026.

Speaker #5: So with assuming that all of that is kind of behind you, what would be for this year and the next two years your main strategic ambitions for 2026?

Speaker #7: So the first question is, with the elasticities that you're seeing so far in Mexico, how comfortable you are or not in implementing another round of price adjustments this time to cover your underlying cost inflation?

Ian: That being said, we continue with the same guidance for 2026, which is a low to mid-single-digit decline in Mexico. Simply because we had to transfer the impacts of the IEPS excise tax, and that was a large price increase that we had to transfer through for the IEPS tax. We're not changing our guidance there, and we are seeing the impacts of that tax increase in Q1.

Ian Craig: That being said, we continue with the same guidance for 2026, which is a low to mid-single-digit decline in Mexico. Simply because we had to transfer the impacts of the IEPS excise tax, and that was a large price increase that we had to transfer through for the IEPS tax. We're not changing our guidance there, and we are seeing the impacts of that tax increase in Q1.

Speaker #5: Not necessarily Mexico only, but across the board. What is keeping you awake as a big opportunities ahead? And then just one other question for Gerry, just a quick update on the shareholder remuneration would be much appreciated given the below one times EBITDA leverage so I think that an update on shareholder distribution would be appreciated.

Speaker #7: This is the number one. And then, the number two is, with the level of hedges that you have so far—particularly on the FX line—what's the visibility that you have in the direction of your gross margins and cost inflation for the next 12 months?

Speaker #7: That's the questions. Thank you very much.

Speaker #5: Thank you so much, guys.

Speaker #4: I'll take the first half, Jerry. It's still too early to tell, though. We need to let the first half of the first quarter flow through.

Ben Theurer: as expected, like the volume declines.

Ian: Yes.

Ian Craig: Yes.

Ben Theurer: The very much basically in line?

Ian: As expected.

Ian Craig: As expected.

Ben Theurer: Okay, perfect.

Ian: As expected.

Ben Theurer: As expected.

Ben Theurer: I'll pass it on. Thank you very much. I'll pass it on. Thanks.

Speaker #4: If you remember the January of last year was very strong. Then we have February where we started seeing changes in sentiment. And in March, we started seeing both the change in sentiment as well as weather.

Operator: Our next question comes from Ricardo Alves with Morgan Stanley. You can open your microphone.

Ricardo Alves: Hello, Ian, Gerry, Jorge. Thanks for the opportunity. Ian, I remember the cycle of investments in 2024. You know, the focus on growth, and then you have 2025 with all the challenges and one-offs. You know, IEPS came through, and I think that to credit Coca-Cola FEMSA, the company was very fast in adjusting the cost structure as needed, the price hikes. When you think about... The question is your strategic views into 2026. When you think about everything that you have in place, right? I think that since 2024, all the investments or the major investments at least were made, even rebuilding plans. The costs were adjusted in Mexico, a big discussion that we had in the first half of last year.

Speaker #4: And that's behind us. Going into 2026, we're already with a lean structure and we adjusted our CapEx primarily in Mexico because the rest of the territories are growing as expected.

Speaker #4: So it's too early to tell. We need to be a little more cautious. From what I see today, I can tell you is the elasticity is behaving as we have imagined.

Speaker #4: So we adjusted our CapEx there. And our key priorities remain the same. I mean, we want to continue growing our core business. It's amazing what's happening with Coke Zero.

Speaker #4: The consumer is still sluggish in Mexico. So it wouldn't be prudent to venture into an additional increase today. At least I need to see how we end up closing the quarter and things are reacting before.

Speaker #4: Even within this environment in Mexico, even with the tax, we're continuing to accelerate Coke Zero. There are opportunities to improve our position in flavors.

Speaker #4: And that gives us plenty of time in any case. Before we could do any sort of adjustment. Additional adjustment.

Speaker #4: What I'm seeing with Sprite Zero in Brazil is nothing short of amazing. What we have done with Quattro in Colombia is very positive. And that's something that we want and what we're doing with the Heritage brands in Mexico.

Speaker #7: And Tiago, connecting my answer to Ian's, I would say gross margins for Mexico—we are seeing a bit of pressure. We're certainly going to follow up on any pricing decisions that we have to make.

Speaker #4: So that's something that we want to continue to leverage this year. And also on profitability NCVs, which continue to gain mix and grow at very attractive rates.

Ricardo Alves: You priced through the tax issues or IEPS issues into 2026. With assuming that all of that is kind of behind you, what would be for this year and the next two years, your main strategic ambitions for 2026? Not necessarily Mexico only, but across the board. What is keeping you awake as a big opportunities ahead? Just one other question for Gerry. Just a quick update on the shareholder remuneration would be great. Much appreciated, given the below one time EBITDA leverage. I think that an update on shareholder distribution would be appreciated. Thank you so much, guys.

Speaker #7: We're being very cautious, but we are very concerned with maintaining sustainable growth for the long term and following up on that promise to the market.

Speaker #7: But we are seeing a bit of pressure in gross margins even though we see a benign raw material environment with the exception of aluminum.

Speaker #4: I mean, those things are growing 3 to 2 percentage points. And those translate directly to increases in share. You see that in Brazil. More compliance on the guided missions.

Speaker #7: We see flattish to favorable prices in sweeteners in plastic. But we do see a bit of pressure in aluminum. That should result in some pressure in gross margins.

Speaker #4: So I think we expect to continue to scale that and leverage those enablers. And finally, we continue working on the culture piece. It's very important for us that we continue improving on our customer centricity journey, improving our customer-centric measures.

Speaker #7: That we're aiming to try to compensate in fixed costs and expenses to try to deliver as close to flat EBIT margins as possible. It's still a work in progress, but that's what we're expecting for the year, for the full year.

Ian: Thank you, Ricardo. Well, just to be clear, as you mentioned, we're very proud of the adjustment that our Mexico team or the reaction, let's say, the rapid reaction that our Mexico teams had, when we were facing the changing consumer sentiment and the sluggish demand that coupled together with weather, by the way. It was a quick and swift reaction, and that's behind us. Going into 2026, we are already with a lean structure, and we adjusted our CapEx, primarily in Mexico, because the rest of the territories are, you know, growing as expected, so we adjusted our CapEx there. Our key priorities, I mean, remain the same. We want to continue growing our core business.

Ian Craig: Thank you, Ricardo. Well, just to be clear, as you mentioned, we're very proud of the adjustment that our Mexico team or the reaction, let's say, the rapid reaction that our Mexico teams had, when we were facing the changing consumer sentiment and the sluggish demand that coupled together with weather, by the way. It was a quick and swift reaction, and that's behind us. Going into 2026, we are already with a lean structure, and we adjusted our CapEx, primarily in Mexico, because the rest of the territories are, you know, growing as expected, so we adjusted our CapEx there. Our key priorities, I mean, remain the same. We want to continue growing our core business.

Speaker #4: We believe that's key to the fundamental long-term health of the business. And that's what we're driving Ricardo. We've talked about this in our conversations.

Speaker #7: Exactly. That's great. Jerry, Ian, thank you very much, you guys.

Speaker #4: Thank you.

Speaker #4: This is a scale business. It's important that we continue growing relative scale. It's a year that we need to be prudent because of the tax, increasing Mexico.

Speaker #1: Our next question comes from Hinata Cabral with Citi.

Speaker #4: It's not a minor tax. It's a very large tax increase. So we need to be prudent. But that only reaffirms our commitment to our sustainable long-term growth model.

Speaker #8: Hi. Hi, Ian, Jerry, and Jorge. Thank you so much for taking my question. My questions are about the Brazilian operation, with some follow-ups. So, the first one is regarding the supply chain improvements.

Speaker #4: We need to come out of this stronger. And continue accelerating what all of our territories outside of South America. Gerry, yeah. Thank you, Ricardo.

Ian: It's amazing what's happening with Coke Zero, even within this environment in Mexico, even with the tax, we're continuing to accelerate Coke Zero. There are opportunities to improve our position in flavors. What I'm seeing with Sprite Zero in Brazil is nothing short of amazing. What we have done with Quatro in Colombia is very positive, and that's something that we want. What we're doing with the heritage brands in Mexico. That's something that we want to continue to leverage this year, and also on profitable NCBs, which continue to gain mix and grow at very attractive rates. That would be my first priority. The second one is, we will have Juntos+ Advisor in our four largest markets this year.

Ian Craig: It's amazing what's happening with Coke Zero, even within this environment in Mexico, even with the tax, we're continuing to accelerate Coke Zero. There are opportunities to improve our position in flavors. What I'm seeing with Sprite Zero in Brazil is nothing short of amazing. What we have done with Quatro in Colombia is very positive, and that's something that we want. What we're doing with the heritage brands in Mexico. That's something that we want to continue to leverage this year, and also on profitable NCBs, which continue to gain mix and grow at very attractive rates. That would be my first priority. The second one is, we will have Juntos+ Advisor in our four largest markets this year.

Speaker #8: We have discussed in the previous quarter the improvement because of the normalization of the operations you're going to do soon. My question is, how much of incremental savings potential remains in the distribution cost to serve for 2026?

Speaker #8: Or if in this specific line, we are getting to a peak, and my second question is a follow-up regarding CapEx investments in Brazil. Is Brazil still receiving incremental capacity investment, or does the current footprint support the growth in the upcoming years without incremental fixed costs improvement or investment this year?

Ian: We already have it in Mexico and Brazil, where it's maturing, where it's giving us improved visitation, improved combined coverages, and those things are growing 3 to 2 percentage points, and those translate directly to increases in share. You see that in Brazil. More compliance on the guided missions. I think we expect to continue to scale that and leverage those enablers. Finally, we continue working on the culture piece. It's very important for us that we continue improving on our customer centricity journey, improving our customer-centric measures. We believe that's key to the fundamental long-term health of the business, and that's what we're driving, Ricardo Alves. We've talked about this in our conversations. This is a scale business. It's important that we continue growing relative scale.

Ian Craig: We already have it in Mexico and Brazil, where it's maturing, where it's giving us improved visitation, improved combined coverages, and those things are growing 3 to 2 percentage points, and those translate directly to increases in share. You see that in Brazil. More compliance on the guided missions. I think we expect to continue to scale that and leverage those enablers. Finally, we continue working on the culture piece. It's very important for us that we continue improving on our customer centricity journey, improving our customer-centric measures. We believe that's key to the fundamental long-term health of the business, and that's what we're driving, Ricardo Alves. We've talked about this in our conversations. This is a scale business. It's important that we continue growing relative scale.

Speaker #8: Thank you.

Speaker #4: Going to Capital Allocation Ricardo, I think we are very or following very closely our capital structure situation. We understand that we're pending to give information to the market regarding what we're doing.

Speaker #4: Hi, Renata. I would say we still have a couple of months where we're cycling still the Porto Alegre plant closure. So most of the improvements you're going to see really in freight come from that extra freight that was occurring there up until May.

Speaker #4: With our dividend strategy, given that we're facing this challenge in Mexico with a YEPS, we're holding on a little bit to see how cash flow behaves during the year.

Speaker #4: In terms of capacity, I think we put in over five lines in Brazil. So we've done a lot for the short-term in Brazil in terms of lines.

Speaker #4: And that should not be an issue. Given the growth that we're seeing, if this continues as strong and we have to see, remember, 2027, a new tax is going to come into effect.

Speaker #4: So it's a little early to say whether we'll need when we'll need the new plant in Brazil. So our projections today is that we will need one to start around 2030.

Ian: It's a year that we need to be prudent because of the tax increase in Mexico. It's not a minor tax, it's a very large tax increase, so we need to be prudent. That only reaffirms our commitment to our sustainable long-term growth model. We need to come out of this stronger and continue accelerating what all of our territories outside of South America. Gerry?

Ian Craig: It's a year that we need to be prudent because of the tax increase in Mexico. It's not a minor tax, it's a very large tax increase, so we need to be prudent. That only reaffirms our commitment to our sustainable long-term growth model. We need to come out of this stronger and continue accelerating what all of our territories outside of South America. Gerry?

Speaker #4: And see how our projection for cash flow for the remainder of the year progresses. So we'll give you a bit more information as the year moves on.

Speaker #4: And so investments for that would be in 2029. So I would say from here to 2028, things are at a lower level of investments.

Speaker #3: Thank you very much, Ian and Gerry, for the complete answers. Appreciate it.

Speaker #4: Because we have already invested quite a bit. So from having invested around 8% of revenues we should go down to around 6.5 over the following years.

Speaker #4: Thank you.

Gerardo Cruz: Thank you, Ricardo. To briefly complement Ian, I would like to just connect a few of the points that Ian mentioned regarding first, our Grow the Core strategic initiative, as well as our digital enablers as our second most important growth strategic priority. Because it's coming at the right precise moment that we can leverage those digital capabilities and the AI enabled capabilities that our platforms have to take the best advantage of our revenue growth management initiatives at a moment where, and specifically in Mexico, we're facing important challenges with the IEPS tax coming online.

Speaker #5: Our next question comes from Thiago Bortolucci with Goldman Sachs. Sir, you can open your microphone. We are going to move on to the next question that comes from Rodrigo Alcantara with UBS.

Speaker #4: And then it steps up again in the start of a new plant. That's the base scenario. But we have to see what sort of impact we see in 2027 from the tax.

Speaker #4: Okay?

Speaker #8: Okay. Super clear. Thank you so much.

Speaker #4: Thank you, Renata.

Speaker #1: Our next question comes from Álvaro Garcia with BTG.

Speaker #6: Hello. Can you hear me?

Speaker #4: Hey, Ian, Jerry, Jorge. I hope you guys are doing well. I have two questions. I have a bigger picture question on affordability in Mexico.

Speaker #4: Yes, Rodrigo. Hello.

Speaker #6: Awesome. Hello. Hello, Jorge. Ian, Gerry, nice to hear from you. One question for Ian. To elaborate on the very encouraging momentum observed in Brazil, right?

Speaker #4: In the context of you've stated your long-term sustainable growth model. If you zoom out, is it fair to assume that we could be entering just sort of a longer period of affordability?

Gerardo Cruz: llocation, Ricardo, I think we are following very closely our capital structure situation. We understand that we are pending to give information to the market regarding what we are doing with our dividend strategy. Given that we are facing this challenge in Mexico with IEPS, we are holding on a little bit to see how cash flow behaves during the year. We will certainly try to do our best to have the least disruption possible from this effect in our cash flow generation

Speaker #6: I mean, we discussed here in terms of the zero concepts momentum but also judging on competitors' performance. Looking your performance quite strong as well.

Speaker #4: And we obviously had a phase let's say in the 2015, '16, '17 where you probably passed a little too much price, and we've discussed that in the past.

Speaker #6: So not sure if it's a matter also of price relativity allowing you guys to give your performance digital tools. Just wanted to understand the drivers behind not only the strong category growth momentum but also the relative performance versus competitors, I mean, in Brazil.

Speaker #4: Given your price gaps today, so maybe some commentary on that would be helpful relative to your competition. And just given the tax and given what the consumer is feeling, is it fair to assume that we could be entering just a multi-year cycle where you're maybe favoring volumes in the context of your long-term sustainable growth model?

Gerardo Cruz: We're being a bit cautious, just waiting out and see how the first half of the year develops with the World Cup coming on and see how our projection for cash flow for the remainder of the year progresses. We'll give you a bit more information as the year moves on.

Speaker #6: That would be for NAT. For non-alcoholic beverage. And the other question for Gerry, and this is a topic that to tell you the truth, I mean, we were asked as writing the review to today.

Speaker #4: So, any thoughts there would be greatly appreciated. And then just one quick one, Jerry, on CapEx levels for 2026. I think last quarter you mentioned potentially lower CapEx levels.

Speaker #4: I'm not sure if you've mentioned it on this call yet or not. I know you cleared up sort of capital allocation. But any comments on specific CapEx levels for '26 would be helpful as well.

Speaker #6: What happened to cash flow? I mean, there was a meaningful outflow in working capital that actually burned all the gains that we saw at the EBITDA level.

Speaker #4: Thank you. Hello, Álvaro. I think your general read is on point. We believe this model is the one that delivers the best results, not only in terms of share of volume or even share of value, but also in terms of sustainable bottom-line growth.

Ricardo Alves: Thank you very much, Ian and Gerry, for the complete answers. Appreciate it.

Gerardo Cruz: Thank you.

Operator: Our next question comes from Thiago Bertolucci with Goldman Sachs. Sir, you can open your microphone. We are going to move on to the next question that comes from Rodrigo Alcântara with UBS.

Speaker #6: So I just wanted to I mean, investors wanted to understand precisely this on what happened to working capital. And if I recall correctly, I mean, it's something to do with payables and stuff like that.

Speaker #4: So we saw this, like you mentioned, we lost too much share in the 8 to 10 years prior to 2022. We adjusted the strategy then.

Speaker #6: But it's a topic that we have privilegedly discussed in El Paso. I thought that we had turned the page on that. So just curious on this and when can we expect some sort of normalization on working capital?

Speaker #4: It reacted very quickly in 2023. So much so that then we had an availability issue. In 2024, I'm talking about Mexico. Then last year, I would say, was a bit of an outlier with everything that happened with the consumer.

Speaker #6: Those would be my two questions. Thank you very much.

Ian: Hello, can you hear me?

Ian Craig: Hello, can you hear me?

Gerardo Cruz: Yes, Rodrigo. Hello.

Speaker #4: Hi, Rodrigo. So just in terms of the market performance, Brazil is the perfect example of having decided to adopt a long-term sustainable growth model.

Ian: Awesome. Hello. Hello, Jorge, Ian, Gerry, nice to hear from you. One question for Ian.

Rodrigo Alcantara: Awesome. Hello. Hello, Jorge, Ian, Gerry, nice to hear from you. One question for Ian.

Speaker #4: The reaction again recovered the impact that we have, but that was, I would say, an event-driven strategy to quickly recover the changes in consumer sentiment.

Rodrigo Alcântara: ... the very encouraging momentum observed in Brazil, right? I mean, we discussed here in terms of the Zero concepts momentum, you know, but also judging on competitor performance, you know, looking your performance quite strong as well. Not sure if it's a matter also of price relativity, you know, allowing you guys to give your performance digital tools. Just wanted to understand the drivers behind not only the strong category growth momentum, but also the relative performance versus competitors in Brazil. That would be for NAB, for non-alcoholic beverage.

Rodrigo Alcantara: ... the very encouraging momentum observed in Brazil, right? I mean, we discussed here in terms of the Zero concepts momentum, you know, but also judging on competitor performance, you know, looking your performance quite strong as well. Not sure if it's a matter also of price relativity, you know, allowing you guys to give your performance digital tools. Just wanted to understand the drivers behind not only the strong category growth momentum, but also the relative performance versus competitors in Brazil. That would be for NAB, for non-alcoholic beverage.

Speaker #4: Where we are leveraging top-notch portfolio brands, consistent investment year over year over year above the line and below the line. With the widest distribution network focusing on expanding our customers, improving our customer service metrics.

Speaker #4: When we look at what's going to happen and what is transpiring in 2026 in Mexico, we're very convinced that it's the right strategy because when you're passing through the EPS tax price tax increase, it's sort of a similar effect to what we saw in Argentina, from there, from the economic crisis, or in Panama after having to adjust our portfolio.

Speaker #4: And also rolling out digital enablers. So it's a combination of that consistency year over year. And you end up improving your relative competitive position.

Speaker #4: The consumer, we don't want to lose household penetration. It's very important that we maintain that penetration. And it's really a 12-month thing. We don't see it as longer-term than that.

Speaker #4: That fits into more scale. It fits into a more orderly market. You can end up continuing to leverage again your scale and you see it on where we have decided to focus.

Speaker #4: So we need to come out, and we're planning to come out of this yes-impact stronger with a stronger relative position. I think we're very the price gaps are manageable where they are.

Rodrigo Alcântara: The other question for Gary, this is a topic that, to tell you the truth, I mean, we were asked as writing the review today. What happened to cash flow? I mean, there was a meaningful outflow in working capital, Gary, that actually, you know, burn all the gains that we saw at the EBITDA level. I just wanted to, I mean, investors wanted to understand precisely this on what happened to working capital. If I recall correctly, I mean, it's something to do with payables and stuff like that, but it's a topic that we have previously discussed in the past. I thought that, you know, we had turned the page on that.

Rodrigo Alcantara: The other question for Gary, this is a topic that, to tell you the truth, I mean, we were asked as writing the review today. What happened to cash flow? I mean, there was a meaningful outflow in working capital, Gary, that actually, you know, burn all the gains that we saw at the EBITDA level. I just wanted to, I mean, investors wanted to understand precisely this on what happened to working capital. If I recall correctly, I mean, it's something to do with payables and stuff like that, but it's a topic that we have previously discussed in the past. I thought that, you know, we had turned the page on that.

Speaker #4: I mean, the Coke Zero Playbook worldwide for the system is called the Brazil Playbook. For a reason. So it was developed there. It's working for Coke Zero.

Speaker #4: It continues to work. And now we brought it out across other geographies and it's working as well. Sprite Zero, nothing short of amazing. What we're doing there, the growth, that we saw in Sprite Zero last year and the has continued again into this year, which is also, by the way, great news when we think of the impact that is going to at some point start to flow through on the GLP once it's great for us to improve our non-caloric mixes.

Speaker #4: So the strategy should pay off. It's worked in the other markets. It worked in Mexico as well. We're missing one price point where we're going to be launching a new returnable presentation, but we're keeping that under wraps until that's in the market.

Speaker #4: But outside of that, we're where we need to be, positioned where we need to be. And it's starting to show. So I think it's a 12-month thing, Álvaro.

Speaker #4: So in Brazil, I would say it's a story of consistency behind our strengths that I mentioned in the prepare remarks. And it's just fitting through.

Speaker #4: Where we reposition this, and then we will grow in terms of RGM initiatives and pricing, as much as the market gives us, while maintaining increases in competitive position.

Rodrigo Alcântara: Just crisp on this and when can we expect some sort of normalization on working capital? Those would be my two questions. Thank you very much.

Rodrigo Alcantara: Just crisp on this and when can we expect some sort of normalization on working capital? Those would be my two questions. Thank you very much.

Speaker #4: And we're very fortunate to now be at a stage where we have very advanced AI enablers. All rolled out and scaled in Brazil. And we just continue to fine-tune them.

Speaker #4: It's really dictated by that. Álvaro, I would like to highlight very quickly to aspects that I think are very relevant for the implementation of the strategy that Ian was elaborating on, which is our digital capabilities.

Ian: Hi, Rodrigo. Just in terms of the market performance, Brazil is the perfect example of having decided to adopt a long-term sustainable growth model. We are leveraging, you know, a top-notch portfolio of brands, consistent investment year-over-year, above the line and below the line, with the widest distribution and network, focusing on expanding our customers, improving our customer service metrics, and also rolling out digital enablers. It's a combination of that consistency year-over-year. You end up improving your relative competitive position that feeds into more scale. It feeds into a more orderly market. You can end up continuing to leverage again, your scale. You see it, you know, on where we have decided to focus.

Ian Craig: Hi, Rodrigo. Just in terms of the market performance, Brazil is the perfect example of having decided to adopt a long-term sustainable growth model. We are leveraging, you know, a top-notch portfolio of brands, consistent investment year-over-year, above the line and below the line, with the widest distribution and network, focusing on expanding our customers, improving our customer service metrics, and also rolling out digital enablers. It's a combination of that consistency year-over-year. You end up improving your relative competitive position that feeds into more scale. It feeds into a more orderly market. You can end up continuing to leverage again, your scale. You see it, you know, on where we have decided to focus.

Speaker #4: And that continues to show through. I mean, when you look at the share that we are winning and exclude the effects of Rio Grande do Sul.

Speaker #4: So if you look at mature territories or São Paulo, and Minas, I mean, these are very large share gains. And they come from that consistency.

Speaker #4: The ability that we have now to capture and process information from the market, and act on that information quickly through our revenue growth management initiatives, I think, puts us in a very strong position to address both the situation that we're facing in Mexico this year and the situation that we will be facing next year in Brazil with the start of the excise tax there as well.

Speaker #4: Hi, Rodrigo. And thank you for your questions. And for your time. Regarding working capital, it's exactly accounts payable, the effect that you're seeing. And it's an effect in the base.

Speaker #4: Just to remind everyone in the call, we are in the process of rolling out and deploying the implementation of our new ERP, SAP for HANA.

Speaker #4: The other thing component I think that is worth mentioning is we have the learnings from the experience we had in 2014 with when the EPS was originally enacted.

Speaker #4: So that will allow us to or is allowing us to take more informed decisions with respect to the market, to address our growth opportunities in the best way, selectively throughout the market.

Ian: I mean, the Coke Zero playbook worldwide for the system is called the Brazil playbook for a reason. It was developed there. It's working for Coke Zero. It continues to work, and now we brought it out across other geographies, and it's working as well. Sprite Zero, nothing short of amazing, what we're doing there. The growth that we saw in Sprite Zero last year and has continued again into this year, which is also, by the way, great news when we think of the impact that is gonna, at some point, start to flow through on the GLP-1s. It's great for us to improve our non-caloric mixes. In Brazil, I would say it's a story of consistency behind our strengths that I mentioned in the prepared remarks.

Ian Craig: I mean, the Coke Zero playbook worldwide for the system is called the Brazil playbook for a reason. It was developed there. It's working for Coke Zero. It continues to work, and now we brought it out across other geographies, and it's working as well. Sprite Zero, nothing short of amazing, what we're doing there. The growth that we saw in Sprite Zero last year and has continued again into this year, which is also, by the way, great news when we think of the impact that is gonna, at some point, start to flow through on the GLP-1s. It's great for us to improve our non-caloric mixes. In Brazil, I would say it's a story of consistency behind our strengths that I mentioned in the prepared remarks.

Speaker #4: Regarding your question on CapEx, as we were talking about the last couple of years, last year, we invested $8.2% of revenues for the whole year.

Speaker #4: We have normalized that for the year. And don't expect to see any further disruptions coming from accounts payables or receivables for 2026.

Speaker #6: Awesome. And so just to confirm, starting 1Q26, we should go back to normal on those outflows, inflows on working capital.

Speaker #4: With a big increase coming from deploying capacity both in manufacturing and distribution. For this year, we're expecting given the phasing out that Ian already mentioned in our Southeast plant in Mexico as well as our plant in Brazil, we're able to generate a little bit of savings in our investments for this year, dropping our CapEx to revenues from a range of $7 to $7.5 probably ending in the lower end of that range for the year with the expectations that we have in our business plan.

Speaker #4: That's correct. Even since fourth quarter '25, I would say is the normal, the disruption comes from the base fourth quarter '24 when we had unusual increase in accounts payable back then.

Ian: It's just feeding through. We're very fortunate to now be at a stage where we have very advanced AI enablers, all rolled out and scaled in Brazil, and we just continue to fine-tune them, and that continues to show through. I mean, when you look at the share that we are winning and exclude the effects of Rio Grande do Sul, so if you look at mature territories, so São Paulo and Minas, I mean, these are very large share gains, and they come from that consistency.

Ian Craig: It's just feeding through. We're very fortunate to now be at a stage where we have very advanced AI enablers, all rolled out and scaled in Brazil, and we just continue to fine-tune them, and that continues to show through. I mean, when you look at the share that we are winning and exclude the effects of Rio Grande do Sul, so if you look at mature territories, so São Paulo and Minas, I mean, these are very large share gains, and they come from that consistency.

Speaker #6: Okay. No, that's encouraging. I mean, it's excluding I mean, that said, I mean, it was a great quarter, guys. Congrats. Thank you.

Speaker #4: Thanks, Rodrigo.

Speaker #1: Our next question comes from Thiago Bortolucci with Goldman Sachs. You can open your microphone.

Speaker #1: Wonderful. Thank you very much to both.

Speaker #4: Thank you, Álvaro.

Speaker #5: Our next question comes from Freyla Mendes with JPMorgan.

Speaker #7: Good morning, everyone. Can you hear me now?

Speaker #4: Hi, Thiago. Yes.

Speaker #7: Yes.

Speaker #6: Ian. Thank you very much, and sorry for the back and forth. I'll just like to move the conversation back into Mexico with two follow-ups.

Speaker #6: Hello, guys. Can you hear me?

Rodrigo Alcântara: Thank you.

Rodrigo Alcantara: Thank you.

Ian: Hi, Rodrigo, thank you for your questions and for your time. Regarding working capital, it's exactly accounts payable, the effect that you're seeing, and it's an effect in the base. Just to remind everyone in the call, we are in the process of rolling out and deploying the implementation of our new ERP, SAP S/4HANA. Due to delays last year, we had a significant increase in accounts payable that were a big effect in Q4 2024. When you compare it to a normalized Q4 2025, you see that large reduction in accounts payable, which basically is the whole effect that you're seeing in working capital.

Gerardo Cruz: Hi, Rodrigo, thank you for your questions and for your time. Regarding working capital, it's exactly accounts payable, the effect that you're seeing, and it's an effect in the base. Just to remind everyone in the call, we are in the process of rolling out and deploying the implementation of our new ERP, SAP S/4HANA. Due to delays last year, we had a significant increase in accounts payable that were a big effect in Q4 2024. When you compare it to a normalized Q4 2025, you see that large reduction in accounts payable, which basically is the whole effect that you're seeing in working capital.

Speaker #4: Yes, Frey. Hello.

Speaker #6: Excellent. Thank you, Jorge. Thank you, Ian. Thank you for taking my question. You mentioned December was the highest monthly volume in Mexico—was there any overstocking, probably a reaction from the different channels, with the upcoming hike on the taxes?

Speaker #6: The first one, I know you mentioned January moving in line with expectations. And it's still too early to call for a more aggressive capital allocation.

Speaker #6: But I remember having prior conversations on pricing. Obviously, the industry as a whole has been pretty clear in passing the yeps. But we had some diverging views on whether to go for a second round of increase to cover the underlying raw materials inflation, right?

Speaker #6: Also, you mentioned that price gaps are manageable. Does that mean that the price gap was reduced and is that a sense that you have been gaining share so far with this EPS implementation in the industry?

Speaker #6: So the first question is, with the elasticities that you're seeing so far in Mexico, how comfortable you are or not in implementing another round of price adjustments this time to cover your underlying cost inflation?

Speaker #6: That would be great if you could give us some color on how competitors have reacted. Thank you.

Speaker #4: Right. So I don't—we don't believe there's a stock effect in that December figure. Firstly, because we never used all channels at the same time.

Speaker #6: This is the number one. And then the number two is, with the level of hedges that you have so far, particularly on the effects line, what's the visibility that you have in the direction of your gross margins and cost inflation for the next 12 months?

Ian: We have normalized that for the year and don't expect to see any further disruptions coming from accounts payables or receivables for 2026.

Gerardo Cruz: We have normalized that for the year and don't expect to see any further disruptions coming from accounts payables or receivables for 2026.

Speaker #4: And in this case, we adjusted the traditional trade mid-month. So any event of overstocking was, let's say, flowed through within the month. So that was done around mid-December.

Speaker #6: That's the questions. Thank you very much.

Rodrigo Alcântara: Just to confirm, starting Q 2026, we should go back to normal on those outflows or inflows on working capital?

Rodrigo Alcantara: Just to confirm, starting Q 2026, we should go back to normal on those outflows or inflows on working capital?

Speaker #4: I'll take the first half, Jerry. It's still too early to tell, though. We need to let the first half the first quarter flow through.

Speaker #4: And the modern trade as you know has a huge incentive to improve their working capital in year-end. So they did not really stock in any major form entering into January.

Ian: That's correct.

Rodrigo Alcantara: That's correct.

Rodrigo Alcântara: Okay.

Rodrigo Alcantara: Okay.

Ian: Even since Q4 2025, I would say, is the normal. The disruption comes from the base, Q4 2024, when we had unusual increase in accounts payable, back then.

Gerardo Cruz: Even since Q4 2025, I would say, is the normal. The disruption comes from the base, Q4 2024, when we had unusual increase in accounts payable, back then.

Speaker #4: And that price flow through in January. So I don't see that major effect. In the Mexico December volumes, it was the highest December on record for our four largest operations.

Rodrigo Alcântara: Okay. No, that's encouraging. I mean, it's excluding... I mean, that said, I mean, it was a great quarter, guys. Okay, congrats. Thank you.

Rodrigo Alcantara: Okay. No, that's encouraging. I mean, it's excluding... I mean, that said, I mean, it was a great quarter, guys. Okay, congrats. Thank you.

Speaker #4: So it's too early to tell. We need to be a little more cautious. From what I see today, I can tell you is the elasticity is behaving as we have imagined.

Ian: Thanks, Rodrigo.

Rodrigo Alcantara: Thanks, Rodrigo.

Speaker #4: And it was the highest fourth quarter on record for Guatemala, Colombia, and Brazil. So, those are underlying green shoots that tell you about the strength of the NARTD market that we serve.

Operator: Our next question comes from Thiago Bertolucci with Goldman Sachs. You can open your microphone.

Thiago Bertolucci: Good morning, everyone. Can you hear me now?

Ian: Hi, Thiago. Yes.

Ian Craig: Hi, Thiago. Yes.

Thiago Bertolucci: Ian, thank you very much. Sorry for the back and forth. I would just like to move the conversation back into Mexico with 2 follow-ups. The first one, I know you mentioned January moving in line with expectations. It's still too early to call for a more aggressive capital location. I remember having prior conversations on pricing. Obviously, the industry as a whole has been pretty clear in passing the gaps, but we had some diverging views on whether to go for a second round of increase to cover the underlying raw materials inflation, right? The first question is, with the elasticities that you're seeing so far in Mexico, how comfortable you are or not in implementing another round of price adjustments, this time to cover your underlying cost inflation? This is the number one.

Speaker #4: And in terms of the price gap, it varies a lot. By competitor region and channel. So what I can tell you is the overall mix it's either the same or very slightly improved than what we have before.

Speaker #4: Before we could do any sort of adjustment. Additional adjustment.

Speaker #6: And Thiago, connecting my answer to Ian's I would say gross margins for Mexico, we are seeing a bit of pressure. We're certainly going to follow up on any pricing decisions that we have to make.

Speaker #4: But it's very different by competitor and channel geography. It's not a homogeneous thing.

Speaker #6: We're being very cautious, but we are very concerned with maintaining sustainable growth for the long term and following up on that promise to the market.

Speaker #6: You mentioned that a little bit about.

Speaker #4: So no.

Speaker #6: No competitor is doing anything crazy, right?

Speaker #4: No, no deterioration in the price gap. You could say there are some competitors that are being aggressive in certain channels and geographies. What I'm giving you is the blended overall picture.

Speaker #6: But we are seeing a bit of pressure in gross margins even though we see a benign raw material environment with the exception of aluminum.

Speaker #6: That's perfect. Thank you.

Speaker #4: I mentioned Frey a bit about share performance I think we're very proud of the job as Ian mentioned and prepared remarks of the job that the Mexico team did recovering from the backlash effect that we had in the second quarter of last year.

Thiago Bertolucci: The number 2 is, with the level of hedges that you have so far, particularly on the effects line, what's the visibility that you have in the direction of your gross margins and cost inflation for the next 12 months? That's the questions. Thank you very much.

Speaker #6: We see flattish to favorable prices in sweeteners in plastic. But we do see a bit of pressure in aluminum. That should result in some pressure in gross margins.

Speaker #4: And we're very excited of the base from where we're starting this year having recovered that share. So this should be a good position, a good platform to start this year that we're facing the challenge of the EPS with the pricing strategy in RGM initiatives that we elaborated on.

Speaker #6: That we're aiming to try to compensate in fixed costs and expenses to try to deliver as close to flat EBIT margins as possible. It's still a work in progress, but that's what we're expecting for the year, for the full year.

Ian: I'll take the first half, Gerry. It's still too early to tell, Thiago. We need to let the first half, the Q1 flow through. If you remember, the January of last year was very strong. We have February, where we started seeing changes in sentiment, and in March, we started seeing both the change in sentiment as well as weather. It's too early to tell. We need to be a little more cautious. From what I see today, I can tell you is, the elasticity is behaving as we have imagined. The consumer is still sluggish in Mexico, so it wouldn't be prudent to venture into an additional increase today.

Gerardo Cruz: I'll take the first half, Gerry. It's still too early to tell, Thiago. We need to let the first half, the Q1 flow through. If you remember, the January of last year was very strong. We have February, where we started seeing changes in sentiment, and in March, we started seeing both the change in sentiment as well as weather. It's too early to tell. We need to be a little more cautious. From what I see today, I can tell you is, the elasticity is behaving as we have imagined. The consumer is still sluggish in Mexico, so it wouldn't be prudent to venture into an additional increase today.

Speaker #6: Exactly. That's great. Jerry, Ian, thank you very much, guys.

Speaker #6: Perfect. Thank you so much.

Speaker #5: Our next question comes from Antonio Hernandez with Actingver.

Speaker #4: Thank

Speaker #1: Our next question comes from Renata Cabral with Citi.

Speaker #7: Hi. Good morning. Thanks for taking my question. Just a quick one regarding—I mean, you mentioned the different tailwinds. For Brazil, especially for this year and next year, it might be a little bit more complicated.

Speaker #7: Hi. Hi, Ian, Jerry, and Jorge. Thank you so much for taking my question. My questions are about the Brazilian operation. Some follow-ups. So the first one, it's regarding the supply chain improvements we have discussed in the previous quarter.

Speaker #7: But more specifically, how are you seeing in terms of any volume guidance or sales guidance in Brazil for the year? Thanks.

Ian: at least I need to see how we end up closing the quarter and things are reacting before. That gives us plenty of time, in any case, before we could do any sort of adjustment, additional adjustment. Thiago, connecting my answer to Ian's, I would say, gross margins for Mexico, we are seeing a bit of pressure. We're certainly gonna follow up on any pricing decisions that we have to make. We're being very cautious, but we are very concerned with maintaining sustainable growth for the long term and following up on that promise to the market.

Gerardo Cruz: at least I need to see how we end up closing the quarter and things are reacting before. That gives us plenty of time, in any case, before we could do any sort of adjustment, additional adjustment. Thiago, connecting my answer to Ian's, I would say, gross margins for Mexico, we are seeing a bit of pressure. We're certainly gonna follow up on any pricing decisions that we have to make. We're being very cautious, but we are very concerned with maintaining sustainable growth for the long term and following up on that promise to the market.

Speaker #4: Sales guidance? Antonio, what I can say is the year started off this first bimester continuing on the back of the strong trend. We've seen no changes there.

Speaker #7: The improvements because the normalization of the operation, you're going to do so. My question is, how much of incremental savings potential remains in the distribution cost to serve for 2026 or if in this specific line, we are getting to a peak?

Speaker #4: We had good weather in January. We have social programs. We have election-related spending. So everything moving on strong in Brazil anything that you want to share on.

Speaker #7: And my second question is a follow-up regarding CapEx investments in Brazil. Is Brazil still receiving incremental capacity investment, or does the current footprint support the growth in the upcoming years without incremental fixed costs improvement or investment this year?

Speaker #3: Yeah, maybe to complement on that part, Ian, I would say that with all the tailwinds that we're seeing, so far Brazil has been off to a good start this year.

Speaker #3: Both January and February have been good months. Some of these tailwinds are already materializing from the social spending. Even weather has been positive. So, with all things considered, I would say that we expect to grow volumes in Brazil this year, which, as you know, when you zoom out and you see Brazil over the past couple of years, all years have been quite strong.

Ian: But we are seeing a bit of pressure in gross margins, even though we see a benign raw material environment, with the exception of aluminum. We see flattish to favorable prices in sweeteners, in plastic. But we do see a bit of pressure in aluminum that should result in some pressure in gross margins that we're aiming to try to compensate and fix the cost and expenses to try to deliver as close to flat EBIT margins as possible. It's still a work in progress, but that's what we're expecting for the year, for the full year. Exactly.

Gerardo Cruz: But we are seeing a bit of pressure in gross margins, even though we see a benign raw material environment, with the exception of aluminum. We see flattish to favorable prices in sweeteners, in plastic. But we do see a bit of pressure in aluminum that should result in some pressure in gross margins that we're aiming to try to compensate and fix the cost and expenses to try to deliver as close to flat EBIT margins as possible. It's still a work in progress, but that's what we're expecting for the year, for the full year. Exactly.

Speaker #7: Thank you.

Speaker #3: And we have been able to outperform even to initial expectations. That was or has been what has been happening in Brazil. So all things considered, I would say that if we were to put a number and please consider this as an early take for the year, I wouldn't call it guidance.

Speaker #4: In terms of capacity, I think we put in over five lines in Brazil. So we've done a lot for the short term in Brazil in terms of lines.

Speaker #3: But I think we can work with positive volumes probably on the low to mid single digits range. But we will progress really update you on that as the year progresses.

Speaker #4: And that should not be an issue. Given the growth that we're seeing, if this continues as strong and we have to see, remember, 2027, a new tax is going to come into effect.

Thiago Bertolucci: That's great, Jerry, and thank you very much, guys.

Thiago Bertolucci: That's great, Gerry, and thank you very much, guys.

Speaker #3: But I think that's a fair assumption for you guys to model.

Ian: Thank you.

Thiago Bertolucci: Thank you.

Speaker #4: So it's a little early to say whether we'll need when we'll need a new plant in Brazil. So our projections today is that we will need one to start around 2030.

Speaker #6: If I may add, Antonio, I think we're cautiously optimistic and a bit excited of what we've been seeing in terms of share gains in Brazil.

Operator: Our next question comes from Renata Cabral with Citi.

Renata Cabral: Hi. Hi, Ian, Gerry, and Jorge. Thank you so much for taking my question. My questions are about the Brazilian operation, some follow-ups. The first one is regarding the supply chain improvements. We have discussed it in the previous quarter, the improvement, because of the normalization of the operation in Rio Grande do Sul. My question is, how much of incremental saves potential remains in the distribution cost to serve for 2026, or if in this specific line, we are getting to a peak? My second question is a follow-up regarding CapEx investments in Brazil. Is Brazil still receiving incremental capacity investment, or does the current footprint support the growth in the upcoming years without incremental fixed cost, improvement or investment this year? Thank you.

Speaker #6: I want to highlight this because it's a particular situation Ian mentioned in one of the earlier questions. But one of the big boosts that we're getting from the launching of our advisor tool in Brazil that is also online in Mexico and are excited for what we may see in Mexico as well.

Speaker #4: And so investments for that would be in 2029. So I would say from here to 2028, things are at a lower level of investment because we have already invested quite a bit.

Speaker #4: So from having invested around 8% of revenues we should go down to around 6.5 over the following years. And then it steps up again in 2029 with the start of a new plant.

Speaker #6: But a good result that we've seen has resulted in share improvement through improvement in combined coverage, both in CSDs and stills. This tool allows us to better execute at the point of sale, reducing out-of-stocks as much as possible, and this has resulted in good share trends in all of the categories. This is especially exciting when we see the breakdown.

Speaker #4: That's the base scenario. But we have to see what sort of impact we see in 2027 from the tax. Okay?

Speaker #7: Okay. Super clear. Thank you so much.

Speaker #4: Thank you, Renata.

Speaker #1: Our next question comes from Álvaro Garcia with BTG.

Speaker #6: So we're optimistic about what this tool will bring for the rest of our business, especially with the late last year launch in Mexico and the expectation of launching in Colombia and Guatemala this year.

Speaker #4: Hey, Ian, Jerry, Jorge. I hope you guys are doing well. I have two questions. I have a bigger picture question on affordability in Mexico.

Speaker #7: Great. Congrats on your results. Thanks.

Speaker #4: In the context of you've stated your long-term sustainable growth model. If you zoom out, is it fair to assume that we could be entering just sort of a longer period of affordability?

Speaker #4: Thank you, Antonio.

Ian: Hi, Renata. I would say we still have a couple of months where we're cycling still the Porto Alegre plant closure. Most of the improvements you're going to see really in freight come from that extra freight that was occurring there up until May. In terms of capacity, I think we put in over five lines in Brazil. We've done a lot for the short term in Brazil in terms of lines, and that should not be an issue. Given the growth that we're seeing, if this continues so strong... We have to see, remember, 2027, a new tax is going to come into effect. It's a little early to say whether we'll need, when we'll need the new plant in Brazil.

Ian Craig: Hi, Renata. I would say we still have a couple of months where we're cycling still the Porto Alegre plant closure. Most of the improvements you're going to see really in freight come from that extra freight that was occurring there up until May. In terms of capacity, I think we put in over five lines in Brazil. We've done a lot for the short term in Brazil in terms of lines, and that should not be an issue. Given the growth that we're seeing, if this continues so strong... We have to see, remember, 2027, a new tax is going to come into effect. It's a little early to say whether we'll need, when we'll need the new plant in Brazil.

Speaker #5: Next question from Gabriela Martinez with Banorte.

Speaker #4: And we obviously had a phase, let's say, in the 2015, '16, '17 where you probably passed a little too much price, and we've discussed that in the past.

Speaker #8: Hi, guys. Good morning. Thank you for taking my questions. Do you already have an estimate of the impact of the World Cup? And could you share more details on your strategies to capitalize the opportunities it will bring?

Speaker #4: Hello, Gabriela. Yes, it's Jorge here. I think, as Ian and Jerry have mentioned in previous earnings calls, we are very excited about the opportunity that the World Cup brings.

Speaker #4: So any thoughts there would be greatly appreciated. And then just one quick one, Jerry, on CapEx levels for 2026. I think last quarter you mentioned potentially lower CapEx levels.

Speaker #4: Not only because of the local aspect of being a host country, but perhaps most especially for the power that it has for our brands.

Ian: Our projections today is that we will need one to start around 2030. Investments for that will be in 2029. I would say from here to 2028, things, you know, are at lower level of investment because we have already invested quite a bit. From having invested around 8% of revenues, we should go down to around 6.5 over the following years. It steps up again in 2029 with the start of a new plant. That's the base scenario. We have to see what sort of impact we see in 2027 from the tax, okay?

Ian Craig: Our projections today is that we will need one to start around 2030. Investments for that will be in 2029. I would say from here to 2028, things, you know, are at lower level of investment because we have already invested quite a bit. From having invested around 8% of revenues, we should go down to around 6.5 over the following years. It steps up again in 2029 with the start of a new plant. That's the base scenario. We have to see what sort of impact we see in 2027 from the tax, okay?

Speaker #4: It creates a lot of opportunities for us to engage with the consumers, with the customers, with activation. And not only for brand Coca-Cola, Coke Zero, but also in other categories as Powerade, for example.

Speaker #4: So we're, as I said, very excited about that. It's hard to put a number like to put a number on the model, let's say, for the World Cup.

Speaker #4: But I would say the most important upside that we see for the World Cup is regarding brand engagement, the opportunities on frequency. That is a great opportunity for us to capitalize.

Speaker #4: So we saw this, like you mentioned, we lost too much share in the 8 to 10 years prior to 2022. We adjusted the strategy then.

Speaker #4: And I would say not only in Mexico. In other markets as well. It's a great opportunity to gather it brings more consumption occasions. And that's a great, great opportunity that we have.

Operator: Okay, super clear. Thank you so much.

Renata Cabral: Okay, super clear. Thank you so much.

Speaker #4: It reacted very quickly in 2023. So much so that then we had an availability issue. In 2024, I'm talking about Mexico. Then last year, I would say was a bit of an outlier with everything that happened with the consumer.

Ian: Thank you, Renee.

Renata Cabral: Thank you, Renee.

Operator: Our next question comes from Alvaro Garcia with BTG.

Speaker #4: We have the, for example, not only during the tournament, but even before and even after the tournament, we have a lot of activations happening we have the trophy tour ongoing.

Alvaro Garcia: Hey, Ian, Gerry, Jorge, hope you guys are doing well. I have two questions. I have a bigger picture question on affordability in Mexico. In the context of, you know, you've stated your long-term sustainable growth model. If you zoom out, is it fair to assume that we could be entering just sort of a longer period of affordability? We obviously had a phase, let's say, in the 2015, 2016, 2017, where you probably passed a little too much price, and we've discussed that in the past. Given your price gaps today, maybe some commentary on that would be helpful relative to your competition.

Speaker #4: The reaction again recovered the impact that we have, but that was, I would say, an event-driven strategy to quickly recover the changes in consumer sentiment.

Speaker #4: It's coming to Mexico as well. So, those are the kind of opportunities that I would highlight for the World Cup.

Speaker #6: If I may add, Gabriela, as well, regarding the World Cup and the expectations for the year, we are particularly proud of the strength and depth of our portfolio of products.

Speaker #6: Because we can offer a product for all of the different consumption occasions that our consumers will have around this event—be it at home, be it on the road, or be it at the venues, occurring during the event itself.

Alvaro Garcia: Just given the tax and given what the consumer is feeling, is it fair to assume that we could be entering just a multi-year cycle where you're maybe favoring volumes in the context of your long-term sustainable growth model? Any thoughts there would be greatly appreciated. Just one quick one, Gerry, on CapEx levels for 2026. I think last quarter you mentioned potentially lower CapEx levels. I'm not sure if you've mentioned it on this call yet or not. I know you cleared up sort of capital allocation, but any comments on specific CapEx levels for 2026 would be helpful as well. Thank you.

Speaker #4: The consumer, we don't want to lose household penetration. It's very important that we maintain that penetration and it's really a 12-month thing. We don't see it as longer term than that.

Speaker #6: So we offer a consumption occasion and a brand and an SKU that allows us to capture all of these opportunities, be it hydration, be it energy, be it indulgence, all of this is has a lot of synonyms with the World Cup and we're proud to be able to serve the Coca-Cola portfolio of products around this event, which is a good engagement brand engagement event for us.

Speaker #4: So we need to come out and we're planning to come out of this yes impact stronger with a stronger relative position. I think we're very the price gaps are manageable where they are.

Ian: Hello, Alvaro. I think your general reading is on point. We believe this model is the one that delivers the best results, not only in terms of share volume or even share value, but also in terms of sustainable bottom line growth. We saw this, like you mentioned, we lost too much share in the 8 to 10 years prior to 2022. We adjusted the strategy. It reacted very quickly in 2023, so much so that we had unavailability issues in 2024. Now I'm talking about Mexico. Last year, I would say, was a bit of an outlier with everything that happened with the consumer.

Ian Craig: Hello, Alvaro. I think your general reading is on point. We believe this model is the one that delivers the best results, not only in terms of share volume or even share value, but also in terms of sustainable bottom line growth. We saw this, like you mentioned, we lost too much share in the 8 to 10 years prior to 2022. We adjusted the strategy. It reacted very quickly in 2023, so much so that we had unavailability issues in 2024. Now I'm talking about Mexico. Last year, I would say, was a bit of an outlier with everything that happened with the consumer.

Speaker #8: Okay. Thank you very much.

Speaker #4: Thank you, Gabriela.

Speaker #4: But outside of that, we're where we need to be, position where we need to be. And it's starting to show. So I think it's a 12-month thing, Álvaro, where we reposition this.

Speaker #5: Our next question comes from Fernando Oliveira with Bank of America.

Speaker #4: Hi. Hello, guys. Can you hear me?

Speaker #4: And then we will grow in terms of RGM initiatives and pricing as much as the market gives us while maintaining increases in competitive position.

Speaker #7: Hi, Fernando. Yes.

Speaker #4: Great. Thank you for taking my question. No, just a quick follow-up regarding volumes. You have mentioned or you share some outlook on Mexico and Brazil.

Speaker #4: But maybe if you can give some color about what you're expecting on a consolidated basis, mainly given the strong recovery that we have seen in Argentina and Colombia, and the very good performance of Guatemala.

Ian: The reaction again recovered the impact that we had, but that was a, I would say, an event-driven strategy to quickly recover the changes in consumer sentiment. When we look at what's going to happen, and what is transpiring in 2026 in Mexico, we're very convinced that it's the right strategy. Because, when you're passing through the IEPS tax price tax increase, it's sort of a similar effect to what we saw in Argentina from there, from the economic crisis, or in Panama, after having to adjust our portfolio. The consumer, we don't want to lose household penetration. It's very important that we maintain that penetration, and it's really a 12-month thing. We don't see it as longer term than that.

Ian Craig: The reaction again recovered the impact that we had, but that was a, I would say, an event-driven strategy to quickly recover the changes in consumer sentiment. When we look at what's going to happen, and what is transpiring in 2026 in Mexico, we're very convinced that it's the right strategy. Because, when you're passing through the IEPS tax price tax increase, it's sort of a similar effect to what we saw in Argentina from there, from the economic crisis, or in Panama, after having to adjust our portfolio. The consumer, we don't want to lose household penetration. It's very important that we maintain that penetration, and it's really a 12-month thing. We don't see it as longer term than that.

Speaker #4: That would be great. Thank you.

Speaker #4: The ability that we have now to capture and process information from the market and act on that information quickly. Through our revenue growth management initiatives, I think is puts us in a very strong position to address both the situation that we're facing in Mexico this year and the situation that we will be facing next year in Brazil with the start of the excise tax there as well.

Speaker #7: Yes. Thanks for the question. Look, when we put it all together, as you mentioned, we've already mentioned low-to-mid single-digit decline in Mexico. Low-to-mid single-digit growth in Brazil.

Speaker #7: And the rest with the putting it all together with the rest of the markets, I would say consolidated volume for 2026 will be more of a flattish year.

Speaker #7: Of course, flattish to slightly positive. I would say if we were to give a range. That's what the team is working on. Of course, we will, as I mentioned before, progress you along the year as the year progresses.

Speaker #4: The other thing component, I think, that is worth mentioning is we have the learnings from the experience we had in 2014 when the EPS was originally enacted.

Speaker #7: Ian and Jerry highlighted the effect of the excise tax that is ongoing, and we still need to get a feel on that. So consider this like an early take on the outlook.

Ian: We need to come out, and we're planning to come out of this impact stronger, with a stronger relative position. I think we're very The price gaps are manageable where they are. The strategy should pay off. It's worked in the other markets. It worked in Mexico as well. We're missing one price point where we're going to be launching a new returnable presentation, but we're keeping that under wraps until that's in the market. Outside of that, we're where we need to be, positioned where we need to be, and it's starting to show.

Ian Craig: We need to come out, and we're planning to come out of this impact stronger, with a stronger relative position. I think we're very The price gaps are manageable where they are. The strategy should pay off. It's worked in the other markets. It worked in Mexico as well. We're missing one price point where we're going to be launching a new returnable presentation, but we're keeping that under wraps until that's in the market. Outside of that, we're where we need to be, positioned where we need to be, and it's starting to show.

Speaker #7: But there are several moving pieces. But this is what we have for now, what we've been working on. And of course, the team is very focused on achieving growth this year.

Speaker #4: Regarding your question on CapEx, as we were talking about the last couple of years, last year, we invested $8.2% of revenues for the whole year.

Speaker #6: So Ian mentioned fair or sustainable growth model. And we've been talking about this for the past few years. I highlighted performance in share that we are seeing positive performance in share across our territories.

Speaker #4: With a big increase coming from deploying capacity both in manufacturing and distribution. For this year, we're expecting given the phasing out that Ian already mentioned in our Southeast plant in Mexico as well as our plant in Brazil, we're able to generate a little bit of savings in our investments for this year dropping our CapEx to revenues from a range of $7 to $7.5 probably ending in the lower end of that range for the year with the expectations that we have in our business plan.

Speaker #6: So our teams are striving to get to return to this path of growth in all of our operations. And I think this year we certainly will be aiming to deliver slight volume growth across our territories.

Ian: I think it's a 12-month thing, Alvaro, where we reposition this, and then we will grow in terms of RGM initiatives and pricing as much as our market gives us, while maintaining increases in competitive positions. It's really dictated by that. Alvaro, I would like to highlight very quickly two aspects that I think are very relevant for the implementation of the strategy that Ian was elaborating on, which is our digital capabilities.

Ian Craig: I think it's a 12-month thing, Alvaro, where we reposition this, and then we will grow in terms of RGM initiatives and pricing as much as our market gives us, while maintaining increases in competitive positions. It's really dictated by that. Alvaro, I would like to highlight very quickly two aspects that I think are very relevant for the implementation of the strategy that Ian was elaborating on, which is our digital capabilities.

Speaker #7: Okay. Great. Thanks so much. Jorge, Ian, Jerry.

Speaker #4: In terms of valuation, how much do you have? In Mexico, there will be a USMCA agreement. Again.

Speaker #1: Wonderful. Thank you very much, Thibault.

Speaker #4: Thank you, Álvaro.

Ian: The ability that we have now to capture and process information from the market and act on that information quickly, through our revenue growth management initiatives, I think, puts us in a very strong position to address both the situation that we're facing in Mexico this year, and the situation that we will be facing next year in Brazil, with the start of the excise tax there as well. The other thing, component I think, that is worth mentioning is we have the learnings from the experience we had in 2014 when the IEPS was originally enacted. That will allow us to, or is allowing us to take more informed decisions with respect to the market....

Speaker #5: Our next question comes from Freylan Mendez with JPMorgan.

Ian Craig: The ability that we have now to capture and process information from the market and act on that information quickly, through our revenue growth management initiatives, I think, puts us in a very strong position to address both the situation that we're facing in Mexico this year, and the situation that we will be facing next year in Brazil, with the start of the excise tax there as well. The other thing, component I think, that is worth mentioning is we have the learnings from the experience we had in 2014 when the IEPS was originally enacted. That will allow us to, or is allowing us to take more informed decisions with respect to the market....

Speaker #6: Hello, guys. Can you hear me?

Speaker #4: Yes, Froy. Hello.

Speaker #6: Excellent. Thank you, Jorge. Thank you, Ian. Thank you for taking my question. You mentioned December was the highest monthly volume in Mexico was there any overstocking probably a reaction from the different channels with the upcoming hike on the taxes?

Speaker #5: This concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Jorge for any closing remarks.

Speaker #7: Well, just to thank everyone for your interest in Coca-Cola FEMSA and for joining us on today's call. As always, we are available to answer any remaining questions.

Speaker #6: Also, you mentioned that price gaps are manageable. Does that mean that the price gap was reduced and is that a sense that you have been gaining share so far with these EPS implementation in the industry?

Speaker #7: And we look forward to meeting with you, hopefully in person, throughout the year. Thank you very much.

Speaker #5: Thank you. This does conclude today's presentation. You may disconnect now and have a nice day.

Speaker #6: That would be great if you could give us some color on how competitors have reacted. Thank you.

Ian: to address our growth opportunities in the best way, selectively throughout the market. Regarding your question on CapEx, as we were talking about the last couple of years, last year, we invested 8.2% of revenues for the whole year, with a big increase coming from deploying capacity both in manufacturing and distribution.

Ian Craig: to address our growth opportunities in the best way, selectively throughout the market. Regarding your question on CapEx, as we were talking about the last couple of years, last year, we invested 8.2% of revenues for the whole year, with a big increase coming from deploying capacity both in manufacturing and distribution.

Speaker #4: Right. So I don't we don't believe there's a stock effect in that December figure. Firstly, because we never used all channels at the same time.

Speaker #4: And in this case, we adjusted the traditional trade mid-month. So any event of overstocking was, let's say, flow through within the month. So that was done around the mid-December.

Ian: For this year, we're expecting, given the phasing out that Ian already mentioned, in our southeast plant in Mexico, as well as our plant in Brazil, we're able to generate a little bit of savings in our investments for this year, dropping our CapEx to revenues from a range of 7 to 7.5, probably ending in the lower end of that range for the year, with the expectations that we have in our business plan.

Ian Craig: For this year, we're expecting, given the phasing out that Ian already mentioned, in our southeast plant in Mexico, as well as our plant in Brazil, we're able to generate a little bit of savings in our investments for this year, dropping our CapEx to revenues from a range of 7 to 7.5, probably ending in the lower end of that range for the year, with the expectations that we have in our business plan.

Speaker #4: And the modern trade as you know has a huge incentive to improve their working capital in year-end. So they did not really stock in any major form entering into January.

Speaker #4: And that price flow through in January. So I don't see that major effect. In the Mexico December volumes, it was the highest December on record for our four largest operation.

Speaker #4: And it was the highest fourth quarter on record for Guatemala, Colombia, and Brazil. So those are underlying green shoots that tell you about the strength of the NARTD market that we serve.

Antonio Hernandez: Wonderful. Thank you very much to both.

Ian: Thank you, Alvaro.

Gerardo Cruz: Thank you, Alvaro.

Operator: Our next question comes from Froylan Mendez with JP Morgan.

Froylan Mendez: Hello, guys. Can you hear me?

Speaker #4: Froy, and in terms of the price gap, it varies a lot by competitor region and channel. So what I can tell you is the overall mix it's either the same or very slightly improved than what we had before.

Ian: Yes, Froy. Hello.

Ben Theurer: Yes, Froy. Hello.

Froylan Mendez: Excellent. Thank you, Jorge. Thank you, Ian. Thank you for taking my question. You mentioned December was the highest monthly volume in Mexico. Was there any overstocking, probably a reaction from the different channels, with the upcoming hike on the taxes? Also, you mentioned that price gaps are manageable. Does that mean that the price gap was reduced? And is that a sense that you have been gaining share so far with this YEPs implementation in the industry? That would be great if you could give us some color on how competitors have reacted. Thank you.

Speaker #4: But it's very different by competitor and channel geography. It's not a homogeneous thing.

Speaker #6: You mentioned a bit about.

Speaker #3: No competitor doing anything crazy, right?

Speaker #6: Perfect. Thank you.

Speaker #4: You mentioned, Froy, a bit about share performance I think we're very proud of the job as Ian mentioned in prepared remarks of the job that the Mexico team did recovering from the backlash effect that we had in the second quarter of last year.

Ian: I don't, we don't believe there's a stock effect in those, in that December figure. Firstly, because we never adjusted all channels at the same time, and in this case, we adjusted the traditional trade mid-month. Any event of overstocking was, let's say, flow through within the month. That was done around the mid-December. The modern trade, as you know, has a huge incentive to improve their working capital in year-end. They did not really stock in any major form entering into January, and that price flowed through in January. I don't see that major effect in the Mexico December volumes.

Ian Craig: I don't, we don't believe there's a stock effect in those, in that December figure. Firstly, because we never adjusted all channels at the same time, and in this case, we adjusted the traditional trade mid-month. Any event of overstocking was, let's say, flow through within the month. That was done around the mid-December. The modern trade, as you know, has a huge incentive to improve their working capital in year-end. They did not really stock in any major form entering into January, and that price flowed through in January. I don't see that major effect in the Mexico December volumes.

Speaker #6: Perfect. Thank you so much.

Speaker #5: Our next question comes from Antonio Hernandez with Actinger.

Speaker #7: Hi, good morning. Thanks for taking my question. Just a quick one regarding I mean, you mentioned the different tailwinds for Brazil, especially for this year.

Ian: It was the highest December on record for our 4 largest operation. It was the highest Q4 on record for Guatemala, Colombia, and Brazil. Those are like underlying green shoots that tell you about the strength of the NARTD market that we serve. Froy, in terms of the price gap, it varies a lot by competitor, region, and channels. What I can tell you is the overall mix, it's either the same or very slightly improved than what we had before. It's very different by competitor and channel geography. It's not a homogeneous thing. You mentioned-

Ian Craig: It was the highest December on record for our 4 largest operation. It was the highest Q4 on record for Guatemala, Colombia, and Brazil. Those are like underlying green shoots that tell you about the strength of the NARTD market that we serve. Froy, in terms of the price gap, it varies a lot by competitor, region, and channels. What I can tell you is the overall mix, it's either the same or very slightly improved than what we had before. It's very different by competitor and channel geography. It's not a homogeneous thing. You mentioned-

Speaker #7: And next year, it might be a little bit more complicated. But more specifically, how are you seeing in terms of any volume guidance or sales guidance in Brazil for the year?

Speaker #7: Thanks.

Speaker #4: Sales guidance, Antonio, what I can say is the year started off this first bimester continuing on the back of the strong trend. We've seen no changes there.

Speaker #4: We had good weather in January. We have social programs. We have election-related spending. So everything moving on strong in Brazil anything that you want to share on.

Speaker #3: Yeah, maybe to complement on that part, Ian, I would say that with all the tailwinds that we're seeing and so far, Brazil has been to a good start of the year, both January and February have been good months.

Froylan Mendez: No.

Ian: A bit about.

Ian Craig: A bit about.

Froylan Mendez: No competitor doing anything crazy, right?

Ian: No deterioration in the price gap. You could say there are some competitors that are being aggressive in certain channels and geographies. What I'm giving you is the blended overall picture.

Ian Craig: No deterioration in the price gap. You could say there are some competitors that are being aggressive in certain channels and geographies. What I'm giving you is the blended overall picture.

Speaker #3: Some of these tailwinds are already materializing from the social spending. Even weather has been positive. So with all things considered, I would say that we expect to grow volumes in Brazil this year, which, as you know, when you zoom out and you see Brazil over the past couple of years, all years have been quite strong.

Froylan Mendez: That's perfect. Thank you.

Ian: I mentioned, Froy, a bit about share performance. I think we're very proud of the job, as Ian mentioned in prepared remarks, of the job that the Mexico team did, recovering from the backlash effect that we had in Q2 of last year. We're very excited of the base from where we're starting this year, having recovered that share. This should be a good position, a good platform to start this year, that we're facing the challenge of the YEPs, with the pricing strategy and RGM initiatives that we elaborated on.

Ian Craig: I mentioned, Froy, a bit about share performance. I think we're very proud of the job, as Ian mentioned in prepared remarks, of the job that the Mexico team did, recovering from the backlash effect that we had in Q2 of last year. We're very excited of the base from where we're starting this year, having recovered that share. This should be a good position, a good platform to start this year, that we're facing the challenge of the YEPs, with the pricing strategy and RGM initiatives that we elaborated on.

Speaker #3: But I think we can work with positive volumes probably on the low to mid single digits range. But we will progress really update you on that as the year progresses.

Froylan Mendez: Perfect. Thank you so much.

Speaker #3: But I think that's a fair assumption for you guys to model.

Operator: Our next question comes from Antonio Hernandez with Actinver.

Speaker #4: If I may add, Antonio, I think we're cautiously optimistic and a bit excited of what we've been seeing in terms of share gains in Brazil.

Antonio Hernandez: Hi, good morning. Thanks for taking our question. Just a quick one regarding, I mean, you mentioned the different tailwinds for Brazil, especially for this year, and next year might be a little bit more complicated. More specifically, how you're seeing in terms of any volume guidance or sales guidance in Brazil for the year? Thanks.

Speaker #4: I want to highlight this because it's a particular situation Ian mentioned in one of the earlier questions. But one of the big boosts that we're getting from the launching of our advisor tool in Brazil that is also online in Mexico and are excited for what we may see in Mexico as well.

Ian: Sales guidance, Antonio, what I can say is the year started off this first semester continuing on the back of a strong trend. We've seen no changes there. We've had good weather in January. We have social programs. We have election-related spending. Everything moving on strong in Brazil. Anything that you want to share on.

Ian Craig: Sales guidance, Antonio, what I can say is the year started off this first semester continuing on the back of a strong trend. We've seen no changes there. We've had good weather in January. We have social programs. We have election-related spending. Everything moving on strong in Brazil. Anything that you want to share on.

Speaker #4: But a good result that we've seen is has resulted in share improvement through improvement in combined coverage both in CSDs and stills. This tool allows us to better execute at the point of sale reducing out-of-stocks as much as possible and this has resulted in good share trends in all of the categories which is especially exciting when we see the breakdown.

Jorge: Yeah, maybe, you know, to complement on that part, Ian, I would say that with all the tailwinds that we're seeing, and so far, Brazil has been out to a good start of the year, you know, both January and February have been good months, no? Some of these tailwinds are already materializing from the, you know, social spending, even weather has been positive. With all things considered, I would say that we expect to grow volumes in Brazil this year, which, as you know, when you zoom out and you see Brazil over the past couple of years, all years have been quite strong, you know. We have been able to outperform even to initial expectations, that was or has been what has been happening in Brazil.

[Company Representative] (Coca-Cola Femsa): Yeah, maybe, you know, to complement on that part, Ian, I would say that with all the tailwinds that we're seeing, and so far, Brazil has been out to a good start of the year, you know, both January and February have been good months, no? Some of these tailwinds are already materializing from the, you know, social spending, even weather has been positive. With all things considered, I would say that we expect to grow volumes in Brazil this year, which, as you know, when you zoom out and you see Brazil over the past couple of years, all years have been quite strong, you know. We have been able to outperform even to initial expectations, that was or has been what has been happening in Brazil.

Speaker #4: So we're optimistic of what this tool will bring for the rest of our business, especially with the late last year launch in Mexico and the expectation of launching in Colombia and Guatemala this year.

Speaker #7: Great, congrats on your results. Thanks.

Speaker #4: Thank you, Antonio.

Speaker #5: Next question from Gabriela Martinez with Vanorte.

Jorge: All things considered, I would say that, you know, if we were to put a number, and please consider this as an early take for the year, we wouldn't call it guidance. I think we can work with, you know, positive volumes, probably on the low to mid-single digits range. We will progressively update you on that as the year progresses, no? I think that's a fair assumption for you guys to model.

[Company Representative] (Coca-Cola Femsa): All things considered, I would say that, you know, if we were to put a number, and please consider this as an early take for the year, we wouldn't call it guidance. I think we can work with, you know, positive volumes, probably on the low to mid-single digits range. We will progressively update you on that as the year progresses, no? I think that's a fair assumption for you guys to model.

Speaker #4: Hello, Gabriela. Yes, it's Jorge here. I think as Ian and Jerry have mentioned in previous earnings calls, we are very excited about the opportunity that the World Cup brings.

Gerardo Cruz: If I may add, Antonio, I think we're cautiously optimistic and a bit excited of what we've been seeing in terms of share gains in Brazil. I want to highlight this because it's a particular situation, Ian mentioned it in one of the earlier questions. One of the big boosts that we're getting from the launching of our Advisor tool in Brazil that is also online in Mexico and are excited for what we may see in Mexico as well. A good result that we've seen is has resulted in share improvement through improvement in combined coverage, both in CSDs and stills. This tool allows us to better execute at the point of sale, reducing out-of-stocks as much as possible.

Speaker #4: Not only because of the local aspect of being a host country, but perhaps most especially for the power that it has for our brands.

Speaker #4: So we're, as I said, very excited about that. It's hard to put a number, like to put a number on the model, let's say, for the World Cup.

Speaker #4: But I would say the most important upside that we see for the World Cup is regarding to brand engagement, the opportunities on frequency. That is a great opportunity for us to capitalize.

Gerardo Cruz: This has resulted in good share trends in all of the categories, which is especially exciting when we see the breakdown. We are optimistic of what this tool will bring for the rest of our business, especially with the late last year launch in Mexico and the expectation of launching in Colombia and Guatemala this year.

Speaker #4: We have the, for example, not only during the tournament, but even before and even after the tournament, we have a lot of activations happening, we have the trophy tour ongoing.

Speaker #4: It's coming to Mexico as well. So those are the kind of opportunities that I would highlight for the World Cup. If I may add, Gabriela, as well, regarding the World Cup and the expectations for the year, we are particularly proud of the strength and depth of our portfolio of products.

Jorge: Great. Congrats on your results. Thanks.

Antonio Hernandez: Great. Congrats on your results. Thanks.

Gerardo Cruz: Thank you, Antonio.

Operator: Next question from Gabriela Martinez with Banorte.

Speaker #4: Because we can offer a product for all of the different consumption occasions that our consumers will have, around this event, be it at home, be it on the road or be it on the venues, occurring during the event itself.

Gabriela Martinez: Hi, guys. Good morning. Thank you for taking my questions. Do you already have an estimate of the impact of the World Cup? Could you share more details on your strategies to capitalize the opportunities it will bring?

Jorge: Hello, Gabriela. Yes, it's Jorge here. I think as Ian and Gerry have mentioned, knowing in previous earnings calls, we are very excited about the opportunity that the World Cup brings, you know. Not only because of the local aspect of being a host country, but perhaps most especially for the power that it has for our brands, you know. Creates a lot of opportunities for us to engage with the consumers, with the customers, with activation, and not only for brand Coca-Cola, Coke Zero, but also in other categories as Powerade, for example, you know. We're, as I said, very excited about that. It's hard to put a number on the model, let's say, for the World Cup.

Jorge Pereda: Hello, Gabriela. Yes, it's Jorge here. I think as Ian and Gerry have mentioned, knowing in previous earnings calls, we are very excited about the opportunity that the World Cup brings, you know. Not only because of the local aspect of being a host country, but perhaps most especially for the power that it has for our brands, you know. Creates a lot of opportunities for us to engage with the consumers, with the customers, with activation, and not only for brand Coca-Cola, Coke Zero, but also in other categories as Powerade, for example, you know. We're, as I said, very excited about that. It's hard to put a number on the model, let's say, for the World Cup.

Speaker #4: So we offer a consumption occasion and a brand and an SKU that allows us to capture all of these opportunities, be it hydration, be it energy, be it indulgence, all of this is has a lot of synonyms with the World Cup and we're proud to be able to serve the Coca-Cola portfolio of products around this event, which is a good engagement brand engagement event for us.

Speaker #8: Okay. Thank you very much.

Speaker #4: Thank you, Gabriela.

Jorge: I would say the most important upside that we see for the World Cup is regarding to brand engagement, the opportunities on frequency. That is a great opportunity for us to capitalize, and I would say not only in Mexico, in other markets as well, you know. It's a great opportunity to gather. It brings more consumption occasions, and that's a great opportunity that we have, you know. We have, for example, not only during the tournament, but even before and even after the tournament, we have a lot of activations happening. You know, we have the trophy tour ongoing. It's coming to Mexico as well. Those are the kind of opportunities that I would highlight for the World Cup.

[Company Representative] (Coca-Cola Femsa): I would say the most important upside that we see for the World Cup is regarding to brand engagement, the opportunities on frequency. That is a great opportunity for us to capitalize, and I would say not only in Mexico, in other markets as well, you know. It's a great opportunity to gather. It brings more consumption occasions, and that's a great opportunity that we have, you know. We have, for example, not only during the tournament, but even before and even after the tournament, we have a lot of activations happening. You know, we have the trophy tour ongoing. It's coming to Mexico as well. Those are the kind of opportunities that I would highlight for the World Cup.

Speaker #5: Our next question comes from Fernando Olvera with Bank of America.

Speaker #4: Hi. Hello, guys. Can you hear me?

Speaker #7: Hi, Fernando. Yes.

Speaker #4: Great. Thank you for taking my question. No, just a quick follow-up regarding volumes. You have mentioned or you shared some outlook on Mexico and Brazil.

Speaker #4: But maybe if you can give some color about what you're expecting on a consolidated basis or mainly given the strong recovery that we have seen in Argentina and Colombia.

Speaker #4: And the very good performance of Guatemala that would be great. Thank you.

Gerardo Cruz: If I may add, Gabriela, as well, regarding the World Cup and the expectations for the year, we are particularly proud of the strength and depth of our portfolio of products because we can offer a product for all of the different consumption occasions that our consumers will have around this event, be it at home, be it on the road, or be it on the venues occurring during the event itself. We offer a consumption occasion and a brand and an SKU that allows us to capture all of these opportunities, be it hydration, be it energy, or be it indulgence.

Speaker #7: Yes, thanks for the question. Look, when we put it all together as you mentioned, we've already mentioned low-to-mid single-digit decline in Mexico. Low-to-mid single-digit growth in Brazil.

Speaker #7: And the rest with the putting it all together with the rest of the markets, I would say consolidated volume for 2026 will be more of a flattish year.

Speaker #7: Of course, flattish to slightly positive if we were to give a range. That's what the team is working on. Of course, we will, as I mentioned before, progress you along the year as the year progresses.

Speaker #7: Ian and Jerry highlighted the effect of the excise tax. That is ongoing and we still need to get a feel on that. So consider this like an early take on the outlook.

Speaker #7: But there are several moving pieces. But this is what we have for now, what we've been working on. And of course, the team is very focused on achieving growth this year.

Gerardo Cruz: All of this is, has a lot of synonyms with the FIFA World Cup. And we're proud to be able to serve the Coca-Cola portfolio of products around this event, which is a good engagement, brand engagement event for us.

Speaker #4: So Ian mentioned fair or sustainable growth model. And we've been talking about this for the past few years. I highlighted performance in share that we are seeing positive performance in share across our territories.

Gabriela Martinez: Okay. Thank you very much.

Speaker #4: So our teams are striving to get to return to this path of growth in all of our operations. And I think this year we certainly will be aiming to deliver slight volume growth across our territories.

Jorge: Thank you, Gabriela.

[Company Representative] (Coca-Cola Femsa): Thank you, Gabriela.

Operator: Our next question comes from Fernando Vera with Bank of America.

Fernando Vera: Hi. Hello, guys. Can you hear me?

Jorge: Hi, Fernando. Yes.

[Company Representative] (Coca-Cola Femsa): Hi, Fernando. Yes.

Fernando Vera: Great. Thank you for taking my question. Now, just a quick follow-up regarding volumes. You have mentioned or you shared some outlook on Mexico and Brazil.

Speaker #9: Or in Mexico, we have some.

Speaker #4: Okay. Great. Thanks so much. Jorge, Ian, Jerry.

Speaker #9: In terms of valuation, how much do you have?

[Analyst]: Maybe if you can give some color about what you're expecting on a consolidated basis, mainly given this strong recovery that we have seen in Argentina, Colombia, you know, and the very good performance of Guatemala. That would be great. Thank you.

Gerardo Cruz: Maybe if you can give some color about what you're expecting on a consolidated basis, mainly given this strong recovery that we have seen in Argentina, Colombia, you know, and the very good performance of Guatemala. That would be great. Thank you.

Speaker #5: This concludes the question and answer section. At this time, I would like to turn the floor back to Mr. Jorge for any closing remarks.

Jorge: Yes, sir. Thanks for the question. Look, when we put it all together, you know, as you mentioned, we've already mentioned, low to mid single digits decline in Mexico, low to mid single digits growth in Brazil, and the rest with the, you know, putting it all together with the rest of the markets, I would say consolidated volume for 2026 will be a more of a flattish year. Of course, you know, flattish to slightly positive, I would say if we were to give a range. That's what the team is working on. Of course, we will, as I mentioned before, progress you along the year as the year progresses. Ian and Gerry highlighted the effect of the excise tax that is ongoing, and we still need to get a feel on that.

[Company Representative] (Coca-Cola Femsa): Yes, sir. Thanks for the question. Look, when we put it all together, you know, as you mentioned, we've already mentioned, low to mid single digits decline in Mexico, low to mid single digits growth in Brazil, and the rest with the, you know, putting it all together with the rest of the markets, I would say consolidated volume for 2026 will be a more of a flattish year. Of course, you know, flattish to slightly positive, I would say if we were to give a range. That's what the team is working on. Of course, we will, as I mentioned before, progress you along the year as the year progresses. Ian and Gerry highlighted the effect of the excise tax that is ongoing, and we still need to get a feel on that.

Speaker #7: Well, just to thank everyone for your interest in Coca-Cola FEMSA and for joining us on today's call. As always, we are available to answer any remaining questions.

Speaker #7: And we look forward to meeting with you hopefully in person throughout the year. Thank you very much.

Jorge: Consider this like an early take on the outlook, you know. There are several moving pieces, but this is what we have for now, what we've been working on, and of course, the team is very focused on achieving growth this year.

Fernando Vera: Consider this like an early take on the outlook, you know. There are several moving pieces, but this is what we have for now, what we've been working on, and of course, the team is very focused on achieving growth this year.

Gerardo Cruz: Ian mentioned Fair, our sustainable growth model, and we've been talking about this for the past few years. I highlighted performance and share that we are seeing positive performance and share across our territories. Our teams are striving to get to return to this path of growth in all of our operations. I think this year we certainly will be aiming to deliver a slight volume growth across our territories.

[Analyst]: In Mexico, we have.

Fernando Vera: In Mexico, we have.

Gerardo Cruz: Okay. Great. Thanks so much, Jorge and Jerry.

Jorge: Thank you.

[Company Representative] (Coca-Cola Femsa): Thank you.

Antonio Hernandez: In terms of valuation, how much room do you have? Mexico.

Fernando Vera: In terms of valuation, how much room do you have? Mexico.

Jorge: Hello?

[Company Representative] (Coca-Cola Femsa): Hello?

Antonio Hernandez: There will be a USMCA agreement, again.

Fernando Vera: There will be a USMCA agreement, again.

Operator: This concludes the question and answer section. At this time, I would like to turn the floor back to Mr. Jorge for any closing remarks.

Jorge: Well, just to thank everyone for your interest in Coca-Cola FEMSA and for joining us on today's call. As always, we are available to answer any remaining questions, and we look forward to meeting with you, hopefully in person, throughout the year. Thank you very much.

Jorge Pereda: Well, just to thank everyone for your interest in Coca-Cola FEMSA and for joining us on today's call. As always, we are available to answer any remaining questions, and we look forward to meeting with you, hopefully in person, throughout the year. Thank you very much.

Operator: Thank you. This does conclude today's presentation. You may disconnect now and have a nice day. Goodbye.

Q4 2026 Coca Cola Femsa SAB de CV Earnings Call

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