Coca-Cola Femsa S.A.B. DE C.V. - ADR

Solid consolidated top-line + margin expansion, but profits down: - Volume: +1.2% YoY to 998 million unit cases (Mexico contracted but other territories more than offset). - Revenue: +1.1% YoY to MXN 70.9bn; +6.0% ex-currency headwinds. - Gross profit/margin: Gross profit +4.5% to MXN 33.3bn; margin +150 bps to 46.9% (helped by PET & sweetener costs and currency appreciation vs USD). - Operating income: -2.3% YoY to MXN 9.0bn; operating margin -50 bps to 12.7% (rightsizing severance + IT/ERP spend). - Adjusted EBITDA: +0.9% to MXN 13.4bn; margin flat at 18.9%; +6.1% ex-currency.

Mexico remains the main drag (excise tax + soft demand), with clear execution and share gains: - Mexico volume: -2.6% YoY (expected). Drivers: excise tax increase + softer consumer dynamics (Nielsen FMCG basket ~-3% in affected territories; inflation expectations rising). - Good (surprising positive): despite volume decline, they reported value share gains: +0.6 pp in CSDs and +0.4 pp in NARTDs; portfolio execution improving. - Category/brand highlights: Coke Zero continued growth (+10% volume in quarter); Coca-Cola one-way pack strategy improved (e.g., +7pp coverage; 32% volume growth in March for a referenced one-way format). - Channel/cooler execution: installed >47,000 doors (~50% of 2025 total) supporting improved distribution and visibility.

Cost/investment pressures in Mexico-Central America are largely “timing” driven (not structural): - Management highlighted marketing being pulled forward to support FIFA World Cup activity; therefore, full-year marketing should normalize/taper later in 2026. - IT expense + ERP rollout (SAP S/4HANA): guided to remain under ~2.5% of sales for the year. - Severance (rightsizing for excise tax impact): treated as an extraordinary first-quarter item (they cited ~MXN 200m severance). - They quantified a ~MXN 600m operating income headwind in Mexico-Central America, roughly 3 components of ~MXN 200m each (severance, IT, currency translation). - Investor-relevant “outlook” implication: remainder of the year should see less distortion vs Q1 for these cost items (timing-related).