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

Strong consolidated performance (Q2 2026): Volumes +3.5% YoY to 1.1bn unit cases; revenues +4.7% YoY to MXN 76.3bn (or +6.6% currency-neutral). Profitability improved meaningfully with gross profit +8.8% YoY to MXN 35.9bn and gross margin +180 bps to 47.1%. Operating income +9.1% to MXN 10.7bn; operating margin +60 bps to 14.0%. Adjusted EBITDA +12.1% to MXN 15.0bn with margin +130 bps to 19.7%.

Key drivers of margins: costs/hedging + one-off insurance recovery (Brazil): Gross profit expansion was driven mainly by favorable sweeteners and PET costs (benefits of disciplined hedging strategy) and currency appreciation on local vs. dollar-denominated inputs; partially offset by higher freights/aluminum costs. Operating income also benefited from Brazil insurance recovery of MXN 265m (management said that without it, operating income would have grown ~6.4% and margin would have been 13.6%).

Market execution: growth vs. headwinds (what’s good): - Brazil (+5.2% volumes): outperformed the industry; continued share gains across NA drinks categories; Zero Sugar Coca-Cola Zero +15% and strong flavors; sparkling performance supported by FIFA World Cup + Panini sticker execution. Management highlighted rising single-serve mix and digital transformation (Juntos+). - Colombia (+17.7% volumes): strong macro improvement and execution; affordability delivered share gains in one-way packs; flavors +27.2% quarterly volume growth supported by Cuatro + Sprite. - Guatemala (+3.4%): growth supported by stronger consumer fundamentals and disciplined execution; share and customer/cooler coverage improvements.