Fomento Económico Mexicano (FEMSAUBD) Q1 2025 earnings summary

Executive summary

• Navigated a challenging macro environment in Mexico, with Proximity Americas facing soft consumer demand, adverse calendar effects, and persistent traffic declines, but maintained resilience through geographic diversification and operational initiatives.

• Consolidated revenues grew 11.1% year-over-year in 1Q25, with income from operations up 4.9% and net income up 54.3%, driven by growth across all business units and favorable FX effects.

• Gross profit increased 15.8% and gross margin expanded 160 bps to 40.3%, reflecting margin gains in most divisions except Proximity Europe.

• Spin by OXXO and Spin Premia saw active user growth of 20.9% and 15.9% year-over-year, respectively, with strong transaction growth.

• Implemented commercial and cost initiatives to drive traffic, expand gross margin, and contain costs, while maintaining investment in transformational projects.

Financial highlights

• Total revenues: Ps. 195,820 million (+11.1% YoY); gross profit: Ps. 78,918 million (+15.8% YoY); income from operations: Ps. 13,565 million (+4.9% YoY); net income: Ps. 8,943 million (+54.3% YoY).

• Adjusted EBITDA: Ps. 25,303 million (+8.8% YoY); EBITDA margin: 12.9%.

• Proximity Americas revenues increased 6.8% (1.4% comparable), but operating income declined 11.8% (11% comparable) due to higher expenses and reduced leverage.

• OXXO Mexico opened 361 net new stores; Colombia and Brazil added 31 and 21 stores, respectively; Proximity Americas store base expanded by 384 units in the quarter.

• Spin by OXXO reached 8.9 million active users (20.9% growth), and Spin Premia loyalty program now linked to 42.5% of OXXO Mexico sales with 25.2 million active users (15.9% growth).

Outlook and guidance

• Sequential improvement in top-line expected from Q2, peaking in Q3, with full-year guidance for high single-digit revenue growth and stable operating margins.

• Management anticipates a recovery in Proximity Americas as the year progresses, with momentum expected in 3Q25 and beyond; cost-cutting and revenue initiatives are being accelerated.

• 2025 is expected to be a solid year, with the second half weighing more for most business units; macroeconomic uncertainty remains high.