Fomento Económico Mexicano (FEMSAUBD) Q2 2025 earnings summary

Executive summary

• Total revenue grew 6.3% year-over-year, driven by international operations, currency tailwinds, and OXXO U.S.A. consolidation, despite a challenging consumer environment and adverse weather in Mexico impacting Proximity and Coca-Cola FEMSA.

• Net consolidated income dropped 64.3% to MXN 5.6 billion, mainly due to a MXN 10 billion swing in non-cash FX losses and lower interest income.

• Operating income increased marginally by 0.2%–1.2% year-over-year, with profitability pressured by inflation, weaker-than-expected consumer demand in Mexico, and mixed segment performance.

• Management remains focused on reversing negative traffic and volume trends, managing costs, and leveraging resilience and strategic initiatives for the second half of the year.

Financial highlights

• Total revenues: Ps. 211,364 million (+6.3% YoY); gross profit: Ps. 85,922 million (+4.2% YoY); income from operations: Ps. 17,832 million (+1.2% YoY).

• Proximity Americas revenues grew 6.9% (2% organic/currency-neutral), with 1,500 new stores year-on-year and strong LATAM/US performance offsetting Mexico weakness.

• Gross margin for Proximity Americas stable at 44.1%; operating margin declined 90 bps to 9%.

• Valora Europe revenues up 31.4% in MXN (5.9% currency-neutral); operating income up 54.4% (24% currency-neutral).

• Health division revenues up 15.6% in MXN, with 13.1% same-store sales growth; 432 underperforming stores closed in Mexico.

Outlook and guidance

• Cautiously optimistic for H2 2025, expecting stable full-year operating margins at Proximity Americas.

• No major changes to store opening plans; OXXO targeting 1,000–1,100 net additions, with growing focus on "Nicho" stores in secure environments.

• Continued focus on operational discipline, strategic investments, and rigorous capital allocation to drive sustainable growth.

• Management expects to focus on cost control, assortment, and price strategies to address weak traffic and volume trends, especially in Mexico.