Fomento Económico Mexicano (FEMSAUBD) Q3 2024 earnings summary

Executive summary

• Third quarter saw solid results in Proximity and Health, with broad-based growth and margin expansion, despite flat same-store sales at Proximity Americas due to lower traffic from weather and a tough comparison base.

• Total consolidated revenues grew 8.3% and income from operations increased 14.6% year-over-year in 3Q24, with margin expansion across most business units despite a soft consumer environment in Mexico.

• Net consolidated income declined 27.5% year-over-year to MXN 9.2 billion, impacted by higher interest expense, lower non-cash FX gains, and a higher loss from discontinued operations, including a MXN 3.9 billion impairment related to the Solistica divestment.

• Strategic focus is on optimizing the portfolio, accelerating high-ROIC investments, and adjusting expansion pace by market and format, with OXXO Mexico and Bara highlighted for growth.

• Significant progress was made on strategic initiatives, including the divestment of Solistica and the acquisition of Delek’s 249 convenience stores in Texas.

Financial highlights

• 3Q24 total revenues: MXN 196.8 billion (+8.3% YoY); gross profit: MXN 79.4 billion (+12.1% YoY); income from operations: MXN 17.4 billion (+14.6% YoY).

• Adjusted EBITDA: MXN 28.9 billion (+19.6% YoY); EBITDA margin: 14.7% (+140 bps YoY).

• Gross margin expanded by 300 bps to 44.2% in Proximity Americas; operating margin up 10 bps to 9%.

• OXXO added 367 net new stores in Q3 (273 in Mexico, 94 in South America); year-to-date, 1,266 net new stores.

• OXXO Gas posted 7.6% same-station sales growth and 8.2% revenue growth; operating margin expanded 40 bps to 4.9%.

Outlook and guidance

• OXXO Mexico targets 1,100 net new stores in 2025, maintaining >4% base growth.

• Bara aims for ~40% store base growth in 2025, with operational segregation to support higher growth.

• OXXO Colombia targets 15–20% store base growth in 2025; expansion in supply chain and assortment.

• Valora expects continued organic growth, especially in German retail and fuel station partnerships, with cautious expansion due to market complexities.

• Management is focused on closing the year strongly and preparing for an improved 2025, with continued investment in store expansion, digital engagement, and operational efficiency.