SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of February 2012

 

.

FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V.

(Exact name of Registrant as specified in its charter)

 

Mexican Economic Development, Inc.

(Translation of Registrant’s name into English)

 

United Mexican States

(Jurisdiction of incorporation or organization)

 

 

General Anaya No. 601 Pte.
Colonia Bella Vista
Monterrey, Nuevo León 64410
México

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports

under cover of Form 20-F or Form 40-F:

 

Form 20-F

x

Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as

permitted by Regulation S-T Rule 101(b)(1): _______

 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as

permitted by Regulation S-T Rule 101(b)(7): _______

 

 

Indicate by check mark whether by furnishing the information contained in this

Form, the registrant is also thereby furnishing the information to the

Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes

No

x

 

If "Yes" is marked, indicate below the file number assigned to the registrant in

connection with Rule 12g3-2(b): 82-_____________

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the

registrant has duly caused this report to be signed on its behalf of the

undersigned, thereunto duly authorized.

 

 

	FOMENTO ECONÓMICO MEXICANO, S.A. DE C.V .
	By:	/s/ Javier Astaburuaga
		Javier Astaburuaga Chief Financial Officer

Date:  February 27, 2012

 

 

 

 

 

 

FEMSA Closes 2011 with Double-Digit Revenue and

Operating Income Growth Across Operations

 

 

Monterrey, Mexico, February 27, 2012 — Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) announced today its operational and financial results for the fourth quarter and full year 2011.

 

 

Fourth Quarter 2011 Highlights:

 

·

FEMSA consolidated total revenues and income from operations grew 24.5% and 24.9%, respectively, compared to the fourth quarter of 2010.

 

·

Coca-Cola FEMSA income from operations increased 27.9% driven by double-digit operating income growth in the South America and Mexico & Central America divisions, including the integration of Grupo Tampico and CIMSA in Mexico.

 

·

FEMSA Comercio achieved total revenues growth of 16.9% and income from operations growth of 15.7% driven by new store openings and 8.0% growth in same-store sales.

 

 

2011 Full Year Highlights:

 

·

FEMSA consolidated total revenues and income from operations grew 19.6% and 19.4%, respectively, compared to 2010 driven by Coca-Cola FEMSA and FEMSA Comercio.

 

·

Coca-Cola FEMSA income from operations increased 18.0%. Strong growth in the South America division was the main driver, combined the integration of Grupo Tampico and CIMSA in Mexico.

 

·

FEMSA Comercio continued its pace of strong floor space growth by opening 1,135 net new stores in 2011. Income from operations increased 20.7%.

 

·

Ordinary dividend of Ps. 6.200 billion proposed by FEMSA’s Board of Directors, to be paid in 2012 subject to approval at the annual shareholders meeting in March 2012, representing an increase of 34.8% over the prior year and 138.5% over the dividend paid in 2010.

 

 

José Antonio Fernández Carbajal, Chairman and CEO of FEMSA, commented: “2011 was a strong year for our company. Despite a volatile economic environment, demand for our products remained healthy, and we stayed the course and managed to convert that demand into robust financial results by focusing our time, efforts and resources on the extraordinary opportunities for Coca-Cola FEMSA and OXXO.

 

For Coca-Cola FEMSA, this was a historic year. We leveraged our financial and operating flexibility to firmly advance on our strategy to grow through accretive mergers and acquisitions—from our incursion into the dairy category through our joint acquisition of Grupo Industrias Lacteas in Panama to our mergers with the beverage divisions of Grupo Tampico, Grupo CIMSA, and Grupo Fomento Queretano in Mexico. And at FEMSA Comercio, our robust top-line growth in 2011 was driven by our continuing store expansion and our comparable same-store sales growth of 9.2 percent, ahead of trend and reinforcing our position as an industry benchmark. Our progress in mapping and understanding consumers’ needs and adjusting our value proposition to better fulfill those needs significantly contributed to our same store sales growth. We also made great strides in our sustainability efforts, from launching joint watershed-conservation initiatives with the Inter-American Development Bank, the Global Environment Facility and the Nature Conservancy, to making significant progress in our renewable energy projects, particularly wind power, to ensuring that every one of our managers now incorporates sustainability objectives in their annual performance metrics.

 

And so we look at 2012 with optimism and renewed energy, ready to keep moving our company forward by pursuing and overcoming new challenges.”

 

FEMSA Consolidated

 

On April 30, 2010, FEMSA announced the closing of the strategic transaction pursuant to which FEMSA agreed to exchange 100% of its beer operations for a 20% economic interest in the Heineken Group (“the transaction”). For more information regarding this acquisition, please refer to the transaction filings available at www.femsa.com/investor. FEMSA’s consolidated results for the fourth quarter and for the full year of 2011 reflect the transaction effects.

 

Total revenues increased 24.5% compared to 4Q10 to Ps. 56.834 billion. Coca-Cola FEMSA accounted for the majority of the incremental consolidated revenues.

 

For the full year of 2011, consolidated total revenues increased 19.6% to Ps. 203.044 billion. This growth resulted mainly from double-digit growth at Coca-Cola FEMSA and FEMSA Comercio.

 

Gross profit increased 25.8% compared to 4Q10 to Ps. 24.478 billion in 4Q11. Gross margin increased 50 basis points compared to the same period in 2010 to 43.1% of total revenues.

 

For the full year of 2011, gross profit increased 19.8% to Ps. 85.035 billion. Gross margin increased 10 basis points compared to the same period in 2010 to 41.9% of total revenues.

 

Income from operations increased 24.9% to Ps. 8.884 billion in 4Q11 as compared to the same period in 2010. Consolidated operating margin remained at 15.6% of total revenues, compared to 4Q10.

 

For the full year of 2011, income from operations increased 19.4% to Ps. 26.904 billion. Our consolidated operating margin in 2011 remained at 13.3% as a percentage of total revenues compared to the same period of 2010.

 

Net income from continuing operations increased 9.3% to Ps. 7.111 billion in 4Q11 compared to 4Q10, including the fact that this line incorporates FEMSA’s implied 20% participation in Heineken’s fourth quarter 2011 net income. The figure reflects growth in income from operations and the variation in FEMSA’s 20% participation in Heineken’s net income which more than compensated the effect of non-recurring items. These include the tough comparison base caused by the income from the sale of our flexible packaging business in 4Q10, as well as write offs of certain non-productive assets at Coca-Cola FEMSA during 4Q11. The effective income tax rate on continuing operations was 25.6% in 4Q11.

 

 

For the full year of 2011, net income from continuing operations increased 15.2% to Ps. 20.684 billion compared to the same period of 2010, mainly due to the growth in income from operations which more than compensated for an increase in the other expenses line largely driven by the net effect of non-recurring items. These include the tough comparison base caused by income from the sale of our flexible packaging business and the sale of the Mundet brand to The Coca-Cola Company during 2010. The full-year effective income tax rate on continuing operations was 27.1%.

 

Net consolidated income increased 9.3% compared to 4Q10 to Ps. 7.111 billion in 4Q11, reflecting the increase in FEMSA’s net income from continuing operations. Net majority income for 4Q11 resulted in Ps. 1.50 per FEMSA Unit¹. Net majority income per FEMSA ADS was US$ 1.08 for the quarter. For the full year of 2011, net majority income per FEMSA Unit¹ was Ps. 4.23 (US$ 3.03 per ADS).

 

Capital expenditures increased to Ps. 5.239 billion in 4Q11, driven by back-end loaded capacity-related investments at Coca-Cola FEMSA and incremental investments at FEMSA Comercio mainly related to store expansion. For the full year of 2011, capital expenditures increased to Ps. 12.515 billion, for the reasons described above.

 

Our consolidated balance sheet as of December 31, 2011, recorded a cash balance of Ps. 27.658 billion (US$ 1.983 billion), an increase of Ps. 0.495 billion (US$ 35.5 million) compared to the same period in 2010. Short-term debt was Ps. 5.573 billion (US$ 399.5 million), while long-term debt was Ps. 23.194 billion (US$ 1.663 billion). Our consolidated net debt balance was Ps. 1.109 billion (US$ 79.5 million).

 

Soft Drinks – Coca-Cola FEMSA

Coca-Cola FEMSA’s financial results and discussion are incorporated by reference from Coca-Cola FEMSA’s press release, which is attached to this press release or visit www.coca-colafemsa.com.

 

FEMSA Comercio

 

Total revenues increased 16.9% compared to 4Q10 to Ps. 19.619 billion in 4Q11 mainly driven by the opening of 413 net new stores in the quarter, reaching 1,135 total net new store openings for the year. As of December 31, 2011, FEMSA Comercio had a total of 9,561 convenience stores, above target relative to the objective for 2011. Same-store sales increased an average of 8.0% for the quarter over 4Q10, reflecting a 4.1% increase in store traffic and a 3.8% increase in average customer ticket.

 

For the full year of 2011, total revenues increased 19.0% to Ps. 74.112 billion. FEMSA Comercio’s same-store sales increased an average of 9.2%, driven by a 4.6% increase in store traffic and a 4.3% increase in average customer ticket.

 

Gross profit increased by 19.2% in 4Q11 compared to 4Q10, resulting in a 70 basis point gross margin expansion to 37.4% of total revenues. This increase reflects (i) a positive mix shift due to the growth of higher margin categories, (ii) a more effective collaboration and execution with our key supplier partners combined with a more efficient use of promotion-related marketing resources. For the full year of 2011, gross margin expanded by 60 basis points to 34.4% of total revenues.

 

Income from operations increased 15.7% over 4Q10 to Ps. 2.289 billion in 4Q11. Operating expenses increased 20.8% to Ps. 5.049 billion, largely driven by the growing number of stores as well as by incremental expenses such as the strengthening of FEMSA Comercio’s organizational structure, mainly IT-related and targeted marketing programs. Operating expense growth above gross profit growth resulted in a 10 basis point contraction of operating margins to 11.7% of total revenues in 4Q11.

 

For the full year of 2011, income from operations increased 20.7% to Ps. 6.276 billion, resulting in an operating margin of 8.5%, which represents a 10 basis point expansion from the prior year.

 

 

 

1

FEMSA Units consist of FEMSA BD Units and FEMSA B Units. Each FEMSA BD Unit is comprised of one Series B Share, two Series D-B Shares and two Series D-L Shares. Each FEMSA B Unit is comprised of five Series B Shares. The number of FEMSA Units outstanding as of December 31, 2011 was 3,578,226,270 equivalent to the total number of FEMSA Shares outstanding as of the same date, divided by 5.

 

Recent Developments

 

·

In accordance with Mexican regulations, FEMSA is adopting International Financial Reporting Standards (IFRS) beginning January 1, 2012. The Company will release its quarterly and full year results for 2011 under IFRS prior to the release of its 1st quarter 2012 results.

 

·

Financing has been secured from a consortium of banks to build the largest wind power farm in Latin America, to be located in the state of Oaxaca, which will provide FEMSA’s operating subsidiaries as well as Heineken’s operations in Mexico with almost 400 megawatts of clean, renewable energy for the next 20 years. FEMSA and Macquarie Capital participated during the development phase of the project as short-term investors in order to enable the project to move forward, and have now sold their ownership stakes to Mitsubishi Corporation, with ample experience in energy-generation projects, and PPGM, a Netherlands-based pension fund service provider. Macquarie Mexico Infrastructure Fund also participated during the development phase and remains as a long-term investor. Going forward FEMSA’s role will be solely as energy off-taker. This news underscores FEMSA’s long-term objective to derive as much as 85% of its electrical energy needs from clean, renewable sources, while representing an economically attractive solution.

 

 

 

FEMSA is a leading company that participates in the non-alcoholic beverage industry through Coca-Cola FEMSA, the largest independent bottler of Coca-Cola products in the world in terms of sales volume; in the retail industry through FEMSA Comercio, operating the largest and fastest-growing chain of convenience stores in Latin America, and in the beer industry, through its ownership of the second largest equity stake in Heineken, one of the world’s leading brewers with operations in over 70 countries.

 

The translations of Mexican pesos into US dollars are included solely for the convenience of the reader, using the noon day buying rate for pesos as published by the Federal Reserve Bank of New York at December 31, 2011, which was 13.9510 Mexican pesos per US dollar.

 

 

FORWARD LOOKING STATEMENTS

This report may contain certain forward-looking statements concerning our future performance that should be considered as good faith estimates made by us. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which could materially impact our actual performance.

 

 

FEMSA

Consolidated Income Statement

Millions of Pesos

 

	For the fourth quarter of:															For the twelve months of:
		2011	(A)		% of rev.			2010			% of rev.			% Increase			2011	(A)		% of rev.			2010			% of rev.			% Increase
Total revenues		56,834			100.0			45,664			100.0			24.5			203,044			100.0			169,702			100.0			19.6
Cost of sales		32,356			56.9			26,200			57.4			23.5			118,009			58.1			98,732			58.2			19.5
Gross profit		24,478			43.1			19,464			42.6			25.8			85,035			41.9			70,970			41.8			19.8
Administrative expenses		2,237			3.9			2,055			4.5			8.9			8,249			4.1			7,766			4.6			6.2
Selling expenses		13,357			23.6			10,294			22.5			29.8			49,882			24.5			40,675			24.0			22.6
Operating expenses		15,594			27.5			12,349			27.0			26.3			58,131			28.6			48,441			28.5			20.0
Income from operations		8,884			15.6			7,115			15.6			24.9			26,904			13.3			22,529			13.3			19.4
Other (expenses) income		(1,369	)					248						N.S			(2,830	)					(63	)					N.S
Interest expense		(772	)					(993	)					(22.3	)		(2,934	)					(3,265	)					(10.1	)
Interest income		220						418						(47.4	)		999						1,104						(9.5	)
Interest expense, net		(552	)					(575	)					(4.0	)		(1,935	)					(2,161	)					(10.5	)
Foreign exchange (loss) gain		246						(7	)					N.S			1,165						(614	)					N.S
(Loss) gain on monetary position		57						122						(53.3	)		146						410						(64.4	)
Gain (loss) on financial instrument(1)		75						61						23.0			(159	)					212						N.S
Integral result of financing		(174	)					(399	)					(56.4	)		(783	)					(2,153	)					(63.6	)
Participation in Heineken results(2)		2,222						597						N.S			5,080						3,319						53.1
Income before income tax		9,563						7,561						26.5			28,371						23,632						20.1
Income tax		2,452						1,058						N.S			7,687						5,671						35.5
Net income from continuing operations		7,111						6,503						9.3			20,684						17,961						15.2
Gain from transaction with Heineken, net of taxes(3)		-						-						-			-						26,623						N.S
Net Income from FEMSA's former beer operations(4)		-						-						-			-						706						N.S
Net consolidated income		7,111						6,503						9.3			20,684						45,290						(54.3	)
Net majority income		5,367						4,939						8.7			15,133						40,251						(62.4	)
Net minority income		1,744						1,564						11.5			5,551						5,039						10.2

(A) We integrated Grupo Tampico and Grupo CIMSA to Coca Cola FEMSA operations since October, 2011 and December, 2011 respectively.

 

EBITDA & CAPEX
Income from operations			8,884				15.6				7,115				15.6				24.9				26,904				13.3				22,529				13.3				19.4
Depreciation			1,261				2.2				1,058				2.3				19.2				4,604				2.3				3,827				2.3				20.3
Amortization & other			627				1.2				553				1.2				13.4				2,450				1.1				2,061				1.2				18.9
EBITDA			10,772				19.0				8,726				19.1				23.4				33,958				16.7				28,417				16.7				19.5
CAPEX			5,239								3,771								38.9				12,515								11,171								12.0
FINANCIAL RATIOS			2011								2010								Var. p.p
Liquidity(5)			1.53								1.69								(0.16	)
Interest coverage(6)			19.51								15.18								4.34
Leverage(7)			0.44								0.46								(0.02	)
Capitalization(8)			13.42	%							14.22	%							(0.79	)

 

⁽¹⁾ Includes solely derivative instruments that do not meet hedging criteria for accounting purposes.

⁽²⁾ Represents the equity-method participation in Heineken´s results.

⁽³⁾ Represents the difference between the market value of the Heineken shares (20% equity interest) and the book value of FEMSA's former beer operations, net of transaction tax, as of April 30, 2010.

⁽⁴⁾ Represents the net income of FEMSA's former beer operations for the period ended April 30, 2010.

⁽⁵⁾ Total current assets / total current liabilities.

⁽⁶⁾ Income from operations + depreciation + amortization & other / interest expense, net.

⁽⁷⁾ Total liabilities / total stockholders' equity.

⁽⁸⁾ Total debt / long-term debt + stockholders' equity.

Total debt = short-term bank loans + current maturities long-term debt + long-term bank loans.

 

 

 

FEMSA

Consolidated Balance Sheet

Millions of Pesos

As of December 31:

 

 

ASSETS		2011 (A)				2010%Increase
Cash and cash equivalents			27,658				27,163				1.8
Accounts receivable			10,499				7,702				36.3
Inventories			14,385				11,314				27.1
Other current assets			6,425				5,281				21.7
Total current assets			58,967				51,460				14.6
Investments in shares			78,972				68,793				14.8
Property, plant and equipment, net			53,402				41,911				27.4
Intangible assets(1)			71,608				52,340				36.8
Other assets			11,755				9,074				29.5
TOTAL ASSETS			274,704				223,578				22.9
LIABILITIES & STOCKHOLDERS´ EQUITY
Bank loans			638				1,578				(59.6	)
Current maturities long-term debt			4,935				1,725				N.S
Interest payable			216				165				30.9
Operating liabilities			32,841				27,048				21.4
Total current liabilities			38,630				30,516				26.6
Long-term debt (2)			23,194				21,510				7.8
Labor liabilities			2,258				1,883				19.9
Other liabilities			19,508				16,656				17.1
Total liabilities			83,590				70,565				18.5
Total stockholders’ equity			191,114				153,013				24.9
LIABILITIES AND STOCKHOLDERS’ EQUITY			274,704				223,578				22.9

 

(A) Grupo Tampico and CIMSA were integrated to FEMSA´s Balance Sheet.              

                   

⁽¹⁾ Includes mainly the intangible assets generated by acquisitions.              

⁽²⁾ Includes the effect of derivative financial instruments on long-term debt.              

                   

 

		December 31, 2011
DEBT MIX (2)		% Integration				Average Rate
Denominated in:
Mexican pesos			63.1	%			6.6	%
Dollars			26.7	%			4.3	%
Colombian pesos			5.6	%			6.4	%
Argentinan pesos			3.6	%			17.3	%
Brazilian Reals			1.0	%			8.8	%
Total debt			100.0	%			6.3	%
Fixed rate(2)			59.4	%
Variable rate(2)			40.6	%

 

% of Total Debt		2012				2013				2014				2015				2016				2017				2018+
DEBT MATURITY PROFILE			19.7	%			14.9	%			5.0	%			10.0	%			8.8	%			8.7	%			32.9	%

 

Coca-Cola FEMSA

Results of Operations

Millions of Pesos

 

 

 

		For the fourth quarter of:																				For the twelve months of:
		2011 (A)				% of rev.				2010				% of rev.				% Increase				2011 (A)				% of rev.				2010				% of rev.				% Increase
Total revenues			36,187				100.0				27,991				100.0				29.3				124,715				100.0				103,456				100.0				20.5
Cost of sales			19,696				54.4				15,017				53.6				31.2				67,488				54.1				55,534				53.7				21.5
Gross profit			16,491				45.6				12,974				46.4				27.1				57,227				45.9				47,922				46.3				19.4
Administrative expenses			1,342				3.7				1,260				4.5				6.5				5,185				4.2				4,451				4.3				16.5
Selling expenses			8,652				23.9				6,634				23.7				30.4				31,890				25.6				26,392				25.5				20.8
Operating expenses			9,994				27.6				7,894				28.2				26.6				37,075				29.7				30,843				29.8				20.2
Income from operations			6,497				18.0				5,080				18.1				27.9				20,152				16.2				17,079				16.5				18.0
Depreciation			879				2.4				683				2.4				28.7				3,269				2.6				2,633				2.5				24.2
Amortization & other			380				1.1				346				1.2				9.8				1,577				1.2				1,310				1.3				20.4
EBITDA			7,756				21.4				6,109				21.8				27.0				24,998				20.0				21,022				20.3				18.9
Capital expenditures			3,446								2,516								37.1				7,826								7,478								4.6

 Average Mexican Pesos of each year.

(A) We integrated Grupo Tampico and Grupo CIMSA to Coca Cola FEMSA operations since October, 2011 and December, 2011 respectively.

 

 

Sales volumes
(Millions of unit cases)
Mexico and Central America			410.3				56.0				348.3				52.8				17.8				1,510.8				57.0				1,379.3				55.2				9.5
South America			322.0				44.0				311.6				47.2				3.4				1,137.9				43.0				1,120.2				44.8				1.6
Total			732.3				100.0				659.9				100.0				11.0				2,648.7				100.0				2,499.5				100.0				6.0

 

FEMSA Comercio

Results of Operations

Millions of Pesos

 

 

	For the fourth quarter of:															For the twelve months of:
	2011			% of rev			2010			% of rev			% Increase			2011			% of rev			2010			% of rev			% Increase
Total revenues		19,619			100.0			16,781			100.0			16.9			74,112			100.0			62,259			100.0			19.0
Cost of sales		12,281			62.6			10,624			63.3			15.6			48,636			65.6			41,220			66.2			18.0
Gross profit		7,338			37.4			6,157			36.7			19.2			25,476			34.4			21,039			33.8			21.1
Administrative expenses		382			1.9			310			1.8			23.2			1,438			1.9			1,186			1.9			21.2
Selling expenses		4,667			23.8			3,869			23.1			20.6			17,762			24.0			14,653			23.5			21.2
Operating expenses		5,049			25.7			4,179			24.9			20.8			19,200			25.9			15,839			25.4			21.2
Income from operations		2,289			11.7			1,978			11.8			15.7			6,276			8.5			5,200			8.4			20.7
Depreciation		312			1.6			266			1.6			17.3			1,175			1.6			990			1.6			18.7
Amortization & other		187			0.9			166			1.0			12.7			707			0.9			607			0.9			16.5
EBITDA		2,788			14.2			2,410			14.4			15.7			8,158			11.0			6,797			10.9			20.0
Capital expenditures		1,376						1,136						21.1			4,096						3,324						23.2
Average Mexican Pesos of each year
Information of OXXO Stores
Total stores																	9,561						8,426						13.5
Net new convenience stores		413						415						(0.5	)		1,135	(2)					1,092	(2)					3.9
Same store data: (1)
Sales (thousands of pesos)		665.9						616.4						8.0			663.9						608.0						9.2
Traffic (thousands of transactions)		25.5						24.5						4.1			25.7						24.6						4.6
Ticket (pesos)		26.1						25.1						3.8			25.8						24.8						4.3

 

 

 

⁽¹⁾ Monthly average information per store, considering same stores with more than 12 months of operations.

⁽²⁾ For the last twelve months for each period.

 

FEMSA

Macroeconomic Information

 

 

										End of period, Exchange Rates
		Inflation								Dec-11								Dec-10
			4Q 2011				December-10 December-11				Per USD				Per Mx. Peso				Per USD				Per Mx. Peso
Mexico			2.60	%			3.82	%			13.98				1.0000				12.36				1.0000
Colombia			0.75	%			3.72	%			1,942.70				0.0072				1,913.98				0.0065
Venezuela			5.86	%			27.57	%			4.30				3.2509				4.30				2.8737
Brazil			1.46	%			6.50	%			1.88				7.4521				1.67				7.4163
Argentina			2.08	%			9.51	%			4.30				3.2478				3.98				3.1079
Euro Zone			0.77	%			2.75	%			0.77				18.0454				0.75				16.4061

 

 

 

 

 

CONSOLIDATED RESULTS

 

Our consolidated total revenues increased 29.3% to Ps. 36,187 million in the fourth quarter of 2011, compared to the fourth quarter of 2010 as a result of double-digit total revenue growth in each division and the integration of Grupo Tampico and Grupo CIMSA in our Mexican operations⁽¹⁾. Excluding the integration of Grupo Tampico and Grupo CIMSA in Mexico, total revenues grew approximately 24%. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues grew approximately 18%, driven by average price per unit case growth in every operation, in combination with volume growth mainly in Mexico, Argentina, Colombia and Brazil.

 

Total sales volume increased 11.0% to reach 732.3 million unit cases in the fourth quarter of 2011 as compared to the same period in 2010. Excluding the integration of Grupo Tampico and Grupo CIMSA in Mexico, volumes grew 3.6% to 683.4 million unit cases. Organically, the sparkling beverage category grew 4% mainly supported by strong volume growth of the Coca-Cola brand in Mexico, Argentina and Colombia, contributing almost 85% of incremental volumes. The still beverage category grew 11%, mainly driven by the Jugos del Valle line of business in Venezuela, Mexico and Brazil and the Hi-C orangeade and Cepita juice brand in Argentina, accounting for approximately 15% of incremental volumes. Our bottled water portfolio, including bulk water, grew 1%, representing the balance.

 

Our gross profit increased 27.1% to Ps. 16,491 million in the fourth quarter of 2011, compared to the fourth quarter of 2010. Cost of goods sold increased 31.2%, mainly as a result of higher PET and sweetener costs across our territories, in combination with the depreciation of the average exchange rate of the Mexican peso,⁽²⁾ the Argentine peso,⁽²⁾ the Brazilian real,⁽²⁾ and the Colombian peso⁽²⁾ as applied to our U.S. dollar-denominated raw material costs. Gross margin reached 45.6%, as compared to 46.4% in the fourth quarter of 2010.

 

Our consolidated operating income increased 27.9% to Ps. 6,497 million in the fourth quarter of 2011, driven by double-digit operating income growth in our South America and our Mexico & Central America division, including the integration of Grupo Tampico and Grupo CIMSA in Mexico. Operating expenses increased 26.6% in the fourth quarter of 2011 mainly as a result of (i) higher labor costs in Venezuela and higher labor and freight costs in Argentina, (ii) the integration of the newly merged territories in Mexico and (iii) increased marketing investment to reinforce our execution in the marketplace, widen our cooler coverage and broaden our returnable base availability. Our operating margin remained flat reaching 18.0% in the fourth quarter of 2011, as compared with 18.1% in the same period of 2010.

 

During the fourth quarter of 2011, we recorded Ps. 1,142 million in the other expenses, net line. These expenses mainly reflect the write-off of certain non-productive assets, the recording of employee profit sharing and the loss on sale of fixed assets.

 

Our comprehensive financing result in the fourth quarter of 2011 recorded an expense of Ps. 235 million as compared to an expense of Ps. 147 million in the same period of 2010. This difference was mainly driven by a foreign exchange loss originated by the sequential devaluation of the Mexican peso as applied to a higher dollar denominated net debt position.

 

During the fourth quarter of 2011, income tax, as a percentage of income before taxes, was 34.9% compared to 29.7% in the same period of 2010. This difference was mainly driven by an increase in the tax on shareholder’s equity in one of our subsidiaries in the South America division.

 

Our consolidated net controlling interest income grew 6.1% reaching Ps. 3,207 million in the fourth quarter of 2011 as compared to the fourth quarter of 2010. Earnings per share (EPS) in the fourth quarter of 2011 were Ps. 1.67 (Ps. 16.69 per ADS) computed on the basis of 1,921.2 million shares⁽³⁾ (each ADS represents 10 local shares).

 

  

 

(1) Our Mexican operations include Grupo Tampico’s results as of October, 2011 and Grupo CIMSA’s results as of December, 2011

(2) See page 12 for average and end of period exchange rates for the fourth quarter and full year

(3) According to Mexican Financial Reporting Standards, Earnings Per Share is computed on the basis of the weighted-average number of shares outstanding during the period. The weighted average number of shares is calculated based on the number of days within a reporting period that each share was outstanding, divided by the full length of that reporting period

 

 

 

 

BALANCE SHEET

 

As of December 31, 2011, we had a cash balance of Ps. 12,661 million, including US$ 372 million denominated in U.S. dollars, an increase of Ps. 127 million compared to December 31, 2010, mainly as a result of the issuance of Ps. 5,000 million of Certificados Bursátiles in April 2011 and cash generated by our operations, net of the dividend and debt payments made during the year.

 

As of December 31, 2011, total short-term debt was Ps. 5,540 million and long-term debt was Ps. 17,034 million. Total debt increased by Ps. 5,223 million, compared to year end 2010. Net debt increased Ps. 5,096 million compared to year end 2010. The Company’s total debt balance includes U.S. dollar-denominated debt in the amount of US$ 553 million.⁽¹⁾

 

The weighted average cost of debt for the quarter was 6.1%. The following charts set forth the Company’s debt profile by currency and interest rate type and by maturity date as of December 31, 2011.

 

Currency		% Total Debt(1)				% Interest Rate Floating(1)(2)
Mexican pesos			53.8	%			33.3	%
U.S. dollars			34.0	%			1.5	%
Colombian pesos			7.1	%			100.0	%
Brazilian reais			0.4	%			0.0	%
Argentine pesos			4.6	%			11.5	%

(1)

After giving effect to cross-currency swaps and interest rate swaps

(2)

Calculated by weighting each year’s outstanding debt balance mix

 

Debt Maturity Profile

 

Maturity Date		2012				2013				2014				2015				2016				2017+
% of Total Debt			24.5	%			3.3	%			6.2	%			12.6	%			11.1	%			42.2	%

 

Consolidated Cash Flow

 

The following cash flow statement is presented on a historical basis, whereas the balance sheet included on page 9 is presented in nominal terms. Certain differences resulting from calculations performed with the information contained in the balance sheet may differ from items shown in this cash flow statement. These differences are presented separately as a part of the Translation Effect in the cash flow statement in accordance with Mexican Financial Reporting Standards.

 

Consolidated Cash Flow
Expressed in millions of Mexican pesos (Ps.) as of December 31, 2011
		Dec-11
		Ps.
Income before taxes			16,768
Non cash charges to net income			7,764
			24,532
Change in working capital			(9,144	)
Resources Generated by Operating Activities			15,388
Investments			(13,830	)
Debt increase			4,143
Dividends declared and paid			(4,366	)
Other			(2,059	)
Increase in cash and cash equivalents			(724	)
Cash, cash equivalents and marketable securities at begining of period			12,534
Translation Effect			851
Cash, cash equivalents and marketable securities at end of period			12,661

 

 

 

 

MEXICO & CENTRAL AMERICA DIVISION OPERATING RESULTS (Mexico, Guatemala, Nicaragua, Costa Rica and Panama)

 

Coca-Cola FEMSA is including the results of Grupo Tampico as of October, 2011 and Grupo CIMSA as of December, 2011 in our Mexico & Central America divisions’ operating results.

 

Revenues

 

Total revenues from our Mexico and Central America division increased 25.8% to Ps. 14,516 million in the fourth quarter of 2011, as compared to the same period in 2010, supported by the integration of Grupo Tampico and Grupo CIMSA in our Mexican operations⁽¹⁾. Higher volumes, including the recently merged territories in Mexico, accounted for more than 70% of incremental revenues during the quarter, and increased average price per unit case represented the balance. Average price per unit case reached Ps. 35.11, an increase of 6.3%, as compared to the fourth quarter of 2010, mainly reflecting selective price increases across our product portfolio implemented in Mexico over the past several months. Excluding the integration of Grupo Tampico and Grupo CIMSA in Mexico, total revenues grew approximately 13%. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues increased approximately 11%.

 

Total sales volume increased 17.8% to 410.3 million unit cases in the fourth quarter of 2011, as compared to the fourth quarter of 2010. Excluding the integration of Grupo Tampico and Grupo CIMSA in Mexico, volumes grew 3.8% to 361.4 million unit cases. Organically, sparkling beverages grew 4%, driven by a 5% increase in the Coca-Cola brand, accounting for approximately 80% of incremental volumes. Our bottled water portfolio, including bulk water, grew 3%, contributing close to 15% of incremental volumes. Still beverages grew 5% mainly driven by the Jugos del Valle line of products, Nestea and PowerAde, representing the balance.

 

Operating Income

 

Our gross profit increased 17.2% to Ps. 6,594 million in the fourth quarter of 2011 as compared to the same period in 2010. Cost of goods sold increased 34.0% as a result of higher PET and sweetener costs across the division in combination with the depreciation of the average exchange rate of the Mexican peso⁽²⁾ as applied to our U.S. dollar-denominated raw material costs. Gross margin reached 45.4% in the fourth quarter of 2011, as compared with 48.8% in the same period of the previous year.

 

Operating income increased 16.3% to Ps. 2,504 million in the fourth quarter of 2011, compared to Ps. 2,153 million in the same period of 2010. Operating expenses increased 17.7%, mainly as a result of the integration of the newly merged territories in Mexico. Operating leverage achieved mainly through higher revenues, resulted in an operating margin of 17.2% in the fourth quarter of 2011, as compared with 18.7% in the same period of 2010.

 

 

 

(1) Our Mexican operations include Grupo Tampico’s results as of October, 2011and Grupo CIMSA’s results as of December, 2011

(2) See page 12 for average and end of period exchange rates for the fourth quarter and full year

 

 

 

SOUTH AMERICA DIVISION OPERATING RESULTS (Colombia, Venezuela, Brazil and Argentina)

 

Volume and average price per unit case exclude beer results.

 

Revenues

 

Total revenues were Ps. 21,671 million in the fourth quarter of 2011, an increase of 31.7% as compared to the same period of 2010 as a result of double-digit total revenue growth in every territory. Excluding beer, which accounted for Ps. 1,199 million during the quarter, revenues increased 32.4% to Ps. 20,472 million. Excluding beer, higher average prices per unit case across our operations accounted for close to 90% of incremental revenues and volume growth in every territory contributed the balance. On a currency neutral basis, total revenues increased approximately 24%.

 

Total sales volume in our South America division increased 3.3% to 322.0 million unit cases in the fourth quarter of 2011 as compared to the same period of 2010, as a result of growth in every operation. Our sparkling beverage portfolio grew 3%, driven by the strong performance of the Coca-Cola brand in Argentina and Colombia, which grew 13% and 5%, respectively and a 5% growth in flavored sparkling beverages, mainly due to the Schweppes brand in Brazil. The still beverage category grew 20%, mainly driven by the Jugos del Valle line of business in Venezuela and Brazil and Hi-C orangeade and the Cepita juice brand in Argentina. These increases compensated for a 4% decline in the bottled water portfolio, including bulk water.

 

Operating Income

 

Gross profit reached Ps. 9,897 million, an increase of 34.7% in the fourth quarter of 2011, as compared to the same period of 2010. Cost of goods sold increased 29.3% mainly driven by higher year-over-year PET and sweetener costs across the division, in combination with the depreciation of the average exchange rate of the Argentine peso,⁽¹⁾ the Brazilian real⁽¹⁾ and the Colombian peso⁽¹⁾ as applied to our U.S. dollar-denominated raw material costs. Gross profit reached 45.7% in the fourth quarter of 2011, an expansion of 100 basis points as compared to the same period of 2010.

 

Our operating income increased 36.4% to Ps. 3,993 million in the fourth quarter of 2011, compared to the same period of 2010. Operating expenses increased 33.6%, mainly as a result of (i) higher labor costs in Venezuela, in combination with higher labor and freight costs in Argentina and (ii) increased marketing investment to reinforce our execution in the marketplace, widen our cooler coverage and broaden our returnable base availability across the division. Our operating margin was 18.4% in the fourth quarter of 2011, an expansion of 60 basis points as compared to the same period of 2010.

 

 

 

(1) See page 12 for average and end of period exchange rates for the fourth quarter and full year

 

 

 

SUMMARY OF FULL-YEAR RESULTS

 

Our consolidated total revenues increased 20.5% to Ps. 124,715 million in 2011, as compared to 2010, driven by double-digit total revenue growth in our South America and Mexico & Central America divisions and the integration of Grupo Tampico and Grupo CIMSA in our Mexican operations⁽¹⁾ during the fourth quarter of 2011. Excluding the integration of Grupo Tampico and Grupo CIMSA in Mexico, total revenues grew approximately 19%. On a currency neutral basis and excluding the recently merged territories in Mexico, total revenues increased approximately 15%.

 

Total sales volume increased 6.0% to 2,648.7 million unit cases in 2011, as compared to 2010. Excluding the integration of Grupo Tampico and Grupo CIMSA in Mexico, volumes grew 4.0% to 2,599.8 million unit cases. Organically, the sparkling beverage category grew 4% mainly driven by the Coca-Cola brand and contributed approximately 80% of incremental volumes. The still beverage category grew 11%, mainly driven by the performance of the Jugos del Valle line of business in Mexico, Brazil and Venezuela, and Hi-C orangeade and the Cepita juice brand in Argentina, and accounted for close to 15% of incremental volumes. Our bottled water portfolio, including bulk water, grew 2%, and represented the balance.

 

Our gross profit increased 19.4% to Ps. 57,227 million in 2011, as compared to 2010. Cost of goods sold increased 21.5% mainly as a result of higher PET and sweetener costs across our operations, which were partially offset by the appreciation of the average exchange rate of the Brazilian real,⁽²⁾ the Colombian peso⁽²⁾ and the Mexican peso⁽²⁾as applied to our U.S. dollar-denominated raw material costs. Gross margin reached 45.9% in 2011 as compared to 46.3% in 2010.

 

Our consolidated operating income increased 18.0% to Ps. 20,152 million in 2011, as compared to 2010. Our South America division accounted for more than 60% of this growth. Our operating margin was 16.2% in 2011, as compared to 16.5% in 2010.

 

Our consolidated net controlling interest income increased 8.3% to Ps. 10,615 million in 2011, as compared to 2010. Earnings per share (EPS) in 2011 were Ps. 5.69 (Ps. 56.91 per ADS) computed on the basis of 1,865.3 million shares⁽³⁾ (each ADS represents 10 local shares)

 

 

 

 

(1) Our Mexican operations include Grupo Tampico’s results as of October, 2011and Grupo CIMSA’s results as of December, 2011

(2) See page 12 for average and end of period exchange rates for the fourth quarter and full year

(3) According to Mexican Financial Reporting Standards, Earnings Per Share is computed on the basis of the weighted-average number of shares outstanding during the period. The weighted average number of shares is calculated based on the number of days within a reporting period that each share was outstanding, divided by the full length of that reporting period

 

 

 

RECENT DEVELOPMENTS

 

·

On February 18, 2011, the Board of Directors approved the adoption of International Financial Reporting Standards (IFRS) in accordance with Mexican regulations beginning January 1, 2012. The Company will release its quarterly and full year 2011 results under IFRS prior to the release of its 1st quarter 2012 results.

·

On December 12, 2011, Coca-Cola FEMSA and Corporación de los Ángeles, S.A. de C.V. and its shareholders (“Grupo CIMSA”) announced the successful merger of Grupo CIMSA’s beverage division with Coca-Cola FEMSA. Coca-Cola FEMSA held an extraordinary shareholders meeting on December 9, 2011, at which the Company’s shareholders approved this merger. Coca-Cola FEMSA started integrating the results of Grupo CIMSA’s beverage division as of December, 2011.

·

On December 15, 2011, Coca-Cola FEMSA and Grupo Fomento Queretano and its shareholders (“Grupo Fomento Queretano”) agreed to merge their beverage businesses. The merger agreement has been approved by Coca-Cola FEMSA’s Board of Directors and is subject to the completion of confirmatory legal, financial and operating due diligence and to customary regulatory and corporate approvals. Coca-Cola FEMSA expects to close this transaction during the first quarter of 2012.

·

On January 26, 2012, in connection with the merger of Grupo CIMSA’s beverage division, Coca-Cola FEMSA issued 75.4 million new KOF series L shares. The total number of outstanding shares is 1,985.4 million of which FEMSA owns 50.0%, The Coca-Cola Company 29.4% and the Public 20.6%.

·

On February 20, 2012, Coca-Cola FEMSA announced that it has entered into a 12 month exclusivity agreement with The Coca-Cola Company to evaluate the potential acquisition of a controlling ownership stake in the bottling operations owned by The Coca-Cola Company in the Philippines.

·

On February 24, 2012, Coca-Cola FEMSA’s Board of Directors agreed to propose an ordinary dividend of approximately Ps. 5,625 million, to be paid during the second quarter of 2012. This dividend is subject to approval at the Annual Shareholders meeting to be held in March 20, 2012. This proposed amount represents a dividend per share of approximately Ps. 2.77, computed on the basis of 2,030.5 million shares, which include the 45.1 million shares to be issued in connection with the merger of Grupo Fomento Queretano. As compared with the dividend per share paid as of April 27, 2011, in the amount of Ps. 2.36, this represents an increase of approximately 17%.

 

CONFERENCE CALL INFORMATION

Our fourth-quarter 2011 Conference Call will be held on February 28, 2012, at 10:30 A.M. Eastern Time (09:30 A.M. Mexico City Time). To participate in the conference call, please dial: Domestic U.S.: 866-700-7477 or International: 617-213-8840. We invite investors to listen to the live audiocast of the conference call on the Company’s website, www.coca-colafemsa.com

If you are unable to participate live, an instant replay of the conference call will be available through March 5, 2012. To listen to the replay, please dial: Domestic U.S.: 888-286-8010 or International: 617-801-6888. Pass code: 38152393.

v v v

Coca-Cola FEMSA, S.A.B. de C.V. produces and distributes Coca-Cola, Fanta, Sprite, Del Valle, and other trademark beverages of The Coca-Cola Company in Mexico (a substantial part of central Mexico, including Mexico City, as well as southeast and northeast Mexico), Guatemala (Guatemala City and surrounding areas), Nicaragua (nationwide), Costa Rica (nationwide), Panama (nationwide), Colombia (most of the country), Venezuela (nationwide), Brazil (greater São Paulo, Campiñas, Santos, the state of Mato Grosso do Sul, part of the state of Goias, and part of the state of Minas Gerais), and Argentina (Buenos Aires and surrounding areas), along with bottled water, juices, teas, isotonics, beer, and other beverages in some of these territories. The Company has 35 bottling facilities in Latin America and serves more than 1,700,000 retailers in the region.

v v v

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance, which should be considered as good faith estimates by Coca-Cola FEMSA. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, many of which are outside Coca-Cola FEMSA’s control, which could materially impact the Company’s actual performance.

References herein to “US$” are to United States dollars. This news release contains translations of certain Mexican peso amounts into U.S. dollars for the convenience of the reader. These translations should not be construed as representations that Mexican peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated.

v v v

 

 

 

 

Consolidated Income Statement

Expressed in millions of Mexican pesos⁽¹⁾

		4Q 11				% Rev				4Q 10				% Rev				Δ%				2011				% Rev				2010				% Rev				Δ%
Volume (million unit cases) (2)			732.3								659.9								11.0	%			2,648.7								2,499.5								6.0	%
Average price per unit case (2)			47.50								40.70								16.7	%			45.38								39.89								13.8	%
Net revenues			35,984								27,847								29.2	%			124,066								102,988								20.5	%
Other operating revenues			203								144								41.0	%			649								468								38.7	%
Total revenues			36,187				100	%			27,991				100	%			29.3	%			124,715				100	%			103,456				100	%			20.5	%
Cost of goods sold			19,696				54.4	%			15,017				53.6	%			31.2	%			67,488				54.1	%			55,534				53.7	%			21.5	%
Gross profit			16,491				45.6	%			12,974				46.4	%			27.1	%			57,227				45.9	%			47,922				46.3	%			19.4	%
Operating expenses			9,994				27.6	%			7,894				28.2	%			26.6	%			37,075				29.7	%			30,843				29.8	%			20.2	%
Operating income			6,497				18.0	%			5,080				18.1	%			27.9	%			20,152				16.2	%			17,079				16.5	%			18.0	%
Other expenses, net			1,142								415								175.2	%			2,326								1,292								80.0	%
Interest expense			478								437								9.4	%			1,736								1,748								-0.7	%
Interest income			156								75								108.0	%			601								285								110.9	%
Interest expense, net			322								362								-11.0	%			1,135								1,463								-22.4	%
Foreign exchange loss (gain)			69								(37	)							-286.5	%			(62	)							423								-114.7	%
Gain on monetary position in Inflationary subsidiries			(61	)							(123	)							-50.4	%			(155	)							(414	)							-62.6	%
Market value (gain) loss on ineffective portion of derivative instruments			(95	)							(55	)							72.7	%			140								(244	)							-157.4	%
Comprehensive financing result			235								147								59.9	%			1,058								1,228								-13.8	%
Income before taxes			5,120								4,518								13.3	%			16,768								14,559								15.2	%
Income taxes			1,785								1,344								32.8	%			5,599								4,260								31.4	%
Consolidated net income			3,335								3,174								5.1	%			11,169								10,299								8.4	%
Net controlling interest income			3,207				8.9	%			3,022				10.8	%			6.1	%			10,615				8.5	%			9,800				9.5	%			8.3	%
Net non-controlling interest income			128								152								-15.8	%			554								499								11.0	%
Operating income			6,497				18.0	%			5,080				18.1	%			27.9	%			20,152				16.2	%			17,079				16.5	%			18.0	%
Depreciation			879								683								28.7	%			3,269								2,633								24.2	%
Amortization and other operative non-cash charges			380								346								9.8	%			1,577								1,310								20.4	%
EBITDA (3)			7,756				21.4	%			6,109				21.8	%			27.0	%			24,998				20.0	%			21,022				20.3	%			18.9	%

 

⁽¹⁾ Except volume and average price per unit case figures.

⁽²⁾ Sales volume and average price per unit case exclude beer results

⁽³⁾ EBITDA = Operating Income + depreciation, amortization & other operative non-cash charges.

Since October 2011, we integrated Grupo Tampico in the operations of Mexico.

Since December 2011, we integrated CIMSA in the operations of Mexico.

 

 

 

 

Consolidated Balance Sheet

Expressed in millions of Mexican pesos.

 

 

Assets						Dec 11								Dec 10
Current Assets
Cash, cash equivalents and marketable securities			Ps				12,661				Ps				12,534
Total accounts receivable							8,634								6,363
Inventories							7,573								5,007
Other current assets (1)							3,206								2,532
Total current assets							32,074								26,436
Property, plant and equipment
Property, plant and equipment							73,309								57,104
Accumulated depreciation							(31,807	)							(25,230	)
Total property, plant and equipment, net							41,502								31,874
Other non-current assets (1)							78,032								55,751
Total Assets			Ps				151,608				Ps				114,061
Liabilities and Shareholders' Equity							Dec 11								Dec 10
Current Liabilities
Short-term bank loans and notes			Ps				5,540				Ps				1,840
Suppliers							11,852								8,988
Other current liabilities							7,685								6,818
Total Current Liabilities							25,077								17,646
Long-term bank loans							17,034								15,511
Other long-term liabilities							8,717								7,023
Total Liabilities							50,828								40,180
Shareholders' Equity
Non-controlling interest							3,089								2,602
Total controlling interest							97,691								71,279
Total shareholders' equity							100,780								73,881
Liabilities and Shareholders' Equity			Ps				151,608				Ps				114,061

 

 

 

 

Mexico & Central America Division

Expressed in millions of Mexican pesos⁽¹⁾

 

		4Q 11				% Rev				4Q 10				% Rev				Δ%				2011				% Rev				2010				% Rev				Δ%
Volume (million unit cases)			410.3								348.3								17.8	%			1,510.8								1,379.3								9.5	%
Average price per unit case			35.11								33.03								6.3	%			34.39								32.69								5.2	%
Net revenues			14,406								11,503								25.2	%			51,960								45,084								15.3	%
Other operating revenues			110								38								189.5	%			236								129								82.9	%
Total revenues			14,516				100.0	%			11,541				100.0	%			25.8	%			52,196				100.0	%			45,213				100.0	%			15.4	%
Cost of goods sold			7,922				54.6	%			5,913				51.2	%			34.0	%			27,421				52.5	%			23,178				51.3	%			18.3	%
Gross profit			6,594				45.4	%			5,628				48.8	%			17.2	%			24,775				47.5	%			22,035				48.7	%			12.4	%
Operating expenses			4,090				28.2	%			3,475				30.1	%			17.7	%			15,869				30.4	%			14,321				31.7	%			10.8	%
Operating income			2,504				17.2	%			2,153				18.7	%			16.3	%			8,906				17.1	%			7,714				17.1	%			15.5	%
Depreciation, amortization & other operative non-cash charges			639				4.4	%			460				4.0	%			38.9	%			2,278				4.4	%			2,027				4.5	%			12.4	%
EBITDA (2)			3,143				21.7	%			2,613				22.6	%			20.3	%			11,184				21.4	%			9,741				21.5	%			14.8	%

 

⁽¹⁾ Except volume and average price per unit case figures.

⁽²⁾ EBITDA = Operating Income + Depreciation, amortization & other operative non-cash charges.

Since October 2011, we integrated Grupo Tampico in the operations of Mexico.

Since December 2011, we integrated Grupo CIMSA in the operations of Mexico.

 

South America Division

Expressed in millions of Mexican pesos⁽¹⁾

 

 

	4Q 11			% Rev			4Q 10			% Rev			Δ%			2011			% Rev			2010			% Rev			Δ%
Volume (million unit cases) (2)		322.0						311.6						3.3%			1,137.9						1,120.2						1.6%
Average price per unit case (2)		63.29						49.29						28.4%			59.97						48.76						23.0%
Net revenues		21,578						16,344						32.0%			72,106						57,904						24.5%
Other operating revenues		93						106						-12.3%			413						339						21.8%
Total revenues		21,671			100.0%			16,450			100.0%			31.7%			72,519			100.0%			58,243			100.0%			24.5%
Cost of goods sold		11,774			54.3%			9,104			55.3%			29.3%			40,067			55.3%			32,356			55.6%			23.8%
Gross profit		9,897			45.7%			7,346			44.7%			34.7%			32,452			44.7%			25,887			44.4%			25.4%
Operating expenses		5,904			27.2%			4,419			26.9%			33.6%			21,206			29.2%			16,522			28.4%			28.4%
Operating income		3,993			18.4%			2,927			17.8%			36.4%			11,246			15.5%			9,365			16.1%			20.1%
Depreciation, amortization & other operative non-cash charges		620			2.9%			569			3.5%			9.0%			2,568			3.5%			1,916			3.3%			34.0%
EBITDA (3)		4,613			21.3%			3,496			21.3%			32.0%			13,814			19.0%			11,281			19.4%			22.5%

 

 

 

⁽¹⁾ Except volume and average price per unit case figures.

⁽²⁾ Sales volume and average price per unit case exclude beer results

⁽³⁾ EBITDA = Operating Income + Depreciation, amortization & other operative non-cash charges.

 

 

 

SELECTED INFORMATION

 

For the three months ended December 31, 2011 and 2010

 

Expressed in millions of Mexican pesos.

 

					4Q 11						4Q 10
	Capex				3,446.3		Capex				2,516.1
	Depreciation				879.0		Depreciation				683.0
	Amortization & Other non-cash charges				380.0		Amortization & Other non-cash charges				346.0

 

VOLUME

Expressed in million unit cases

 

	4Q 11						4Q 10
	Sparkling	Water (1)	Bulk Water (2)	Still	Total		Sparkling	Water (1)	Bulk Water (2)	Still	Total
Mexico	276.6	16.9	60.3	18.4	372.2		236.8	12.8	47.2	15.4	312.2
Central America	33.0	1.7	0.1	3.3	38.1		31.5	1.5	0.1	3.0	36.1
Mexico y Central America	309.6	18.6	60.4	21.7	410.3		268.3	14.3	47.3	18.4	348.3
Colombia	49.0	4.9	6.6	4.0	64.5		46.6	5.3	6.7	3.9	62.5
Venezuela	49.1	2.3	0.4	2.3	54.1		48.7	2.6	0.8	1.1	53.2
Brazil	126.9	7.1	0.8	6.1	140.9		125.3	7.1	0.8	5.8	139.0
Argentina	56.0	3.6	0.2	2.7	62.5		51.5	3.3	0.3	1.8	56.9
Sudamerica	281.0	17.9	8.0	15.1	322.0		272.1	18.3	8.6	12.6	311.6
Total	590.6	36.5	68.4	36.8	732.3		540.4	32.6	55.9	31.0	659.9

 

 

⁽¹⁾ Excludes water presentations larger than 5.0 Lt

⁽²⁾ Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations

 

Certain brands within our portfolio have been reclassified across categories. This reclassification affects, among others, flavored water brands that were previously included as a part of still beverages and will now be presented within our water category. For comparison purposes, the figures of 2010 have been restated. This change mainly affects our Argentina, Mexico, Venezuela and Colombia 2010 volumes and accounts for 4.9 million unit cases.

Volume of Mexico, the Mexico & Central America division, and Consolidated for the fourth quarter 2011 results includes Grupo Tampico’s results as of October, 2011 and Grupo CIMSA’s results as of December, 2011, accounting for 48.9 million unit cases, of which 63% is Sparkling Beverages, 5% is Water, 27% is Bulk Water and 5% is Still Beverages.

 

SELECTED INFORMATION

 

For the twelve months ended December 31, 2011 and 2010

 

Expressed in millions of Mexican pesos.

 

					2011						2010
	Capex				7,825.5		Capex				7,478.3
	Depreciation				3,269.0		Depreciation				2,633.0
	Amortization & Other non-cash charges				1,577.0		Amortization & Other non-cash charges				1,310.0

 

VOLUME

Expressed in million unit cases

 

	2011						2010
	Sparkling	Water (1)	Bulk Water (2)	Still (3)	Total		Sparkling	Water (1)	Bulk Water (2)	Still (3)	Total
Mexico	1,007.0	67.4	223.1	69.0	1,366.5		919.4	56.8	204.2	61.9	1,242.3
Central America	123.8	7.2	0.3	13.0	144.3		118.4	6.1	0.4	12.1	137.0
Mexico y Central America	1,130.8	74.6	223.4	82.0	1,510.8		1,037.8	62.9	204.6	74.0	1,379.3
Colombia	187.6	20.8	27.3	16.4	252.1		174.1	24.5	29.0	16.7	244.3
Venezuela	174.1	8.4	1.9	5.4	189.8		192.6	11.3	2.4	4.7	211.0
Brazil	437.5	23.4	2.6	21.8	485.3		431.7	23.4	2.6	17.9	475.6
Argentina	189.2	12.1	0.8	8.6	210.7		171.8	10.9	1.0	5.6	189.3
Sudamerica	988.4	64.7	32.6	52.2	1,137.9		970.2	70.1	35.0	44.9	1,120.2
Total	2,119.2	139.3	256.0	134.2	2,648.7		2,008.0	133.0	239.6	118.9	2,499.5

 

 

⁽¹⁾ Excludes water presentations larger than 5.0 Lt

⁽²⁾ Bulk Water = Still bottled water in 5.0, 19.0 and 20.0 - liter packaging presentations

 

Certain brands within our portfolio have been reclassified across categories. This reclassification affects, among others, flavored water brands that were previously included as a part of still beverages and will now be presented within our water category. For comparison purposes, the figures of 2010 have been restated. This change mainly affects our Argentina, Mexico, Venezuela and Colombia 2010 volumes and accounts for 18.9 million unit cases.

Volume of Mexico, the Mexico & Central America division, and Consolidated for 2011 results includes Grupo Tampico’s results as of October, 2011 and Grupo CIMSA’s results as of December, 2011, accounting for 48.9 million unit cases, of which 63% is Sparkling Beverages, 5% is Water, 27% is Bulk Water and 5% is Still Beverages.

 

 

 

December 2011

Macroeconomic Information

 

					Inflation (1)
					LTM	4Q 2011		YTD
			Mexico		3.82%	2.60%		3.82%
			Colombia		3.72%	0.75%		3.72%
			Venezuela		27.57%	5.86%		27.57%
			Brazil		6.50%	1.46%		6.50%
			Argentina		9.51%	2.08%		9.51%
			(1) Source: inflation is published by the Central Bank of each country.

 

Average Exchange Rates for each Period

 

			Quarterly Exchange Rate (local currency per USD)					YTD Exchange Rate (local currency per USD)
			4Q 11		4Q 10	Δ%		YTD 11	YTD 10	Δ%
	Mexico		13.6180		12.3900	9.9%		12.4256	12.6383	-1.7%
	Guatemala		7.8236		8.0190	-2.4%		7.7898	8.0597	-3.3%
	Nicaragua		22.8375		21.7500	5.0%		22.4243	21.3565	5.0%
	Costa Rica		515.0143		514.8583	0.0%		511.0512	530.9824	-3.8%
	Panama		1.0000		1.0000	0.0%		1.0000	1.0000	0.0%
	Colombia		1,920.8899		1,864.6441	3.0%		1,847.5181	1,898.9456	-2.7%
	Venezuela		4.3000		4.3000	0.0%		4.3000	4.2653	0.8%
	Brazil		1.8000		1.6967	6.1%		1.6750	1.7601	-4.8%
	Argentina		4.2570		3.9674	7.3%		4.1297	3.9123	5.6%

 

End of Period Exchange Rates

 

					Exchange Rate (local currency per USD)
					Dec 11	Dec 10		Δ%
			Mexico		13.9787	12.3571		13.1%
			Guatemala		7.8108	8.0136		-2.5%
			Nicaragua		22.9767	21.8825		5.0%
			Costa Rica		518.3300	518.0900		0.0%
			Panama		1.0000	1.0000		0.0%
			Colombia		1,942.7000	1,913.9800		1.5%
			Venezuela		4.3000	4.3000		0.0%
			Brazil		1.8758	1.6662		12.6%
			Argentina		4.3040	3.9760		8.2%