Coca Cola Femsa (NYSE:KOF) reported record third-quarter volume, with consolidated unit case volume rising 5.3% year over year to 1.1 billion. Revenue increased 10.9% to MXN 79.7 billion, while majority net income rose 5.5% to MXN 6.2 billion.
CEO Ian Craig said the company’s results reflected commercial strategies tailored to different consumer and macroeconomic conditions across its markets. He cited the company’s brand portfolio, distribution network, investments in marketing, customer execution and digital tools as key competitive advantages.
Profitability Supported by Lower Input Costs
Gross profit increased 14.5% to MXN 37 billion, and gross margin expanded 140 basis points to 46.5%. CFO Gerardo Cruz said lower sweetener and PET costs, supported by commodity hedging and appreciation in most operating currencies against the U.S. dollar, helped offset higher aluminum costs and unfavorable mix effects.
Operating income rose 15.4% to MXN 11.9 billion, with operating margin increasing 60 basis points to 14.9%. However, reported operating income included MXN 1.1 billion of recovered insurance claims in Brazil. Excluding that non-recurring recovery, operating income would have risen 7.4% and operating margin would have been 13.6%, a 40-basis-point contraction.
Adjusted EBITDA rose 16.2% to MXN 16.8 billion, producing a 21.1% margin. Excluding the Brazilian insurance recovery, adjusted EBITDA increased 10.6%, with a 19.7% margin.
Net financing expense increased to MXN 2 billion from MXN 1.3 billion a year earlier. Cruz attributed the increase primarily to higher interest expenses following debt issuance in the first quarter, as well as a MXN 377 million loss on financial instruments, compared with a MXN 39 million loss a year earlier, largely reflecting higher interest rates in Brazil.
Mexico Volumes Recover, but Costs Pressure Margins
Mexico volume increased 4.2% year over year, aided by affordability initiatives, price-pack architecture and commercial execution. Craig said the comparison reflected a low base in the prior year, when consumer backlash had affected results. The company reported a 70-basis-point increase in sparkling beverage value share in Mexico as of September.
The company introduced Coca-Cola Triple Zero, Topo Chico Sparkling Lemonade and Orangeade, and Ciel Aguas Frescas. Topo Chico’s new sparkling products reached 70% coverage in traditional trade and recorded a 40% repurchase rate, according to Craig. Ciel Aguas Frescas reached 65% traditional-trade coverage and gained 7.6 percentage points of market share since its May launch.
Mexico and Central America volume rose 4.8%, while revenue grew 8.3% to MXN 46 billion. Operating income in the region declined 3.1% to MXN 6.5 billion and margin contracted 170 basis points to 14.3%, though management said profitability improved sequentially from the first two quarters.
Management pointed to a higher mix of multi-serve products, particularly 3-liter Coca-Cola packages, as a source of price-mix and margin pressure. It also cited marketing, labor and freight expenses, along with an operating foreign-exchange loss. Freight costs increased as the company shipped product from its Toluca plant to southeastern Mexico, with management pursuing plant efficiencies and a longer-term new plant project in the region.
Craig said pricing and revenue growth management initiatives introduced in August were well received, and the company expects to take additional actions as needed to address foreign-exchange, labor and raw-material pressures.
South America Delivers Growth Across Markets
South America volume increased 6% to 448 million unit cases, while revenue rose 14.7% to MXN 33.7 billion. Operating income increased 51.2% to MXN 5.3 billion, including the Brazilian insurance recovery. Cruz said underlying profitability also benefited from operating leverage, favorable mix and expense efficiencies.
Brazil volume increased 3.9%. Coca-Cola Zero volume grew 15%, while flavors and still beverages increased 8% and 20%, respectively. The company said it gained approximately 1.2 percentage points of share in total nonalcoholic ready-to-drink beverages and nearly 6 percentage points in energy drinks.
Craig said management remains mindful of a possible post-election slowdown in Brazil, as well as potential selective-tax and labor-reform effects. If such measures create non-neutral costs, the company intends to use revenue growth management initiatives and productivity actions to address them.
Colombia volume increased 15.9%, supported by consumer demand, household purchasing power, weather conditions and GDP growth of approximately 3.5%, according to management. Sparkling beverage volume rose 15.4%, while year-to-date non-carbonated beverage volume grew 12.9%. The company said its Fury launch reached 30% customer coverage in its first month.
Craig said demand in Colombia and Venezuela has outpaced expectations, creating capacity constraints and low inventory levels. The company is investing in those markets but described the supply environment as tight.
Guatemala volume grew 8%, above an estimated 5.5% expansion in the local nonalcoholic ready-to-drink industry. Energy drink volume rose 98%, while the company reported a roughly 1-percentage-point gain in sports-drink market share. Argentina volume was flat amid pressure on household purchasing power, though sparkling beverages grew 3.9%.
Digital Tools and Hedging Remain Strategic Priorities
Management said its Juntos+ digital platform continues to support customer engagement and larger order values. In Mexico, Juntos+ drove a 19% increase in average ticket, while digital revenue in Brazil represented nearly 42% of traditional-trade revenue and average ticket increased 18%.
The company plans to expand its Juntos+ Advisor salesforce tool, including order-entry capabilities in Mexico and additional deployment across Latin America. Craig said a new supervisor tool being piloted in Brazil is designed to provide real-time visibility into salesforce gaps and coaching opportunities.
For 2026, Coca-Cola FEMSA said it had hedged about 65% of PET requirements, 88% of sugar, 98% of high-fructose corn syrup and 74% of aluminum. For 2027, it had secured approximately 16% of PET, 85% of sugar, 94% of high-fructose corn syrup and 54% of aluminum requirements, at prices broadly in line with 2026 levels for the portion secured.
Cruz also said the company expects to announce a shareholder capital-return mechanism early next year after completing its analysis of balance-sheet and capital-allocation options.
About Coca Cola Femsa (NYSE:KOF)
Coca-Cola FEMSA, SAB. de C.V. is the world’s largest Coca-Cola franchise bottler by sales volume. The company produces, markets, sells and distributes beverages under The Coca-Cola Company’s brands, including Coca-Cola, Sprite, Fanta and Powerade, as well as bottled water, juices, dairy products, sports drinks, energy drinks and other beverage products.
The company serves consumers through a broad distribution network that includes traditional retail stores, supermarkets, convenience stores, restaurants, food-service businesses and other commercial channels.
