Coca-Cola FEMSA: revenue nearly flat, profit down 15.5% on financial items

On April 29, Coca-Cola FEMSA reported first quarter 2026 results. Revenue rose just 1.1% to Ps. 70,925 million, EBITDA 0.9%, while net profit fell 15.5% to Ps. 4,342 million. At the current price, the share looks rather attractive: valuation is below its own three-year history and dividend yield exceeds 4%.

Key takeaways

— Revenue rose only 1.1% due to negative FX effects, but 6.0% on a currency-neutral basis

— EBITDA margin held at 18.9%, but operating income fell 2.3% on restructuring and IT costs

— Net profit fell 15.5% due to higher financing costs and a loss on financial instruments

— Debt increased, but net debt/EBITDA ratio improved to 0.80

— The 2025 dividend is being paid in four installments, the first already paid

— On the portal's model, the share's upside potential is only +1%

Attractiveness

Key figures, MXN bn

Revenue rose only 1.1% due to negative FX effects, but 6.0% on a currency-neutral basis

In the first quarter of 2026, Coca-Cola FEMSA's total revenue reached Ps. 70,925 million, just 1.1% above the year-ago figure. The main contribution came from a 1.2% volume increase and pricing initiatives, but negative currency translation from all operating markets into Mexican pesos almost completely offset that growth.

Excluding currency effects, revenue rose 6.0%. In South America, growth was 12.3% on a comparable basis, while in Mexico and Central America it was only 1.4%. In Mexico, the company's largest market, revenue fell 0.4% to Ps. 31,127 million due to softer consumer demand and higher excise taxes.

EBITDA margin held at 18.9%, but operating income fell 2.3% on restructuring and IT costs

Adjusted EBITDA for the quarter was Ps. 13,374 million, 0.9% above last year, with margin holding at 18.9%. However, operating income fell 2.3% to Ps. 9,032 million, and operating margin contracted 50 basis points to 12.7%.

Operating income was pressured by restructuring costs and SAP H4ana implementation, as well as higher marketing and depreciation expenses. These were partially offset by efficiencies in freight and maintenance, and a one-time income of Ps. 95 million from insurance claims related to Hurricane John.

Net profit fell 15.5% due to higher financing costs and a loss on financial instruments

Net income attributable to shareholders was Ps. 4,342 million, 15.5% below last year. The main driver was the comprehensive financing result: expenses rose 55.7% to Ps. 1,752 million.

Within the financial line – a loss on financial instruments of Ps. 167 million versus a gain of Ps. 135 million a year earlier, as well as higher net interest expenses due to new bond issuances in dollars and pesos. Foreign exchange losses also increased to Ps. 117 million. The effective tax rate rose from 33.4% to 36.6% due to inflationary effects in Argentina and non-creditable taxes in Mexico.

Debt increased, but net debt/EBITDA ratio improved to 0.80

At the end of March 2026, the company's net debt stood at Ps. 39,118 million, up Ps. 49.6 billion RUB from the previous reporting date, but over 12 months the increase was only Ps. 0.2 billion RUB. Including hedges, net debt was Ps. 47,535 million.

The ratio of net debt including hedges to adjusted EBITDA fell from 0.89 at end-2025 to 0.80. This is a low level of leverage, leaving room to fund capex and dividends.

The 2025 dividend is being paid in four installments, the first already paid

The annual shareholders' meeting on March 24 approved a dividend for 2025 of Ps. 7.74 per KOF UBL (Ps. 0.9675 per share). Payment is split into four equal installments of Ps. 1.935 per UBL; the first was paid on April 21, the remaining on July 14, October 13, and December 8, 2026.

The trailing twelve-month dividend yield is 4.03%. Capex in the first quarter was Ps. 3,138 million versus Ps. 4,228 million a year earlier, below operating cash flow.

On the portal's model, the share's upside potential is only +1%

Our value-creation model, based on EBITDA growth and a target multiple, puts the share's upside to fair value at just +1%. This means the current price is close to the calculated fair value.

The share trades at a P/E LTM of 16.5, below the three-year average EV/EBITDA of 7.88 times (current EV/EBITDA not provided). ROE is 11.3%.

Valuation on the latest reported figures

Bottom line

In the first quarter of 2026, Coca-Cola FEMSA showed resilience amid a challenging environment: revenue was nearly flat, but rose 6% excluding currency effects, and EBITDA margin held at 18.9%. The 15.5% drop in net profit was mainly due to financial items, not operational issues. Debt leverage remains low, the dividend is being paid, and the share's valuation is below its own three-year history. However, the portal's model puts upside at just +1%, limiting attractiveness. The share is rather attractive for income-oriented investors, but price appreciation potential is limited.