E-Malt.com News article: Mexico: Analysts expect Femsa to post a 40% drop in Q4 net profit

Mexico’s Femsa, the largest brewer in Latin America, will make public the results of its fourth-quarter performance on February, 26, Reuters reported on February, 24.

The company is expected to post a 40 percent plunge in fourth-quarter net profit as exchange losses offset higher sales.

A Reuters poll of six analysts showed that Femsa earned, on average, 1.582 billion pesos ($115 million) in the October-December period, compared with 2.645 billion pesos in the same period of 2007.

Currencies of countries where Femsa operates depreciated sharply against the dollar during the quarter, generating estimated losses of over 2 billion pesos, compared with a gain of 209 million pesos in the fourth quarter of the previous year.

The Mexican peso alone weakened 21 percent against the dollar during the quarter.

Femsa, with operations in nine countries across Latin America, controls KOF, the world's second-largest bottler of Coca Cola drinks, as well as a beer unit and convenience store chain Oxxo.
The company's quarterly sales are seen up 16.6 percent, driven by KOF, a sterling performance from Oxxo and exports of its top selling brands Tecate and Dos Equis, which helped offset lower beer volumes in Mexico. But high costs of some raw materials pressured margins.

"FEMSA's sales mix allows it to cushion extreme results from its different units and, after expectations of a neutral (quarterly) report, we maintain our 'buy' recommendation," Vector brokerage said in a report.

Analysts assume that Femsa’s EBITDA increased by 12.2% between October – December 2008.

($1 = 13.815 pesos as of end December)


25 February, 2009