FMX - Earnings call transcript Q3 2020 | Fomento Económico Mexicano, S.A.B. de C.V.

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Operator

Good morning, and welcome, everyone, to FEMSA's Third Quarter 2020 Financial Results Conference Call. [Operator Instructions] During this conference call, management may discuss certain forward-looking statements concerning FEMSA's future performance and should be considered as good faith estimates made by the Company. 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 can materially impact the Company's actual performance. At this time, I'd like to turn the conference over to Mr. Fonseca. Juan sir. ahead, go Please

Juan Fonseca

morning, everyone. Conference with Quarter Results FEMSA's Welcome Today, we to Call. team Third have XXXX Good an us. expanded

Jorge we Padilla usual; Francisco and Camacho. Eduardo here, from welcoming is Coke So we are FEMSA; have also is but Eugenio Garza; as as

As remember, responsibility treasury has he now been given broader Eugenio in planning including of strategic and you M&A of for tax. years, corporate may for and finance, and the has charge last couple been

recently a very him FEMSA Chief at joined Corporate in with Francisco part, his bringing as decades global Officer, For Danone. CPG long experience of companies, including trajectory

can press bit release. You more our bio in little a on read his

the And over to so Eugenio. that, with me turn call let

Eugenio Garza

Juan. be you, Thank everyone. morning. Glad Hello, to this with you

FEMSA's across sales OXXO, operations, bottom gradual from of still challenging again improvement but the appears there, consistent our did second was At third quarter the we business third in same-store quarter. we quarter lockdown-driven a were for across of the hit middle the And seeing it are The units. contraction mobility last sequentially, regulatory in average over months average are they trend better and just picture saw across a just place as and still we This but than still double-digit but Mexico. reflects traffic a ago. year, ticket, remains show strong suppressed, a lower broadly in restrictions three

a in from performance Mexican drug our recovery from stores, trough. Division Health standout saw quarter, a had sequential OXXO a Our improvement including strong and deep

key markets. in sequential profitability several showing consolidated and across For operating improved Coca-Cola its its operations, saw part, its delivering growth also performance FEMSA better in income

decreased basis, from decreased Total decreased operations Moving and total quarterly income by XX.X%. revenues On on X%, to third numbers. consolidated organic quarter operations XX.X%. FEMSA's revenues decreased from X.X%, an during income while discuss the

on we we're results on should organic in operations subject, while and schedule. full ambitious We have cash for Back from CEO lower at the just in For and new net by we and income XX%, that operations, long-term integration the of brought well nonoperating the growth by the position. U.S. driven foreign of the mention loss described, lead exchange North to decreased as Brazil company reflects results, WAXIE America reported a quarter, assets recently dollar-denominated the FEMSA's as difference right expenses, FEMSA on the quarter income for to advancing of Jan-San AGV in combined between impairments execute in FEMSA's figures other to higher that certain driven mainly U.S. I a as this that noncash Coca-Cola platform. a distribution is related by strategy

always of rationalize even stable management, similar as In compared lines, third our debt priority, XX.X% the treasury net quarter our to end operation at of disciplined continued the the billion was environment. reflects more approach remained position, every CapEx it to terms quarter, so in MXNXX during at This investments. previous to down our September. but noncritical current consolidated a Along

beginning Moving Division, begin updating OXXO FEMSA by on Proximity to operations openings. me let our you and store discuss on with Comercio's

new receiving time XXX stores XXX closed, reopened that were remodeled XXX At being were opened for major that stores, we quarter, and underperforming temporarily and or permanently time, third same the During a remain stores the short closed. we XX maintenance. stores were

recall, as the is This total was result, the quarter, in stores, a last our months. XX saw which, we a XX. plus what quarter third minus previous a number you additions of XXX in for the number than better net was a As XX net for

could a set a the and the importantly, and expansion coming gradual we fronts, continue store More to mobility to robust for months an return see consumer demand improvement in if quarter. in more the stage this

we beverages. as thinking alcoholic put further keep evolve as of that COVID-XX said certainly mentioned on measures a our and sales, time posted store pressure call, will and our to to remains analysis our base restrictions this. previous subject sell you our on We that, such on windows portion limited Having as

end consistent an decline stores a more far at restriction. XX% optimal, a our were were in than and the May. some the a but of from of numbers, This gradual third sort X.X% same-store of points, average September, under of of basis the customer it reflecting still XX.X% levels the the OXXO almost is of down for XX% Getting middle As improvement deep we sequential in-store saw sales traffic and quarter, increase into still shows improvement of from least in XXX ticket.

statement. down income Moving the

offset points, of and meaningful For category, Partially significant the third resilient often our by commercial XX% margin points, environment. quarter, XXX basis reflecting that in income from income the met deleverage, contracted improvement. decreased linked services performance operating but again, to in a low operations sequential being decrease not targets showing a operating reflecting gross sales current is basis margin contracted are by the mobility XX that

on Health Moving Division. FEMSA Comercio's to

as operations points Mexican margin is all already in reflecting described. simplifies Mexico across while sales operating operations shifts our gross in in in our X,XXX our increased business more During by of expansion performance quarter, by XXX access Revenues as percentage reflecting activity the I the same-store in up leverage driven a with across of collaboration X.X%, effective and we and net in stores as been practices related XX in applying has new trends our points, an total strong economic pesos, where supplier XXX their to our margin at by sales drug the connection fruit. better to consumer reflecting in XXX margin partners and the small lockdown total quarter, operational third basis reach of Operating where increased expanded margin bearing just mix well key units our granted increased and consumers alleviate count net to average last have best performance Ecuador, picked a positive September behavior for open pensions institutional positive of effect additions of territories to months. store sales recently pressures. a the expanded Chile, pandemic, XX the basis Colombian Gross expanded X.X% end of

Moving sequential Division. seeing well vehicle neighborhoods. Those are recovering on more note even to our that In commercial much improvement some than remains We industrial context, toward mobility normal we that or below as residential FEMSA Comercio's Fuel skew levels. many ones. locations of are slowly

chain. sales, we third controls tighter margin which and see the our was expense quarter, margins almost X.X% revenues, During supply pressure management of XX.X%, decreased while reflecting continued reached on better Gross XX%. of total same-station to operating our

FEMSA. Finally, moving Coca-Cola on briefly to

in while were they a moderate by revenue operating profitability driven of to America contraction, to recover income Mexico grow growth markets Brazil. last improved highlighted even several the and Monday, solid John volume continued America, South in context like Central able As and in

For listen of more call. can webcast always, quarterly the to the detail, as you

cities on deployment existing at refiguring creation. capital our considering together digital bolt-on some to Looking in to putting and are of of in selectively focus recovery business we ahead, store in think past These medium and our always verticals, defense and result initiatives of trends, on platform; quarters, and and see again a a after we focusing cautiously are OXXO; as expansion long-term the opportunities terms our accelerating value prudent small with on beginning very place across begin couple acquisitions for growth strategy opens. include:

we normal, too environment and look will it's still continue clear to normality a As the like. new what toward is eventually forward fluid, move not

meantime, exposure emphasizing adapt, We will our will consumer to employees in we customers following segments safe. have to and and rationalizing such to well. and need patterns, highlight the management approach to done teams our all habits will our these healthy navigating hard a work we and adjust profound and of our and people to evolving to we segments keep market prices In continue our want Once by job to others. superb disruptive the some so and again,

out yet, across past We downturn and the opportunity recognize Operator? and we open we to it shown the take for expect commitment, prolonged face resilience, months. across this seven the agility that, quarters, to our questions. with the economic will of the organization in in are but And up flexibility coming call we markets not

Operator

Please Alan Santander. take [Operator question Thank you at Instructions] first from our We'll now ahead. go Alanis

Alan Alanis

it absence my much Eduardo, let me are and mean, question. what issue put is, hope strategy this that is my you initiatives, your of digital you're on well. the context that you used, question, Good acquisitions. are topic Reunion examples that guess in question I well families that I the more And you taking Thank the of OXXO call it's playing think in statistics -- these stores I to morning, the offerings. doing rekindling, and in that on the you meaning Eugenio, the you. and terms in want that word external for some And are this way. on changes, the welcome, of very expansion environmental mobility and in Francisco, terms that side is an all doing Reunion specifically location of build address Thank so location? expand and criteria drop store to I clear what mobility is

Miguel Eduardo Silva

let's steel where just they is positive where what have And try this -- now where -- in cities others, sales, We taking. -- There Alan, Eduardo. negative. positive are some exemplify growth. there we Hello, Plaza some still growth, you? to are -- the same-store let's How we are are are say

very has do with cities, lot. kind they offices cities it the impacted also the positively, you And what shutdown I -- face impacted to and that mean can of are with think cities offices, I very suffering stores so that, So where very still negatively. are exist, stores a to close of

of stores, compared or location small gathering a what because big and Reunion in is very their picking I is facing city are people So are by up houses, the is what gatherings stores now by we're segment. -- gathering. facing Nebula And performance now diverse the with we

the store the what really is get or something offices really have and to or of snack outside most hurt been to to together the eating in snacking that that are eat. in people meet are we office So

better think And think think off an the And of that make things, there and we and the OXXO, the we tackle are average so offense I be. it's deleverage can performance certain -- we'll as so some have moves a of I Juan? and certain great more threats. I opportunities it opportunity cities in mix we --, and the the

Juan Fonseca

which seeing sure Alan, needed think and And bandwidth amount -- get defense. actually are on of playing that of the cash reversion you're of eight what following Yes. hours still deepens, really that kind making normalcy, that beginning -- if Eduardo about dedicating up meeting of just shut how quarters, of dedicated defense to we sick, you couple tower expansion I the flows what liquidity. but stores. care was for with to where up is have a now didn't part mean kind management Hi, always volume couple in I reversion what of course, the are it, -- were the said, last people the long identifying turn of so you're again the that by setting now to decision-makers, That's stores to should to down, quickly up that an gradual we talk the taking there's probably control think of hour do turn we and opening new you're on of

their again strategy with the loyalty Coke through rollout more WhatsApp to of lot and what what fintech is about eventual have OXXO a application. and conversations and begin program the are guys digital doing doing the You

verticals. You're deals small beginning to the some on of entertain some

say a also So that's of months I feels shifting throw to what we difference nine gradually say, would from kind to think we off lot we're to normal, mean and the ago, from cities it when more I back us.

Alan Alanis

that from Thank and same its just being you grounded by of topic, they're a -- has from and which both that saying Dala, the mom-and-pop so on mom-and-pop, from seeing historically so hear moment? question The is weak. recovery OK? mean, Mexico, still your contains share strong basically And which it's convenience market this the consumer and still which channel or offensive these in Juan. the we follow-up it. from Eduardo OXXO much you of But of traditional share also, different the of seeing Coca-Cola, a from quick pocket of mobility from pickup restrictions taking are share And store the on moves in forth. I Mexico success companies suppliers Got is that the offense or we're return, the is,

Juan Fonseca

in said this light you seeing, a Yes, country few what have to yes, few and stores, the really place know, at those green is you those let's to the -- this think very you follows when of gone very where-- channels which recover in look to Juan. what in you we're go yellow I getting mechanism stores our which parts all that -- to idea Mexico, normal. is or this to orange go is there's from go from green, And should they traffic on Ideally, of as minutes when up Eduardo in back very, and yellow, see country that markedly. the those geographies, we parts ago,

of is number saw And that people the you soon same-store that to So people The to go is that in mid-single -- look release majority have have go at the basically be same-store as of high-single work. the people at Negative, everything -- would add, to if as they so if four as in work. stores. buy course, I we habits be month online it's going last or that's, people mid-single the back we the and are now the Mexico in not obviously, is in everybody what And perform to seen changing as to their very Street, that but going press -- out for the it's digits. go to look as that weeks, OXXO the on and about of digits soon opposed sales. I mean, to store. the out comforting we're But digits. numbers, they sales And they're zooming returns, actually they're we the X% their vast to October, sense

of steep. So middle that is so improvement pretty us of to it's slope May look it's But pretty week consistent and straight-line a when you week, super been today. lot gives after week are it's we at The a where not positive, comfort. after

Alan Alanis

Thank again much Francisco. you you. and so Thank

Juan Fonseca

Appreciate it. Thanks.

Operator

[Operator Instructions] ahead. [Technical Difficulty] go

Unidentified Analyst

on frontal some question of you're all? in a respect so that, at categories an to are had that's around perhaps wellness And I with opportunities, the your question. at if in changes, having OXXO? new my I doing impact residential and Taking curious and health new particularly label where the was seeing well markets you mix

Eugenio Garza

right and whatnot. really right that's our this past making Eugenio, with it's the obviously the how stores think have issue, I labeling We've early Bob, play to over on couple the been busy is sure too going to out. months, tell the SKUs of labels

SKUs that different I consumer wellness, very important the categories commercial what area, wanting. a the other to where So and to I able think in it's out. pan be cautiously health patterns, of Chile all that's and behavior right still optimistic in are of so the to and too consumer early examples the going labeling regards with initiatives are so to base. we'll our to mean, sure making to for be And seen We've continues store we attuned are course, formats the that consumers to that tell adapt whatnot little effect in with focus

So of home-focused especially options terms a categories. we and mix, are in seeing a the healthier slight better product pickup in

Miguel Eduardo Silva

would many to demand-driven mean what had healthier don't different them. thing. don't just I right, and has has -- I products. OXXO people move, they buy know we've I be Eugenio years, on types And introducing that to tried a This for Yes, of said. add

our effect out work it's obviously, shifts consumer consumer early eventually these be And buy to And a Eugenio you know products. labeling. are so But retailer, need to different the -- way what definitely of too will as going for sell to things you're agnostic, the wants. the consumer, reformulate is everything you yet what as and come. said, the those want want really to suppliers to to to you And for launch

Unidentified Analyst

where advantage these more of to -- How makes particularly about assortments the can in you that? shifting some just of granola effectively? Got you're growth. more taking bit stores, thinking mentioned stronger a every to are talk it, demand some little the of a you of at-home it more But day, performance performance perfect that seeing sense over that bit right? and the the seriously, plazas cater little And Eugenio, Mexico? about OXXOs rekindling of you new maybe Is the

Eugenio Garza

the earlier mean mean, by most as mean, well I selling I I geographic -- as Eduardo restrictions geographic the governmental of issues stores or Bob. perspective, Correct, driven of it alcohol mentioned before, from is performance as not. a

plazas are sense more So away, that, those I driving product those what mix think going focusing to is on and far makes important the the constant, rekindle But the forward, going And factor be are step store mixing plazas, in better. we're new we will the are shifting obviously, this that sales. most we growth not locations. beers, the the and as to obviously, a than reality. perform closer the seeing if of geography to to segment we that home performed ones we plazas and again, are better lot we are doing able And where that our

trying are our performance get we as with on to quicker in and capital to try deployment to the investment. we greater again, something better that? want add you stores a So new a to do accuracy pinpoint Eduardo, return

Miguel Eduardo Silva

Yes. has add in the that the has because promoted I new -- of consumer consumer we've conditions been -- the might store. pandemic, things the tried have the been

up. at that prices expect because in of were a well, but good we lot categories, the categories as now And -- beginning. end didn't to will one we snacking, tried than in think and that's being -- we position the a the part the observation that fact, down ticket up we ticket the consumer that or pays have better there I think really is stay might might And I we end what again, of In much. away, with are mind, why use those of of that the in that sell mix it we is are high a high going the go good that selling has mobility

Eugenio Garza

exemplify thousands just maybe if OXXO categories, example, a where food. And we of this go of strongly. about realize But of and when those. they that to people diapers supermarket-type think that, beer Yes. And you didn't liquors little And had so the talked have I perform pricing a know, out of of been and what consumers, we very actually would bit assortment right? place that we a call think have continues detergent, are, think to spirits of run very dog kind in they very, not and and SKUs the current category, carried, as liquors, I generally, to wine remain by good standout eventually as beyond and call, you which for but May we many last pandemic. or or hundreds And may now that for back

Unidentified Analyst

points. very Thank great are much. Those you

Eugenio Garza

Thank you, Bob.

Operator

We'll take go ahead. Alvaro our BTG. next question at Please from Garcia

Alvaro Garcia

structure. organizational guess or there's Francisco's My going Francisco, Thank would whether Francisco of of is mentioned, be my a the I question this not That role change Eduardo. the to will role. a to broader in be teams different and reports could on of great. if rationale on In is you. And Congrats, the the expand internal into on you organizational question structure? that maybe you release bit is a part sort new who report

Miguel Eduardo Silva

replacements. to people staff into sentiment getting organization Basically, we And to to we're different jump we to people and to our we're consumer are to different ready have different improve time, need -- are do -- this, and to by positions operating roles. where doing our have same the in what people at doing older the trying great the new is ready also, be people positions bringing

it. I really that's the main So behind think thing

Juan Fonseca

Daniel right, role long years probably to Alberto, this think Rodriguez, he is Juan. a this head thereafter, reason, Comercio into FEMSA is One who ago that too and not to useful joined precisely example few I moved operation.

common in. it a I of FEMSA years world-class not ago, it to kind has long XX find years So come XX and for very think FEMSA way. was talent bring outside ago,

Daniel a got better find to and that we've think able I fortunate we're executives that, like and little been Francisco. at we've

I think a useful that's probably precedent. So

Alvaro Garcia

Great. Welcome, Francisco. Thank you.

Operator

question next from our take at Barclays. Please go ahead. Hernandez now We'll Antonio right. All

Antonio Hernandez

morning. Hi, good Thanks.

Eugenio Garza

Sure. of as flow. Hi, in both are the pandemic certain the Eugenio. in But CEO Antonio, and that expected surprised and down, new mentioned operations in of during as platform for meeting both cash to pleased, extremely other we not EBITDA opening synergy the overall, pleasantly been are to the that The I Jan-San segments as segments future. are were into in are Again, we targets comments, are company it just We've and expected, and are And integration find the with able combined free revenue, up. mean coming we're also we exceeding that a happy we both was it's terms expand my performance looking of platforms. planned. the we actively businesses. I

up as by obviously, the So formats same summer, sales that's most we restaurant on the broadliners were a I of middle depot, That just expect. and as thing. but and changing assortment they of beginning from focused offers. and going going the little pricing model, on the the the taking through at restaurant cash-and-carry we advantage bit, restaurants, depot convenience other that as cash mean, the were carry pandemic same-store struggled people and of

a in and cash And than pandemic. pie, this at flows point, there's share. smaller year despite last getting share the are they're they're gaining but revenues, So EBITDA higher -- their

So and capital look we investments of are opportunities. to very pleased both continue deployment with future as our very, them at

Antonio Hernandez

safe. Thank you stay and all

Operator

from next HSBC. question our Laboy Carlos take now ahead. go at Please We'll

Carlos Laboy

good morning Yes, everyone.

on pair eyes New CFO hoping view the big could was your And ones. you I brings talent, two issues. of new old fresh share to

first is Coca-Cola The one FEMSA.

do so the recently, for deal importantly, you obviously your think the is what gap DCF. -- control $X And So big what back gap. peers issue, so the more have you at are value on shareholders? trades shareholders valuation cash back returning billion in or of to then around strategy Directors really this Heineken this thoughts is at how half in emerging these of to The saw and idea the might to But might its And the commercial do for not long the the stock or of it a capturing you about to you problem, shareholder right, exists? to discount Europe, of think in it's Amatil on of you there give why before sit cash shareholders? value you is value type view second that Board

Miguel Eduardo Silva

this Carlos, Eduardo. is

go Let me question. the to first very

We place what its organization, that new Coca-Cola happy how Coca-Cola the FEMSA think that there selling this its Company in we now is And really is are opportunities very and of transformation, Company together, execution. Coca-Cola very are the hopeful optimistic are the are improving the growth -- I with opening are Company major Coca-Cola performance, with and very more with and Company, envisioning. that we we beer the for relation by

needs of they we So what and to needs better align I find the we what understanding better I are think Coca-Cola have are, with ourselves think with them. And Company better working our have the -- are. to better ways understanding

I decisions, So really aligning things same. the And are making and company time, more to make the we same better what think Coca-Cola better, happen. is doing is aligning to the make ourselves at agile doing together

optimistic of are are very market I about So the the very think opportunities. we reservation, we optimistic

that hopeful. is Coca-Cola that I of this -- FEMSA itself, in way people Coca-Cola leveraging to functionalization So able Latin in And execution. FEMSA mean, expertise the just think a know I the the that the stop been America, how so has place I this structured the they've think in -- improve we're been very well deploying and it's by matter their

and I we ambitioning much future. think or the I we're aligned will better such back with be -- later, Company, will -- Coca-Cola is sooner growth think being a again the come

Eugenio Garza

Yes.

add a no to over what obviously, mean to the on, we control, Just was just from stock saying. I price. perspective, Carlos, again, Eduardo portfolio have

the present said, the over that helping growth the opportunities a us we going digital is And equity with Their are look in market happy, but with penetrate Eduardo in way. very if of only the Company, initiatives the remarkable. alignment still the forward. I -- we're And better We at casual not of have story, for growth. the still mean management control have and Coca-Cola their you themselves as much strategy combination

the we and of on the portfolio continue I understand we're from that key pragmatic to double-digit we much there. round right we out for shares we prices, forward, accretive from question, I is We deliver opportunities mean have with we that it's Carlos, the way deploy not that the so forward is those I the mean, rest our to a mean the the be to a our to with in verticals very also will asset as are it performance see going capital to opportunities at into specialized the second Jan-San are So U.S., our a mix with fund to portfolio. numbers balance we two going again, Heineken of in a to continue our -- that's stake decide assets. and but are sheet portfolio now on attractive eventually well be are point, have again, very our with at we believe Heineken, the our internal other of forward our growth, now a some continue how able more for, of mean a those And there tax shareholders. of I -- we And But And and store we optionality only verticals. any will regards capital deployment set higher the return in going and both distribution are creation see pragmatic. for need look range for again, To that or with to is value regards that our unfortunate come believe food. allocation one still evaluate to kind that opportunities you And hurdle think back future. are where current returns stop of as but we to importantly, we if your the facing at you are keep on to we But see But show stage, and be to decisions they situation it. for seeing ton of segments and we add-ons the gotten with assets. targets in going very situation I point as it capital portfolio risk-reward pretty happy forward, good we very with your for of we now, that fourth we each to whether going that as our Carlos, value. it those that continues platform levels we the Heineken in that valuation perspective, current pricing attractive to has dividend, we will to current the what still believe at believe current in that the Heineken, on, assets.

Carlos Laboy

Thank beer said. for government you follow-up soft ones order can requests both drinks cross-category Colombia? And to on the owners better? governance to the light that, a -- you possibilities that. just also to Coke with tools as in sell to to more digital rules, FEMSA has, in more like Can Eduardo, you Colombia comment can distribution at how you've that the to in brand with related proper made really, you what shed enable -- on And distribution multiple

Miguel Eduardo Silva

not decisions, that very would they these we mean, happy very the really matter -- made I that impressed are it. seltzers grab Yes. happy the in Latin things way. were a very opportunity. are the how beer in were I top. not major has only past And red are we of to efficient Company not And are load Company vision, how countries that that hard and deploying are to I fast a aligned things how the we were market we better that I in a would happy Coca-Cola that different very And but think just we also it's very, order it probably more will much to America, in the quick say say be the are beer, think in bottle with And -- with in make the aligned. could I they those the we we much the

Eugenio Garza

file and jointly what to to the a with precise be pilot to that end. process instead Ovadia how in distribute a Colombia And and program in of Commission at filed the you to see soft just just start we'll clarifying together the is antitrust we that of basically request regulators Antitrust again, beginning with beer there, Colombia, And drinks the out. with the plays at

And started really getting just so this. we're with

Operator

go We'll take Please from Alcantara UBS. our ahead. next at Rodrigo question

Rodrigo Alcantara

Thanks labor morning. My good related question. is for expenses. Hi, the to taking question my

you discussions could at -- So afford wage you as meaningful looking so will double-digit salaries impact pay me appears that minimum have that a, say, to in minimum a let's margins. would approach in we wage gain increase don't perhaps you the on a Mexico,

XXXX? will view just expenses for my be I question. wondering labor your So was That regarding what's Thanks

Juan Fonseca

the And mean, Rodrigo, his of take he the you minimum years seen the as double-digit during years, that President we power ago, one. minimum tenure. let This I in have couple is country. had at know, wage me plan when into came increases the to couple Juan. a course a double crack first administration, the of wage of a the

sense there's more the wage. isolated we than to of -- year, a We supply make in a time. lots make in demand than people many buffer unemployment. employees little the a bit are not our that it's today story been different tend it minimum a FEMSA, long has actually very bit At And that. is arguably, This different you where have a of and long, the obviously, equation or

next it to couple but be what little going will terms of to wouldn't than years. the we did So in what I different last be something certainly, speculate of increase a is bit year, the have

Eugenio Garza

the paid add Just OXXO people mean, in have employed by of were us by not because that a working upwards to remember, I pandemic, on during they being that. and Rodrigo, vulnerable XX,XXX you whatnot. position to or to were

So the right in to to forward I make the the balance need that aspects, the aspects between we stores. we flexibility, with and some yes, careful you're we've tried past. it of but need the serve the mean, we, of aspect balance social again, and say business to portfolio the social going right the kind business be there's to to If of of communities aspects do

Miguel Eduardo Silva

working first in stores, pandemic, we of say we happy the order very would a very stages bonus. -- were the were that the I in this people make Also paid the the -- to --

to We stores got in the were for that making have the working of working with we we several who the safe until that, And were control paid make people we see not were perfectly at compared bonus how also, them. months with where home. people for store -- the a in premium

Rodrigo Alcantara

very quick. last Then That's very you. one helpful. Thank Understood.

two corroborate things. to Just

is plan disclosure strategy, digital disclose the as other quarter that still the the as the the businesses? first on well of deploy or First, XXXX this to on this case? the still Is by to higher

Eugenio Garza

begin the business. disclosure, first yes, business, on Solistica, I you P&L Yes. of will legacy for next thinking year, which mean, and the both we is with logistics called Jan-San quarter is to provide the the a new that

in it way would going similarities obviously, especially the two I the do versus two there's which do or businesses operation put the we're at it be business, disadvantage -- But in we it's information, to think doesn't harm among them lot because, margin up their that, going we're a competitors. internally jointly, probably still are opening to the will of whether a analyzing the some how cases, a that separately. U.S.

next happen going combined, we're $X how of at going of businesses do to year. have But visibility market and looking two almost that. going that's way, into of is worth we're either billion the in QX revenues to to So those

the be certainly and fintech the processes. down to that of has pandemic terms some the obtained license -- some there's In a there's from of strategy, needs regulators, slowed those

were as this might you yes, So year. of we're for we shooting remember, -- end originally, we

but than because it year, maybe this slowly we is moving back a to processes more having bit of more ready kind first half are being to internally. quarter, hope We external that little of us first next of are than push would

Rodrigo Alcantara

Thank Eugenio. That's you, clear.

Eugenio Garza

you. Thank

Operator

now question [Operator Cipiccia Sachs. Luca Please next Golman from We'll ahead. go take Instructions] with our

Luca Cipiccia

has have probably specific I the on, light the Coca-Cola context could had, it past anything the the current asked, volatility you can Actually, so where been balance to us of asked. exposure been, for so interesting. changed a the that this high-level do reducing Mexico, already forward go whether you back part regions, in how across I'll if thoughts, the in months, question. call, how question, on I'll you that the some don't business the Thanks I assume to As taking continuing new wondering are of the portfolio between but what to believe resilient in avoid in -- you miss U.S.? how asking volatility or maybe -- in part has had can earlier morning. business portfolio discussion the you been still. into has going of all the good discuss concentration going balance Hi, think to unfortunately, given do segments significant specifics my exposure we you more Heineken few more even opportunity which geographic but FEMSA's not of operations, share I I know if the or been Maybe transcript experience general take geographic if But in experience other and has think already and may evolve, portfolio thoughts think would to trying is be without you the opportunities that of was find about and it know,

Eugenio Garza

it's Luca, of have significant the it's what to question focused mostly there, past. America, or risk not had business getting reasonable in less and provide Latin because was Latin More are you're I'm I macro mean again, have economies I organically Thanks provided saying as mean and in for more the question. business but Sure. the the of -- America specifically, involved. just well -- aware, Eugenio. it platforms is growth returns reasons risk-reward our than in reasons, -- the more, businesses model that very we, traditionally, vis-a-vis not most it's where attractive

because sale So surely, obtention as XXXX, to slowly, first to earlier I that of the double-digit developed the and but the I return potential mentioned portfolio the of to the diversification have deploy capital And synergies allow platform we with to the emerging could platforms we is two in Heineken, and with markets questions, in that establish in platforms attractive started now markets. make of one moving mean, Heineken of Cerveceria there very established shares important already. us

invest diversified platforms that safe, skills more, these exposure. believe investment markets. want we're achieve again, you that make with to But in we very market we I above in continue it's capital markets a not is that, So not saying will the could economy. that out. can capital where make we're we highest because the additional lots of returns in have mean, right we because more play we more more we platforms And into we geography, stores, prudent we our the don't and skills think that I just the see allocation, think and sure in and so of the divisions ROIC well total the that diversified develop I'm it's emerging allocation to but the build export will being that. prudence because now, aware not across Again, developed to markets of of

Miguel Eduardo Silva

And growth, we high sectors investing we two really those we in are those that have really, really, see And high profitability. sectors. invested why that's

Juan Fonseca

look Luka, billion you would it's hey, were those And of if of about two Juan. I we them think of add, in last would the six just basis, deploy add, the Mexico. did, in transactions $X on regular CapEx in Latin that four I were U.S. I a we And worth at America,

that's clearly, So to to continue happen. going

stuff. an of all distribution eventually thousands, hundreds As and drugstores, go centers, back we good that of stores, to more expansion start path of opening more

market resources Again, Company. Latin sectors the not the maybe make just we're shifting stay. in cap. But the be will be very we're to sectors that It not you expect that looking sectors, but will today. present just were the in of should small U.S. that are that we're around So at successful, to us sectors the keep rest in to on where the Mexico going to we a point of investing super will again, maybe today, a double term. the America, X% If part going the U.S. of the medium our we because be into and could represents of in continue

Luca Cipiccia

Right.

So actually. up, that follow my was

that So all you with cannot do, some verticals in are C-stores you're even, Or right? that should least at the mean new you going recently -- or a developed the how that? limits have the opportunity in know arise open you it to to again, do can something have. out? going that verticals what cannot there be to now. the there U.S., there saying we You that is -- But move for you is U.S. cannot today on you what and for not rule that's that about markets, all possibility that unlikely you're We does compared think it's

Eugenio Garza

By that able No, in to been aware think a -- out has entering with Luca the been because well we market added haven't of to these put businesses the some which I a shortfall. received, lot information I been there's sharing right? that complexity message some we really disclosure very the well we've U.S., structure, there, of a so think that we're have

to now, sharing businesses, complexity the it's that as these the been we're the consolidating is that capturing sort shares, complicated really but to synergies, as complexity, added going of it's message growing thing. we've get. market peak So with And we've from the structure, basically This at right? market,

and So more But this is yes, the it. of blocking tackling.

So what continue to is you see what will you see.

Luca Cipiccia

on based caught That's that very clear. that on I statement. will

Eugenio Garza

Absolutely.

Luca Cipiccia

you. Thank

Eugenio Garza

Thank you.

Operator

go [Operator next question ahead. Echagaray our Instructions] take We'll Please at Scotiabank. Rodrigo from now

Rodrigo Echagaray

to guys. store question My Hey closures. is related

were XXX number does close next year for you net guess years? many more for OXXOs relative that stores openings you. closed. what mean coming I importantly, quarters? on the expect was Thank This you if new do than in How to And and thereafter? like the to I that permanently wondering that quarter, prior could were more looks color there some share how

Juan Fonseca

their so as notes happening you this question. asked June, for market, the especially this a in colleagues, your forcing is that were take really Stores hard kind What's our -- never listening always a before, little right? the May, look marginal, competitors glad at Yes, question in capital pay some things you their Internally, of capital. that bit have metric. stores maybe identifying that bit be probably basically of paid pandemic out other to and companies some is cost at some or EVA we give quite -- at of some the July, cost true and the them back Rodrigo, case, Juan. well, of it's forcing should companies of lot right? look is to looked been might know, as were reading a time, we kind more And the I'm putting we of they'll have little that you the and been Hey, mark, that I've a just a

yes, context, of lot of ago. you're And a to the of closures be choice has pandemic seeing, on because should of are the that And those taking always say, a limit. mean, kind I you sudden, of were clear, hard the make stores, we're, -- in what's have this not is closed I I of what so while -- These and want we're not, kind the made stores all opportunity mean to those a those current their bad. stores

we going juncture going some back. how before this but we're doing So and the more should from a we of But the defense, this fine should be that's with a pandemic. have to were that we're not a I choices. little a is We'll we we're this pandemic. it's about things that it's versus look a a But But really that have see is kind a should and in especially beginning, kind question taking OK, clear, be back demand going to really a a that the of and eventually. far we close with too And let's Mexico. oh that changed of and few lot layer, sudden, mentioned relevant all equation, international opportunity big what not using going Rodrigo, message structurally terms just before, stores is, going the has something and have wait this the light tough God, saying, That's number the chance that stores, become this closed decision. forward, that bit closing we're thing things also we've frankly, there's how changed of offense of And in magnifying hope that not international at this in a to to my not make is evolves. to of I very layer kind openings probably to in the we're open quickly, Brazil be well. how because the optimistic markets, tough performing that to of rather, is Quite spoken about have make stores and

Miguel Eduardo Silva

I improving performance October, again, add, for Yes. September. part future. October, and about too, happy And look with have to we just this because mean, We'll very the in the October we finish we're of of are to what is

Juan Fonseca

the P&L at Proximity going when everything powerful is commercial very OXXO. and is right? income of I at Yes. you mean, better, if mentioned the operating leverage the look the good, And is Division, equation we

So wonders and you at need a line. little improvement in bit of line, the does top it bottom

at And down few should us well so revenue very serve of line, what we're points improvement a seeing, the the is which P&L.

Rodrigo Echagaray

Got it. Not clear. very

so that we're XXX comments is to So I that's relative what which your that the definitely Thanks after. stores, Thanks, mean the something this it. needle. talking full, was take move I from guys, about not I not should meaningful is appreciate

Miguel Eduardo Silva

after of much thing a a thing kind very that's now. of it because year, shouldn't Especially recurring be year punctual

Rodrigo Echagaray

Got it.

Operator

additional I'll questions, it back no you further appears turn Instructions] for to [Operator be There comments. to

Miguel Eduardo Silva

organization, is a once to attention. this thank every much and And Eduardo, in while, prune Well, very you your good. the it's for

to keep the to growth that and I for organizations getting think good here and back the right again. the signals the stores are we giving it's also profitable

Juan Fonseca

everyone. you, weekend. to and thank a great safe, like thank Great, With Stay that, you. we'd have

Eugenio Garza

Thank you.

Operator

wish replay gentlemen, This All day. may a webcast Thank website. to our investor may now for at so your if and disconnect. call have concludes participation relations you conference. you for nice you Ladies this do parties

Fomento Económico Mexicano, S.A.B. de C.V. (FMX) 31 Oct 202020 Q3 Earnings call transcript