ANNUAL REPORT 2018
ANNUAL REPORT 2018

VALUE CREATION Highlights

Millions of pesos 2018 (1) 2018 2017 (8) %Change 2016 %Change
Total revenues 23,924 469,744 439,932 6.8% 399,507 10.1%
Income from operations 2 2,117 41,576 40,261 3.3% 37,427 7.6%
Operating margin   8.9% 9.2%   9.4%  
Consolidated net income 1,684 33,079 37,206 -11.1% 27,175 23.2%
Controlling interest net income 3 1,221 23,990 42,408 -43.4% 21,140 100.6%
Controlling interest earnings per BD unit 4 0.3 6.7 11.9 -43.7% 5.9 101.7%
Controlling interest earnings per ADS 5 3.4 67.0 118.5 -43.5% 59.1 100.5%
EBITDA 3,079 60,458 58,165 3.9% 54,987 5.8%
EBITDA margin   12.9% 13.2%   13.8%  
Total assets 29,355 576,381 588,541 -2.1% 545,623 7.9%
Total liabilities 12,266 240,839 251,629 -4.3% 259,453 -3.0%
Total equity 17,089 335,542 336,912 -0.4% 286,170 17.7%
Capital expenditures 1,236 24,266 23,486 3.3% 22,155 6.0%
Total cash and cash equivalents 6 3,160 62,047 96,944 -36.0% 43,637 122.2%
Short-term debt 696 13,674 13,590 0.6% 7,281 86.7%
Long-term debt 5,856 114,990 117,758 -2.4% 131,967 -10.8%
Headcount 7   297,073 295,027 0.7% 266,144 10.9%
  1. U.S. dollar figures are converted from Mexican pesos using the noon-buying rate published by U.S. Federal Reserve Board, which was Ps. 19.6350 per US$1.00 as of December 31, 2018.
  2. Company’s key performance indicator.
  3. Represents the net income that is assigned to the controling shareholders of the entity.
  4. "BD" units, each of which represents one series “B” share, two series "D-B" shares and two series "D-L" shares. Data based on outstanding 2,161,177,770 BD units and 1,417,048,500 B units.
  5. American Depositary Shares, a U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange.
  6. Cash consists of non-interest bearing bank deposits and cash equivalents consist principally of short-term bank deposits and fixed rate investments.
  7. Includes headcount from Coca-Cola FEMSA, FEMSA Comercio and FEMSA Strategic Businesses.
  8. The consolidated income statement of 2017 was revised to reflect the discontinued operations of Coca-Cola FEMSA Philippines.

Total Revenues
by Business Unit
millions of Mexican pesos

Coca-Cola FEMSA
FEMSA Comercio:		 37%
Proximity Division 34%
Health Division 10%
Fuel Division 10%
Others* 9%
Ps. 469,744
 

Total Assets
by Business Unit
millions of Mexican pesos

Ps. 576,381
Coca-Cola FEMSA
FEMSA Comercio:		 43%
Proximity Division 12%
Health Division 6%
Fuel Division 1%
Others* 38%
Coca-Cola FEMSA
FEMSA Comercio:		 59%
Proximity Division 34%
Health Division 5%
Fuel Division 1%
Others* 1%
Ps. 41,576

Income from Operations1
by Business Unit
millions of Mexican pesos

 
Ps. 60,458
Coca-Cola FEMSA
FEMSA Comercio:		 59%
Proximity Division 32%
Health Division 5%
Fuel Division 1%
Others* 3%

EBITDA2
by Business Unit
millions of Mexican pesos

 
  1. Includes FEMSA Strategic Businesses
  2. Company’s key performance indicator
  3. EBITDA equals to Income from operations
    plus depreciation, amortization and other
    non-cash items

SOCIAL and ENVIROMENTAL VALUE

FEMSA creates value for our stakeholders and wider society by generating the economic, social and environmental conditions necessary to operate today and grow sustainably over time. Our sustainability strategy—guided by a commitment to our people, planet and communities—is integral to our business approach.

In 2018, we continued to manage the social and environmental impacts of our products, services and activities across our business units, and we made progress on multiple company-wide sustainability initiatives.

 

Committing to Clean Energy

85%
of the total electric energy demand of our operations in Mexico will come from renewable energy by 2020.

FEMSA’s goal is to source 85 percent of the total electric energy demand of our operations in Mexico with renewable energy by 2020. By the end of 2018, 37% of our requirements were supplied with clean energy, compared to 26.4% in 2017.

Our progress in 2018 was greatly supported by the launch of the Amistad Wind Farm in November in the state of Coahuila; this dedicated wind farm has a capacity of 197.5 MW and can produce more than 750,000 Mwh of electricity per year – enough to supply an average of 427,350 households in Mexico with electricity.

Looking ahead, we are on track to continue to make solid progress toward achieving our company goal by 2020. In December 2018, the construction of the Energía Eólica del Sur (EES) wind farm was finalized and will start supplying clean energy to FEMSA in early 2019. Located in the state of Oaxaca, the EES wind farm will add 396 MW of capacity with the installation of 132 wind turbines of 3MW each, distributed across two sites.

82% local sourcing   

Supporting Local Suppliers

As part of our commitment to responsible sourcing, we consistently seek opportunities for enhancing value creation across our supply chain. This includes supporting local suppliers whenever possible, which in turn supports local economies and reduces the costs and greenhouse gas emissions associated with transporting products over long distances. In 2018, we maintained our spend with local suppliers by over 80 percent.

closer to our goal

At the end of 2018, we sourced 37 percent of clean energy in Mexico, up 10 percent in 2017.

 
 
 

Organizational Climate    

The Organizational Climate Diagnostic, our internal employee engagement tool, assesses the level of Satisfaction, Commitment and Quality of Life for all FEMSA employees. The survey is applied to all Business Units every two years, and in 2018, more than 89,000 employees representing 82% participated. The results of the survey confirmed that FEMSA continues to improve, strengthen and promote a harmonious and efficient Organizational Climate for our employees.

 

 

In addition to the highlights below, sustainability progress is featured throughout this integrated report, and in our Global Reporting Initiative (GRI) Content Index.

 
 
  2018 2017 2016
Average hours of training per employee 30.15 33.92 25.60
Accident Index 1 2.50 2.10 2.13
General Diseases Rate 1 27.90 40.70 47.25
Organizational Climate Result 2 81.00 80.80 81.50
Energy Intensity
(Gigajoules / Total Revenues in Ps. million)		 39.95 37.27 40.46
Greenhouse gas emissions intensity
(Tons of equivalent CO2 / Total Revenues in Ps. million)		 3.38 3.27 3.59
Water efficiency
(liters of water used per liter of beverage produced)		 1.59 1.65 1.72
Economic spill to the community 3 Ps. 274.0 billion
US$ 13.9 billion		 Ps. 253.2 billion
US$ 12.8 billion		 Ps. 258.2 billion
US$ 12.5 billion
Percentage of procurement budget on local suppliers 4 82% 87% 82%
Direct beneficiaries of FEMSA Foundation programs 5 1,423,985 1,248,123 1,124,319
 
  1. Number of incidents per 100 employees, based on the number of FEMSA direct employees reported to the Occupational Health and Safety Administration System. Includes information on all countries.
  2. According to FEMSA’s Organizational Climate Diagnostic.
  3. Includes human resources remuneration, provider payments, public administration sector remuneration, external donations and donations to the community.
  4. Local suppliers are defined as suppliers from the country where the purchase is made.
  5. The number of direct beneficiaries is accumulated.