José Antonio Fernández Carbajal
Executive Chairman of the Board
Carlos Salazar Lomelín
Chief Executive Officer

On behalf of the entire FEMSA team, we are pleased to share this report on our performance, people, strategy and impact in 2016.

It was a challenging but rewarding year for the company, one of growth, diversification, expansion and consolidation. We strengthened our competitive position, leveraged our strong brand portfolio and operational expertise, successfully accessed the capital markets, and further embedded sustainability within our operations, all while adapting to challenging macroeconomic conditions and industry dynamics in several of our key markets.

A year of growth
A number of developments in the year helped shape our performance and advance our growth.

FEMSA Comercio, which is now comprised of three divisions –Retail, Health and Fuel– to provide greater transparency to the dynamics and performance of each format, delivered remarkable gains in 2016. In Retail, we benefited from a 7.0% rise in same-store sales at OXXO Mexico, as well as the addition of 1,164 net new OXXO stores and the acquisition of a small but promising convenience store platform in Chile; in Health, the first full year of integration of Socofar and bolt-on acquisitions in Colombia and Mexico drove growth; and in Fuel, our role in the rapid transformation of Mexico’s energy sector can be seen with the addition of 75 new OXXO GAS stations, and an encouraging 7.6% increase in same-station sales.

At Coca-Cola FEMSA, we might characterize the year as a tale of two regions: in Mexico, a supportive consumer backdrop and strong execution drove solid top line growth, while we faced adverse consumer and macroeconomic environments in South America. Notwithstanding, revenues, transactions and volume all rose in the year, with outperformance in still beverages. Our multi-category leadership was strengthened this year with the acquisition of AdeS1, the leading soy-based beverage brand in Latin America, and the acquisition of Vonpar, one of the largest privately owned bottlers in the Brazilian Coca-Cola system that expands our regional footprint and consolidates our position as the largest volume franchise bottler in the world. We continue to see strong growth potential across our markets, with a focus on increasing our share of value and on driving incremental transactions.

Within our Strategic Businesses, FEMSA Logistica made progress in the integration of its less-than-truckload platform in Brazil and its storage platform in Mexico, while Imbera, our commercial cooling solutions operation, expanded into the foodservice equipment space through an acquisition in Mexico. While these business units are not yet of a scale comparable to our retail or beverage businesses, they are growing quickly and delivering attractive levels of profitability and returns.

Creating value, retaining flexibility
Our long-term growth strategy and disciplined execution have continued to create economic and social value with and for the communities we serve, and for all our stakeholders. This is reflected in our performance at the consolidated level:

Total revenues in 2016 increased 28.2% over the previous year to Ps. 399.5 billion (US$ 19.4 billion), mainly driven by solid growth across most operations, as well as by the integration of Socofar in FEMSA Comercio’s Health Division. Income from operations increased 10.9% to Ps. 37.4 billion (US$ 1.8 billion), while net consolidated income increased 16.8% to Ps. 27.2 billion (US$ 1.3 billion). Net majority income per BD Unit was Ps. 5.91 in 2016 (US$ 2.87 per ADS).

We know the value we create must be shared in order to be sustainable. To that end, we invest approximately 1% of total consolidated revenue in sustainability each year, an amount totaling Ps. 2,875 million in 2016 (US$ 139.4 million), allocated both externally to our communities, and internally to employee development and environmental stewardship. This helps us develop the capabilities we need to generate the economic, social, and environmental conditions required to operate today and grow in the future, in harmony with our environment.

The road ahead
As is often the case, we begin the new year on a road that presents challenges as well as many opportunities. We are expanding our powerful, diversified platform across businesses and markets, primed for growth yet also resilient and defensive as the environment requires. Our balance sheet is robust and we will continue to use it with focus and care. And we are fortunate to have an extraordinary team of men and women who every year find a way to exceed our expectations and create more value than ever. Thus we are very confident as together we all write the growth story of the year that begins.

1 At the time of the publication of this report, this transaction was still pending approval from antitrust authorities. Hence, the closing of this acquisition has not yet been finalized.


Consolidated revenues totaled Ps. 399.5 billion in 2016, up 28.2%."