Mexico's Femsa eyes Oxxo expansion, new ventures

MEXICO CITY Thu Feb 28, 2013 2:25pm EST

MEXICO CITY Feb 28 (Reuters) - Mexican retailer and bottling company Femsa expects to further expand its Oxxo convenience store chain this year and may venture further into new businesses such as drugstores and fast food, an executive told analysts on a call on Thursday.

The company, which co-owns Coke bottler Coca-Cola Femsa with The Coca-Cola Co, will spend about $400 million on expanding and improving its retail unit this year, Chief Financial Officer Javier Astaburuaga said.

Femsa did not say how many Oxxo stores it hopes to open in 2013, but the level of spending is in line with investment in 2012. The company ended 2012 with 10,601 stores, up 10.9 percent from 9,561 stores at the end of 2011.

Oxxo has been selling more prepared foods, and the company could consider further expanding into this sector, perhaps with acquisitions, Astaburuaga said.

Femsa, which in November agreed to buy a 75 percent stake in drug store chain YZA, is considering similar deals this year, perhaps even adding to its fast-food sales, Astaburuaga said.

Any deal would be small and it would have to be a "good fit" with Oxxo, he said, without giving details on any possible transactions the company might be considering.

Separately, the company is also looking at expanding Oxxo outside of Mexico.

"We are looking at some opportunities in some other places in South America," said Astaburuaga. "We are very open to acquiring or even partnering with somebody down there, but we are still in the phase where we are looking at things rather than being close to doing something."

Femsa may also use some of its cash to buy more shares in Coca-Cola Femsa, Astaburuaga said. "That's definitely a possibility for Femsa's uses of cash going forward."

Femsa on Wednesday reported its fourth-quarter profit climbed almost 80 percent to 9.661 billion pesos ($751 million) from 5.446 billion pesos a year earlier.

FILED UNDER: