* 1st-qtr profit 2.434 bln pesos vs 2.637 bln a year ago
* Costs rise 5.3 pct
* Parent Femsa reports higher earnings
By Elinor Comlay
April 24 Mexico's Coca-Cola Femsa, Latin
America's biggest Coke bottler, said higher costs triggered a
7.7 percent drop in its first-quarter profit, sending its shares
down more than 7 percent in morning trading.
The company, a joint venture of Coca-Cola Co and
Mexican firm Femsa , reported on Wednesday
that profit dropped to 2.434 billion pesos ($197 million) from
2.637 billion pesos a year earlier.
Higher freight and labor costs in some countries as well as
increased marketing investment in South America dragged on
earnings, the company said.
Coca-Cola Femsa shares fell as much as 7.1 percent
to 204 pesos in morning trading, falling back from a record high
close in the previous session. Mexico's IPC stock index was down
more than 1 percent.
The volume of bottled drinks sold increased 3.9 percent in
the quarter but total revenue edged up less than 1 percent to
33.68 billion pesos, hurt by the strengthening of Mexico's peso
against other regional currencies in the quarter.
Still, the results did not dampen the company's expectations
for the year.
"We are confident that our operators' skills, coupled with a
benign commodity cost environment, will enable us to achieve our
targets for the full year," said Chief Executive Carlos Salazar
in a statement.
Coca-Cola Femsa has been on a buying spree in the last two
years, snapping up smaller, family-owned Coke bottlers in
Mexico, and it also made its first foray outside of Latin
America when it bought a stake in Coca-Cola Co's bottling
operations in the Philippines.
The Monterrey-based company could also consider acquiring
some of Coca Cola Co's operations in the United States, Chief
Financial Officer Hector Trevino told analysts on a conference
Right now the company is focused on opportunities in Latin
America as well as working on its business plan in the
Philippines. However, Trevino added: "We (would) certainly
analyze and take a hard look at the (US)."
Coke said last week it plans to refranchise some of its
capital-intensive U.S. distribution business.
Separately, Femsa, which also operates the Oxxo chain of
convenience stores, reported its first-quarter profit increased
more than 12 percent.
Femsa also holds a 20 percent stake in Heineken,
after selling its beer-making business to the Dutch company in
Oxxo stores, which primarily sell Coke products and Heineken
beers, have expanded rapidly and the company told investors in
February it is considering repeating its formula with fast food
Femsa shares were down 4.9 percent at 143.51 in early
The company said separately that due to low rates globally,
it is considering issuing more long-term debt. Femsa had net
debt of 6.12 billion pesos at the end of March.