October 25, 2017 / 2:00 PM / a year ago

Mexico's Coca-Cola Femsa reports 39 percent jump in profit

MEXICO CITY (Reuters) - Mexico’s Coca-Cola Femsa (KOFL.MX), the world’s largest Coke bottler, said on Wednesday its third-quarter net profit surged 39.2 percent from the year-earlier period, as sales increased.

A man walks next to corporate logos of Coca-Cola and Femsa at a distribution center of the company in Caracas, Venezuela May 24, 2016. REUTERS/Carlos Garcia Rawlins

Femsa, which operates in Mexico, Central America, Colombia, Brazil, Argentina and a number of other countries, said in a filing on Mexico’s stock exchange that it posted a quarterly net profit of 3.15 billion pesos ($173.4 million).

Femsa said sales rose 16.6 percent to 49.36 billion pesos versus the year-ago quarter on the back of increased prices for its products in Brazil, Colombia and Mexico as well as greater volumes in Argentina.

“Underscoring the capacity of our company to adapt to diverse situations, our Mexico and Central America divisions continued to implement our transformational initiatives in order to mitigate pressure on our margins and the impact that hurricanes and earthquakes had on our consumers,” Femsa Chief Executive Officer John Santa Maria said.

Femsa said in July it was poised to lose a key Brazilian distribution contract after Dutch brewer Heineken (HEIN.AS), which holds a stake in its parent company Femsa, had told the company it would end its distribution of products with bottlers of the Coca-Cola system in Brazil from Oct. 31.

Heineken has maintained the contract can be terminated with six months’ notice, but Coke Femsa disagrees.

“In respect to Heineken, our position is that the contract is effective until 2022 ... The agreement that we have provides for mechanism to resolve differences, and we are currently in that process,” Hector Trevino, Femsa’s chief financial officer, said on a call with analysts.

Coca-Cola Co (KO.N) also reported its third-quarter results on Wednesday, topping profit and revenue estimates for the period on a 3 percent rise in North American sales, gaining market share over arch-rival PepsiCo Inc PEP.N as it sold more Sprite, teas and coffees.

Femsa’s shares were down 1.7 percent in Wednesday afternoon trading.

($1 = 18.1785 Mexican pesos at the end of September)

Reporting by Anthony Esposito and Noe Torres; Editing by Paul Simao and James Dalgleish

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