With the combination of a late Easter and the impact of new accounting standards (IFRS16), it was likely that FEMSA’s (FMX) first quarter was going to be messy relative to expectations, and so it was. Reported revenue was weaker than expected, but I’d argue core underlying trends remain strong. Although FEMSA management still has much to prove regarding the strategic expansion into pharmacies and fuel stations, the OXXO business still offers significant growth potential and Coca-Cola FEMSA (KOF) seems to finally be on better footing.
The shares do not seem