October 27, 2017 / 9:13 PM / a year ago

Femsa sees Mexico inflation hitting consumption in fourth quarter, 2018

The logo of Coca Cola Femsa, the largest Coke bottler in the world, is pictured at its headquarters in Monterrey, Mexico April 25, 2017. REUTERS/Daniel Becerril

MEXICO CITY (Reuters) - Mexican bottler and retailer Fomento Economico Mexicano (Femsa) (FMSAUBD.MX) said on Friday it could see a slowdown in sales in the fourth quarter and in 2018 as high inflation, concerns over trade talks and an upcoming election dampen consumer appetite.

The Monterrey-based company reported on Thursday that third quarter profit jumped 385 percent from a year earlier to 32.4 billion pesos ($1.70 billion). That was boosted in part by a 14.3 percent increase in sales to 114.65 billion pesos.

In a Friday conference call with analysts, Eduardo Padilla, Femsa’s corporate and finance director, said consumption could take a hit thanks to inflation, which at close to 6 percent on an annualized basis, is already well above the central bank’s 3 percent target.

“Inflation has hurt real wage increases and consumer sentiment. So after three years of strong growth we are lowering our expectations ... for the fourth quarter and next year,” said Padilla, who is scheduled to take over from outgoing Chief Executive Carlos Salazar on Jan. 1, 2018.

Concerns surrounding Mexico’s 2018 presidential election and ongoing talks to modernize the North American Free Trade Agreement (NAFTA), a lynchpin of Mexico’s economy are also factors to consider, he added.

Femsa controls the world’s biggest Coke bottler, Coca-Cola Femsa (KOFL.MX), and also owns the Oxxo convenience store chain and a stake in Dutch beer company Heineken NV (HEIN.AS).

Reporting by Sheky Espejo, writing by Anthony Esposito; Editing by Andrew Hay

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