July 25, 2019 / 9:24 PM / 4 months ago

Mexico's Oxxo stores push Femsa growth, while exchange rate hits profit

MEXICO CITY (Reuters) - Mexican bottler and retailer Femsa FMSAUBD.MX reported on Thursday that its second-quarter net income fell nearly 36% from the year-earlier period because of exchange-rate losses, despite a jump in revenue.

The conglomerate reported net income of 5.64 billion pesos ($294 million), down from 8.8 billion pesos the year before. Analysts had expected a substantial decrease, saying higher sales would still help Femsa deliver a positive quarter.

Profit took a hit from exchange-rate losses after the appreciation of the Mexican peso, Femsa said.

Revenue grew 9.4% from the prior year, to 128.2 billion pesos.

Femsa Chief Executive Eduardo Padilla said in a statement that “healthy pricing” at Femsa’s gas stations and vast chain of Oxxo convenience stores helped their margins expand, a sign of profitability.

Oxxo remains a prime motor of growth, fueling a 6.2% rise in sales at stores open at least a year, while such sales were flat in Femsa’s gas stations and down 2.6% at pharmacies.

Femsa opened 375 net Oxxo stores in the quarter to reach a total of 18,608 stores, mostly in Mexico.

The Easter holiday in April also helped sales, Padilla added, although adding that Femsa had a tough comparison base with last year, when the World Cup soccer tournament boosted shopping.

Margins contracted at Femsa’s pharmacies and Coca-Cola bottling division, the company said, largely because of exchange-rate losses. Femsa said net consolidated income for the quarter was 7.75 billion pesos.

The company is scheduled to host a call with analysts early on Friday.

Reporting by Daina Beth Solomon in Mexico City; Editing by Anthony Esposito and Peter Cooney

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