Amounts expressed in millions of U.S. dollars and Mexican pesos, except data per share and headcount.
Amounts expressed in millions of U.S. dollars and Mexican pesos, except data per share and headcount.
U.S.* | 2019 | 20184,5,6 | 20172,3,4 | 20161 | 2015 | |
---|---|---|---|---|---|---|
INCOME STATEMENT | ||||||
Total revenues | 10,311 | 194,471 | 182,342 | 183,256 | 177,718 | 152,360 |
Cost of goods solds | 5,671 | 106,964 | 98,404 | 99,748 | 98,056 | 80,330 |
Gross profit | 4,640 | 87,507 | 83,938 | 83,508 | 79,662 | 72,030 |
Operative expenses | 3,211 | 60,537 | 57,924 | 58,044 | 55,462 | 48,284 |
Other expenses, net | 132 | 2,490 | 1,881 | 31,357 | 3,812 | 1,748 |
Comprehensive financing result | 321 | 6,071 | 6,943 | 5,362 | 6,080 | 7,273 |
Income before income taxes and share of the profit or of associates and joint ventures accounted for using the equity method | 976 | 18,409 | 17,190 | (11,255) | 14,308 | 14,725 |
Income taxes | 299 | 5,648 | 5,260 | 4,184 | 3,928 | 4,551 |
Share of the profit of associates and joint ventures accounted for using the equity method, net of taxes | (7) | (131) | (226) | 60 | 147 | 155 |
Net income (loss) after tax from discontinued operations | - | - | 3,366 | 3,725 | — | — |
Consolidated net income | 670 | 12,630 | 15,070 | (11,654) | 10,527 | 10,329 |
Equity holders of the parent for continuing operations | 642 | 12,101 | 10,936 | (16,058) | 10,070 | 10,235 |
Equity holders of the parent for discontinued operations | - | - | 2,975 | 3,256 | — | — |
Non-controlling interest net income for continuing operations | 28 | 529 | 768 | 679 | 457 | 94 |
Non-controlling interest net income for discontinued operations | - | - | 391 | 469 | — | — |
RATIOS TO REVENUES (%) | ||||||
Gross margin | 45.0 | 45.0 | 46.0 | 45.6 | 44.8 | 47.3 |
Net income margin | 6.5 | 6.5 | 8.3 | (6.4) | 5.9 | 6.8 |
CASH FLOW | ||||||
Operative cash flow | 1,660 | 31,289 | 29,687 | 33,236 | 32,446 | 23,202 |
Capital expenditures7 | 608 | 11,465 | 11,069 | 12,917 | 12,391 | 11,484 |
Total cash, cash equivalents | 1,086 | 20,491 | 23,727 | 18,767 | 10,476 | 15,989 |
BALANCE SHEET | ||||||
Current assets | 3,011 | 56,796 | 57,490 | 55,657 | 45,453 | 42,232 |
Investment in shares | 517 | 9,751 | 10,518 | 12,540 | 22,357 | 17,873 |
Property, plant and equipment, net | 3,244 | 61,187 | 61,942 | 75,827 | 65,288 | 50,532 |
Intangible assets, net | 5,941 | 112,050 | 116,804 | 124,243 | 123,964 | 90,754 |
Deferred charges and other assets, net | 958 | 18,055 | 17,033 | 17,410 | 22,194 | 8,858 |
Total Assets | 13,671 | 257,839 | 263,787 | 285,677 | 279,256 | 210,249 |
Liabilities | ||||||
Short-term bank loans and notes payable | 609 | 11,485 | 11,604 | 12,171 | 3,052 | 3,470 |
Interest payable | 23 | 439 | 497 | 487 | 520 | 411 |
Other current liabilities | 2,073 | 39,086 | 33,423 | 42,936 | 36,296 | 26,599 |
Long-term bank loans and notes payable | 3,101 | 58,492 | 70,201 | 71,189 | 85,857 | 63,260 |
Other long-term liabilities | 989 | 18,652 | 16,312 | 18,184 | 24,298 | 7,774 |
Total Liabilities | 6,795 | 128,154 | 132,037 | 144,967 | 150,023 | 101,514 |
Equity | 6,876 | 129,685 | 131,750 | 140,710 | 129,233 | 108,735 |
Non-controlling interest in consolidated subsidiaries | 358 | 6,751 | 6,806 | 18,141 | 7,096 | 3,986 |
Equity attributable to equity holders of the parent | 6,518 | 122,934 | 124,944 | 122,569 | 122,137 | 104,749 |
FINANCIAL RATIOS (%) | ||||||
Current | 1.11 | 1.11 | 1.26 | 1.00 | 1.14 | 1.39 |
Leverage | 0.99 | 0.99 | 1.00 | 1.03 | 1.16 | 0.93 |
Capitalization | 0.37 | 0.37 | 0.41 | 0.39 | 0.41 | 0.39 |
Coverage | 5.51 | 5.51 | 4.52 | 4.16 | 4.80 | 3.92 |
DATA PER SHARE | ||||||
Book Value8 | 0.388 | 7.315 | 7.434 | 7.293 | 7.365 | 6.317 |
Loss (income) attributable to the holders of the parent9 | 0.038 | 0.723 | 0.831 | (0.765) | 0.607 | 0.617 |
Dividends paid10 | 0.023 | 0.443 | 0.419 | 0.422 | 0.419 | 0.386 |
Headcount11 | 82,186 | 82,186 | 83,364 | 79,636 | 85,140 | 83,712 |
Exchange rate as of December 31st, 2018, Ps 19.64 per U.S. dollar, solely for the convenience of the reader according to the federal USA reserve.
Results for the Year Ended December 31, 2019
Compared to the Year Ended December 31, 2018
Consolidated Results
The comparability of our financial and operating performance in 2019 as compared to 2018 was affected by the following factors: (1) the ongoing integration of mergers, acquisitions, and divestitures completed in recent years, specifically the acquisitions in Guatemala and Uruguay in April and June 2018, respectively; (2) translation effects from fluctuations in exchange rates; and (3) our results in Argentina, which effective as of January 1, 2018 has been considered a hyperinflationary economy. To translate the full-year results of Argentina, we used the 2019 end-of-period exchange rate of 59.89 Argentine pesos per U.S. dollar and the 2018 end-of-period exchange rate of 37.70 Argentine pesos per U.S. dollar, for the periods ended December 31, 2019 and 2018, respectively. The depreciation of the end-of-period Argentine peso at December 31, 2019, as compared to the end-of-period exchange rate for 2018, was 58.9%. In addition, the average depreciation of currencies used in our main operations relative to the U.S. dollar in 2019, as compared to 2018, were: 14.8% for the Uruguayan peso, 11.0% for the Colombian peso, 7.9% for the Brazilian real, and 0.1% for the Mexican peso.
Total Revenues. Our consolidated total revenues increased by 6.7% to Ps.194,471 million in 2019, mainly as a result of price increases aligned with or above inflation, volume growth in key territories and the consolidation of our acquisitions of ABASA and Los Volcanes in Guatemala and Monresa in Uruguay. These effects were partially offset by the depreciation of the Argentine peso, the Brazilian real and the Colombian peso, in each case as compared to the Mexican peso. This figure includes extraordinary other operating revenues related to an entitlement to reclaim tax payments in Brazil. On a comparab+le basis, total revenues would have increased by 10.8%, mainly as a result of an increase in the average price per unit case across our operations and volume growth in Brazil and Central America. Total sales volume increased by 1.4% to 3,368.9 million unit cases in 2019 as compared to 2018. On a comparable basis, total sales volume would have increased by 1.4% in 2019 as compared to 2018.
Consolidated average price per unit case increased by 3.7% to Ps.52.46 in 2019, as compared to Ps.50.57 in 2018, mainly as a result of price increases aligned with or above inflation partially offset by the negative translation effect resulting from the depreciation of most of our operating currencies relative to the Mexican peso. On a comparable basis, average price per unit case would have increased by 7.8% in 2019, driven by average price per unit case increases aligned with or above inflation in key territories.
Gross Profit. Our gross profit increased by 4.3% to Ps.87,507 million in 2019; with a gross margin decline of 100 basis points to reach 45.0% in 2019 as compared to 2018. On a comparable basis, our gross profit would have increased by 8.0% in 2019, as compared to 2018. Our pricing initiatives, together with lower PET resin costs and stable sweetener prices in most of our operations, were offset by higher concentrate costs in Mexico, higher concentrate costs in Brazil due to the reduction of tax credits on concentrate purchased from the Manaus Free Trade Zone coupled with our temporary decision to suspend such tax creditsand the depreciation in the average exchange rate of most of our operating currencies as applied to U.S. dollar-denominated raw material costs.
The components of cost of goods sold include raw materials (principally concentrate, sweeteners and packaging materials), depreciation costs attributable to our production facilities, wages and other labor costs associated with labor force employed at our production facilities and certain overhead costs. Concentrate prices are determined as a percentage of the retail price of our products in local currency, net of applicable taxes. Packaging materials, mainly PET resin and aluminum, and HFCS, used as a sweetener in some countries, are denominated in U.S. dollars.
Administrative and Selling Expenses. Our administrative and selling expenses increased by 4.5% to Ps.60,537 million in 2019 as compared to 2018. Our administrative and selling expenses as a percentage of total revenues decreased by 70 basis points to 31.1% in 2019 as compared to 2018, mainly as a result of operating expense efficiencies which were partially offset by an increase in labor, freight and maintenance expenses. In 2019, we continued investing across our territories to support marketplace execution, increase our cooler coverage, and bolster our returnable presentation base.
Other Expenses Net. We recorded other expenses net of Ps.2,490 million in 2019 as compared to Ps.1,881 million in 2018, which increased mainly as a result of severance payments related to the implementation of our efficiency program to create a leaner and more agile organization partially offset by the tax actualization effect of tax reclaim proceeds received in Brazil. Our non-operating expenses net in 2019 were mainly comprised of an impairment of Ps. 948 million of our investment in Compañía Panameña de Bebidas, S.A.P.I. de C.V. (Estrella Azul) along with provisions related to contingencies in Brazil.
Comprehensive Financing Result. The term “comprehensive financing result” refers to the combined financial effects of net interest expenses, net financial foreign exchange gains or losses, and net gains or losses on the monetary position of hyperinflationary countries where we operate. Net financial foreign exchange gains or losses represent the impact of changes in foreign exchange rates on financial assets or liabilities denominated in currencies other than local currencies, and gains or losses resulting from derivative financial instruments. A financial foreign exchange loss arises if a liability is denominated in a foreign currency that appreciates relative to the local currency between the date the liability is incurred or the beginning of the period, whichever occurs first, and the date it is repaid or the end of the period, whichever occurs first, as the appreciation of the foreign currency results in an increase in the amount of local currency, which must be exchanged to repay the specified amount of the foreign currency liability.
Comprehensive financing result in 2019 recorded an expense of Ps.6,071 million as compared to an expense of Ps.6,943 million in 2018. This 12.6% decrease was mainly driven by a reduction in our interest expense, due to debt reductions during the year, a foreign exchange loss as our cash exposure in U.S. dollars was negatively impacted by the appreciation of the Mexican peso, and a reduction in other financial expenses.
Income Taxes. In 2019, our effective income tax rate was 30.7%, reaching Ps.5,648 million in 2019, as compared to Ps.5,260 million in 2018. As a result, our effective income tax rate remained stable as compared with 2018, as the non-deductible charge related to the impairment of our investment in Estrella Azul offset by the increase in the relative weight of Mexico operations profits in our consolidated results which have a lower tax rate, coupled with certain tax efficiencies across our operations.
Share of the Profit of Associates and Joint Ventures Accounted for Using the Equity Method, Net of Taxes. In 2019, we recorded a loss of Ps.131 million in the share of the profits of associates and joint ventures accounted for using the equity method, net of taxes, mainly due to a loss in Estrella Azul that was partially offset by gains in our Jugos Del Valle joint venture and our water joint ventures in Brazil.
Net Income (Equity holders of the parent). We reported a net controlling interest income of Ps.12,101 million in 2019, as compared to Ps.13,911 million in 2018. This was mainly driven by a demanding comparable driven by the results of discontinued operations related to the sale of the operation in the Philippines and an impairment of Ps. 948 million in our Estrella Azul dairy joint venture in Panama.
Results by Consolidated Reporting Segment
Mexico and Central America
Total Revenues. Total revenues in our Mexico and Central America consolidated reporting segment increased by 9.1% to Ps.109,249 million in 2019 as compared to 2018, mainly as a result of an increase in the average price per unit case in Mexico, the consolidation of our acquisitions of ABASA and Los Volcanes in Guatemala and volume growth in Central America.
Total sales volume in our Mexico and Central America consolidated reporting segment increased by 0.5% to 2,075.3 million unit cases in 2019 as compared to 2018, as a result of the consolidation of our acquisitions of ABASA and Los Volcanes in Guatemala, coupled with volume growth in Central America.
Sales volume in Mexico slightly decreased by 0.6% to 1,838.3 million unit cases in 2019, as compared to 1,850.2 million unit cases in 2018.
Sales volume in Central America increased by 10.3% to 236.9 million unit cases in 2019, as compared to 214.8 million unit cases in 2018, mainly as a result of the consolidation of our acquisitions of ABASA and Los Volcanes in Guatemala, coupled with organic volume growth.
Gross Profit. Our gross profit in this consolidated reporting segment increased by 8.8% to Ps.52,384 million in 2019 as compared to 2018; however, gross profit margin decreased by 20 basis points to 47.9% in 2019. Gross profit margin decreased mainly as a result of increases in concentrate prices in Mexico and the depreciation of the average exchange rates of most of our operating currencies of the division, in each case as applied to our U.S. dollar denominated raw material costs, which factors were partially offset by our pricing initiatives coupled with more stable sweetener prices and a decline in our PET resin prices.
Administrative and Selling Expenses. Administrative and selling expenses as a percentage of total revenues in this consolidated reporting segment decreased by 80 basis points to 32.9% in 2019 as compared with the same period in 2018. Administrative and selling expenses, in absolute terms, increased by 6.5% as compared to 2018 driven mainly by Increases in maintenance and labor costs in Mexico.
South America
Total Revenues. Total revenues in our South America consolidated reporting segment increased by 3.7% to Ps.85,222 million in 2019 as compared to 2018, mainly as a result of volume growth in Brazil together with average price per unit case growth across our territories and the consolidation of the new acquisition in Uruguay. These effects were partially offset by volume declines in the rest of our operations and negative translation effects due to the depreciation of the Argentine peso, the Brazilian real and the Colombian peso in each case as compared to the Mexican peso. Total revenues for beer amounted to Ps.15,619 million in 2019. This figure includes extraordinary other operating revenues related to an entitlement to reclaim tax payments in Brazil. On a comparable basis, total revenues would have increased by 14.8%, driven by volume growth in Brazil and average price per unit case increases in local currencies across our territories.
Total sales volume in our South America consolidated reporting segment increased by 2.9% to 1,293.6 million unit cases in 2019 as compared to 2018, mainly as a result of volume growth in Brazil and the consolidation of Uruguay, effects that were partially offset by declines in Argentina and Colombia. On a comparable basis, total sales volume would have increased by 4.9% in 2019 as compared to 2018, as a result of volume growth in Brazil.
Sales volume in Brazil increased by 7.5% to 846.5 million unit cases in 2019, as compared to 787.4 million unit cases in 2018.
Sales volume in Colombia decreased by 2.2% to 265.5 million unit cases in 2019, as compared to 271.4 million unit cases in 2018.
Sales volume in Argentina decreased by 20.6% to 139.3 million unit cases in 2019, as compared to 175.3 million unit cases in 2018.
Sales volume in Uruguay amounted to 42.4 million unit cases in 2019. Our sparkling beverage category represented 91.1% of our total sales volume. Our still beverage category represented 0.9% of our total sales volume. Our water portfolio represented 8.0% of our total sales volume.
Gross Profit. Gross profit in this consolidated reporting segment amounted to Ps.35,123 million, a decrease of 1.8% in 2019 as compared to 2018, with a 230 basis point margin contraction to 41.2%. This decrease in gross profit was mainly driven by higher concentrate costs in Brazil related to the reduction of tax credits on concentrate purchased from the Manaus Free Trade Zone, coupled with our temporary decision to suspend such tax credits and the depreciation of the average exchange rate of all our local currencies in the division as applied to our U.S. dollar denominated raw material costs. These factors were partially offset by our revenue management initiatives, a favorable currency hedging position, combined with lower PET prices in the division and lower sweetener prices mainly in Brazil.
Administrative and Selling Expenses. Administrative and selling expenses as a percentage of total revenues in this consolidated reporting segment decreased by 60 basis points to 28.9% in 2019 as compared to 2018 , driven mainly by operating expense efficiencies in Brazil. Administrative and selling expenses, in absolute terms, increased by 1.8% as compared to 2018.
human
natural
social
financial
intellectual
manufactured
Our company is present in different countries and regions. Consequently, we are continually exposed to an environment that presents challenges and risks. Our ability to manage the risks that may arise in the global environment where we operate is vital for our business’ value creation. Accordingly, our strategy includes a Comprehensive Risk Management Process through which we are able to identify, measure, register, assess, prevent, and/or mitigate risks.
John Santa Maria Otazua
Chief Executive Officer
Constantino Spas Motesinos
Chief Financial Officer
Rafael Ramos Casas
Supply Chain and Engineering Officer
Xiemar Zarazua López
Commercial Development Officer
Karina Paola Awad Pérez
Human Resources Officer
José Ramon Martínez
Corporate Affairs Officer
Rafael Alberto Suárez Olaguibel
Information Technology and Transformation Officer
Fabricio Ponce García
Chief Operating Officer – mexico
Ian Marcel Craig Garcia
Chief Operating Officer - Brazil
Eduardo Guillermo Hernández Peña
Chief Operating Officer - LATAM
Directors Appointed by Series A Shareholders
José Antonio Fernández Carbajal
Executive Chairman of the Board of Directors of Coca-Cola FEMSA
27 years as a Board Member
José Luis Cutrale
Chairman of the board of directors of Sucocítrico Cutrale, Ltda
16 years as a Board Member
Alternate: José Henrique Cutrale
Luis Alfonso Nicolau Gutiérrez1
Partner at Ritch, Mueller, Heather y Nicolau, S.C. and member of the firm’s executive committee.
2 years as a Board Member
Enrique F. Senior Hernández1
Managing Director of Allen & Company, LLC.
16 años como Consejero
Ricardo Guajardo Touché
Chairman of the board of directors of Solfi, S.A. de C.V.
27 years as a Board Member
Federico José Reyes García
Independent consultant
27 years as a Board Member
Alternate: Javier Gerardo Astaburuaga Sanjines
Alfonso González Migoya1
Chairman of the board of directors of Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (Volaris) and managing partner of Acumen Empresarial, S.A. de C.V.
14 years as a Board Member
Daniel Servitje Montull1
Chief Executive Officer and Chairman of the board of directors of Grupo Bimbo, S.A.B. de C.V. (Bimbo)
22 years as a Board Member
Luis Rubio Freidberg1
President of México Evalúa, A.C. and Centro de Investigación para el Desarrollo.
6 years as a Board Member
Alternate: Jaime A. El Koury
John Anthony Santa Maria Otazua
Chief Executive Officer of Coca-Cola FEMSA
6 years as a Board Member
Alternate: Héctor Treviño Gutiérrez
Eduardo Padilla Silva
Chief Executive Officer of FEMSA
4 years as a Board Member
Directors Appointed by Series D Shareholders
John Murphy
Executive vice president and chief financial officer of The Coca-Cola Company.
2 year as a Board Member
Alternate: Sunil Krishna Ghatnekar
José Octavio Reyes Lagunes
Retired.
4 year as a Board Member
Alternate: T.Robin Rodgers Moore
Charles H. McTier1
Retired.
22 years as a Board Member
Alternate: Franz Alscher
Brian Smith
President of The Coca-Cola Company Europe, Middle East and Africa Group.
3 years as a Board Member
Alternate: Marie Quintero-Johnson
Directors Appointed by Series L Shareholders
Herman Fleishman Cahn1
President of Grupo Tampico, S.A.P.I de C.V.
8 years as a Board Member
Alternate: Robert Alan Fleishman Cahn
Victor Tiburcio Celorio1
Independent consultant
2 years as a Board Member
Francisco Zambrano Rodríguez1
Managing Partner of FORTE Estate Planning S.C.
17 years as a Board Member
Secretary
Carlos Eduardo Aldrete Ancira
General Counsel, FEMSA
27 years as Secretary
Alternate: Carlos Luis Díaz Sáenz
1 Independent
Finance and Planning Committee
The Finance and Planning Committee works with management to set our annual and long-term strategic and financial plans and monitors adherence to these plans. It is responsible for setting our optimal capital structure and recommends the appropriate level of borrowing as well as the issuance of securities. Financial risk management is another responsibility of the Finance and Planning Committee. Ricardo Guajardo Touché is the chairman of the Finance and Planning Committee. The other members include: Federico Reyes García, John Murphy, Enrique F. Senior Hernández and Miguel Eduardo Padilla Silva. The secretary non-member of the Finance and Planning Committee is Héctor Treviño Gutiérrez, our former Chief Financial Officer.
Audit Committee
The Audit Committee is responsible for reviewing the accuracy and integrity of quarterly and annual financial statements in accordance with accounting, internal control and auditing requirements. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent auditor, who reports directly to the Audit Committee, such appointment and compensation being subject to the approval of our Board of Directors; the internal auditing function also reports to the Audit Committee. The Audit Committee has implemented procedures for receiving, retaining and addressing complaints regarding accounting, internal control and auditing matters, including the submission of confidential, anonymous complaints from employees regarding questionable accounting or auditing matters. To carry out its duties, the Audit Committee may hire independent counsel and other advisors. As necessary, we compensate the independent auditor and any outside advisor hired by the Audit Committee and provide funding for ordinary administrative expenses incurred by the Audit Committee in the course of its duties. José Manuel Canal Hernando is the chairman and financial expert of the Audit Committee. Pursuant to the Mexican Securities Market Law, the chairman of the Audit Committee is elected at our shareholders meeting. The other members are: Alfonso González Migoya, Charles H. McTier, Francisco Zambrano Rodríguez, Victor Alberto Tiburcio Celario and Ernesto Cruz Velázquez de León. Each member of the Audit Committee is an independent director, as required by the Mexican Securities Market Law and applicable New York Stock Exchange listing standards. The secretary nonmember of the Audit Committee is José González Ornelas, vice-president of FEMSA’s internal corporate control department.
Corporate Practices Committee
The Corporate Practices Committee, which consists exclusively of independent directors, is responsible for preventing or reducing the risk of performing operations that could damage the value of our company or that benefit a particular group of shareholders. The committee may call a shareholders meeting and include matters on the agenda for that meeting that it deems appropriate, approve policies on related party transactions, approve the compensation plan of the chief executive officer and relevant officers, and support our board of directors in the elaboration of related reports. The chairman of the Corporate Practices Committee is Daniel Servitje Montull. Pursuant to the Mexican Securities Market Law, the chairman of the Corporate Practices Committee is elected at our shareholders meeting. The other members include: Jaime A. El Koury, Luis Rubio Freidberg and Luis A. Nicolau Gutiérrez. The secretary non-member of the Corporate Practices Committee is Karina Awad Pérez.
Advisory Board
The Advisory’s Board main role is to advise and propose initiatives to our board of directors through the Chief Executive Officer. This committee is mainly comprised of former shareholders of the various bottling businesses that merged with us, whose experience constitute an important contribution to our operations.
Through our ethical culture, we manage under schemes that must be adopted as a way of life that inspires the acts and actions of all those who are part of the organization through the establishment of an Ethical System.
Our ethical management is based on:
Our Code of Ethics
It is the basis of our organizational culture, communicates our values, contemplates our main behaviors, promotes good behavior inside and outside our organization and guides our correct decision-making based on ethical principles. Our Code, recently updated, includes important topics such as Human Rights, Inclusion and Diversity, Discrimination, Violence and Harassment, Conflicts of interests, Misuse of information and Anti-corruption.
Our Ethics Committee
It is the oversight and control body, which guarantees compliance with the Code of Ethics and attends to the most relevant ethical situations of the company. In each of our territories, there is an Ethics Committee and each Committee reports to the Corporate Ethics Committee.
Our KOF Ethics Line whistleblowing system
Complaints about noncompliance with the Code of Ethics are received through the KOF Ethics Line, which is managed by a third-party. Employees, customers, suppliers, third parties or anyone who has a relationship with Coca-Cola FEMSA can use the system anonymously.
A group of investigators analyzes the complaints impartially and confidentially and, if a violation of the Code is found, corrective measures are applied.
In 2019, we received 1,190 complaints; of these, none were related to child labor, forced labor or freedom of association.
To strengthen our culture, our workers sign a Letter of Compliance to our Code of Ethics. Its purpose is to ensure that our employees are aware of the Code of Ethics, understand the main acts or omissions that may be incurred and can put at risk to our organization and that they must report any violation of the Code that they know.
From our headquarters in Mexico City, we present our Integrated Report 2019 edition. Developed by the guidelines of the International Integrated Reporting Council (IIRC) and in accordance with the GRI (Global Reporting Initiative) Standards: Core option. Similarly reporting the indicators of the Sector Supplement for Food Processing Companies of the same guide in its G4 version. Furthermore, this Report complements our Communications on Progress (COP) to the United Nations Global Compact included by FEMSA in its 2019 report.
The information contained corresponds to the period from January 1st to December 31st, 2019. It includes data from all the countries where Coca-Cola FEMSA, S.A.B. of C.V. has operations or a majority share. Its operations encompass franchise territories Mexico, Brazil, Guatemala, Colombia, and Argentina, and, nationwide, in Costa Rica, Nicaragua, Panama and Uruguay.
Chief Financial and Administrative Officer
Constantino Spas Montesinos
Corporate Affairs Officer
José Ramón Martínez Alonso
Stock listing information: Mexican Stock Exchange, Ticker: KOFUBL | NYSE (ADS), Ticker: KOF | Ratio of KOFUBL to KOF = 10:1
Coca-Cola FEMSA files reports, including annual reports and other information with the U.S. Securities and Exchange Commission, or the “SEC,” and the Mexican Stock Exchange (Bolsa Mexicana de Valores, or the “BMV”) pursuant to the rules and regulations of the SEC (that apply to foreign private issuers) and of the BMV. Filings we make electronically with the SEC and the BMV are available to the public on the Internet at the SEC’s website at www.sec.gov, the BMV’s website at www.bmv.com.mx, and our website at www.coca-colafemsa.com. Coca-Cola FEMSA, S.A.B. de C.V. is the largest Coca-Cola franchise bottler in the world by sales volume. The Company produces and distributes trademark beverages of The Coca-Cola Company, offering a wide portfolio of 129 brands to a population of more than 261 million. With over 80 thousand employees, the Company markets and sells approximately 3.4 billion unit cases through close to 2 million points of sale a year. Operating 49 manufacturing plants and 268 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain. The Company is a member of the Dow Jones Sustainability Emerging Markets Index, Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the Mexican Stock Exchange’s IPC and Sustainability Indices, among others. Its operations encompass franchise territories in Mexico, Brazil, Guatemala, Colombia, and Argentina, and, nationwide, in Costa Rica, Nicaragua, Panama, Uruguay, and Venezuela through its investment in KOF Venezuela. For further information, please visit www.coca-colafemsa.com
We maintain a permanent and open communication with stakeholders, identified based on the materiality assessment we carried out in 2012. This communication helps us understand the interests and concerns of the people who are related, directly or indirectly, to our business activities. We select the stakeholders based on their relationship with each aspect of our value chain, impacts to our operations, and the relevance they hold as part of our purpose of creating shared value.
Whistleblower | 01-800 | e-mail / | Working | Community | Dialogue | Participation | Area responsible | Main issues | |
---|---|---|---|---|---|---|---|---|---|
Associates and their Families | Human Resources | Business philosophy, work culture, labor relations. | |||||||
Community | Corporate Affairs, Commercial, Human Resources | Community development programs, portfolio of products, job openings, safety at the work centers. | |||||||
Clients and Consumers | Commercial, Marketing | Different information requests, portfolio of products, job openings, sponsorships, technical assistance, and sales. | |||||||
Suppliers | Procurement | Commercial relationships. | |||||||
Shareholders and Investors | Investor Relations | Financial results, company strategy, investment plans, economic prospects. | |||||||
Authorities and Business Associations | Corporate Affairs | Collaboration in community development initiatives and environmental stewardship. | |||||||
Unions | Human Resources | Negotiations for collective bargaining contracts, labor relations. | |||||||
Civil Society Organizations | Corporate Affairs | Joint projects. | |||||||
Communications Media | Corporate Affairs | Business strategy, financial results, community development programs and environmental stewardship, institutional positioning. | |||||||
Education Institutes | Human Resources, Corporate Affairs | Joint projects, academic advice, research, training. |
We are interested in promoting and exchanging best practices in Sustainability, and we actively participate in associations and organisms of the countries where we are present.
Coca-Cola FEMSA
Alianza Latinoamericana de Asociaciones de Industria de Alimentos y Bebidas (ALAIAB)
American Beverage Association (ABA)
Business Industry Advisory Council (BIAC)
International Council of Beverages Associations (ICBA)
International Council of Beverages Associations (ICBA-LATAM)
American Chamber of Commerce of Mexico (AMCHAM)
Consejo Empresarial Mexicano de Comercio Exterior, Inversión y Tecnología (COMCE)
Argentina
Asociación de Fabricantes de Coca-Cola (AFAC)1
Cámara de la Industria de Bebidas Sin Alcohol (CADIBSA)1
Cooperadora de Industrias de Alimentos y Bebidas (COPAL)1
Cámara de Comercio Argentino-Mexicana (CCAM)1
Federación de Almaceneros de Buenos Aires
Cámara de Sociedades Anónimas
Asociación Argentina de Estudios Fiscales
Cámara de Comercio de Estados Unidos en Argentina (AmCham Argentina)
Brazil
ABA - Associação Brasileira de Anunciantes1
ABINAM - Associação Brasileira de Indústria de Água Mineral
ABIR – Associação Brasileira das Indústrias de Refrigerantes e de Bebidas não Alcoólicas1
ADIAL – Associação Brasileira Pró-Desenvolvimento Regional Sustentável1
AFBCC – Associação dos Fabricantes Brasileiros de Coca-Cola1
Câmara Mexicana
CBH-TB Comite de Bacias Hidrograficas - Tietê Batalha
CBH-AP - Comite de Bacias Hidrograficas - Aguapeí Peixe (Marília)
CEMPRE - Compromisso Empresarial para Reciclagem
CIESP - Centro das Indústrias do Estado de São Paulo
Comitê da Bacia Hidrográfica do Rio Paranapanema1
Comitê das Bacias Hidrográficas do Alto Iguaçu e Afluentes do Alto Ribeira.
Comitê de Gerenciamento da Bacia Hidrográfica do Lago Guaíba - RS
Comitê de Gerenciamento da Bacia Hidrográfica do Rio Gravataí - RS
Comitê de Parceiros da Adesita
Conselho Unidade de Conservação MONAE Serra da Moeda
CTMH - Camâra Técnica de Monitoramento Hidrológico - PCJ
FIERGS - Federação das indústrias do Rio Grande do Sul
Fundação Fernando Henrique Cardoso
LIDE – Grupo de Líderes Empresariais
Rede de Investidores Sociais (Maringá)
SINDBEBIDAS MG - Sindicato das Indústrias de Cerveja e Bebidas em Geral do Estado de Minas Gerais1
SINDIBEBIDAS PR - Sindicato das Indústrias de Bebidas do Estado do Paraná1
Subcomitê de Bacias Hidrográficas de Itabirito1
Costa Rica
Unión Costarricense de Cámaras y Asociaciones del Sector Empresarial Privado (UCCAEP)
Cámara Costarricense de la Industria Alimentaria (CACIA)
Cámara Costarricense Norteamericana de Comercio (AMCHAM)
Cámara de industria y comercio Costa Rica-México (CICOMEX)
Cámara de Industrias de Costa Rica (CICR)
Alianza Empresarial para el Desarrollo (AED)
Alianza Empresarial para Sostenbilidad
Cámara de Comercio de Costa Rica
Guatemala
Cámara de Comercio e Industria Guatemalteco Mexicana "CAMEX"1
Asociación Guatemalteca de Exportadores "AGEXPORT"1
Cámara de Industria Guatemalteca "CIG"1
Cámara Guatemalteca de Alimentos y Bebidas "CGAB"
Cámara de Comercio Guatemalteco Americana "AMCHAM"
Cámara de Comercio de Guatemala
Asociación de Gerentes de Guatemala
Mexico
Asociación de Embotelladores Coca-Cola (ASCOCA)1
Asociación Nacional de Productores de Refrescos y Aguas (ANPRAC)
Cámara de la Industria de la Transformación (CANACINTRA)
Centro Mexicano para la Filantropía (CEMEFI)
Comisión de Estudios para el Desarrollo Sustentable del Consejo Coordinador Empresarial (CESPEDES)2
Confederación de Cámaras Industriales (CONCAMIN)
Confederación Patronal de la República Mexicana (COPARMEX)
Consejo Coordinador Empresarial (CCE)
Consejo Mexicano de la Industria de Productos de Consumo (CONMEXICO)1
Ecología y Compromiso Empresarial, A.C. (ECOCE)1
Iniciativa GEMI (Global Environmental Management Initiative)
Movimiento por una Vida Saludable (MOVISA)
Queremos Mexicanos Activos (QUEMA)
Nicaragua
Cámara de Industria de Nicaragua
Consejo Superior de la Empresa Privada
Cámara de comercio y servicios de Nicaragua
AMCHAM Nicaragua
Panama
Cámara Comercio Panamá México
Sindicato de Industriales de Panamá
American Chamber (AMCHAM) Panamá
Cámara de Comercio, Industrias y Agricultura
Uruguay
Cámara de Industrias del Uruguay
Cámara Industrial de Alimentos
Cámara de Anunciantes del Uruguay
Cámara de Comercio Uruguay - Estados Unidos
DERES (Responsabilidad Social Empresaria)
CEMPRE (Compromiso Empresarial por el Reciclaje)
Cámara de Comercio Uruguay - México
GRI 102: General Disclosures 2016
102-1 Name Of the Organization
About
102-2 Activities, brands, products, and services
KOF Value Chain
Product Portfolio
Our Footprint
102-3 Location of headquarters
About
102-4 Location of operations
Our Footprint
102-5 Ownership and legal form
20-F
102-6 Markets served
Our Footprint
102-7 Scale of the organization
Employees
Operations
Revenue
Capitalization
Products & services
102-8 Information on employees and other workers
People 4 Growth
102-9 Supply chain
Value Chain
102-10 Significant changes to the
organization and its supply chain
About
102-11 Precautionary Principle or approach
Letter to Stakeholders
102-12 External initiatives
About
102-13 Membership of associations
Business Engagement
102-14 Statement from senior decision-maker
Letter to Stakeholders
102-15 Key impacts, risks, and opportunities
Risks
Capitals
102-16 Values, principles, standards, and norms of behavior
KOF DNA
Ethics System
102-17 Mechanisms for advice and concerns about ethics
Ethics System
102-18 Governance structure
Corporate Governance
102-19 Delegating authority
Corporate Governance
102-20 Executive-level responsibility for
economic, environmental, and social topics
Corporate Governance
102-21 Consulting stakeholders on economic,
environmental, and social topics
Stakeholders
102-22 Composition of the highest governance body and its committees
Corporate Governance
102-23 Chair of the highest governance body
Corporate Governance
102-24 Nominating and selecting
the highest governance body
20-F
102-25 Conflicts of interest
20-F
102-26 Role of highest governance body
in setting purpose, values, and strategy
Corporate Governance
102-27 Collective knowledge of highest governance body
Corporate Governance
102-28 Evaluating the highest
governance body’s performance
20-F
102-29 Identifying and managing economic,
environmental, and social impacts
Materiality
102-30 Effectiveness of risk management processes
Risks
Capitals
102-31 Review of economic, environmental,
and social topics
N/A
102-32 Highest governance body’s
role in sustainability reporting
N/A
102-33 Communicating critical concerns
N/A
102-34 Nature and total number of critical concerns
N/A
102-35 Remuneration policies
N/A
102-36 Process for determining remuneration
N/A
102-37 Stakeholders’ involvement in remuneration
N/A
102-38 Annual total compensation ratio
CONFIDENTIAL
102-39 Percentage increase in
annual total compensation ratio
CONFIDENTIAL
102-40 List of stakeholder groups
Stakeholders
102-41 Collective bargaining agreements
Talent
102-42 Identifying and selecting stakeholders
Stakeholders
102-43 Approach to stakeholder engagement
Stakeholders
102-44 Key topics and concerns raised
Stakeholders
102-45 Entities included in the
consolidated financial statements
Financial Statements
102-46 Defining report content and topic Boundaries
Materiality
102-47 List of material topics
Materiality
102-48 Restatements of information
When applicable it is stated in the disclosed information throughout this report.
102-49 Changes in reporting
As of December 31, 2017, as a non-consolidated operation, Venezuela is reported as an investment in shares.
102-50 Reporting period
About
102-51 Date of most recent report
About
102-52 Reporting cycle
About
102-53 Contact point for questions
regarding the report
About
102-54 Claims of reporting in
accordance with the GRI Standards
About
102-55 GRI content index
GRI content index
102-56 External assurance
External assurance
GRI 103: Management Approach 2016
103-1 Explanation of the material topic and its Boundary
Materiality
103-2 The management approach and its components
Materiality
103-3 Evaluation of the management approach
Materiality
GRI 201: Economic Performance 2016
201-1 Direct economic value generated and distributed
Financial Highlights
Economic Value Distributed
201-2 Financial implications and other risks and opportunities due to climate change
Our Future
201-3 Defined benefit plan obligations
and other retirement plans
Financial Statements
201-4 Financial assistance received from government
-
GRI 202: Market Presence 2016
202-1 Ratios of standard entry level wage
by gender compared to local minimum wage
People 4 Growth
202-2 Proportion of senior management hired from the local community
60%
GRI 203: Indirect Economic Impacts 2016
203-1 Infrastructure investments and services supported
Community development
203-2 Significant indirect economic impacts
Economic Value Distributed
GRI 204: Procurement Practices 2016
204-1 Proportion of spending on local suppliers
Sustainable Sourcing
GRI 205: Anti-corruption 2016
205-1 Operations assessed for risks related to corruption
KOF ethics system
205-2 Communication and training about
anti-corruption policies and procedures
KOF ethics system
205-3 Confirmed incidents of corruption and actions taken
KOF ethics system
GRI 206: Anti-competitive Behavior 2016
206-1 Legal actions for anti-competitive
behavior, anti-trust, and monopoly practices
KOF ethics system
GRI 207: Tax 2019
207-1 Approach to Tax
20-F
207-2 tax governance, control & risk management
20-F
207-3 Stakeholder engagement and
management of concerns related to tax
20-F
207-4 Country-by-country reporting
20-F
GRI 301: Materials 2016
301-1 Materials used by weight or volume
Waste and recycling
301-2 Recycled input materials used
Waste and recycling
301-3 Reclaimed products and their packaging materials
Waste and recycling
GRI 302: Energy 2016
302-1 Energy consumption within the organization
Clean energy in our operations
302-2 Energy consumption outside of the organization
Clean energy in our operations
302-3 Energy intensity
Clean energy in our operations
302-4 Reduction of energy consumption
Clean energy in our operations
302-5 Reductions in energy requirements of products and services
Clean energy in our operations
GRI 303: Water and Effluents 2018
303-1 Interactions with water as a shared resource
Water Sustainability
303-2 Management of water discharge-related impacts
Water Sustainability
303-3 Water withdrawal
Water Sustainability
303-4 Water discharge
Water Sustainability
303-5 Water consumption
Water Sustainability
GRI 304: Biodiversity 2016
304-1 Operational sites owned, leased,
managed in, or adjacent to, protected areas and areas
of high biodiversity value outside protected areas
Non-material
304-2 Significant impacts of activities,
products, and services on biodiversity
Non-material
304-3 Habitats protected or restored
Non-material
304-4 IUCN Red List species and national
conservation list species with habitats
in areas affected by operations
Non-material
GRI 305: Emissions 2016
305-1 Direct (Scope 1) GHG emissions
Clean energy in our operations
305-2 Energy indirect (Scope 2) GHG emissions
Clean energy in our operations
305-3 Other indirect (Scope 3) GHG emissions
Clean energy in our operations
305-4 GHG emissions intensity
Clean energy in our operations
305-5 Reduction of GHG emissions
Clean energy in our operations
305-6 Emissions of ozone-depleting substances (ODS)
Clean energy in our operations
305-7 Nitrogen oxides (NOX), sulfur oxides (SOX),
and other significant air emissions
Clean energy in our operations
GRI 306: Effluents and Waste 2016
306-2 Waste by type and disposal method
Waste and recycling
306-3 Significant spills
Waste and recycling
306-4 Transport of hazardous waste
non-material
GRI 307: Environmental Compliance 2016
307-1 Non-compliance with environmental
laws and regulations
During 2019, we did not received any non-compliance notices pertaining our environmental practices.
GRI 308: Supplier Environmental Assessment 2016
308-1 New suppliers that were screened using environmental criteria
Sustainable Sourcing
308-2 Negative environmental impacts in the supply chain and actions taken
Sustainable Sourcing
GRI 401: Employment 2016
401-1 New employee hires and employee turnover
People 4 Growth
401-2 Benefits provided to full-time employees
that are not provided to temporary or part-time employees
People 4 Growth
401-3 Parental leave
People 4 Growth
GRI 402: Labor/Management Relations 2016
402-1 Minimum notice periods regarding operational changes
People 4 Growth
GRI 403: Occupational Health and Safety 2018
403-1 Occupational health and safety management system
Safety commitment
403-2 Hazard identification, risk assessment, and incident investigation
Safety commitment
403-3 Occupational health services
Safety commitment
403-4 Worker participation, consultation,
and communication on occupational
health and safety
Safety commitment
403-5 Worker training on occupational health and safety
Safety commitment
403-6 Promotion of worker health
Safety commitment
403-7 Prevention and mitigation of occupational
health and safety impacts directly linked by
business relationships
Safety commitment
403-8 Workers covered by an occupational health and safety management system
Safety commitment
403-9 Work-related injuries
Safety commitment
403-10 Work-related ill health
Safety commitment
GRI 404: Training and Education 2016
404-1 Average hours of training per year per employee
People 4 Growth
404-2 Programs for upgrading employee
skills and transition assistance programs
People 4 Growth
404-3 Percentage of employees receiving
regular performance and career development reviews
People 4 Growth
GRI 405: Diversity and Equal Opportunity 2016
405-1 Diversity of governance bodies and employees
People 4 Growth
405-2 Ratio of basic salary and remuneration of women to men
People 4 Growth
GRI 406: Non-discrimination 2016
406-1 Incidents of discrimination and corrective actions taken
KOF ethics system
GRI 407: Freedom of Association and Collective Bargaining 2016
407-1 Operations and suppliers in
which the right to freedom of association
and collective bargaining may be at risk
KOF ethics system
GRI 408: Child Labor 2016
408-1 Operations and suppliers at significant
risk for incidents of child labor
KOF ethics system
GRI 409: Forced or Compulsory Labor 2016
409-1 Operations and suppliers at significant
risk for incidents of forced or compulsory labor
KOF ethics system
GRI 410: Security Practices 2016
410-1 Security personnel trained in
human rights policies or procedures
People 4 Growth
GRI 411: Rights of Indigenous Peoples 2016
411-1 Incidents of violations involving rights
of indigenous peoples
KOF ethics system
GRI 412: Human Rights Assessment 2016
412-1 Operations that have been subject
to human rights reviews or impact assessments
KOF ethics system
412-2 Employee training on human
rights policies or procedures
People 4 Growth
412-3 Significant investment agreements and
contracts that include human rights clauses or that underwent
human rights screening
KOF ethics system
GRI 413: Local Communities 2016
413-1 Operations with local community engagement,
impact assessments, and development programs
Community development
413-2 Operations with significant
actual and potential negative
impacts on local communities
Community development
GRI 414: Supplier Social Assessment 2016
414-1 New suppliers that were screened using social criteria
Sustainable Sourcing
414-2 Negative social impacts in the supply chain and actions taken
Sustainable Sourcing
GRI 415: Public Policy 2016
415-1 Political contributions
KOF ethics system
GRI 416: Customer Health and Safety 2016
416-1 Assessment of the health and safety
impacts of product and service categories
Responsible Marketing
416-2 Incidents of non-compliance concerning
the health and safety impacts of products and services
KOF ethics system
GRI 417: Marketing and Labeling 2016
417-1 Requirements for product and service information and labeling
Responsible Marketing
417-2 Incidents of non-compliance concerning product and service information and labeling
KOF ethics system
417-3 Incidents of non-compliance concerning marketing communications
KOF ethics system
GRI 418: Customer Privacy 2016
418-1 Substantiated complaints concerning
breaches of customer privacy and
losses of customer data
KOF ethics system
GRI 419: Socioeconomic Compliance 2016
419-1 Non-compliance with laws
and regulations in the social and economic area
KOF ethics system