FOMENTO ECONÓMICO MEXICANO, S.A.B. DE C.V. AND SUBSIDIARIES, MONTERREY, N.L., MEXICO

Audited Financial Results for the twelve months ended December 31, 2016
Compared to the twelve months ended December 31, 2015.

Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”) is a Mexican holding company. Set forth below is certain audited financial information for FEMSA and its subsidiaries (the “Company” or “FEMSA Consolidated”) (NYSE: FMX; BMV: FEMSA UBD). The principal activities of the Company are grouped mainly under the following subholding companies (the “Subholding Companies”): Coca-Cola FEMSA, S.A.B de C.V. (“Coca-Cola FEMSA” or “KOF”), (NYSE: KOF, BMV: KOFL) which engages in the production, distribution and marketing of beverages, and FEMSA Comercio, S.A. de C.V. (“FEMSA Comercio”), including its Retail Division which operates small-format chain stores, a Health Division, which includes drugstores and related operations and its Fuel Division which operates retail service stations for fuels, motor oils and others.

The consolidated financial information included in this annual report was prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The 2016 and 2015 results are stated in nominal Mexican pesos (“pesos” or “Ps.”). Translations of pesos into US dollars (“US$”) are included solely for the convenience of the reader and are determined using the noon buying rate for pesos as published by the U.S. Federal Reserve Board in its H.10 Weekly Release of Foreign Exchange Rates as of December 30, 2016, which was 20.6170 pesos per US dollar.

This report may contain certain forward-looking statements concerning Company’s future performance that should be considered good faith estimates made by the Company. These forward-looking statements reflect management expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which could materially impact the Company’s actual performance.

FEMSA Consolidated
2016 amounts in millions of Mexican pesos

FEMSA’s consolidated total revenues increased 28.2% to Ps. 399,507 million in 2016 compared to Ps. 311,589 million in 2015. Coca-Cola FEMSA’s total revenues increased 16.6% to Ps. 177,718 million, supported by the positive translation effect originated by the appreciation of the Brazilian real and the Colombian peso, despite of the depreciation of the Venezuelan bolivar and the Argentine peso; all as compared to the Mexican peso. FEMSA Comercio – Retail Division’s revenues increased 14.4% to Ps. 137,139 million, driven by the opening of 1,164 net new OXXO stores combined with an average increase of 7.0% in same-store sales. FEMSA Comercio – Health Division’s amount to PS. 43,411 million, which on an organic basis¹, increased 24.0% compared to 2015. FEMSA Comercio – Fuel Division revenues increased 54.6% to Ps. 28,616 million in 2016, compared to the ten-month period from March to December of 2015, driven by the addition of 75 total net new stations in the last twelve months, a 7.6% increase in same-store sales.

Consolidated gross profit increased 20.3% to Ps. 148,204 million in 2016 compared to Ps. 123,179 million in 2015. Gross margin decreased 240 basis points to 37.1% of total revenues compared to 2015, reflecting a contraction in Coca-Cola FEMSA’s gross margin and the incorporation and growth of lower margin businesses in FEMSA Comercio.

Consolidated operating expenses increased 23.9% to Ps. 110,777 million in 2016 compared to Ps. 89,444 million in 2015. As a percentage of total revenues, consolidated operating expenses decreased from 28.7% in 2015 to 27.7% in 2016.

Consolidated administrative expenses increased 25.8% to Ps. 14,730 million in 2016 compared to Ps. 11,705 million in 2015. As a percentage of total revenues, consolidated administrative expenses decreased 10 basis points, from 3.8% in 2015, compared to 3.7% in 2016.

Consolidated selling expenses increased 25.1% to Ps. 95,547 million in 2016 as compared to Ps. 76,375 million in 2015. As a percentage of total revenues, selling expenses decreased 60 basis points, from 24.5% in 2015 to 23.9% in 2016.

Consolidated income from operations increased 10.8% to Ps. 37,427 million in 2016 as compared to Ps. 33,735 million in 2015. As a percentage of total revenues, operating margin decreased 140 basis points, from 10.8% in 2015 to 9.4% in 2016.

Some of our subsidiaries pay management fees to us in consideration for corporate services we provide to them. These fees are recorded as administrative expenses in the respective business segments. Our subsidiaries’ payments of management fees are eliminated in consolidation and, therefore, have no effect on our consolidated operating expenses.

Net financing expenses decreased to Ps. 4,619 million from Ps. 7,618 million in 2015, mostly driven by a positive result caused by inflationary effects in KOF’s net monetary positions across different countries, combined with a foreign exchange gain related to the effect of FEMSA’s US Dollar-denominated cash position, these movements where enough to offset an interest expense increase of 24.0% to Ps. 9,646 million in 2016, compared to Ps. 7,777 million in 2015 resulting from new debt issuance at Coca-Cola FEMSA in connection to the Vonpar acquisition, and the EUR $1,000 million bond issued by FEMSA during the first half of 2016.

Income before income taxes and share of the profit in Heineken results increased 13.7% to Ps. 28,600 million in 2016 compared with Ps. 25,163 million in 2015, mainly as a result of growth in FEMSA’s income from operations and lower financing expenses, which more than offset higher non-operating expenses.

Our accounting provision for income taxes in 2016 was Ps. 7,888 million, as compared to Ps. 7,932 million in 2015, resulting in an effective tax rate of 27.6% in 2016, as compared to 31.5% in 2015, slightly under our expected medium term range of 30%. The lower effective tax rate registered during 2016 is mainly related to Coca-Cola FEMSA driven by; certain tax efficiencies, lower effective tax rate in Colombia and ongoing efforts to reduce non-deductible items across our operations.

Consolidated net income was Ps. 27,175 million in 2016 compared to Ps. 23,276 million in 2015, resulting from growth in FEMSA’s income from operations and an increase in FEMSA’s 20% participation in Heineken’s results. Controlling interest amounted to Ps. 21,140 million in 2016 compared to Ps. 17,683 million in 2015. Controlling interest in 2016 per FEMSA Unit was Ps. 5.91 (US$ 2.87 per ADS).

Coca-Cola FEMSA
Coca-Cola FEMSA total revenues increased 16.6% to Ps. 177,718 million in 2016, as compared to 2015, supported by the positive translation effect originated by the appreciation of the Brazilian real and the Colombian peso, despite of the depreciation of the Venezuelan bolivar and the Argentine peso; all as compared to the Mexican peso. On a currency neutral basis and excluding Venezuela, total revenues grew 6.6%, driven by average price per unit case growth across most of our operations and volume growth in Mexico and Central America.

Coca-Cola FEMSA gross profit increased 10.6% to Ps. 79,662 million in 2016, as compared to 2015, with a gross margin contraction of 250 basis points. In local currency, higher sugar prices, plus the depreciation of the average exchange rate of the Argentine peso, the Colombian Peso, the Brazilian Real and the Mexican peso as applied to our U.S. dollar-denominated raw material costs; and an unfavorable currency hedging position in Brazil, were not fully offset by the benefit of lower PET prices, and our ongoing currency hedging strategy. Gross margin reached 44.8% in 2016.

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 employment 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 the local currency, net of applicable taxes. Packaging materials, mainly PET and aluminum, and HFCS, used as a sweetener in some countries, are denominated in U.S. dollars.

Operating expenses increased 12.9% to Ps. 55,742 million in 2016 compared with Ps. 49,386 million in 2015.

Administrative expenses increased 15.9% to Ps. 7,423 million in 2016, compared with Ps. 6,404 million in 2015. Selling expenses increased 14.7% to Ps. 48,039 million in 2016 compared with Ps. 41,880 million in 2015.

Income from operations increased 5.6% to Ps. 23,920 million in 2016 compared with Ps. 22,645 million in 2015.

FEMSA Comercio – Retail Division
FEMSA Comercio – Retail Division total revenues increased 14.4% to Ps. 137,139 million in 2016 compared to Ps. 119,879 million in 2015, primarily as a result of the opening of 1,164 net new OXXO stores during 2016, together with an average increase in same-store sales of 7.0%. As of December 31, 2016, there were a total of 15,225 OXXO stores. As referenced above, OXXO same-store sales increased an average of 7.0% compared to 2015, driven by a 6.8% increase in average customer ticket while store traffic increased 0.2%. Cost of goods sold increased 13.0% to Ps. 86,149 million in 2016, compared with Ps. 76,235 million in 2015. Gross margin increased 80 basis points to reach 37.2% of total revenues. This increase reflects healthy trends in our commercial income activity and the sustained growth of the services category, including income from financial services. As a result gross profit increased 16.8% to Ps. 50,990 million in 2016 compared with 2015.

Operating expenses increased 18.4% to Ps. 39,505 million in 2016 compared with Ps. 33,356 million in 2015. The increase in operating expenses was driven by the electricity tariff pick-up seen during the second half of 2016, and our initiative to improve the compensation structure of key in-store personnel.

Administrative expenses increased 17.6% to Ps. 2,924 million in 2016, compared with Ps. 2,487 million in 2015; as a percentage of sales, they reached 2.1%. Selling expenses increased 18.6% to Ps. 36,341 million in 2016 compared with Ps. 30,631 million in 2015; as a percentaje of sales, they reached 26.5% in 2016.

Income from operations increased 11.6% to Ps. 11,485 million in 2016 compared with Ps. 10,288 million in 2015, resulting in an operating margin contraction of 20 basis points to 8.4% as a percentage of total revenues for the year, compared with 8.6% in 2015.

FEMSA Comercio – Health Division
FEMSA Comercio – Health Division total revenues amounted to Ps. 43,411 million compared to Ps. 13,053 million in 2015 driven by the integration of Socofar and 220 net new store openings across territories. On an organic basis¹, total revenues for the full year increased 24.0% compared to 2015. As of December 31, 2016, there were a total of 2,120 drugstores in Mexico, Chile and Colombia. FEMSA Comercio – Health Division same-store sales increased an average of 22.4% reflecting strong performance across operations and positive foreign exchange translation effects from our South American operations.

Cost of goods sold amounted to Ps. 30,673 million in 2016, compared with Ps. 9,365 million in 2015. Gross margin increased 100 basis points to reach 29.3% of total revenues compared with 28.3% in 2015 reflecting higher structural gross margins at the Socofar operation. As a result, gross profit reached Ps. 12,738 million in 2016.

Operating expenses amounted to Ps. 11,166 million in 2016 compared with Ps. 3,078 million in 2015. The increase reflects the integration of Socofar and the organic expansion across Mexico.

Administrative expenses amounted to Ps. 1,769 million in 2016, compared with Ps. 414 million in 2015; as a percentage of sales, they reached 4.1%. Selling expenses amounted to Ps. 9,365 million in 2016 compared with Ps. 2,682 million in 2015; as a percentage of sales, they reached 21.5%.

FEMSA Comercio – Fuel Division
FEMSA Comercio – Fuel Division total revenues increased 54.6% to Ps. 28,616 million in 2016 compared to the ten-month period from March to December 2015. Same-station sales increased an average of 7.6% compared to the comparable period in 2015, driven by a 6.9% increase in average volume and a slight increase of 0.7% in average price per liter.

Cost of goods sold increased 54.3% to Ps. 26,368 million in 2016, compared with Ps. 17,090 million in 2015. Gross margin increased 20 basis points to reach 7.9% of total revenues. This increase reflects the benefit of price increases as well as higher operating leverage. For 2016, gross profit increased 58.3% to Ps. 2,248 million in 2016 compared with the ten-month period from March to December of 2015.

Operating expenses increased 64.5% to Ps. 1,995 million in 2016 compared with Ps. 1,213 million the comparable period of 2015.

Administrative expenses increased 44.3% to Ps. 127 million in 2016, compared with Ps. 88 million in the comparable period of 2015; as a percentage of sales, they reached 0.4%. Selling expenses increased 65.9% to Ps. 1,865 million in 2016 compared with Ps. 1,124 million in the comparable period of 2015; as a percentage of sales, they reached 6.6%.

Income from operations increased 22.2% to Ps. 253 million in 2016 compared with Ps. 207 million in the comparable period of 2015, resulting in an operating margin contraction of 20 basis points to 0.9% as a percentage of total revenues for the year, compared with 1.1% from the comparable period reflecting the ongoing expansion of our infrastructure to accommodate rapid growth across more territories, as well as higher regulation costs.

Key Events During 2016
Successful Euro Bond issuance in International Markets
The following texts reproduced our press releases exactly as the time they were published.

On March 18, 2016, FEMSA announced the placement of Euro-denominated notes in the international capital markets.

FEMSA successfully issued EUR $1,000 million in 7-year senior unsecured notes at a spread of 155 basis points over the relevant benchmark mid-swap, for a total yield of 1.824%. This issuance received credit ratings of A- from Standard & Poor's and A from Fitch Ratings. The proceeds from this issuance will be used for general corporate purposes, improving FEMSA's cost of debt. FEMSA has again increased its financial flexibility under extremely favorable conditions in order to continue to advance its long-term growth strategy.

The Coca-Cola Company and Coca-Cola FEMSA acquired soy-based beverage business from Unilever
On June 1 2016, The Coca-Cola Company together with Coca-Cola FEMSA announced that it had entered into an agreement with Unilever to acquire Unilever’s AdeS soy-based beverage business for an aggregate amount of US$ 575 million.

Founded in 1988 in Argentina, AdeS is the leading soy-based beverages brand in Latin America. As the first major brand launched in the category, AdeS pioneered the development of the second largest global market for soy-based beverages. The AdeS brand has a presence in Brazil, Mexico, Argentina, Uruguay, Paraguay, Bolivia, Chile, and Colombia. During 2015, AdeS sold 56.2 million unit cases of beverages and generated net revenues of US$ 284 million.

FEMSA Comercio enters convenience store space in Chile
On June 6, 2016, FEMSA Comercio announced that it had acquired Big John, a leading convenience store operator based in Santiago, Chile.

Following its acquisition of a majority stake in Chilean drugstore operator Socofar in the second half of 2015, FEMSA Comercio reiterated its appetite to pursue incremental growth opportunities in the region by acquiring Big John, which as of that date operated 49 stores mainly in the Santiago metropolitan area. This transaction represents another important step for FEMSA Comercio as it brings its considerable expertise in the convenience store format to the Chilean market, acquiring a strong local operator with a leading banner and attractive growth prospects while establishing a solid base from which to expand in the region.

Coca-Cola FEMSA Selected as One of the Most Sustainable Emerging Market Companies
On July 11, 2016, Coca-Cola FEMSA was selected for the second consecutive time as one of the highest rated companies in sustainability in emerging markets by the Vigeo Eiris Emerging Market 70 Ranking.

Because of its commitment to the sustainable generation of economic, social and environmental value, the Company was selected from a field of 842 companies from 37 industries and 31 countries. Furthermore, the ranking selected only four companies from the beverage sector, and only four based in Mexico. The ranking follows the Equitis ® methodology, based on 38 criteria, divided into six key areas: environment, human rights, human resources, community involvement, business behavior, and corporate governance.

Coca-Cola FEMSA Recognized by Dow Jones for Its Commitment to Sustainable Development
On September 13, 2016, Coca-Cola FEMSA was selected as a member of the Dow Jones Sustainability Emerging Markets Index for the fourth consecutive year. After a rigorous evaluation process, the Dow Jones Sustainability Index selects the top companies committed to sustainable development. The Company is one of only eight beverage companies in the world and one of just five Mexican companies across all industries chosen on the Dow Jones Sustainability Emerging Markets Index for its excellent performance in the economic, social, and environmental fields. Throughout the year, the Company has earned several awards and recognitions for its sustainability performance. These include its participation in the Mexican Stock Exchange Sustainability Index and its selection as a member of the Vigeo Eiris Emerging Market 70 Ranking.

Coca-Cola FEMSA reaches an agreement to acquire Vonpar in Brazil
On September 23, 2016, Coca-Cola FEMSA announced that its Brazilian subsidiary, Spal Industria Brasileira de Bebidas S.A. (“Spal”), had reached an agreement with the shareholders of Vonpar to acquire 100% of Vonpar, one of the largest privately owned bottlers in the Brazilian Coca-Cola system, for an aggregate enterprise value of R$3,578 million and an approximate equity value of R$3,508 million.

Vonpar’s footprint is a perfect geographic fit that links with the Coca-Cola FEMSA’s operations in the state of Paraná, in the south of Brazil. This transaction will increase Coca-Cola FEMSA’s volume in Brazil by 25%, allowing them to reach 49% of the Coca-Cola system’s volume in the country. During the last twelve months ended June 30, 2016, Vonpar sold 190 million unit cases of beverages, including 23 million unit cases of beer, generating R$2,026 million in net revenues and an EBITDA of R$335 million. The preliminary estimated amount of synergies to be captured from this transaction in the next 18 to 24 months is approximately R$65 million at the EBITDA level. These synergies will result from reconfiguration of the logistic network, manufacturing optimization, efficiencies in administrative expenses and the implementation of Coca-Cola FEMSA’s commercial practices. This transaction was successfully closed on December 6, 2016.

1 Excludes non-comparable results and significant acquisitions in the last twelve months.