José Antonio Fernández Carbajal
Executive Chairman of the Board
Eduardo Padilla Silva
Chief Executive Officer
The economic impact inherent to the operations is reflected by the returns on the investments we made and the indicators of our financial strength, including growth, revenues, profits and income from operations. But we also track social value creation by measuring the impact around these three pillars, the basis of the Sustainability Strategy: Our People, Our Planet and Our Community.
In 2018, we marked another important step forward in FEMSA’s evolution as an organization that creates value for all stakeholders. After thorough self-reflection and analysis, we have reviewed and adapted the FEMSA Corporate Identity model, which reflects our culture and purpose. This model also clarifies for us, and for all our stakeholders, FEMSA’s mission, vision and set of shared corporate values that guide this collective mindset and strategic approach toward long-term success. In short, our mission is to generate economic and social value– a premise that is at the heart of the entire business.
We view these social and economic drivers of value creation as two sides of the same coin, closely linked and mutually reinforcing. FEMSA is committed to shared corporate values that provides the blueprint for how we will succeed in achieving our mission across the organization.
It is in this spirit that our 2018 integrated Annual Report highlights how we are working to stay true to the organization’s mission, activate our vision and live the shared values as one, unified team. We seek to disclose the progress we have made this year on both sustainability and financial performance.
We are proud to say that we had notable successes in 2018.
First, despite challenging macroeconomic conditions in several markets, we continued to leverage our diversified business platform and operational expertise to realize strong performance on a consolidated level. Total revenues in 2018 increased 6.8 percent over the previous year to Ps. 469.7 billion (US$ 23.9 billion), and income from operations increased 3.3 percent to Ps. 41.6 billion (US$ 2.1billion), while net consolidated income decreased 11.1 percent to Ps. 33.1 billion (US$ 1.7 billion). Net majority income per BD Unit was Ps. 6.70 in 2018 (US$ 3.42 per ADS).
FEMSA Comercio opened 1,422 net new OXXO stores in the Proximity Division, 136 net new stores in the Health Division and 87 net new stations in the Fuel Division. An increasingly important part of this growth resulted from the expansion of our international footprint. We opened the first OXXO store in Peru and entered the Ecuadorian market through Socofar’s acquisition of Corporación GPF*, Ecuador’s leading drugstore operator. Of a combined total of 1,645 new stores and stations across the three divisions globally, 92 percent were opened in Mexico. This expansion contributed to FEMSA Comercio creating more than 14,000 new jobs in Mexico during 2018. In terms of investment, FEMSA Comercio deployed US$ 566 million in Capital Expenditures during the year, with 88 percent of that invested in Mexico.
The economic impact inherent to the operations is reflected by the returns on the investments we made and the indicators of our financial strength, including growth, revenues, profits and income from operations. But we also track social value creation by measuring the impact around these three pillars, the basis of the Sustainability Strategy: Our People, Our Planet and Our Community.
As part of the approach to sustainability governance, we continue to support the UN Global Compact’s (UNGC) ten principles to protect human rights, uphold ethical labor practices, reduce environmental impacts and combat corruption. Our 2018 Annual Report represents our thirteenth Communication on Progress of the UNGC since 2005.
Coca-Cola FEMSA continued strengthening its total beverage leadership position. For example, we continued to capitalize on strategic, long-term synergetic opportunities through the newly acquired territories of Uruguay and Guatemala and by accelerating the digitally-driven business transformation, building up a winning portfolio and creating a more collaborative, consumer and client-centric culture. Conversely, and with a firm focus on value creation, in August 2018 Coca‑Cola FEMSA announced the sale of its 51% stake in Coca-Cola FEMSA Philippines, Inc., in order to serve the best interest of its shareholders and maintain discipline in its capital-allocation process.
We also made strides in 2018 on the corporate sustainability strategy.
To support Our People, we launched several new courses on FEMSA University, which offers an array of online curricula and functional materials that focus on strengthening our employees’ key business capabilities. With support from an expanded investment in the platform in 2018 of nearly half a million ($US) dollars, we now offer more than 5,000 different resources for our employees including events, online courses, videos, tutorials and other professional development materials.
In support of Our Planet, we made great progress toward achieving our 2020 goal of sourcing 85 percent of our Mexico operations’ total electric energy needs from renewable energy. As of the end of 2018, we are meeting 37 percent of the total energy needs through renewables. This progress has been due largely to the launch of two new wind farms in Mexico that are now supplying clean energy to FEMSA.
In support of Our Community, employees continued to contribute to their local communities through volunteering. In 2018, 71,683 employees devoted a total of 593,308 hours to approximately 1,975 initiatives. Additionally, we reaffirmed our commitment to education through important programs such as Líderes del Mañana at Tec de Monterrey.
We are grateful for the support of all our key stakeholders—especially our employees, who bring FEMSA’s culture to life and exemplify our values every day. Looking ahead, we know there will be challenges, changes and exciting new opportunities. As we step forward to continuing evolution, we are confident in our approach—grounded by a mission and vision that serve us as beacon and guide. We welcome your feedback and we look forward to sharing this journey with you in 2019 and beyond.
José Antonio Fernández Carbajal
Executive Chairman of the Board
eduardo padilla silva
Chief Executive Officer
