Coca Cola Femsa (NYSE:KOF) reported second-quarter 2026 volume, revenue and profit growth, supported by record quarterly volumes in Brazil, Colombia and Guatemala, while Mexico continued to contend with an excise-tax increase and softer consumer demand.
Chief Executive Officer Ian Craig said consolidated volume rose 3.5% to 1.1 billion unit cases. Revenue increased 4.7% to MXN 76.3 billion, or 6.6% on a currency-neutral basis, as volume growth and revenue-management actions more than offset unfavorable product mix and currency translation effects.
Operating income increased 9.1% to MXN 10.7 billion, while adjusted EBITDA grew 12.1% to MXN 15 billion. The company’s operating results included MXN 265 million in recovered insurance claims in Brazil. Excluding that item, operating income would have increased 6.4% and adjusted EBITDA would have risen 10.1%, according to management. Majority net income increased 16.9% to MXN 6.2 billion, reflecting higher operating income and a lower effective tax rate.
Mexico faces demand pressure but gains share
Mexico’s volume grew 1% from a year earlier, though Craig said the business remained affected by the excise-tax increase and subdued consumer conditions. Management said it gained share across markets and categories during the quarter and expects to use that improved competitive position to gradually close the remaining gap between pricing and inflation.
Craig told analysts that volumes in Mexico were slightly negative during the first two months of the quarter, at roughly a 3.5% decline, before rising more than 12% in June, largely due to easier comparisons. The company now expects full-year Mexican volumes to be approximately flat, rather than slightly negative, though it wants to evaluate consumer response after an expected August pricing adjustment.
The company said it passed through about 85% of the combined impact of taxes and inflation rather than the full amount at once. Craig said the approach was intended to avoid losses in household penetration and consumer preference, citing the larger share losses that followed a prior tax-related price increase in 2013 and 2014.
Mexico’s product mix continued shifting toward more affordable one-way multi-serve formats, particularly three-liter packages. Chief Financial Officer Gerardo Cruz said the mix shift weighed on reported pricing, but also showed consumers were remaining within the company’s portfolio. Coca-Cola Zero grew 24% in Mexico, while Powerade gained 150 basis points of share during the FIFA World Cup period, aided by the introduction of Powerade Zero and limited-edition flavors.
Digital sales through the Juntos+ platform represented 38% of traditional trade sales and 19% of total Mexican revenue. The company also said it is investing in dedicated single-serve coolers to support those packages.
South America drives growth and margins
South American volume increased 6.9% to 426 million unit cases. Revenue in the division rose 11.8% to MXN 30.9 billion, or 14.1% on a currency-neutral basis. Division operating income climbed 46.5% to MXN 4.3 billion, including the Brazilian insurance recovery, and operating margin expanded 330 basis points to 13.9%.
Brazil volume rose 5.2%, supported by commercial execution, digital capabilities and World Cup-related campaigns. The company said it outpaced the broader non-alcoholic ready-to-drink industry and gained share across categories. Coca-Cola Zero volume grew 15%, Sprite Zero posted triple-digit growth, and still beverages grew 23%, led by Monster, teas and Powerade.
Craig said Brazil still has room for growth in flavors, energy drinks, sports drinks and water. He also noted that the company is monitoring potential regulatory developments for 2027, including the possibility of tax changes and labor-related reforms, though management said it is too early to determine the magnitude or business implications of any potential changes.
Colombia delivered the strongest volume increase among the company’s major markets, with volume up 17.7%. Management cited a minimum-wage increase, improving consumer conditions and commercial execution. Flavors volume rose 27.2%, led by the Cuatro grapefruit beverage and Sprite. The company also cited strong performance by Powerade and Monster, along with gains in customer engagement through Juntos+.
Guatemala volume rose 3.4%, supported by stronger household consumption and remittances. The company said its customer base expanded 5.2% to about 156,000 customers, while cooler coverage increased to 78.8%. Argentina volume declined 2.8%, primarily due to a truck-driver strike and continued softness in consumer demand, although the company said it gained 100 basis points of carbonated soft-drink share through affordability and revenue-management actions.
Costs, capital allocation and outlook
Cruz said the company’s comprehensive financing result was an MXN 1.3 billion expense, compared with an MXN 1.2 billion expense a year earlier. Higher net interest expense following new debt issuance in the first quarter and lower gains on financial instruments were partly offset by a higher foreign-exchange gain tied to the Mexican peso’s appreciation against U.S. dollar-denominated net debt.
For 2026, Coca-Cola FEMSA had hedged 65% of PET needs, 96% of sugar, 98% of high-fructose corn syrup and 73% of aluminum requirements. For 2027, it had hedged 80% of sugar and high-fructose corn syrup requirements and 54% of aluminum requirements. Management said it was still seeking opportunities to build PET hedges for next year amid commodity-market volatility.
The company continues to expect capital expenditures of 7% to 7.5% of revenue in 2026. It cited new PET production capacity in Costa Rica and a new aluminum-can line in Uruguay as recent investments. Cruz also said the company is reviewing alternatives for returning capital to shareholders and will provide updates as that process develops.
Craig opened the call by addressing the June 24 earthquakes in Venezuela. He said the company, FEMSA and The Coca-Cola Company were supporting affected employees and communities, including through donations of more than 100,000 liters of water and other emergency supplies.
About Coca Cola Femsa (NYSE:KOF)
Coca‑Cola FEMSA (NYSE: KOF) is a large multinational beverage bottler and distributor operating primarily in Mexico and across multiple markets in Latin America. As a principal franchise bottler for The Coca‑Cola Company, the firm is responsible for producing, packaging, marketing and distributing Coca‑Cola branded beverages and a wide range of nonalcoholic drinks to retail and foodservice customers throughout its territories.
The company’s product portfolio includes carbonated soft drinks, bottled water, juices, ready‑to‑drink teas and coffees, sports and energy drinks, and other noncarbonated beverages.
