Tags: KOF | FEMSA | Coca-Cola | Mexico

Coca-Cola Sees Strong Latin Sales

By Forrest Jones   |   Monday, 01 Aug 2011 01:43 PM

Higher food prices got consumers down? Maybe. But many still need their jolt of Coca-Cola, especially in Latin America. Coca-Cola FEMSA (KOF), a Mexico-based Latin American unit of the U.S. soft drinks giant, says sales and profits are up due to increased sales volumes at increased prices.

Revenues during the second quarter of the company's fiscal 2011 rose to $2.4 billion from $2.2 billion during the same period a year earlier. Net controlling interest income rose to $225.7 million during the second quarter from $212.9 million in the same quarter of 2010.

Total sales volume increased 5 percent to reach 665.6 million unit cases in the second quarter of 2011 compared to the same period in 2010.

Increased demand at higher prices equals more money. "Our performance was supported by volume growth across all of our divisions and our ability to implement pricing initiatives over the past several months throughout our main markets," says CEO Carlos Salazar Lomelin.

Coca-Cola FEMSA recently announced a merger with Mexican conglomerate Grupo Tampico's beverages unit and plans to open a bottling plant in Brazil.

It also bought Grupo Industrias Lacteas, a Panamanian juice and beverage company, earlier this year.

Ratings agency Moody's has assigned a positive outlook for the company's debt ratings.

"The positive outlook reflects our expectation that KOF will be able to keep the current trend in earnings and generate ample free cash flow in 2011 allowing it to at least maintain current credit metrics," Moody's says in a statement on the company.

M&A greenlight

The agency says money spent in mergers and acquisitions across the Americas won't hurt company ratings.

"The outlook also reflects the expectation that acquisitions and/or returns to shareholders will not materially affect credit metrics over the medium term," analysts write.

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Higher food prices got consumers down? Maybe. But many still need their jolt of Coca-Cola, especially in Latin America. Coca-Cola FEMSA (KOF), a Mexico-based Latin American unit of the U.S. soft drinks giant, says sales and profits are up due to increased sales volumes at...
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