By Valentine Hilaire
MEXICO CITY (Reuters) -Mexican bottler and retailer Femsa could spend $7 billion to $8 billion on new store openings over the next five to six years, an executive said following the release of second-quarter earnings boosted by more convenience stores.
Femsa, which is selling stakes in Dutch brewing giant Heineken and Jetro Restaurant Depot as it focuses on retail and bottling, said the funds would come from these divestments and internal revenues.
Net profit rose 18% from the year-ago quarter to 6.16 billion pesos ($360 million) on revenue that also grew 18%, to 198.22 billion pesos.
Femsa said it was also eyeing new strategic ventures and the distribution of extraordinary dividends as options for its capital allocation plan.
“We have a very nice problem of having a lot of cash,” said interim Chief Executive Jose Antonio Fernandez on a call after earnings were announced.
Femsa said growth was fueled particularly by its Proximity convenience division, whose revenue from Oxxo stores rose 20% across Latin America on the back of stronger same-store sales and more expansion.
Femsa said it opened 444 new units in Latin America during the quarter, reaching a net total of 1,391 new stores added over the last year. As of June 30, Proximity Americas had 22,059 Oxxo stores.
The company’s fintech arm, Spin by Oxxo, more than doubled its user base from a year earlier to 7.6 million users.
Femsa’s earnings before interest, tax, depreciation and amortization (EBITDA), or core earnings, for the quarter rose 16% to 27.13 billion pesos.
Earlier this week, the company’s Coca-Cola FEMSA bottling subsidiary reported a slight increase in quarterly net income, lifted by higher sales volumes and a favorable exchange rate.
Femsa did not update its timeline for finding a new non-interim CEO, after its former chief executive stepped down for health reasons earlier this month.
($1 = 17.1156 pesos at end-June)
(Reporting by Valentine Hilaire and Marion Giraldo and Natalia Siniawski; Editing by Sarah Morland, Alistair Bell and Richard Chang)
