{"id":90206,"date":"2024-07-25T10:43:50","date_gmt":"2024-07-25T13:43:50","guid":{"rendered":"https:\/\/murray.adv.br\/?p=90206"},"modified":"2024-07-25T10:43:51","modified_gmt":"2024-07-25T13:43:51","slug":"coca-cola-femsa-maxes-out-factories-will-need-new-plant-in-brazil","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/coca-cola-femsa-maxes-out-factories-will-need-new-plant-in-brazil\/","title":{"rendered":"Coca-Cola Femsa \u201cmaxes out\u201d factories, will need new plant in Brazil"},"content":{"rendered":"\n
Company is adding two new bottling lines in the country to start operating in the second half of the year<\/em><\/h6>\n\n\n\n

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Coca-Cola Femsa<\/strong>, the world\u2019s largest bottler by sales volume, told analysts it must open\u00a0new factories<\/strong>\u00a0in Brazil and Mexico to meet increasing demand. Currently, the company has \u201cmaxed out\u201d its\u00a0existing factory capacity<\/strong>\u00a0to handle orders.<\/p>\n\n\n\n

In this scenario, focusing on maximizing its installed capacity, the company is adding two new bottling lines in Brazil<\/strong>, set to begin operations in the second half of the year. \u201cAs long as we can add lines, that\u2019s the way to go,\u201d said CEO Ian Craig Garc\u00eda.<\/p>\n\n\n\n

The company did not immediately respond to Valor<\/strong>\u2019s request for comment.<\/p>\n\n\n\n

In a conversation with analysts, the company revealed details about the impact of the floods in Rio Grande do Sul<\/strong>, which had a non-recurring effect on the balance sheet, costing nearly R$40 million. The tragedy led to lower margins in Latin America.<\/p>\n\n\n\n

In addition to Coca-Cola<\/strong>, the group\u2019s portfolio includes brands like Fanta<\/strong>, Sprite<\/strong>, Schweppes<\/strong>, Le\u00e3o<\/strong>, Sucos Del Valle<\/strong>, Ades<\/strong>, beers such as Therez\u00f3polis<\/strong>, Eisenbahn<\/strong>, Sol<\/strong>, and Kaiser<\/strong>, and Crystal<\/strong> mineral water.<\/p>\n\n\n\n

During the second-quarter earnings conference call on Friday (19), the management team was asked about investments in Brazil and Mexico, in light of the addition of seven new bottling lines in Latin America this year. Mr. Garc\u00eda said the company is trying to \u201cmax out\u201d current facilities before making new investments.<\/p>\n\n\n\n

Regarding the lines, CFO Gerardo Cruz Celaya explained that of the seven planned, two will be in Mexico, two in Guatemala, two in Brazil, and one in Colombia.<\/p>\n\n\n\n

Despite this expansion, the CEO admitted that a new plant would eventually be needed in southeastern Mexico and, at some point, a \u201ccompletely new greenfield project<\/strong>\u201d for Brazil and Mexico, though he did not specify timelines or product focuses for this investment.<\/p>\n\n\n\n

According to him, the bottler is executing a production capacity expansion plan initiated last year, which aims to add 15% production from 2023 to 2025. However, in the distribution area, he said they are \u201ca bit behind\u201d and need to increase capacity by 30% over the same period.<\/p>\n\n\n\n

Earlier this month, Valor<\/strong> reported that Uberl\u00e2ndia Refrescos, a Coca-Cola System franchisee and distributor in the Tri\u00e2ngulo Mineiro, Alto Parana\u00edba, and northwestern Minas Gerais regions, will invest R$1.5 billion in the region from 2024 to 2030, with R$860 million allocated for a new factory in Uberl\u00e2ndia.<\/p>\n\n\n\n

The CEO also noted that the operating profit margin in Latin America reached 14% from April to June, and would have been 14.2% excluding the negative impacts of the floods in Rio Grande do Sul.<\/p>\n\n\n\n

According to Mr. Garc\u00eda, operating profit rose 13.8% to 9.7 billion Mexican pesos ($540 million) in the quarter, with a profitability rate of 14%\u2014compared to 13.9% a year earlier. Coca-Cola Femsa managed to partially shield itself from the impacts in Brazil and global cost increases, avoiding a downturn compared to last year. Excluding the extraordinary effects related to the floods in Brazil, the margin would have been 14.2%.<\/p>\n\n\n\n

The CFO added that in the South American division, operating profit grew 19.6% in the quarter, with a margin of 10.1%. However, gains in the region were impacted by pressures in Argentina and costs from the tragedy in Brazil.<\/p>\n\n\n\n

Mr. Garc\u00eda mentioned that the supply chain team in Brazil had to adapt the sales and distribution network in Rio Grande do Sul, setting up two distribution centers around Porto Alegre. Finished products were sent from Uruguay, Argentina, and other bottlers in the system to mitigate production losses while working to reopen the Porto Alegre base.<\/p>\n\n\n\n

Due to the tragedy, over 5,000 tonnes of debris and lost products had to be cleaned and removed from the facilities. \u201cWe are working with our equipment manufacturing partners for a gradual reopening in the fourth quarter of the year,\u201d said the CEO.<\/p>\n\n\n\n

Despite the challenges, Mr. Garc\u00eda noted that sales volume in Brazil increased by 12.1% from April to June, reaching 269 million units, but did not specify what the increase would have been without the tragedy. From January to June, the growth was 11.2%.<\/p>\n\n\n\n

Ita\u00fa<\/strong> analyst Alejandro Fuchs asked the company about non-recurring effects in Brazil, estimating a negative impact of 200 million pesos on the balance sheet due to the floods in Rio Grande do Sul. The effect, absorbed in the second-quarter balance sheet, amounted to 130 million pesos (R$39 million, according to June\u2019s exchange rate), Mr. Celaya calculated.<\/p>\n\n\n\n

Regarding Femsa\u2019s operations, the Oxxo supermarket chain, created in a joint venture with Ra\u00edzen, saw an 89% increase in net sales in Brazil from April to June, driven by new store openings that boosted total sales. There were 179 net openings (balance between openings and closings) in 12 months until June. From April to June, 14 new stores were added, bringing the total to 525 stores in the country. Same-store sales increased by 22%, well above the market average, which has been in single digits during this period.<\/p>\n\n\n\n

*Por Adriana Mattos\u00a0\u2014 S\u00e3o Paulo<\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Company is adding two new bottling lines in the country to start operating in the second half of the year 07\/25\/2024 Coca-Cola Femsa, the world\u2019s largest bottler by sales volume, told analysts it must open\u00a0new factories\u00a0in Brazil and Mexico to meet increasing demand. Currently, the company has \u201cmaxed out\u201d its\u00a0existing factory capacity\u00a0to handle orders. In […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[25325,25326],"class_list":["post-90206","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-coca-cola-femsa","tag-new-plant-in-brazil"],"yoast_head":"\nCoca-Cola Femsa \u201cmaxes out\u201d factories, will need new plant in Brazil - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/coca-cola-femsa-maxes-out-factories-will-need-new-plant-in-brazil\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Coca-Cola Femsa \u201cmaxes out\u201d factories, will need new plant in Brazil - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"Company is adding two new bottling lines in the country to start operating in the second half of the year 07\/25\/2024 Coca-Cola Femsa, the world\u2019s largest bottler by sales volume, told analysts it must open\u00a0new factories\u00a0in Brazil and Mexico to meet increasing demand. 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