UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of July 2021
Commission File Number 1-12260

COCA-COLA FEMSA, S.A.B. de C.V.

(Translation of registrant’s name into English)

United Mexican States

(Jurisdiction of incorporation or organization)

Calle Mario Pani No. 100,
Santa Fe Cuajimalpa,
Cuajimalpa de Morelos,
05348, Ciudad de México,

México

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F X   Form 40-F     

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)

Yes    No  X 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)

Yes    No  X 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes    No  X 

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with

Rule 12g3-2(b): 82-__.

Coca-Cola FEMSA Announces Results for the Second Quarter and First Six Months of 2021

Mexico City, July 26, 2021, Coca-Cola FEMSA, S.A.B. de C.V. (BMV: KOF UBL, NYSE: KOF) (“Coca-Cola FEMSA”, “KOF” or the “Company”), the largest Coca-Cola franchise bottler in the world by sales volume, announces results for the second quarter and the first six months of 2021.

SECOND QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS

John Santa Maria, Coca-Cola FEMSA’s CEO, commented:

“We are proud that our efforts to accelerate the recovery are reflected in solid second-quarter results and a solid cash flow generation. Our consolidated revenues increased 10.9%, driven by our portfolio and execution initiatives, coupled with recovering mobility and improving price-mix trends. Notably, our Mexico and Central America division delivered double-digit top-line growth, while our South America division’s outstanding volume performance was driven mainly by a solid growth in Brazil, coupled with recovering trends in Colombia, Argentina, and Uruguay. As a result, our consolidated volumes already exceed our 2019 baseline by 1.3%. Importantly, as part of our resilient profile and disciplined approach, our favorable raw material hedging initiatives combined with cost and expense efficiencies, are enabling us to protect our profitability, while successfully navigating still volatile environments.

As we enter the second half of the year, we are confident that we are taking the right strategic actions to continue building an unparalleled commercial beverage platform that is digitally integrated in order to carry on capturing opportunities to grow profitability. Moreover, we continue ensuring that our employees, clients and consumers remain at the center of every decision and action we take. By delivering on our objectives, we are confident that we will continue to deliver sustainable value for all of our stakeholders for many years to come.”

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RECENT DEVELOPMENTS

As part of a shared vision for the future, and to continue strengthening its relationship and alignment, Coca-Cola FEMSA and The Coca-Cola Company have agreed to enhance the Cooperation Framework previously announced in July 2016. This enhancement includes additional drivers to grow the business, strengthening our successful and longstanding partnership.

This update contemplates the following main objectives:

CONFERENCE CALL INFORMATION

CONSOLIDATED SECOND QUARTER RESULTS

Volume increased 9.1% to 851.4 million unit cases, driven mainly by double-digit growth in South America, coupled with solid volume recoveries in Mexico and Central America. Consolidated volume increased 1.3% versus our 2019 baseline.

Total revenues increased 10.9% to Ps. 47,786 million, driven mainly by volume, our pricing initiatives and favorable price-mix effects across our markets. These effects were partially offset by unfavorable currency translation effects from all of our operating currencies. On a comparable basis, total revenues would have increased 19.2%. Total revenues declined 0.4% versus the same period of 2019.

Gross profit increased 18.3% to Ps. 22,560 million, and gross margin expanded 290 basis points to 47.2%, driven mainly by cost efficiencies, successful raw material hedging initiatives, favorable price-mix effects, and the recognition of Ps. 1,083 million related to the resumption of tax credits on concentrate purchased from the Manaus Free Trade Zone. These effects were partially offset by an unfavorable currency hedging position and higher concentrate costs in Mexico. On a comparable basis, gross profit would have increased 26.1%. Gross profit increased 2.1% versus the second quarter of 2019.

Operating income increased 41.3% to Ps. 7,248 million, and operating margin expanded 330 basis points to 15.2%. This increase was driven mainly by the increase in gross profit, coupled with operating expense efficiencies. These effects were partially offset by the normalization of certain operating expenses such as marketing, labor, and maintenance related to increases in mobility across our operations. On a comparable basis, excluding currency translation effects, our operating income would have increased 44.1%. Our operating income increased 14.4% versus our 2019 baseline.

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Comprehensive financing result recorded an expense of Ps. 1,323 million, compared to an expense of Ps. 1,268 million in the same period of 2020. This increase was driven mainly by a foreign exchange loss of Ps. 171 million, as our cash exposure in U.S. dollars was negatively impacted by the appreciation of the Mexican Peso, as compared to the first quarter of the year. In addition, the Company recorded a lower interest income as compared to the same period of the previous year.

These effects were partially offset by a decrease in interest expenses of Ps. 162 million, driven mainly by the payment of short-term financing incurred during the first quarter of 2020, which was a preventive measure to reinforce the Company’s cash position in the face of the uncertainties driven by the COVID-19 pandemic.

Finally, a gain of Ps. 118 million in monetary position in inflationary subsidiaries was recognized as compared to a gain of Ps. 81 million during the same period of 2020.

Income tax as a percentage of income before taxes was 37.9% as compared to 32.6% during the same period of the previous year. This increase was driven mainly by adjustments to deferred tax reserves, the effects of a higher inflation level, and adjustments in the tax provision.

Net income attributable to equity holders of the company reached Ps. 3,316 million as compared to Ps. 2,115 million during the same period of the previous year. This increase was driven mainly by operating income growth, coupled with impairments recognized in other non-operating expenses of Ps. 903 million during the same period of 2020. Earnings per share¹ were Ps. 0.20 (Earnings per unit were Ps. 1.58 and per ADS were Ps. 15.79.).

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CONSOLIDATED FIRST SIX MONTHS RESULTS

Volume increased 4.9% to 1,652.1 million unit cases in the first six months of 2021 as compared to the same period of 2020, driven mainly by gradual recoveries and increases in mobility across our markets. Consolidated volume increased 0.9% as compared with the same period of 2019.

Total revenues increased 4.7% to Ps. 92,500 million in the first six months of 2021 as compared to the same period of 2020, driven mainly by volume growth, coupled with our pricing initiatives and favorable price-mix effects. These factors were partially offset by unfavorable currency translation effects resulting from the depreciation of all of our operating currencies into Mexican Pesos. On a comparable basis, total revenues would have increased 12.2%. Total revenues declined 2.1% versus the same period of 2019.

Gross profit increased 6.9% to Ps. 42,491 million in the first six months of 2021 as compared to the same period of 2020, and gross margin expanded 90 basis points to 45.9%. Our raw material hedging initiatives, cost efficiencies, favorable price-mix effects, and the recognition of Ps. 1,083 million related to the resumption of tax credits on concentrate purchased from the Manaus Free Trade Zone were partially offset by an unfavorable currency hedging position, the depreciation in the average exchange rate of most of our operating currencies as applied to our U.S. dollar-denominated raw material costs, and higher concentrate costs in Mexico. On a comparable basis, gross profit would have increased 13.7%. Gross profit declined 1.4% versus 2019.

Operating income increased 21.1% to Ps. 13,147 million in the first six months of 2021 as compared to the same period of 2020, and operating margin expanded 190 basis points to 14.2%. This increase was driven mainly by operating expense efficiencies and an increase in gross profit. These effects were partially offset by the normalization of certain operating expenses such as marketing, labor, and maintenance related to increases in mobility across our operations and unfavorable currency translation effects. On a comparable basis, operating income would have increased 26.9%. Our operating income increased 8.9% versus our 2019 baseline.

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Comprehensive financing result recorded an expense of Ps. 2,454 million during the first six months of 2021 compared to an expense of Ps. 3,467 million in the same period of 2020.

Interest expense, net, recorded a decrease during the first six months of 2021, driven mainly by a one-time interest expense related to our successful debt refinancing initiatives during the first quarter of 2020, coupled with the payment of short-term financings during the first six months of 2021. These short-term financings were a preventive measure to reinforce the Company’s cash position in the face of the uncertainties driven by the COVID-19 pandemic.

In addition, we recognized a larger gain in monetary position in inflationary subsidiaries as compared to the same period of 2020.

These effects were partially offset by a foreign exchange loss of Ps. 156 million, as compared to a gain of Ps. 493 million registered during the same period of 2020, as our cash exposure to U.S. dollars was negatively impacted by the appreciation of the Mexican Peso.  

Income tax as a percentage of income before taxes was 36.5% as compared to 31.5% during the first six months of the previous year. This increase was driven mainly by tax impacts related to higher inflation in 2021, adjustments of deferred tax assets and effects of certain changes on tax legislation where we operate.

Net income attributable to equity holders of the company increased 38.9% to reach Ps. 6,472 million in the first six months of 2020 as compared to Ps. 4,658 million during the same period of the previous year. This increase was driven mainly by an increase in operating income, coupled with lower financial costs related to a one-time increase in our interest expense in 2020 and lower non-operative expenses due to impairments of Ps. 903 million recognized during the first six months of 2020. Earnings per share¹ were Ps. 0.39 (Earnings per unit were Ps. 3.08 and earnings per ADS were Ps. 30.81.).

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MEXICO & CENTRAL AMERICA DIVISION SECOND QUARTER RESULTS

Volume increased 4.6% to 545.8 million unit cases, driven mainly by double-digit growth in Guatemala, Panama, and Nicaragua, coupled with volume recoveries in Mexico and Costa Rica. Volume declined 1.6% versus our 2019 baseline.

Total revenues increased 10.5% to Ps. 30,262 million, driven by volume increases, our pricing initiatives, and favorable price-mix effects. These effects were partially offset by an unfavorable currency translation effect from all our operating currencies in Central America as translated into Mexican Pesos. On a comparable basis, total revenues would have increased 13.7%. Total revenues grew 4.3% versus the same period of 2019.

Gross profit increased 12.6% to Ps. 15,175 million, and gross margin increased 90 basis points, driven mainly by cost efficiencies coupled with favorable raw material hedging strategies and favorable price-mix effects. These factors were partially offset by higher concentrate costs in Mexico and an unfavorable currency hedging position. On a comparable basis, gross profit would have increased 15.6%. Gross profit increased 7.1% versus our 2019 baseline.

Operating income increased 9.3% to Ps. 5,132 million, and operating margin contracted 20 basis points to 17.0%, driven mainly by gross profit growth. These effects were partially offset by the normalization of certain operating expenses such as marketing, labor, and maintenance as compared to the same period in 2020. On a comparable basis, operating income would have increased 11.1%. Our operating income increased 13.4% versus our 2019 baseline.

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SOUTH AMERICA DIVISION SECOND QUARTER RESULTS

Volume increased 17.9% to 305.6 million unit cases, driven mainly by double-digit growth in all of our markets, led mainly by Brazil and Colombia that grew volumes as compared to 2019. The division’s volume increased 6.8% versus our 2019 baseline.

Total revenues increased 11.7% to Ps. 17,524 million, driven mainly by volume growth across our territories and favorable price-mix effects, partially offset by an unfavorable currency translation effect resulting from the depreciation of all of our operating currencies in the division as compared to the Mexican Peso. On a comparable basis, excluding currency translation effects, total revenues would have increased 29.9%. Total revenues declined 7.6% versus the same period of 2019, driven mainly by unfavorable currency translation effects.

Gross profit increased 32.0% to Ps. 7,385 million, and gross margin expanded 650 basis points to 42.1%. This increase is a result of improving operating leverage and price-mix effects, cost efficiencies, and our favorable raw material hedging position, coupled with the recognition of Ps. 1,083 million related to the resumption of tax credits on concentrate purchased from the Manaus Free Trade Zone. These effects were partially offset by an unfavorable currency hedging position, the depreciation in the average exchange rate of the Argentine Peso as applied to our U.S. dollar-denominated raw material costs. On a comparable basis, gross profit would have increased 55.0%. Gross profit decreased 7.0% versus our 2019 baseline.

Operating income increased 387.6% to Ps. 2,116 million, and operating margin expanded 930 basis points, driven mainly by gross profit growth, coupled with operating expense efficiencies. These effects were partially offset by the gradual normalization of marketing, labor, and maintenance expenses and an operating foreign exchange loss. On a comparable basis, operating income would have increased 415.3%. Operating income increased 16.8% versus our 2019 baseline.

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DEFINITIONS

Volume is expressed in unit cases. Unit case refers to 192 ounces of finished beverage product (24 eight-ounce servings) and, when applied to soda fountains, refers to the volume of syrup, powders, and concentrate that is required to produce 192 ounces of finished beverage product.

Transactions refers to the number of single units (e.g., a can or a bottle) sold, regardless of their size or volume or whether they are sold individually or in multipacks, except for soda fountains, which represent multiple transactions based on a standard 12 oz. serving.

Operating income is a non-GAAP financial measure computed as “gross profit – operating expenses – other operating expenses, net + operative equity method (gain) loss in associates.”

Operating cash flow is a non-GAAP financial measure computed as “operating income + depreciation + amortization & other operating non-cash charges.”

Earnings per share are equal to “quarterly earnings / outstanding shares.” Earnings per share (EPS) for all periods are adjusted to give effect to the stock split resulting in 16,806,658,096 shares outstanding. For the convenience of the reader, as each KOF UBL Unit is comprised of 8 shares (3 Series B shares and 5 Series L shares), earnings per unit are equal to EPS multiplied by 8. Each ADS represents 10 KOF UBL Units.

COMPARABILITY

In an effort to provide our readers with a more useful representation of our company's underlying financial and operating performance, as of the first quarter 2020, we adjusted our methodology to calculate our comparable figures, no longer excluding hyperinflationary operations. Due to this change, our “comparable” term means, with respect to a year-over-year comparison, the change of a given measure excluding the effects of: (i) mergers, acquisitions, and divestitures; and (ii) translation effects resulting from exchange rate movements. In preparing this measure, management has used its best judgment, estimates, and assumptions in order to maintain comparability.

ABOUT THE COMPANY

Stock listing information: Mexican Stock Exchange, Ticker: KOFUBL | NYSE (ADS), Ticker: KOF | Ratio of KOFUBL to KOF = 10:1

Coca-Cola FEMSA files reports, including annual reports and other information with the U.S. Securities and Exchange Commission, or the “SEC,” and the Mexican Stock Exchange (Bolsa Mexicana de Valores, or the “BMV”) pursuant to the rules and regulations of the SEC (that apply to foreign private issuers) and of the BMV. Filings we make electronically with the SEC and the BMV are available to the public on the Internet at the SEC’s website at www.sec.gov, the BMV’s website at www.bmv.com.mx, and our website at www.coca-colafemsa.com.

Coca-Cola FEMSA, S.A.B. de C.V. is the largest Coca-Cola franchise bottler in the world by sales volume. The Company produces and distributes trademark beverages of The Coca-Cola Company, offering a wide portfolio of 129 brands to a population of more than 265 million. With over 80 thousand employees, the Company markets and sells approximately 3.3 billion unit cases through close to 2 million points of sale a year. Operating 49 manufacturing plants and 268 distribution centers, Coca-Cola FEMSA is committed to generating economic, social, and environmental value for all of its stakeholders across the value chain. The Company is a member of the Dow Jones Sustainability Emerging Markets Index, Dow Jones Sustainability MILA Pacific Alliance Index, FTSE4Good Emerging Index, and the Mexican Stock Exchange’s IPC and Social Responsibility and Sustainability Indices, among others. Its operations encompass franchise territories in Mexico, Brazil, Guatemala, Colombia, and Argentina, and, nationwide, in Costa Rica, Nicaragua, Panama, Uruguay, and Venezuela through its investment in KOF Venezuela. For further information, please visit www.coca-colafemsa.com.

ADDITIONAL INFORMATION

All of the financial information presented in this report was prepared under International Financial Reporting Standards (IFRS).

This news release may contain forward-looking statements concerning Coca-Cola FEMSA’s future performance, which should be considered as good faith estimates by Coca-Cola FEMSA. These forward-looking statements reflect management’s expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, many of which are outside Coca-Cola FEMSA’s control, which could materially impact the Company’s actual performance. References herein to “US$” are to United States dollars. This news release contains translations of certain Mexican peso amounts into U.S. dollars for the convenience of the reader. These translations should not be construed as representations that Mexican peso amounts actually represent such U.S. dollars amounts or could be converted into U.S. dollars at the rate indicated.

(6 pages of tables to follow)

⁽¹⁾              Except volume and average price per unit case figures.

⁽²⁾              Please refer to page 14 and 15 for revenue breakdown.

⁽³⁾              Includes equity method in Jugos del Valle, Leão Alimentos, and Estrella Azul, among others.

⁽⁴⁾              Includes equity method in PIASA, IEQSA, Beta San Miguel, IMER, and KSP Participacoes, among others.

⁽⁵⁾              The operating income and operating cash flow lines are presented as non-GAAP measures for the convenience of the reader.

⁽⁶⁾              Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.

⁽⁷⁾              Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

⁽¹⁾              Except volume and average price per unit case figures.

⁽²⁾              Please refer to page 14 and 15 for revenue breakdown.

⁽³⁾              Includes equity method in Jugos del Valle and Estrella Azul, among others.

⁽⁴⁾              The operating income and operating cash flow lines are presented as non-GAAP measures for the convenience of the reader.

⁽⁵⁾              Operating cash flow = operating income + depreciation, amortization & other operating non-cash charges.

⁽⁶⁾              Please refer to page 9 for our definition of “comparable” and a description of the factors affecting the comparability of our financial and operating performance.

COCA-COLA FEMSA
CONSOLIDATED BALANCE SHEET
Millions of Pesos
Assets		Jun-21	Dec-20	% Var.		Liabilities & Equity		Jun-21	Dec-20	% Var.
Current Assets						Current Liabilities
Cash, cash equivalents and marketable securities						Short-term bank loans and notes payable		3,148	5,017	-37%
		46,786	43,497	8%		Suppliers		19,663	17,195	14%
Total accounts receivable		8,895	11,523	-23%		Short-term leasing Liabilities		554	560
Inventories		11,580	9,727	19%		Other current liabilities		24,614	20,073	23%
Other current assets		7,785	7,693	1%		Total current liabilities		47,979	42,845	12%
Total current assets		75,046	72,440	4%		Non-Current Liabilities
Non-Current Assets						Long-term bank loans and notes payable		81,213	82,461	-2%
Property, plant and equipment		108,334	109,551	-1%		Long Term Leasing Liabilities		891	746
Accumulated depreciation		(49,910)	(50,091)	0%		Other long-term liabilities		15,417	14,557	6%
Total property, plant and equipment, net		58,424	59,460	-2%		Total liabilities		145,500	140,609	3%
Right of use assets		1,425	1,278	11%		Equity
Investment in shares		7,607	7,623	0%		Non-controlling interest		6,131	5,583	10%
Intangible assets and other assets		104,248	103,971	0%		Total controlling interest		113,454	116,874	-3%
Other non-current assets		18,335	18,294	0%		Total equity		119,585	122,457	-2%
Total Assets		265,085	263,066	1%		Total Liabilities and Equity		265,085	263,066	1%
		June 30, 2021
Debt Mix		% Total Debt (1)	% Interest Rate Floating (1) (2)	Average Rate		Debt Maturity Profile
Currency
Mexican Pesos		53.0%	24.1%	7.0%
U.S. Dollars		26.6%	0.0%	2.9%
Colombian Pesos		2.2%	5.7%	3.8%
Brazilian Reals		15.7%	55.6%	6.8%
Uruguayan Pesos		1.6%	0.0%	7.3%
Argentine Pesos		0.8%	0.0%	46.7%
Total Debt		100%	11.0%	6.1%
(1) After giving effect to cross- currency swaps and financial leases.
(2) Calculated by weighting each year´s outstanding debt balance mix.
Financial Ratios		2Q 2021	FY 2020	Δ%
Net debt including effect of hedges (1)(3)		36,392	42,194	-13.8%
Net debt including effect of hedges / Operating cash flow (1)(3)		0.94	1.13
Operating cash flow/ Interest expense, net (1)		7.29	5.46
Capitalization (2)		42.0%	42.7%
(1) Net debt = total debt - cash
(2) Total debt / (long-term debt + shareholders' equity)
(3)  After giving effect to cross-currency swaps.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.