Coca-Cola FEMSA, S.A.B. de C.V. (KOF) Income Statement

The deceleration from 19.2% YoY growth in 2024Q4 to 4.7% in 2026Q2 suggests that the excise tax increase in Mexico is dampening volume growth, with pricing likely offsetting some impact. The 1.1% growth in 2026Q1 further indicates a soft patch, though the sequential recovery to 4.7% in Q2 may reflect price adjustments or mix shifts. Investors should monitor whether volume declines persist, as the tax effect annualizes.

The 180 basis point year-over-year gross margin improvement in 2026Q2 is notable given commodity inflation and currency volatility, implying that KOF's route-to-market moat is enabling effective price realization. However, operating margin remained flat at 13.2%, indicating that SG&A or other costs absorbed some of the gross margin gains. The sustainability of this margin expansion is uncertain, especially if the excise tax forces further price increases that could dampen volumes.

With gross profit up 8.8% YoY in 2026Q2, operating income growth of only 4.1% indicates that SG&A expenses are growing faster than gross profit, likely due to investments in digital platforms like Juntos+ or higher distribution costs. This suggests that KOF is not yet realizing significant operating leverage from its scale, and investors should watch for efficiency gains from digital transformation. If SG&A growth continues to outpace gross profit, operating margin could compress.

The reduction in COGS ratio suggests that KOF has been able to pass through higher input costs or benefit from favorable commodity pricing, but SG&A remains a large component, likely reflecting the labor-intensive direct-store delivery model. The absence of R&D spending is typical for a bottler, but the lack of SG&A data in several quarters makes it difficult to assess full cost trends. Investors should monitor whether SG&A growth moderates as digital initiatives improve sales force productivity.