FEMSA Forward - Focused Leadership in Retail, Beverages & Digital
February 15 2024 - 3:15PM
UK Regulatory
FEMSA Forward - Focused Leadership in Retail, Beverages &
Digital
Advancing FEMSA Forward: Revamping capital
allocation strategy to drive long-term intrinsic per-share
value
MONTERREY, Mexico, Feb. 15, 2024 (GLOBE NEWSWIRE) --
Fomento Económico Mexicano, S.A.B. de C.V.
(“FEMSA” or the “Company”) (NYSE: FMX; BMV: FEMSAUBD, FEMSAUB) is
providing additional information regarding its future capital
allocation plans. These plans have been approved by the Board of
Directors of FEMSA and are an integral part of, and fully
consistent with, the FEMSA Forward strategy presented in
February of 2023.
Our capital allocation strategy is focused on
driving our long-term intrinsic per-share value. We believe we have
abundant attractive capital deployment opportunities. Over the next
five years we expect to invest capital in core organic growth
initiatives in excess of Ps. 237,000 million, with close to Ps.
170,000 million of that deployed in Mexico, where we are one of the
largest employers (over 280,000 employees), and taxpayers,
expecting to pay over Ps. 100,000 million in aggregate income taxes
for the period between fiscal 2023 and 2028. Considering the
remarkable speed and success with which the FEMSA
Forward-related divestments have been executed, and after
accounting for our expected organic and inorganic capital needs, we
believe that returning capital to shareholders should be an
important part of the overall strategy.
Capital allocation strategy overview and
parameters
As we look at the portfolio of investment opportunities available
to us, we will privilege organic investments within our proven
business models that can generate returns well in excess our cost
of capital, and with a relatively low level of risk. We will also
favor investments in initiatives and capabilities with attractive
risk-reward profiles that create and drive, through market
expansion and innovation, future value creation opportunities. In
addition, inorganic investments will be focused on meeting the
strategic objectives of our core verticals and scrutinized to meet
strict financial criteria: value creation and cash flow
generation.
Furthermore, subject to business performance and
capital deployment opportunities and beyond our ordinary dividend,
we will endeavor to return to shareholders an aggregate amount
equivalent to approximately six percent of FEMSA’s current public
market value over the next two to three years, through a
combination of additional dividends and share buybacks. This
capital return framework will have the overarching tenet of not
maintaining idle capital on the balance sheet, and maximizing
per-share value accretion as we strive to reach and maintain a 2x
Net Debt/EBITDA ex-KOF1 objective.
Return of capital initiatives for
2024
FEMSA expects to use a combination of dividends and a multi-year
share buyback program to return capital to its shareholders in 2024
and beyond. To this end, the Board of Directors has approved to
submit to the 2024 Annual Shareholders Meeting the following
proposals: i) Increase our ordinary dividends by approximately 20%
compared to 2023 on an aggregate basis by paying four quarterly
installments of Ps. 0.9161 per FEMSAUB unit and Ps. 1.0993 per
FEMSAUBD unit (Ps. 10.9931 per ADS); ii) pay an additional dividend
in four quarterly installments of Ps. 0.6418 per FEMSAUB unit and
Ps. 0.7701 per FEMSAUBD unit (Ps. 7.7010 per ADS), over and above
the approved ordinary dividends, to be disbursed on the same dates
as the ordinary dividends; and iii) double our maximum share
buyback capacity from the currently existing
authorization.
Medium-term capital allocation
considerations
Consistent with our plans described above, it is our intention to
utilize a mix of the share buyback program and additional dividends
as needed. We intend to continue to use these
mechanisms in the medium term, focused on per-share value accretion
and maintaining our stated leverage objective.
About FEMSA
FEMSA is a company that creates economic and social value through
companies and institutions and strives to be the best employer and
neighbor to the communities in which it operates. Across its
business units, FEMSA has more than 350,000 employees in 18
countries. FEMSA is a member of the Dow Jones Sustainability MILA
Pacific Alliance, the FTSE4Good Emerging Index and the Mexican
Stock Exchange Sustainability Index: S&P/BMV Total México ESG,
among other indexes that evaluate its sustainability
performance.
1 Net Debt / EBITDA ex-KOF: (Total Financial Debt
ex-KOF + Lease Liabilities ex-KOF – Total Cash ex-KOF) / (FEMSA
Retail businesses EBITDA + dividends received from Coca-Cola
FEMSA).
Fomento Economico Mexica... (LSE:0TD7)
Historical Stock Chart
From Jun 2024 to Jul 2024
Fomento Economico Mexica... (LSE:0TD7)
Historical Stock Chart
From Jul 2023 to Jul 2024