Mexican Coca-Cola bottler FEMSA has unveiled additional insights into its future capital allocation plans.
FEMSA holds a crucial position in the bottling of Coca-Cola products across numerous Latin American countries via its subsidiary, Coca-Cola FEMSA (KOF). These initiatives, sanctioned by FEMSA’s board of directors, are in harmony with its overarching strategy known as ‘FEMSA Forward’.
FEMSA’s strategy for capital allocation prioritizes enhancing long-term intrinsic per-share value. Over the upcoming five years, the company aims to allocate over MXN 237 billion (approximately $13.89 billion) towards core organic growth endeavors, with nearly MXN 170 billion (approximately $9.96 billion) earmarked for investment in Mexico.
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Being one of Mexico’s major employers and contributors to tax revenue, FEMSA, boasting a workforce of over 280,000 employees, foresees paying more than MXN 100 billion (approximately $5.86 billion) in total income taxes from fiscal years 2023 to 2028.
The company plans to allocate funds to projects demonstrating favorable risk-reward ratios, prioritizing value generation and cash flow. Strategic investments will adhere to FEMSA’s fundamental objectives and undergo thorough financial scrutiny.
Additionally, contingent upon business performance and capital deployment opportunities, FEMSA targets returning to shareholders an aggregate amount approximately equivalent to 6% of its current public market value within the next two to three years.
This will be achieved through a combination of additional dividends and share buybacks, going beyond the usual dividend distribution.
To distribute capital to shareholders in 2024 and beyond, FEMSA plans to utilize dividends along with a multi-year share buyback program.
The board of directors has approved proposals for submission at the 2024 annual shareholders meeting. This includes an approximate 20% increase in ordinary dividends compared to 2023, disbursed in four quarterly installments, and the payment of an additional dividend in four quarterly installments alongside the approved ordinary dividends. Additionally, the maximum share buyback capacity will be doubled from the current authorization.
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