Post 2Q25 Update

Soft expectations were met by resilient results. As expected, weather headwinds and a weak consumer environment weighed on results. Nonetheless, while top-line was fairly in line with our estimates, margins contracted less than expected, as companies benefitted from different strategies —along with mix, FX in some cases, and efficiencies— to protect profitability. On average, our covered Consumer companies grew top line by 8% YoY (vs. 7% forecasted), and EBITDA by 5% (vs. our 3% estimate).

However, Consumer companies are not out of the woods yet, and while management teams are relatively positive about 2H25 — partially due to easier comps—, we don’t see a consensus on whether the last weeks of 2Q and first weeks of 3Q show an improving trend. Still, all companies reiterated their FY25 guidance, with Bimbo an exception, as the company now forecasts flat-to-expanding margins (vs. a previously more cautious outlook). Additionally, the FX effect is expected to be less meaningful in 2H25 given its previous year comp base.

We continue to see Coke bottlers AC and KOF as solidly positioned despite the 2Q25 underperformance. We remain Outperform on these companies, along with FEMSA and Becle. While volumes (and traffic for FEMSA) are expected to remain weak, we see positive pricing and resilient margin trends. On Bimbo (Market Perform) and Gruma (Market Perform) we remain more cautious.

In Consumer Discretionary, we continue to prefer Alsea (Outperform) vs Liverpool (Market Perform), with recent quarterly performance reaffirming our investment thesis on Alsea’s better positioning within the discretionary spectrum.

In Supermarkets, we prefer Chedraui and Walmex; we recently upgraded Walmex to Outperform (link to full report). Their scale, diversification, and low-end positioning could help them withstand consumer trade down, with the former benefitting from U.S. upside in the medium term, and the latter facing deep valuation discounts. We meanwhile reiterate our Market Perform rating for La Comer.

Within HPC, we remain Market Perform in Kimberly-Clark de Mexico, as FX margins remain resilient, yet top-line continues to disappoint.