Post 1Q25 Update

Soft consumer environment, with weaker conditions at the beginning of the year vs the company’s expectations; a cooler season didn’t help either. While some companies did start to see an improvement in late 1Q25-early 2Q25, a meaningful trend across all covered companies is not identified. Companies in the meantime are focusing on cost efficiencies and battling competitive pressures, as pricing —and traffic for retailers—is the main driver yet limited by consumers’ elasticity. Still, companies stuck to their guidance —with Bimbo the only exception—, as they wait for a better 2H25, not impacted by calendar and spending tough comps.

We continue to see Coke bottlers AC and KOF as solidly positioned despite an overall competitive and lackluster consumer environment. We remain Outperform on these companies, along with FEMSA and Becle. We are raising our PTs in most of these companies, mostly on the Becle given its better-than-expected margin performance. On Bimbo (Market Perform) and Gruma (Underperform) we remain more cautious.

In Consumer Discretionary, we continue to prefer Alsea (Outperform) vs Liverpool (Market Perform),given the former’s positioning and a more upbeat view on its ability to capture both a potential consumer trade down and an expected positive trend on services vs other discretionary spending.

In Supermarkets, we continue to prefer Chedraui. In our view, the company remains the best positioned vs peers amid a potential consumer trade down/up, and with a healthy diversification in terms of formats and geographies. We remain more positive on 2H25, and continue to expect margin expansion for the year. We reiterate our Market Perform rating in both Walmex and La Comer.

Within HPC, we remain Market Perform in Kimberly-Clark de Mexico, as FX headwinds slightly subside, yet top-line growth remains muted.

Going forward, we expect further noise in 2Q25, due to the shift of Easter festivities to April (vs March last year), while the consumer environment remains lackluster, with a potential gradual recovery; for companies exposed to the U.S., conditions are similarly soft. Additionally, the FX comp base is expected to continue impacting 2Q25 results, for better or worse depending on the company.