Fomento Economico Mexicano S.A.B. de C.V.

Good morning and welcome everyone to PHMSA's second quarter 2021 financial results conference call. All lines have been placed on mute to prevent any background noise. After the presentation, there will be a question and answer session. During this conference call, management may discuss certain forward-looking statements concerning PHMSA's future performance and should be considered as good faith estimates made by the company. These forward-looking statements reflect management expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which can materially impact the company's actual performance. At this time, we'll now turn the conference over to Juan Fonseca, FEMSA's Director of Investor Relations. Please go ahead, sir.

Good morning, everyone. Welcome to FEMSA's second quarter 2021 results conference call. Today, we are joined by Paco Camacho, FEMSA's Chief Corporate Officer, Eugenio Garza, our Finance and Corporate Development Director, and by Jorge Collazo, who heads Coke FEMSA's investor relations effort. The plan for today is to have Paco comment on some higher-level trends and more strategic considerations, and then to have Eugenio walk us through the numbers for the quarter. And we will follow the remarks with Q&A, as always. So with that, let me turn it over to Paco Camacho.

Thank you, Juan. Good morning, everyone. Thank you for joining us today. We hope you and your families are safe and doing well. As you know, the health emergency is not over. Despite this, our operations posted solid results for the second quarter of 2021. While this partially reflects increased mobility and some economic recovery, it is also driven by the team's superior operational capabilities and a top-notch ability to execute. Exactly one year ago, we were discussing the full impact of the COVID pandemic and the effect of the resulting lockdowns in our operations. Energy and resources were being quickly reallocated to prioritize the safety of our employees and customers, to help our communities, to preserve our cash, and to ensure the continuity of our business. Once these priorities were addressed, we look for opportunities and ways to come out stronger on the other side of this crisis. Some of our operations, particularly OXO and OXO-Gas, were affected by the significant reductions in consumer mobility. Some others, like Coca-Cola FEMSA and other drugstore operations, were more resilient and managed to deliver a solid performance in 2020. Today, six months into 2021, All of them are achieving much better results than they were a year ago. And in some cases, we are already at levels that match or exceed 2019 results. Clearly, we are not out of the woods yet. Vaccination levels have been uneven across our geography. Operating restrictions still exist in many markets. And consumers will generally increase or decrease their activity in inverse proportion to the level of concern. In fact, as you know, there is a bit of a rebound in cases right now, in what seems to be a third wave. So it continues to be a bumpy ride. But there is a clear recovery taking place in Mexico and in most of our markets. This recovery, combined with the learnings and efficiencies developed during the crisis by our teams, is helping us deliver an encouraging set of numbers today and setting the stage for compelling growth going forward. In our proximity division, less stringent restrictions have led to an increase in costumer mobility. In turn, this has translated into a steady recovery of OXO's most relevant categories, like beverages in single serve presentations. We have also been able to maintain the momentum that some other categories picked up during 2020, such as spirits and some traditional pantry items. Importantly, we are seeing our customers come right back to the store as soon as they regain some sort of normality in their routines. At our health division, we continue to leverage our consolidated platform capability to increase our market share in key territories, such as Mexico, Chile, and Colombia. Even our fuel division that saw the deepest fall in demand last year as consumers largely stopped driving their vehicles, is showing a recovery as demand gradually comes back, even if the pace is lower than we would like. For its part, our logistics and distribution operations continue to see better demand trends across markets, although some end-user segments in the US, such as hospitality, education, and office facilities, are not yet back to normal activity levels. Finally, Coca-Cola FEMSA kept finding ways to drive volumes while its adoption of digital platforms continue to help develop the business in Brazil and Mexico. At the same time, product mix is recovering towards smaller, more profitable presentations, ultimately helping the bottom line. With that, I will now turn the call over to Eugenio, who will go over the results in more detail.