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Fomento Economico Mexicano SAB de CV
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Good morning, and welcome, everyone, to FEMSA's Third Quarter 2021 Financial Results Conference Call. Today's call is being recorded. [Operator Instructions]
During this conference call, management may discuss certain forward-looking statements concerning FEMSA'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, I would now like to turn the conference over to Juan Fonseca, FEMSA's Director of Investor Relations. Please go ahead, sir.
Good morning, everyone. Welcome to FEMSA's Third Quarter 2021 Results Conference Call. Today, we have a full team for you as we are joined by Eduardo Padilla, FEMSA's Chief Executive Officer; Paco Camacho, our Chief Corporate Officer; Eugenio Garza, our Finance and Corporate Development Director; and Daniel Rodriguez Cofre, current CEO of FEMSA Comercio, who will succeed Eduardo as CEO of FEMSA next January, as you all know. And as always, we're also joined by Jorge Collazo, who heads Coke FEMSA's Investor Relations.
The plan for today is to have Paco comment on some higher level trends we saw during the quarter, and then Eugenio will walk us through the numbers. We will then turn the call to Eduardo and Daniel for some strategic considerations and final remarks, followed by Q&A.
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 doing well. In many ways, the third quarter marked a continuation of the dynamics we saw in Q2, gradually improving health and mobility trends, tempered by some operating reductions, restrictions that remain in place in many markets. And consumers that little by little feel more comfortable going back to what begins to look to them like almost normal activity levels. In our proximity division, same-store sales in Mexico were stable sequentially for the quarter. Importantly, we began to see an improvement in the last part of September and through the beginning of October. This means that we are increasingly seeing figures that approach 2019 levels. This, combined with higher commercial income activity and a more efficient expense structure is translating into margin gains at the operating and EBITDA levels.
Moving on to our Health division. We continue to see a solid performance driven by our operations in Chile, which continue to be a market where consumers have been showered with extra liquidity even as we begin to lap a tough comparison base. Mexico and Colombia are also operating at encouraging levels. With Ecuador, lagging a little because of a tougher macro environment. The fuel division continues to see a consumer that is gradually becoming more mobile and demand numbers that are improving even as we remain below pre-pandemic level. For its part, our logistics and distribution operation grew its top-line sequentially. Once again, balancing positive dynamics in several markets with some end-user segments in the U.S. that continue to operate below 2019 level, such as facility supplies and hospitality. As a result, profitability levels were in line with those in the second quarter. Importantly, we are already seeing returns on invested capital for the U.S. business approaching its WACC.
Further, we have made good progress in expanding our footprint in key new markets and integrating the new operations into our platform. We are executing on the strategy we defined when we decided to enter this business last year, and the results are very encouraging. Finally, Coca-Cola FEMSA had a strong quarter in terms of volume growth, particularly in South America. However, we faced a tough supply chain and raw materials cost environment, as well as a one-time adverse tax effect from the Brazilian operation that we were able to mitigate only partially through pricing, hedging and operating efficiencies. Beyond the short-term results and the core operations, we are making progress with our beer portfolio in Brazil as well as pilot testing additional categories as distribution opportunities.
With that, I will now turn the call over to Eugenio, who will go over the numbers in more detail.
Thank you, Paco. While the third quarter of last year was relatively strong in the context of the health emergency, our operations remained under severe restrictions, and we're still facing operational challenges. Therefore, growth figures relative to 2020 still do not reflect the full story, and we will complement it with some comparison data relative to 2019, where we consider this to be helpful as we did last quarter.
Starting with FEMSA's consolidated quarterly numbers. Total revenues during the third quarter increased 12.6%, while income from operations increased 14% compared to the third quarter of 2020. When we compare against the third quarter of 2019, total revenues increased 9%, while income from operations increased 2.7%. FEMSA's net income increased significantly and reached MXN16 billion, reflecting higher income from operations, higher non-operating income, including dividends received from our investment in Jetro, a non-cash foreign exchange gain relating to FEMSA's U.S. dollar-denominated cash position as impacted by the depreciation of the Mexican peso and an increase in our participation in associates results, which mainly reflects the results of our investment in Heineken. This was partially offset by higher interest expense.
In terms of our consolidated net debt position, it reached MXN70 billion at the end of September. For its part, CapEx increased 38%, reflecting a low comparison base in the third quarter of 2020, when most of our operations have suspended noncritical investment activities. Moving on to the OXXO operations and beginning with FEMSA Comercio's Proximity division. We opened 163 net new OXXO stores during the third quarter, reaching 431 net openings year-to-date. Our expansion operations were slowed down a bit by the third wave of COVID, and we were running behind schedule this year. As it still stands, we still have the objective of 800 net new stores in Mexico for the year, but we might come up a little bit short.
OXXO same-store sales were up 9.7% for the third quarter, reflecting 2.8% growth in-store traffic and an increase of 6.8% in the average customer ticket, both against 2020. When compared to the third quarter of 2019, same-store sales declined 3.5%. Gross margin increased 180 basis points to reach 41.3%, reflecting a recovery in commercial income from promotional programs with their key supplier partners and strong performance from our services category. Income from operations and operating margin increased significantly compared to the same period of 2020, reflecting improved operating leverage and strict expense discipline across the division. Relative to the third quarter of 2019, operating income increased 5.2%, while operating margin was flat. These are encouraging numbers given the still challenging operating environment.
Moving on to FEMSA Comercio's Health Division. During the third quarter, we expanded our drug store count by 81 net additions to reach a total of 3,540 units across our territories at the end of September and 291 total net new stores for the last 12 months. Revenues increased 8.2%, while same-store sales increased an average of 4.2%. We continue to see good momentum at our operations in Chile, Mexico and Colombia, coupled with gradually improving conditions in Ecuador. Gross margin contracted by 40 basis points in the quarter, reflecting increased promotional activity and higher institutional sales in our South American operation, partially offset by improved efficiency and more effective collaboration and execution with our supplier partners in Mexico. Operating margin contracted 20 basis points as we were able to partially mitigate the gross margin contraction.
Moving on to FEMSA Comercio's Fuel Division. Revenues increased 20.5%, and same-station sales grew 16.7% relative to the third quarter of 2020. When compared to 2019 numbers, we're not there yet, reflecting vehicle mobility levels that remain depressed and an increased competitive environment. During this quarter, gross margin was 12.9%, while operating margin was 4% of total revenues, reflecting tight expense control that offset operating deleverage.
Regarding our logistics and distribution business, revenues increased sequentially, reflecting positive dynamics overall. However, in the U.S., we continue to see different speeds of recovery at some end-user categories such as facility supplies and hospitality, which are still lagging their historical pace, particularly in some large metropolitan markets. We expect trends to continue improving towards the end of this year and into 2022. On the logistics front, our operation again showed good trends across its main Latin American markets of Brazil, Mexico and Colombia. Even as economic recovery continues to be less dynamic in those countries than in the U.S.
Finally, moving on to Coca-Cola FEMSA. Volumes grew 5.8% over the last year, reflecting double-digit growth in South America. Revenues increased 3.4% and gross profit grew 2.1% despite supply chain disruptions and cost pressures on certain raw materials. However, operating income fell by 9%, largely driven by a one-time tax effect in Brazil. You can listen to the webcast of their quarterly call that took place yesterday.
And with that, let me turn it over to Eduardo.
Thank you, Eugenio. Good morning. This morning, I would like to reflect a little on where our company and our business units are today, focusing on the big picture. As Paco mentioned, while we are still not fully out of the covered woods, things are definitely being more normal. If we begin with OXXO, we have tightened our standards for approving and operating new stores, and we'll see that at least 10,000 more stores in Mexico over the next decade or so. And importantly, we have reached a stage in Colombia and Chile, where we can confidently accelerate the pace of openings as our stores already profitable on a stand-alone basis, but we still need to increase our scale to fully absorb overhead and drive profitability at the country level.
In Peru, we continue to fine-tune our value proposition, while in Brazil, our joint venture is making progress faster than expected, setting the stage for a more aggressive pace of expansion beginning next year. And of course, all eyes are on the digital opportunity, how our new platform, Spin and OXXO PREMIA are getting off to a very promising start in Mexico. They are very interesting times ahead. Our health vision, things are also looking good. The platform we put together is operating as a single unit led by our team in Chile with the ability to develop -- to deploy talent and best practices such as loyalty programs and e-commerce across markets.
Anchoring our Socofar legacy platform, we're putting our operations in Mexico, Colombia and Ecuador in a position to grow rapidly in the medium term. As we develop our scale in these markets, and we continue to test new value propositions and formats. We expect to see margins gains that allow us to narrow the gap relative to our benchmark operation in Chile. In this part, the Food Division has seen some of its growth avenues curtail by mobility and regulatory changes. But it continues to find opportunities by institutional sales and it's operating at a very attractive levels of profitability and returns.
Our logistics and distribution operations are gaining momentum, and you can now follow the performance through our disclosure. As Paco mentioned earlier, we are excited by their potential. And we're particularly very happy at the speed of efficiency with which we are growing our geographical footprint in the United States, while simultaneously generating good returns on our capital that approach our cost, less than 2 years after entering the business. In fact, our other investments in the United States, Jetro Restaurant Depot is also performing at a high level and has generated an annualized total shareholder return above 25% for all so far in these past 2 years.
Finally, Coca-Cola FEMSA has a new framework, the long-term relationship model in place with the Coca-Cola company that aligns system interest even more and is allowing Coke to develop and maximize incremental revenue and profit opportunities and growth like never before, including the recent renewal of our partnership with Heineken in Brazil, as well as exploring other distribution relationships and initiatives elsewhere. Combined with Coca-Cola FEMSA formula operational capabilities, the new framework holds significant improvements to keep growing the business into the future. As you can tell, I'm very optimistic about the platform we have assembled and our opportunities to keep creating value for a long period of time.
For these past 2 years, we grew as a Latin American company. But today, we're a company of the Americas and developed and being developed and our capabilities were in the business verticals we want to be in, all of which hold very good promise. As I move on, I want to thank you for accompanying me in this journey, all these years, we're always been inquisitive and for helping me understand the market's point of view.
And with that, I will turn the call over to Daniel for some final thoughts. Thank you.
Thank you, Eduardo. There is no question in my mind that our company is positioned well to pursue and capture the next stage of growth. In particular, I want to talk a little bit about the digital opportunities that are increasingly taking shape across our business units. Beginning with speed by OXXO, we're still in the same regulatory status as we have been for the last few quarters, operating through our subsidiary, ComproPago, and awaiting final approval from the regulators. However, we are expanding the number of markets where the product is available, and we are already fine-tuning our value proposition to ensure that we meet our customers' expectations, while improving the overall performance and engagement futures of the platform.
In line with our business case, registered users are accelerating, and they have already surpassed 600,000, even though the product is not yet available in every market, and we have not done nation-wide launch or any significant media campaign. However, we're looking beyond downloads, and we are working to increase the engagement and stickiness of the app and ensure the technical resilience to accommodate such rapid growth. In a way, it's a bit like how we grow with OXXO. Increasing the number of stores is powerful and to some extent, it is straightforward, but improving your value proposition to grow your comparable sales is what creates the most value and what is harder for competitors to replicate in the long run.
For its part, our new loyalty platform, OXXO PREMIA, is also off to a great start, working well in tandem with Spin and with more than 1 million accounts already created. Digital initiatives are also being used aggressively to drive omnichannel and e-commerce platforms in our other business units, such as our warehouse division or Coca-Cola FEMSA, where these initiatives are fast becoming relevant contributors to the overall top and bottom-line growth.
Wrapping up, I'm honored and humbled by the opportunity to take the baton from Eduardo next January. To keep guidance this amazing team of more than 320 colleagues with the shared purpose to create economic and social value for the long term. After January, I look forward to sharing a productive dialogue with all of you beginning with our first conference call of the Year in February, where I will be able to share this year's progress as well as our expectation for the coming year and our vision of the business for the future.
And with that, we can open the call for your questions. Operator, please.
[Operator Instructions] Our first question comes from Luis Willard with GBM.
Daniel, I know you're probably be starting to get some details on how do you see the company evolving and the strategy that you're putting in place. But I mean, as Eduardo mentioned in his comments, he leaves the company in a great shape and very well positioned to grow in the future. So if you can share with us maybe ballpark. What do you see as your strategic and capital allocation priorities? And where do you see yourself adding more value to FEMSA in the future?
Well, thank you very much. I mean, as I said before, I prefer to wait till January in order that I can share my views.
Yes. I think -- I mean, in the [indiscernible], in February, having finished the year and at the start of the new year, I think that will be the perfect occasion for Daniel to kind of talk about those high-level big picture aspirations. The idea today, obviously, was to focus on the quarter and the shorter term, but also to have Eduardo talk a little bit about the big picture issues that you already began to address in the opening remarks. That's how we kind of thought it would work out.
That's perfect, Juan. So well, then we updated on the Spin and also been the rollout in Mexico. So I know there's still -- we're waiting for the regulatory approval to really roll it out. But can you share with us some data of users? And also, how do you see in the market where you're highlighting this, how do you see the app, especially has been working with the store and you're seeing, I don't know, maybe incremental tickets after the use of the OXXO PREMIA and Spin, that would be the question.
Thank you, Luis. This is Eduardo. Basically, we're very excited. We're very excited because here, we are finding something that will evolve -- I mean Saldazo was a very dumb, not very agile application. And with Spin, I think we're going to be able to enable the consumer and enable the connection with the store, with the loyalty program. So I think we're very excited. And as Daniel said, basically, acquiring customers in also for Spin is not very expensive. In fact, it's very cheap because we have a lot of customers. We have 12 million, 30 million visits a day.
So with that in mind, I think the -- our effort and our obsession is to have a product that delivers value that the value proposition of the product is compelling to the consumer that also is sticky, and it will be reviews about. There has been a lot of initiatives elsewhere in the market, where some of them have -- although they seem to be very interesting, but they are -- they don't have the stickiness, and they don't have the value proposition. So I think our obsession is not really about growing. It's about having a value proposition that is compelling and adds value to the consumer. And the connection with the store is very, very important. As always, we have thought. That is something that will enable the store and the things are, the store will enable Spin as well.
Our next question comes from Antonio Hernandez with Barclays.
Well, you mentioned the deceleration of, well, the delays in openings of new OXXOs. I don't understand what are your expectations for the next year, both for OXXOs and the pharmacies open?
Well, I don't know, Juan, do you want to -- but let me just give you, basically, mobility affected us and the stores were a little bit down. And because of -- and because we were -- we set up our restrictions in a more strict way. We decided to be more cautious about opening stores. I think as mobility is coming up, the schools are back in Mexico and offices are filling up. I think we are very confident to speed up again. I don't know, Juan, if you want to add on this?
Thank you. Yes. I think we -- maybe 6 months ago when things began to improve. And of course, we have these 3 waves that we all know of. So when things were improving, the guys worked their numbers and came up with this 800 number for 2021. And then, of course, the third wave came along, and it's complicated a little bit the way that we got there. So as we mentioned in the opening remarks, I think it's still within reach. It's a little bit of a stretch at this point. Obviously, we're a couple of months from the end of the year, but we're still shooting for 800. I think the probability is that we're going to come up a little bit short of that.
Now, in terms of 2022, and we'll -- obviously, we'll give you harder numbers across the business units in February, but I think we're returning to a place where if everything continues to improve to Eduardo's point about mobility. We could put the 1,000 store bogey there as the aspiration and the target. And that work towards that. And if there are no more waves, then I would imagine the 1,000 store number is reasonable. And Daniel mentioned in his remarks, 10,000 stores over the next decade continues to be the aspiration. I think Eduardo wants to add.
Also, I would say that we are very excited also the opportunities that we're facing in Colombia and Chile and Brazil. Colombia and Chile, we have a very profitable store base, and we just have to scale it up. And I think we're very excited about the opportunity. And I think probably we might receive a lot of growth from Chile, Colombia and Brazil as never before. So I think that lecturer growth is there, too. So this is not only in Mexico, but Chile, Colombia and Brazil.
Yes. I think again, we'll tighten these numbers short in a couple of months. But for South America, really, for Colombia and Chile, you will probably be expecting about 150 new stores next year. And then, of course, there's the joint venture in Brazil, which is shooting for a number that's above 200 new stores for next year. So of course, that doesn't flow through our P&L. But in terms of just sheer number of stores, South America should be contributing several hundred stores starting in 2022. And I think that's very relevant. And I think one more thing to point out that just -- that actually works in our favor is we need to figure out where the consumer spending patterns will come out after the pandemic.
But if we continue to see the trends both in services, now the digital offering of Spain and also consumption of higher-margin items such as alcohol, hard liquor, et cetera, that should make the bogey for new store openings in terms of becoming profitable better. So that should open up, I think, more space from a unit economic perspective than it did before. So I think we've got win on the back in that respect as well.
Perfect. And openings for pharmacies for the health unit expectations for next year?
For the pharmacies, it should be double-digit. So let's talk about 10% for now, and we'll fine-tune that in the February call.
Okay. Perfect.
Just have to clarify, as always, I mean, if you kind of do a double-click on the pharmacies, the countries that grow the most should be Colombia, Mexico and Ecuador. Chile grows more moderately. It's a more mature market, but it generates a ton of cash flow. So Chile is a slightly different role. But the fastest growth well in the double digits should certainly come from Mexico, Colombia. But there is a great thing that has happened in Chile. We have a MICO chain, which is a chain of beauty products that is just adding up all the drug store. They're being enhanced their value proposition improvement.
Okay. Perfect.
Our next question comes from Alvaro Garcia with BTG.
All the best Eduardo going forward and congrats, Daniel. My question is for Eduardo. Hopefully, I can sneak in the second question. But my first question is Eduardo. You led the first wave of investments in the U.S. for FEMSA. And I'd be curious to hear your view on how much more American you think FEMSA will become going forward?
We were very lucky that we look for opportunities based on our capabilities, and we found this businesses related with Janssen, packaging and food disposables. And the great thing is we've been able to gather a group of companies that they were very well operated and lack scale. And now with this scale by putting all this business together and setting up a great team in the United States and having great partners, our original the companies that we bought we've been able to leverage this in the United States, probably we are locking off, we may have probably 11, 12 companies altogether.
And the beauty of it is that these companies were very well operated. And -- but by putting them together, we've been able to enhance the value proposition and have this geographical footprint. So we are very excited. We're very excited and look forward to expand this capability even more. So I think, as I said before, we're becoming a partner American company. We were a Latin America company. We're a partner American company, and we're very excited about it.
Yes. I think, Alvaro, maybe if you look at how much capital we've deployed in the U.S. So far, it's still not -- it's not even 10% of fences market cap. You will see in the short run, as Eduardo was saying, we're fortunate that we are finding these small-ish companies, in the greater scheme of things, where we can continue to deploy capital. So we will hopefully be announcing more deals. But in terms of moving the dial beyond 10% of FEMSA, I don't think we're there yet anytime soon. I don't think in the -- I mean, if you think about longer horizons, yes, probably we could go above 10%, but it's going to take us a while to get there.
Great. And then just one-second question -- sorry, for the second question here. But on the -- we saw some rejections on the fintech law front. And these companies were operating under a double transitory as well. So I was wondering if you could just give us a quick update as to your status and how you felt about that? More than anything, how you felt about the rejections as you look to seek approval under the fintech law?
Sure. On our end, Alvaro, thanks for the question. On our end, we continue to be in the same position. We're confident that our submission to the authorities is complete well-rounded and the business case makes sense. Again, are we worried about these rejections? Again, we don't know the exact details. But so far, I think we're making -- we were confident that with the package that we put together in the application that we will get the approval in short notice.
Our next question comes from Fernanda Sayao with Credit Suisse.
So my first question is related to opposed gross margin. Could you please comment on what are the main drivers behind this good performance? And also, if you could comment on perspectives for same-store sales in -- for the fourth quarter and next year.
Yes. I would say on gross margin, we've got several things going on. One is the return of, I think, more promotional activity and commercial spending by our supplier partners. Coupled with, I think, a much better mix of services in some of the other higher-margin categories. Together with, I think, a little bit better tailored merchandising as we adapt to the post-pandemic consumer habits. And your second question was with regards to a yes, next -- same-store sales, correct. The same-store sales, as you know, we're about 3.3% down from where we were in 2019. Traffic is still down, ticket is up.
Again, as this is a problem of double-clicking in terms of geographies, types of stores, etc. If you look at office buildings, we're still not doing as well as we should. But if you look at traffic stops, if you look at beaches, if you look at tourism destinations, if you look at the North versus the South, we're seeing much better traffic trends for overall, you really need to do a double click. We have high confidence that once that we are back to normal, especially with regards to traffic into the offices and schools that we will continue to see the same-store sales growth trends that we had in the past, but with a much better margin mix. So that's hopefully the double whammy that could get our operating leverage to work again in our favor.
We'll take our next question from Thiago Bortoluci with Goldman Sachs.
My question is also on capital allocation. You mentioned in the opening remarks that U.S. logistics is already approaching your cost of capital, which is a great news, but it's also true that you're adding more assets to the base. So it gets really tricky to reconciliate all these moving parts. Putting this in context of the company's overall capital allocation strategy, what is the short and medium-term trajectory that we should expect for returns going forward? And also as a follow-up, if we were to rank U.S. logistics OXXO expansion out from Mexico and health, where you see opportunities for higher returns? And how does it fit with the company's inorganic focus going forward?
If you want to take the first question, with regards to capital allocation in the U.S., the whole strategy behind this is that as we're rolling up these companies, we're able to get significant synergies on the purchasing side just by the scale that we've already accomplished. So we're serving the same customers with the same products that -- at much higher margins and also bringing in different skill sets in terms of distribution, infrastructure, technology, et cetera, that can also adjust on the operating side, improve our margins. So although we are paying multiples that -- I mean, are usual for this kind of roll-ups in the U.S. and are higher than what we were used to when we were buying other kinds of assets in Latin America because of the synergies we're able to underwrite these kinds of valuation and get our cost of capital within the first couple of years with very little risk in terms of integrating the synergies.
So that's why I think this platform makes a lot of sense to us in that we can bring our abilities and our skills and our capabilities to deploy this capital and earn our returns. And again, when I say returns, we are talking about, I mean, either high single-digit to low double-digit returns in dollar terms in the first couple of years. So it's very, very powerful in terms of a compounding activity.
Our next question comes from Alan Alanis with Santander.
I have a couple of questions, one for Eduardo and one for Daniel. Well, Eduardo, first of all, congratulations, and who would have thought? I mean, 20 years ago that you took the OXXO chain with 1,000 stores, and you're leaving it now 20x larger and more than half of the market cap. So congratulations for that very successful career. My question for you is very simple. I mean, I think you're too young to retire. What are you going to do now?
Thank you, Alan. No, I will never retire. I'm just going to reconvert myself, and it's been a wonderful experience. And I think really about leading and working in this great company is about very -- always very passionate about what you're doing, but we always have this detachment that is really that will -- that is part of the life of the human being, detachment that helps us to convert in something else. So I will listen to your ideas, Alan. I look forward to see you again.
Likewise, Eduardo. And Daniel, I want to be very respectful about the idea of speaking about the future until January, and that makes total sense. But can you talk a little bit about the past? I mean, I think investors would like to hear a little bit about how you're making your decisions professionally throughout your career. Why did you choose to come to FEMSA as quick reminder? And what have been the biggest lessons you've learned in the 5, 6 years that you've been running the FEMSA Comercio and being part of the FEMSA group.
So, yes. Thank you for the question, Alan. I mean, I think I've been working over 30 years and which almost 18 a work for Shell, I mean the oil company. And then I spent -- I have experience in several markets. So give me, I would say, a good sense about global organization and global businesses. Then I move back to Chile, where I'm originally from. And I took the role of CEO for, I mean, a large retail company with several formats. But then, I mean, if you are a football fan, when you get a call from FEMSA, like Real Madrid or Barcelona called you, I mean, so you have to hear and you have to speak. And to be honest, I think one of the elements that really convince me to move to FEMSA it was not only about the financial success or the size of the company was more about the value, the culture of the organization.
And really, I think that really match with what I believe is the right thing to do in business. I mean, how you can really create economic but also social value going forward. So I mean, the decision, to be honest, it was not that difficult, and I'm very happy. I mean, this is the second time that I need to replace Eduardo. So I mean, it's not an easy task. But I'm very happy and really enjoy the time working with Eduardo. So thank you very much.
You're very welcome. We look forward to hearing your vision in January, and we wish you best of luck.
Our next question comes from Rodrigo Alcantara with UBS.
I have a simple one here on the debt reimbursement. So as you mentioned, right, the results have been well above expectations here. So I was just curious about yourself here, perhaps you would be considering to increase the stake and the minority or perhaps exploring the option. I remember that as part of the deal, a JV in Mexico to bring that model was also in the table. So just curious about your thoughts about Jetro, considering the standing results that we have seen so far. Just a quick one here regarding the Ok Market in Chile. Just curious if you can remind us, is that acquisition has been approved in Chile or still pending? Those are my questions.
Okay. The Ok Market, yes, has been approved. We are using the process of implementing the changes they recommended. And in terms of Jetro, yes, we wanted to be aligned with them above and a line with them the JVs in Latin America, then COVID came. And I think we are very excited that there are a lot of opportunities where this capability and the way this cash and carry works in the United States, where there's still room to grow, it will evolve also in Latin America. And also, we are very excited about the opportunity. I don't know, Juan, you want to add to this.
Sure. No, absolutely. And again, both from a financial perspective as well as just from a learning from each other perspective, it's been a wonderful relationship so far. And the joint venture in Mexico is still on. Obviously, it was put on hold because of the pandemic, but we still continue to see value in testing out these formats to compete against the [Centralia Vasco’s ] model in several cities in Mexico. So we'll slowly make progress on that and hopefully, at some point, be able to share some better news. But we're very, very happy with the relationship as well as with the financial returns so far.
And the opportunities ahead.
Okay. That's great. So 2022, unlikely to see perhaps that 4-month arriving to Mexico. Is that fair to say? Or...
Yes. That's fair to say. If anything, maybe later towards the year, we'll start to get a move on. But yes, that's fair to say.
Our next question comes from Carlos Laboy with HSBC.
Yes. Daniel, first of all, congratulations. And Eduardo, thank you for so many years of educating us. I always thought the most dangerous place to stand in a room was always between you and a whiteboard. And so I was thinking that this being your last whiteboard opportunity with us, what might be the most misunderstood element of FEMSA or the most exciting part of it as you look into the future that you would want to diagram for us on this virtual whiteboard today?
The -- I will say, we have invested a lot of in the culture. And culture is a major lubricant for things for change and improve things. And these relative tensions that usually we have, while you are evolving a value proposition, but you also want to have a business model that make you want to make this profitable. Culture makes those 2 things that sometimes are -- distension that might be that the value proposition is probably one direction and the business model is going to the other. The cultural approach that we're having of working as a team with a lot of collaboration, I'm playing our egos down. So the game is about the whole, not about any of us. But I think that's a great asset in the future.
And I think the more that we need to collaborate with the customers, the more we need to collaborate with suppliers. This culture is a major enhancing opportunity. And this in agent opportunities where this tension goes from the value proposition and the business model, this culture is a lubricant for those to flow in a very, very dramatic way. So I'm very excited. And I think it's something that we don't talk about much about it. We will experience in our lives and we experienced within the business units, and we -- you -- Carlos, you know much about our relationship with The Coca-Cola Company. And to this approach, we've been able to adapt above in a major, major step forward in the long-term relation model, which is collaboration. And having very much aligned incentives and working as a team, we did never before.
So I think that would say that's a major lever that we have, and it's part of our lives. And we are very proud of it. And we really tried to incorporate these 320,000 people based to be part of this beautiful [ business ].
Ladies and gentlemen, that is all the time we have for questions today. I will now turn the conference back to Paco Camacho for posing additional remarks.
Thank you very much for your participation today, and thank you also for your continued support to FEMSA and its team. Stay safe and have a great day, everyone.
Ladies and gentlemen, if you wish to replay the webcast for this call, you may do so at FEMSA's Investor Relations website. This concludes our conference for today. Thank you for your participation, and have a nice day. All parties may now disconnect.