Oct 25, 2013
Executives
Javier Gerardo Astaburuaga Sanjinés - Chief Corporate Officer
Analysts
Lauren Torres - HSBC, Research Division Lore Serra - Morgan Stanley, Research Division Luca Cipiccia - Goldman Sachs Group Inc., Research Division Alexander Robarts - Citigroup Inc, Research Division Sambuddha Ray - JP Morgan Chase & Co, Research Division Belinda Hill Karla Miranda
Operator
Good morning, and welcome, everyone to FEMSA's Third Quarter 2013 Earnings Results Conference Call. [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, it's my pleasure to turn the conference over to Javier Astaburuaga, FEMSA's CFO. Please go ahead, sir.
Javier Gerardo Astaburuaga Sanjinés
Thank you, and good morning, everyone. Welcome to FEMSA's Third Quarter 2013 Results Earnings Conference Call.
As always, Juan Fonseca and José Castro are with us today as well. Before we begin discussing this quarter's results, we should take a moment to recap the announcement we made yesterday regarding change to the most senior positions at FEMSA.
As you know, José Antonio Fernández proposed to our board, and the board agreed, to separate the positions of Chairman and CEO. Starting in January of next year, José Antonio will be Executive Chairman and Carlos will be CEO.
With John Santa María becoming CEO of Coca-Cola FEMSA. We are convinced that the changes will allow José Antonio and Carlos to focus even more on the tasks at hand, while providing continuity to what has been a very successful tenure.
And to start, John will bring a unique track record to his new role. Yesterday's press release is very self-explanatory in terms of the rationale for the changes.
But we will be happy to elaborate during the question-and-answer session today, if you wish so. Moving on, as we normally do in our calls, today we will focus on the consolidated figures for FEMSA among the results of FEMSA Comercio, as many of you know probably had the opportunity to participate in Coca-Cola FEMSA's conference call yesterday.
And since you have likely seen our detailed result, we will use this opportunity to share some of what we see as highlights and main trends in our business. Beginning with some comments on the macroeconomic environment in our key Mexico market, there are some data points that suggest that some of the drivers, such as government spending and remittances may be improving but still very gradually.
However, consumer demand has yet to show meaningful signs of the recovery and negative impacts from very wet weather in September are making it hard to read any strength in trends for the third quarter. In fact, the torrential rains we saw across large sections of Mexico made September one of the toughest months of our operations in a long time.
We continue to believe this weakness is temporary, not structural, and we are optimistic that trends will improve and a more constructive scenario will materialize for Mexico in the medium term. But in the meantime, we have been adjusting our plans and strategies to reflect the softer economic reality than we originally expected when the business plans were drawn up a year ago.
Having said that, and against such a challenging backdrop, our performance in Mexico has shown some resilience. At Coca-Cola FEMSA, strong execution in this key market helped to deliver stable results.
However, performance in South America remained soft, particularly in Brazil, where volumes contracted, operating expenses increased and we were, again, compounded by the significant impact of foreign exchange weakness across our division. The consumer in Brazil continues to be cautious as a response to lower economic growth, even though unemployment and inflation seem to be gradually improving.
While low growth is a concern for the short term, we remain optimistic about the medium and long term, and the prospects of the Brazilian consumer. As demonstrated by our willingness to keep investing in our operations both through capital projects like the new plant in Minas Gerais and through acquisitions like the recently announced Fluminense and Spaipa transactions.
Though despite FEMSA Comercio's quarterly results reflect tough comparisons, the same soft consumer environment in Mexico and some continued pressure from the telephony category as described in recent quarters, all of which is reflected in our same-store sales growth. However, considering the challenging environment and the very wet September, our same-store sales growth is encouraging.
In fact, the months of July and August showed promising signs sequentially. I will elaborate more on Comercio's numbers in a minute.
But first, let me touch briefly on our consolidated results. And I would also like to mention that given the recent acquisitions carried out by FEMSA Comercio, we are now breaking out comparable organic growth for its operations like we do for Coca-Cola FEMSA, and the organic growth data in the consolidated numbers includes both operations.
During the third quarter, consolidated total revenues increased 7% and income from operations contracted 3%. On an organic basis, excluding the integration of the beverage operations of Grupo Yoli and Fluminense and the pharmacy operations of YZA and Moderna, total revenues increased 4% and income from operations contracted 4%.
For the third quarter, the line label participation in Heineken results represents FEMSA's 20% participation in Heineken's third quarter net income, which was reported on Wednesday using the average exchange rate for the euro during the third quarter. Net income decreased 8%, driven by a decrease in our income from operations, combined with a decrease in FEMSA's 20% participation in Heineken's third quarter 2013 net income and also higher financing expenses related to bonds issued recently both by FEMSA and Coca-Cola FEMSA.
In terms of our cash position, during the third quarter, we went from having a consolidated net debt position of MXN 10 billion at the end of June to a net debt position of almost MXN 13 billion at the end of September, reflecting the acquisition of Fluminense, which was partially compensated by cash generation at both our core businesses. Moving now on to this cost, our operations, and beginning with FEMSA Comercio.
We opened 195 net new stores during the third quarter. This number is slightly higher than the comparable figure for 2012.
And if we look at the first 9 months of the year, we're pretty much on track to deliver a similar number of net openings. Therefore, our confidence is pretty high that we will again surpass the benchmark of 1,000 net new stores for the year.
Revenues increased 13% during the quarter. And on an organic basis, they increased 9%.
Same-store sales were up 1.6%. And if we want to break the number down, we see that the increase was driven by our average ticket, while traffic slightly contracted.
These trends are directionally consistent with what we have seen throughout the year. But however, we must remember that September was a strong negative influence for the quarter.
While we continue to outperform the growth of our industry on that and that of all the retail benchmarks, and there are different reasons why consumers enter our stores and purchase our products as opposed to other retail formats, there is no question that our consumers are continuing to adjust their behavior in response to macro pressures. And we, again, saw some contractions in several categories.
First among them was telephony revenues, where as we discussed the last 2 quarters, we continue to see a declining trend, driven by a significant reduction in the price per minute for the end user combined with the migration of some consumers to postpaid plans, as well as a consumer now having more alternative outlets where he or she can top up a cell phone. But there were other categories as well -- for a variety of reasons, we saw declines.
For the quarter, gross margin expanded 20 basis points and operating margin expanded 10 basis points, as operating expenses were contained during the period. And once again, it is important to reiterate that we do not see, in all the data at our disposal, any signs that could point to structural changes that might affect our operations negatively in the medium and long term.
On the contrary, and you have heard me say this before, we see consumers continuing to privilege proximity when this proximity does not imply a large price premium. We continue to improve our own ability to satisfy consumer needs better and we continue to see ample whitespace to grow our store base for an extended period of time without compromising productivity.
As for the rest of this year, regarding the growth in same-store sales and the behavior of the operating margin, we continue to run a bit behind our medium-term aspirations, and we're running out of time as far as 2013 is concerned. However, as you know, we manage our company for the long-term and we do not make major adjustments to the strategy based on short-term dynamics.
So while it is likely that our full year numbers will come in below that long-term trend, it does not alter our sentiment beyond 2013. Moving on very briefly to Coca-Cola FEMSA.
Total revenues increased 4%. And organically, they remain stable as revenues grew by mid-single digits in our Mexico and Central America division and by low single digits in our South American division.
These numbers incorporate a significant negative translation effect from the devaluation of several South American currencies. Coca-Cola FEMSA's operating income decreased 8% and organically decreased 9%.
Driven by the margin contraction caused by the devaluation of South American currencies and higher operating expenses, mainly labor and freight related across South America, and reflecting to a lesser extent, continued marketing investments. If you were unable to participate in the conference call yesterday, you can access a replay of the webcast for additional details on the results.
On the strategic front. During the quarter, we announced Coca-Cola FEMSA's acquisition of Spaipa, a key bottling franchise in Southern Brazil that fits perfectly with our existing territories.
This acquisition is consistent with our bullish view of Brazil as a territory with great long-term potential, in spite of the short-term issues it faces today. For its part, FEMSA Comercio announced the acquisition of an 80% stake in Doña Tota, a strong regional player in the quick-service restaurant segment, with high consumer preference in Northern Mexico.
And moving on. At this time, we would normally talk a little bit of our expectation for next year.
And certainly, as I mentioned before, there are isolated data points in Mexico that can be considered as positive and the comparison basis across our businesses and territories will generally be easier than what we have had this year. But as you know, there are a number of uncertainties that have been introduced into the equation, particularly in Mexico, related mainly to incremental taxation, which would take some time for us to incorporate into our business plans.
So please bear with us for a little longer and be assured that we will use all the significant tools at our disposal to adjust our strategy to the changing environment. And with that, we can open the call now for questions.
Operator, please?
Operator
[Operator Instructions] We'll take our first question from Lauren Torres with HSBC.
Lauren Torres - HSBC, Research Division
My question relates to the economy and consumer behavior. You mentioned that you're not really seeing any meaningful signs of recovery.
But if we kind of exclude September, it seemed like the prior months were good for the quarter. I don't know if there's any way of kind of quantifying that or giving us a sense of maybe what same-store sales growth would have been on a more normalized basis if September wasn't as weak as we did see.
And with that said, I guess, if we do expect this trend to continue into next year, we did see some margin improvement and you mentioned the benefit of some promotion-relating marketing resources and pricing strategies. I was curious if you could just maybe talk a little bit more about that and what other initiatives you may have in place if you do see this softness continue?
Javier Gerardo Astaburuaga Sanjinés
Sure, Lauren. Basically as I said, it's a quarter very hard to read because we were, I would say, struck in the quarter on a high note after a very, very bad second quarter of the year.
We were all expecting a much better third quarter. And as I said, we saw sequential marginal improvements in July and August, which were not regretfully sustained in September but -- due to weather reasons.
So we are, as I said, looking at some marginal improvements, but to a -- looking at the experience for the first 9 months of the year, I think it's better for us to be cautious about if this -- the sequential marginal improvement is there to stay. And we will need, I think, to wait for at least the rest of the year to see how things play out.
It seems -- and going back into, again, the -- our prospectives for 2014, it is very hard, again, to really put a position on our feeling for 2014 because we have some, I would say, positive elements. A fair one being, of course, 2013 being such a challenging year.
It's going to create some references for next year, which has -- are going to be, I would say, not as challenging than some other times in the past. But we have a number of elements in the tax reforms that some of them will basically affect the pricing structure of our Coca-Cola products, some of it will affect a part of our store base in the border towns in Mexico.
And most importantly, we are not sure how consumers are going to react of the incremental tax burden that's going to be imposed on them. So going forward, as I said at my closing remarks, it's still a very, very dark, not -- in terms of not being able to see what the future looks like, scenarios so far.
So in terms of, again, the quarter, we feel very good about the improvement in the trends in July and August. But September is so bad.
And again, influenced by these external factors that's it's very, very hard for us to really read something more precise on what's the shape of the economy. So in terms of the comment I made of -- we have been working for the last, I would say, 4 months, at least, since late June on adapting our business plans to the reality.
In the case of FEMSA Comercio, I think that a number of things have been, I would say, accomplished in terms of cost containment. And you see that for the performance of the quarter.
And of course, we have been working with our supplier partners in order to adapt our programs and plans for the years, reviewing what would work best under this environment. And there it comes my point of we making better use of our promotional resources in combination with our suppliers to really target some of those promotional activities that we think are more optimal for the kind of conditions that the consumer is facing in this tougher times.
So that would be basically my comments, Lauren.
Operator
And we'll go next to Lore Serra with Morgan Stanley.
Lore Serra - Morgan Stanley, Research Division
I wonder if you could talk a little bit more about at the OXXO level, kind of 2 things. One is when you look at what you're seeing -- I mean, I guess you don't want to talk about what October was, but I guess you have some sense of how one-off September was.
But kind of looking at what you're seeing at the store level, I mean telephony sounds like it's a secular change that's just not coming back. I mean, you have a different view.
But what other categories can replace that or enhance it? And is there anything you're seeing in terms of the competitive -- not competitive, the consumer environment that's telling you that there's really something more profound going on?
And then separately, if you think about the taxation changes, I understand it's complicated and it's going to affect different parts of FEMSA in different ways. But I'd appreciate any thoughts you have on OXXO, specifically from the OXXO perspective.
You mentioned border towns. I suppose that's pretty significant and that's going to hurt.
I don't know if large price increases from suppliers actually hurts OXXO or not because it gets a margin. So just even on any preliminary thoughts about how we should think about that would be really helpful.
Javier Gerardo Astaburuaga Sanjinés
Sure, Lore. A lot of questions under the umbrella of your one question, as always.
I'm glad to try to elaborate a little bit on some of them and to come back to you if I'd miss one. I may start talking about these implications on the tax effects, the last part of your question.
My concern here is we're still looking at trends in some retail formats in Mexico, particularly departmental stores in which performance is not as affected. And -- but we've seen some other categories, both, I think, in big-box retail and also in OXXO, in which some of the categories that are, I would say, not performing up to the level that we think they should.
And that's a concern because it really implies to us that a large majority of the population in Mexico is not feeling as confident maybe at spending in some of those needs or desires. And that's one of the key -- as I said at my opening remarks that the impact of the taxation on consumer is something that remains to be seen.
And that's -- although, I would say, on the side that worries us a little bit. Of course the program for 2014 that the government has put in place and looking at that very, very bad shape of the economic growth that 2013 has represented, will provide a lot also of, I would say, liquidity and in some parts also money to be spent because of the effect on the general economy of some of the contracyclical programs that the government's putting in place.
So we will be helped also by that. So what's going to be the net effect going forward?
We're not sure. But again, our consumer base is pretty much comprised of middle class in Mexico.
And we're now penetrating also lower sort of social economic levels. And of course, the high social economic levels as well are an important part.
But there it lies, I think, my biggest concern. In terms of the border towns effects, even though OXXO started a number of years, basically with the basic skewed to the north of the country.
Today, the store base in the border towns represents roughly 15%, a little bit more than that. So a major impact on the whole company, the consolidated numbers at FEMSA Comercio, I don't think it's going to be a huge impact.
Of course, consumer products -- producers are going to manage their pricing strategy, taking into account this incremental value-added tax in the border towns, and that's something that we will be also having to manage. And even though my comment here would be -- even though the 5% incremental value-added tax for the border towns is a very important one, we also need to take into account that, that is, I would say, a differential on some of the products that we sell, which are, as you know, some of them are non-planned purchases or impulse purchases as opposed to people thinking of filling up their gas tank or going and doing their shop for replenishment of the pantry on a weekly basis.
We have very different occasion needs that we satisfy at OXXO. So I don't feel as concerned by that as mostly the general impact on our soft drink business and the impact on taxation on the middle class in Mexico.
Those would be my main 2 concerns. And going back to the first part of your question, again, we're looking at performance in different categories that I think reflect a number of the things that are going on in Mexico these days, which is a collapsing of the construction industry, which hurts some of our categories, some of our consumption occasions at some times of the day, even -- we have been measuring that early in the mornings, late in the afternoons.
But it's also hurting some other categories, which some of them have, as you said, some more structural changes in progress, such as the telephony, as you mentioned. And we have spent a lot of time in the past talking about our intention of developing categories.
I think we have been successful in daily and replenishment. I think we have been successful in promoting more -- satisfying the consumer needs of gathering on our store base as well.
And we have been, I would say, very successful but still in a very small scale, on a number of stores, on fast-food offerings. And I think that's going to be heavily reinforced by the acquisition of Doña Tota, mostly in terms of the skills that we're acquiring from this business and some of the cross-sharing practices that -- between OXXO and Doña Tota are going to start as soon as we close the transaction, which we hope with the authorization of the Antitrust Commission.
Hopefully at the end of this year, we can start working on this business as well. So there is going to be a permanent, I think, dynamics in terms of how categories, some of them will be more relevant to OXXO, some of them will be less relevant to OXXO.
But I think that the game -- the name of the game here is to continue to evolve our internal capabilities to be able to incorporate better offerings and wider categories and having a wider even assortment of products in the store to much better satisfy different and evolving consumer needs going forward. So all in all -- but I hope my -- I mean, the sentiment behind my words reflects the positive and the enthusiasm that we have still of the big number of opportunities.
We have to continue improving the value proposition and the performance of FEMCO, FEMSA Comercio going forward.
Operator
We'll take our next question from Luca Cipiccia with Goldman Sachs.
Luca Cipiccia - Goldman Sachs Group Inc., Research Division
A follow-up on what you were just discussing briefly before. When we think about potential addition of new formats, the acquisitions that we've seen, the Doña Tota, the pharmacies, so how should we think about them in the future in the context of what is happening currently in Mexico?
Is it more likely that you're going to concentrate further in terms -- on OXXO in terms of format, so incorporating some of the things that these acquisitions will bring? Or we will have a parallel development of these formats as a stand-alone, additional change?
Maybe if you can share some of the thoughts on this as we look in 2014. And on the Drug Store business, if there is any update or an update on the activities on what has been done over the past few months and as well what should we expect going forward?
Javier Gerardo Astaburuaga Sanjinés
Sure, sure, Luca. I guess that the ways to think about our intentions here is quite simple.
It's -- we think there are learnings from us participating in this pharmacy sector, as well as in the fast-food offering that we can really leverage within the OXXO store. And by that, I mean, a number of, not only, I would say, synergies but also better practices and skills that will help us to improve the way we present to our consumers in the OXXO stores, the very limited offering on health, on personal care products and also on fast-food offerings.
So that's -- as a starting point, I would say, we feel that there is some important elements that contribute to the development or the value proposition in the OXXO store by us now trying to learn and contribute to the development of these 2 new lines of businesses that we have entered in 2013. That's to start with.
On then, what are the intentions for us to develop these lines of businesses? These businesses are thought out to be stand-alone boxes in terms of developing, again, value propositions, which hopefully can evolve and improve a long time.
And we have said that we will continue to look, in the case of pharmacies, for additional change that might have a good fit with the regional position that we have built with one beachhead in Southeastern Mexico and one in Northwestern Mexico. And that we will continue to evaluate and explore opportunities to increase, on a nonorganic basis, our footprint for the country.
As well, we will continue opening significant number of stores in both chains, which were part of the business plans that we've developed when we were basically in the early stages of exploring and making due diligence with these 2 companies. And I'm happy to report that we are basically above our plans in terms of opening of OXXO -- I mean, of pharmacy stores, which would represent opening in terms of square meters, double-digit creates [ph] of opening of floor spaces.
So we're not frozen in terms of not opening stores. But again, we're not scaling it up in such a significant way that it will create openings in the numbers of hundreds of stores or whatsoever.
So we're basically doing both things, continue to fine-tune value propositions and continue the expansion process. And also, we are starting to share practices with OXXO as well.
And in terms of the fast-food offering, I would say, it's a similar story. I think that in the fast-food offering, we will stay put a little bit on dealing with Doña Tota integration.
I think it's a very fine business, which have a lot of potential to be really scaled up in the rest of the national geography. We think that we might have some, again, cross-sharing practices with OXXO on a very, very short period of time that will help us to improve and to speed up our own process of deployment of our fast-food offerings in OXXO as well.
And of course, the intention for the long-term is to really create, I would say, a much more significantly and larger platform for offering consumers in Mexico, both fast-food offering and pharmacy and personal care one-stop shops. So those would be my comments there on your question, Luca.
Operator
And we'll take our next question from Alex Robarts with Citi.
Alexander Robarts - Citigroup Inc, Research Division
Listen, I was keen then to focus a little bit on the -- in the same spirit as last question, the M&A outlook. I mean, you -- for OXXO, so you've talked about adapting business plans to the new reality as you explain them.
And kind of a lot of this is resources on promotions that you're allocated in and negotiating with your suppliers. But does the new reality, as you do describe it, or the current environment kind of impact your M&A outlook for OXXO.
We've seen 3 deals, right, in the last 11 months. You have the firepower.
How should we think about capital allocation, capital deployment in these -- with these targets that as we look out over the next few years? And I guess, when we think about QSR, it seems to me there's a little bit more fertile ground vis-à-vis that space has fragmentation and such versus the pharma.
But it would be great if you could give us a sense of what to expect and as far as the capital allocation and deployment in this area, that would be great.
Javier Gerardo Astaburuaga Sanjinés
Sure. So Alex, good to hear you.
I would say, it's very simple. It's -- going back to my previous answer, in the case of pharmacies, we will continue looking for regional chains that fits well with the geography.
And by that, I mean, we can also think on one side on complementary adjacent territories to the beachheads we already have. We are opening new ones.
We think we have the capability to stretch up a little bit more, even the presence in the national territory. So we have a number of, I would say, processes in place in trying to understand better and trying to get closer to people and explore opportunities on that regard, and we will continue that.
And as well as saying so, we will also be very, I would say, attentive and we will keep our eyes very wide open for anything that in the pharmacy space in Mexico might be a good possibility for the company, as well for some other players in the Mexican market as well. But again, we think we have a very solid, which is a very well-paced strategy of bringing the presence into Mexico on our part, and then building up from there.
So we're very open to, again, entertain any possibilities on the pharmacy space. Although fast-food offering, as I said, I think that it's going to take some time, a number of months at least, for us to really feel comfortable with integrating on the right way with this new business and to have very, I would say, aligned and clear path for at least the next couple of years that would imply having business plans very detailed, the way we tend to do them here for our businesses.
And I think, it's going to -- I would say, it's going to -- we're going to concentrate a lot on that. But having said that, I fully agree with you that there seems to be a much more, I would say, larger opportunity because of the size of the market and because of the, I would say, absence of really fundamental big players in the Mexican and, I should say also, Latin American market, with the absence of very large offerings, of fast-food offerings, we are much more well organized that the informal market today represents.
So long term, I think this is a sector in which we can really, I mean, at least, try to create a much more larger and significant business. But again, this is a new business for us.
It will help us to speed things up in OXXO. But we will need to take it with the -- a reasonable cautiousness that this new venture implies for FEMSA.
The capital allocation matter for us it's -- at this juncture of time, it doesn't have a lot to do with really, I would say, making analysis of what alternative is better than the other because of stretching of the financial flexibility of the company. We are, I would say, sufficiently financially flexible today.
But it has a lot much more to do with, again, does it make good strategic fit long term, does it can really be a significant business for us in the long term, those are skills are pretty much aligned with what is required to be successful in those new formats. And then it's just a matter of looking at what makes sense and what not.
And there have been, I would say, at least a couple of opportunities in Mexico, one in the precisely food offering that we basically said no because we don't think that's the line of business that we can really create value for our shareholders. But this one, which is, by definition, smaller, we think makes much more better fit with what we required at OXXO and what we can bring to the business.
And it also creates opportunity for our business that can be significantly larger than the size that we are buying it now. So all in all, those will be my reflections on your question, Alex.
Operator
And we'll take our next question from Sambuddha Ray with JPMorgan.
Sambuddha Ray - JP Morgan Chase & Co, Research Division
This is Sambuddha from Alan's team at JPMorgan. I mean, we had a question with respect to OXXO's CapEx and working capital.
You already have a strong cash conversion cycle. Just to hear your view, if there could be more improvements there.
And also we note, there's a slightly higher CapEx, almost 8.5 percentage of sales in OXXO versus 5% on an average. So the question is, how does the incorporation of Doña Tota and the Pharmacy business change your incremental working capital and CapEx needs going forward?
Javier Gerardo Astaburuaga Sanjinés
Sure. Sure Sambuddha.
This business is at the early stages, as I just mentioned, are very, very small. And you can see that by our difference in organic growth and reported growth.
So this is a very, very small component still. Of course, the economic structure of the business is just quite different.
In terms of the pharmacies, I will say, it's not quite different from the OXXO in terms of requirements to open stores. It's -- depending on the size of the store, tend to be smaller, even because you don't have a cold chamber and things like that, on one hand.
The sector in which it plays, it's also very favorable in terms of the retail sector, in terms of managing working capital. So that doesn't, as well, tend to deviate a lot from the structure of the OXXO.
Margins, of course, as a starting point is lower, the scale is lower. So there's no reason why it shouldn't be.
And the requirement of CapEx, again, to produce $1 of scale, it's similar, I would say, maybe a little bit lower. But the other business is quite different, it should have higher margins as any fast-food offering should.
But again, it's much less intensive in working capital, as you can imagine. Because we don't have to have the store full of gorditas for people to come in.
The point of the matter is to have them very, very fresh. So you don't have to have a lot of working capital.
So all in all, my main message to you would be, very small still, not quite so different from any dimension you just asked.
Operator
And we'll take our next question from Belinda Hill with Schroders.
Belinda Hill
I have 2 questions, actually. The first is can you give us a sense of what the potential impact might be, if any, on cash flows from, specifically, the fiscal consolidation regime that's being discussed now?
And secondly, can you give us a sense of the total debt at the OXXO level, at the Comercio level?
Javier Gerardo Astaburuaga Sanjinés
Sure. Sure, Belinda.
The first one is basically, we do not have an impact. We have been, I would say -- let me put it this way, we have been lucky of having only businesses which have been making profits for a long time.
So we don't really have a lot of tax loss carryforwards or bad limits [ph] located between the companies. And we have also been very, as always, I would say, conservative in the sense of tax planning, complying with all obligations and, again, looking for efficiency but not being very aggressive on that front.
So we don't really have any implication on cash flows for the changes in the consolidation regime from a tax perspective. And on the second one, basically, FEMCO is almost an unlevered business.
If I remember correctly, it's calculated on $100 million in debt in its balance sheet, but it has more cash than that. So it's pretty much basically unlevered.
Operator
And we'll go next to Karla Miranda with GBM.
Karla Miranda
Javier, I had a question regarding a CapEx for 2014. Yesterday, Hector stated that as the fiscal reform should be approved the MXN 1 per liter should be approved.
They would be a reducing CapEx for the next year in Mexico. Would that be the same case in OXXO?
Or should we still see the strong openings going forward?
Javier Gerardo Astaburuaga Sanjinés
Sure, Karla. Yes, in Coca-Cola FEMSA, you will have this effect of, again, the tax reform now of, again, creating some capacity, which we will be utilizing in 2014.
So CapEx should be lower. In OXXO, we don't think it's going to be lower.
We think it's going to -- we're going to remain basically at the same level that it will close in 2013. We don't think that there's a reason for us to really change our thinking in terms of store openings.
And of course, the more we progress, we will need to, again, invest in the maintenance and remodelation of the older stores that we have been opening in the past 10, 15 years. So we don't see any reason why CapEx for OXXOs will decline.
So all in all, I would say, we look at 2014 numbers, the combination of the 2 and some other additional investments we are thinking of doing on our logistics business will call for a CapEx for 2014 for FEMSA in similar levels as the one we should be close in 2013.
Operator
Ladies and gentlemen, that's all the time we have for questions today. I'll now turn the conference back over to Mr.
Astaburuaga for additional or closing remarks.
Javier Gerardo Astaburuaga Sanjinés
Thank you very much for attending the conference call, and have a great weekend, everyone. See you next time.
Bye.
Operator
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 today.
Thank you for your participation, and have a nice day. All parties may now disconnect.