Note 26. Information by Segment

The information by segment is presented considering the Company’s business units (as defined in Note 1) based on its products and services, which is consistent with the internal reporting presented to the Chief Operating Decision Maker. A segment is a component of the Company that engages in business activities from which it earns revenues, and incurs the related costs and expenses, including revenues, costs and expenses that relate to transactions with any of Company’s other components. All segments’ operating results are reviewed regularly by the Chief Operating Decision Maker, which makes decisions about the resources that would be allocated to the segment and to assess its performance, and for which financial information is available.

In 2018, FEMSA made a change to the disclosure related to the businesses segments formerly named as FEMSA Comercio’s “Retail Division” by removing those operations that are not directly related to Proximity store business, including restaurant and discount retail units, from this segment. The business segment is now named the FEMSA Comercio – “Proximity Division” and will only include Proximity and Proximity-related operations, most of which operate today under the OXXO brand across markets. The removed operations are included in “Other.” The financial information by operating segment reported below for the years ended December 31, 2017 and 2016, respectively; has been restated in order to give effect to business units’ reorganization described above.

Inter-segment transfers or transactions are entered into and presented under accounting policies of each segment, which are the same to those applied by the Company. Intercompany operations are eliminated and presented within the consolidation adjustment column included in the tables below.

a) By Business Unit:

2018

Coca-Cola
FEMSA

FEMSA Comercio —
Proximity Division

FEMSA Comercio —
Health Division

FEMSA Comercio —
Fuel Division

Heineken
Investment

Other ⁽¹⁾

Consolidation
Adjustments

Consolidated

Total revenues

Ps. 182,342

Ps.167,458

Ps. 51,739

Ps.46,936

Ps.—

Ps.42,293

(21,024

)

Ps.469,744

Intercompany revenue

5,160

290

—

15,574

(21,024

)

—

Gross profit

83,938

65,529

15,865

4,231

—

10,233

(4,626

)

175,170

Administrative expenses

—

17,313

Selling expenses

—

114,573

Other income

—

673

Other expenses

—

2,947

Interest expense

7,568

1,806

678

211

2,057

(2,496

)

9,825

Interest income

1,004

372

159

3,757

(2,496

)

2,832

Other net finance
income ⁽³⁾

—

(387

)

Income before income taxes and share of the profit of equity accounted investees

17,190

13,335

1,438

407

1,219

33,630

Income taxes

5,260

1,124

652

123

3,006

—

10,169

Share of the profit of equity accounted investees, net of tax

(226

)

(17

)

—

6,478

—

6,252

Net income from continuing operations

29,713

Net income from discontinued operations

3,366

Consolidated net income

33,079

Depreciation and amortization ⁽²⁾

10,028

4,971

983

152

—

1,103

—

17,237

Non-cash items other than depreciation and amortization

755

367

—

490

—

1,645

Investments in equity accounted investees

10,518

—

83,461

252

—

94,315

Total assets

263,787

75,146

35,881

7,015

86,340

150,674

(42,462

)

576,381

Total liabilities

132,037

56,468

23,357

6,142

4,054

61,340

(42,559

)

240,839

Investments in
fixed assets ⁽⁴⁾

11,069

9,441

1,162

520

—

2,391

(317

)

24,266

(1)	Includes other companies and corporate (see Note 1).

(2)	Includes bottle breakage.

(3)	Includes foreign exchange loss, net; gain on monetary position for subsidiaries in hyperinflationary economies; and market value loss on financial instruments.

(4)	Includes acquisitions and disposals of property, plant and equipment, intangible assets and other long-lived assets.


2017 (Revised^{) (5)}	Coca-Cola FEMSA			FEMSA Comercio– Proximity Division		FEMSA Comercio– Health Division		FEMSA Comercio– Fuel Division		Heineken Investment			Other ⁽¹⁾		Consolidation Adjustments			Consolidated
Total revenues	Ps.	183,256		Ps.	149,833	Ps.	47,421	Ps.	38,388		—		Ps.	39,732	Ps.	(18,698	)	Ps.	439,932
Intercompany revenue		4,679			202		—		—		—			13,817		(18,698	)		—
Gross profit		83,508			56,127		14,213		2,767		—			9,307		(3,832	)		162,090
Administrative expenses		—			—		—		—		—			—		—			15,222
Selling expenses		—			—		—		—		—			—		—			105,880
Other income		—			—		—		—		—			—		—			31,951
Other expenses		—			—		—		—		—			—		—			33,866
Interest expense		8,778			1,313		685		156		—			2,372		(2,212	)		11,092
Interest income		791			306		23		47		23			2,492		(2,212	)		1,470
Other net finance expenses ⁽³⁾		—			—		—		—		—			—		—			6,320
Income before income taxes and share of the profit of equity accounted investees		(11,255	)		11,723		956		146		30,000			4,265		(64	)		35,771
Income taxes		4,184			762		434		23		(5,132	)		9,942		—			10,213
Share of the profit of equity accounted investees, net of tax		60			5		—		—		7,847			11		—			7,923

Net income from continuing operations		–			–		–		—		–			–		–			33,480

Net income from discontinued operations		–			–		–		—		–			–		–			3,726

Consolidated net income		—			—		—		—		—			—		—			37,206

Depreciation and amortization ⁽²⁾		9,632			4,144		942		118		—			804		—			15,640
Non-cash items other than depreciation and amortization		1,663			285		31		18		—			267		—			2,264

Investments in equity accounted investees		11,501			642		—		—		83,720			234		—			96,097
Total assets		285,677			64,717		38,496		4,678		76,555			154,930		(36,512	)		588,541
Total liabilities		144,967			49,101		25,885		4,091		1,343			62,754		(36,512	)		251,629
Investments in fixed assets ⁽⁴⁾		12,917			8,396		774		291		—			1,479		(371	)		23,486

(1)	Includes other companies and corporate (see Note 1).

(2)	Includes bottle breakage.

(3)	Includes foreign exchange gain, net; gain on monetary position for subsidiaries in hyperinflationary economies; and market value loss on financial instruments.

(4)	Includes acquisitions and disposals of property, plant and equipment, intangible assets and other long-lived assets.

(5)

Disclosure has been revised for the restructuring of FEMSA Comercio – Proximity Division and for 2017 the discontinued Philippines operations of Coca-Cola FEMSA Philippines. The assets (Ps. 28,272) and liabilities (Ps. 9,945) for the discontinued operation for 2017 of Philippines segment are included in Mexico and Central America


2016 (Revised)⁽⁵⁾	Coca-Cola FEMSA		FEMSA Comercio – Proximity Division			FEMSA Comercio – Health Division		FEMSA Comercio – Fuel Division		Heineken Investment		Other ⁽¹⁾			Consolidation Adjustments			Consolidated
Total revenues	Ps.	177,718	Ps.	133,228		Ps.	43,411	Ps.	28,616		—	Ps.	33,406		Ps.	(16,872	)	Ps.	399,507
Intercompany revenue		4,269		4			—		—		—		12,599			(16,872	)		—
Gross profit		79,662		49,046			12,738		2,248		—		8,062			(3,552	)		148,204
Administrative expenses		—		—			—		—		—		—			—			14,730
Selling expenses		—		33			—		—		—		—			—			95,547
Other income		—		(13	)		—		—		—		—			—			1,157
Other expenses		—		—			—		—		—		—			—			5,909
Interest expense		7,473		789			654		109		—		1,613			(992	)		9,646
Interest income		715		259			31		37		20		1,229			(992	)		1,299
Other net finance expenses ⁽³⁾		—		—			—		—		—		—			—			3,728
Income before income taxes and share of the profit of equity accounted investees		14,308		11,203			914		182		9		2,061			(121	)		28,556
Income taxes		3,928		729			371		16		3		2,841			—			7,888
Share of the profit of equity accounted investees, net of tax		147		22			—		—		6,342		(4	)		—			6,507

Consolidated net income		—		—			—		—		—		—			—			27,175

Depreciation and amortization ⁽²⁾		8,666		3,510			855		92		—		586			—			13,709
Non-cash items other than depreciation and amortization		2,908		270			8		17		—		648			—			3,851

Investments in equity accounted investees		22,357		611			—		—		105,229		404			—			128,601
Total assets		279,256		55,453			35,862		3,649		108,976		94,716			(32,289	)		545,623
Total liabilities		150,023		40,857			24,368		3,132		7,132		66,230			(32,289	)		259,453
Investments in fixed assets ⁽⁴⁾		12,391		7,598			474		299		—		1,705			(312	)		22,155

(1)	Includes other companies and corporate (see Note 1).

(2)	Includes bottle breakage.

(3)	Includes foreign exchange gain, net; gain on monetary position for subsidiaries in hyperinflationary economies; and market value gain on financial instruments.

(4)	Includes acquisitions and disposals of property, plant and equipment, intangible assets and other long-lived assets.

(5)	Disclosure has been revised for the restructuring of FEMSA Comercio – Proximity Division.

b) By Geographic Area:

The Company aggregates geographic areas into the following for the purposes of its consolidated financial statements: (i) Mexico and Central America division (comprising the following countries: Mexico, Guatemala, Nicaragua, Costa Rica and Panama) and (ii) the South America division (comprising the following countries: Brazil, Argentina, Colombia, Chile, Ecuador, Peru and Uruguay). (iii) Europe (comprised of the Company’s equity method investment in Heineken Group). For further information related with aggregates geographic areas see Note 27.2 Disaggregation of revenue.

Geographic disclosure for the Company non-current assets is as follow:


	2018		2017
Mexico and Central America ⁽¹⁾		Ps. 195,310	Ps.	176,174
Asia		—		17,233
South America ⁽²⁾		120,003		130,226
Europe		83,461		83,720

Consolidated		Ps. 398,774	Ps.	407,353

⁽¹⁾	Domestic (Mexico only) non-current assets were Ps. 185,857 and Ps. 170,547, as of December 31, 2018, and December 31, 2017, respectively.

⁽²⁾

South America non-current assets includes Brazil, Argentina, Colombia, Chile and Uruguay. Brazilian non-current assets were Ps. 76,869 and Ps. 89,137, as of December 31, 2018 and December 31, 2017, respectively. Colombia non-current assets were Ps. 16,664 and Ps. 18,396, as of December 31, 2018 and December 31, 2017, respectively. Argentina non-current assets were Ps. 4,538 and Ps. 3,052, as of December 31, 2018 and December 31, 2017, respectively. Chile non-current assets were Ps. 16,787 and Ps. 19,590, as of December 31, 2018 and December 31, 2017, respectively. Uruguay non-current assets were Ps. 5,145, as of December 31, 2018.