Good morning. And welcome everyone for FEMSA’s First Quarter 2016 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 FEMSA’s future performance and should be considered as good-faith estimates made by the company. These forward-looking statements reflect management’s 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 like to turn the conference over to Eduardo Padilla, FEMSA’s Chief Corporate Officer. Please go ahead, sir.

Good morning, everyone. And welcome to FEMSA’s first quarter results conference call. Juan Fonseca and Roland Karig are also with us today. Since most of you have already seen our detailed results, as well as those of Coca-Cola FEMSA, we wanted to use the call to try to add more color and some qualitative elements to the discussion as well as to hear your views and answer your questions. Hopefully, you will find it useful. Before getting to the numbers, we should talk a little bit about the changes we are making to how we present information for FEMSA Comercio. As you have seen, we made additional changes and we are now showing three separate divisions in a permanent effort to improve our disclosure and to keep it consistent with the way that we look at information internally, Retail, Health and Fuel. So, now our pharma operations in Chile, Colombia and Mexico constitute Health division, which should allow you to follow up its performance more closely. As another benefit, there will be much less noise around information of the Retail Division. And therefore, you will be able to track also results more accurately as it represents the vast majority of this division. Turning to the results, our company started the year on a solid note. FEMSA Comercio Retail Division continued to see strong comparable growth and profitability gains at the core OXXO business, supported by our in-store initiatives and execution as well as by a robust macroeconomic backdrop in Mexico, while taking advantage of positive calendar shifts around the Easter holidays and the leap year. Our drugstore operations continued to perform well, delivering good comparable store growth, while allowing us to grow our store base and to invest in the integration of a single operating platform in Mexico. For this…

Hi, everyone. I just wanted to mention basically Eduardo is done with his prepared remarks, so we’re going to move to Q&A. But I just wanted to mention that based on feedback from several of you after our last conference call in February, we’re going to try to keep the Q&A moving along and try to keep the call from becoming a little bit too long for you. So, please let’s try to have just one question per caller. Thank you. And with that, we can open the call for your questions. Operator, please?

Thank you, sir. The question-and-answer session will begin at this time. [Operator Instructions] Your first question comes from the line of Alex Robarts with Citi.

I guess from my one question, I’d like to go to the Health Division, the drugstore chain. And first of all, just before that to say thanks again for opening out the segment data; it’s very helpful. As we think about this 21% growth organic that you have posted in the drugstore business year-on-year, you tell us that about half of that is same-store sales; how can you compare contrast what the Chilean business is doing versus the three acquisitions in Mexico? I guess it’s probably safe for us to assume that on the metrics of store growth and same-store sales, there is a kind of more rapid growth in Mexico versus Chile. So, if you could give us a sense of that 11% same-store sales growth, how much was in Chile and Mexico? And the second part of this question is about Socofar, you now are kind of finished with second full quarter. If you had to give yourself a report card, are you happy with the integration and maybe some of the short-term opportunities you see for the rest of the year? Thanks very much.

We are very happy with the acquisition of Socofar. Things are coming as we planned; the projections that we have and the results are very much in line with the prediction we had at the time of acquisition. In fact we are now hiring a new CEO and that he will be in place probably a month and half. And we’re very happy. And I think there are a lot of strategies the way we foresee business. The culture of this company in Chile or cultures here in Mexico are very much similar. So, we’re very happy and I think we’re going to find in the long run more value than we really originally thought so.

Hey, Alex, let me take the part of the question, this is Juan, on the same-store sales. Actually, all of the same-store sales that you see is basically Mexico because if you think about it, Chile, we haven’t really had the operation for a full year. So, the whole -- almost 11% that you see is basically the Mexico stores. And you’re correct that the expectation is that the same-store sales growth in Chile is going to be slower than that. I think what we’re going to see this quarter and the following three quarters, as we kind circle or lap around the integration of Socofar into the numbers, there are some differences in the P&L in terms of -- I mean stem already [ph] from the operation. As we mentioned in the remarks and in the press release, the gross margin tends to be higher Socofar, so the stores are bigger, the revenue per store is higher, prices are probably higher as well. But then also in terms of the expense structure, it’s higher, you need to have a pharmacist on site; you have more people at the store. Inventory levels are different, so there is also implication for D&A. At the end of the day, what we showed when we first did the transaction, EBITDA margin around 6%; that’s what we’re going to use kind of at the benchmark. Obviously this first quarter is seasonally a smaller quarter. So, there is a lot of kind of moving pieces that we’re going to have kind of transition into, as we go through the year. And because it is a large operation relative to the Mexico operation, it will impact the numbers. But just to the specific question about same-store sales growth, we’re not showing anything for Chile yet. But the expectation as you pointed out is that Mexico and perhaps Colombia, Colombia also has I think good chance for accelerated unit growth and same-store sales growth, but by and large, it’s all about Mexico in terms of the numbers you saw.

We’ll go next to Andrea Teixeira with J.P. Morgan.

Good morning everyone and thanks for taking the question, congratulations, and thank you for the format as well of the call. The one question I would ask relates to potentially also health. On the €1 million bond, I understand that obviously it will likely the use of proceeds will be M&A. And I was just curious if -- what is your wish list in terms of presence in drugstores in Mexico City or continue to expand outside Mexico, how should we think on that? Thank you.

Let me tell you, in Mexico, what we’re trying to build first is these two things that we already have and the potential was that we might acquire. We have to build our common platform for operations. And once we have that in place, it will be much easier to have synergies and buy and inventories, exchange inventories and exchange platforms for growth. So that is in place. And I think it will take us throughout this year to have that completed. At the same time, we’re also thinking what to do with the brand. I think it will be very important to have a common brand, again to have a common impact for the consumer. However, we understand that current brands that we have are also very important, so there will be a plan how to implement one plan which might be probably one that we are going with that we already have and have a transition base where we could have the local brands available and slowly implement the change to the common brand for the Mexican operations. The other thing that we probably foresee important is that there are some territories that we should go, which is as you said Mexico City. Mexico City is an important market. There are no dominant players. And I think we already are opening stores in Mexico area. [Ph] So, I think we’re very optimistic that we could probably in two, three years have a strong operation with a common platform and with a common brand to tackle the consumer.

I was just going to add to what Eduardo said, hi Andrea. In terms of South America also, I mean the fact that we are already there, but it’s some of the early days in terms of getting our arms around the South America operation. But the fact that now we have to go in Santiago and as Eduardo mentioned that we’re going to have a reinforced management structure down there. I think it also improves the possibility that we might look around for assets in that region and of course Colombia is also an interesting place, where there could be other assets to pursue. So you’re right that -- I mean some of the proceeds, probably a good chunk of the proceeds from the bond, we said during that road show, probably earmark for M&A, small box retail being the most likely recipient of that. I will mention, in the past, I mean our logistics business is also another one that we would like to continue to invest behind. Both health and drugstores clearly are on top of that list.

And how about a QSR in U.S.; isn’t that like something that could help you eventually rollout more OXXOs in the U.S.? I know you had some, but that could change, could be a transformational to your business model in the U.S.

I love QSR and I think we’re implementing some QSR efforts given also stores. But at the same time, even though the value proposition of OXXO and QSR might overlap a little bit, the way to run QSRs is very different from running a convenience store. So, we’re learning; we already have some operations within that -- operations to learn and see how really we can add value. And I think throughout the year, we will more define of how well or how strong we should pursue that initiative. But I’m optimistic, but it really requires different abilities that we should be incorporating in the Company.

So, it should come to list, but it probably sits a little bit under -- below the drugstores.

Yes. I think probably we should define these in the next 18 months.

And Brazil, on your comment, on Juan’s comment on South America, like Brazil would be out of it -- of the opportunity now, especially with your currency being stronger and the opportunity to go…

Brazil is very interesting market and drugstores in Brazil are extraordinary, so there might be some opportunities, but we are still learning about it.

Next question comes from the line of Antonio Hernandez with Barclays.

Hi. Good morning, thanks for taking my call. My question is on the Health and Fuel divisions. Do you expect an improvement in the margins of these divisions? And for when will you expect an improvement, if you have any strategy on that? Thanks.

Hi, Antonio, this is Juan. I mean certainly, I guess you have kind of two different things here. In terms of the Mexico operation, everything that Eduardo just described in terms of integration of the three companies that we bought on to one platform, the SAP system, the inventory, the back office, all of that should be conducive to margin expansion. There is still what I would call perhaps low hanging fruit in terms of three companies that are subscale. And we’re in the process of scaling them up. And there is a lot of wide space in terms of what we think we can grow in Mexico. And all of that I think would be conducive to margin expansion. So, the answer there should be a very categorical, yes. I think in Chile and you have a more mature operation where perhaps the opportunities for margin expansion are less obvious or less large, if you will. But still, I mean obviously we’re coming to Socofar with a fresh set of eyes and obviously there are things that we think we can bring to the table. I think we can accelerate growth. And I’m sure we can also work on expanding the margins. But I guess, what I’m trying to say is you’re going to have two different slopes of the curve in terms of the Mexico operation and perhaps I would put Colombia closer to what I would expect from Mexico. And then the role of Chile where you have very steady cash flows, a very strong operator already where growth within Chile is probably less obvious. Now there is also opportunity as we said a couple of questions ago of going beyond Chile or even looking within Chile at the convenient store opportunity. There is a lot of things that come from the top of our platform. But just margin-wise and remembering that this first quarter is probably one of the lower margin quarter, so perhaps the smallest quarter of the four, so I would view the 6% in EBITDA margin that we mentioned for Socofar when we did the announcement as kind of the reference point. And we’ll obviously update you as we move throughout the year. For the Mexico operation, we said before, we are looking into developing an in-house distribution capability, so that we can then deal a little bit more directly with the pharma companies. That’s going to take a while, but it’s already getting started. So, yes, you should expect a faster margin expansion at pharma Mexico than elsewhere.

Your next question comes from the line of Luca Cipiccia with Goldman Sachs.

Thanks for taking my question. Just as we focus on only one, I actually wanted to ask a bit on update on capital allocation and Heineken. I would assume there is no news there or there is no different message. But, Juan, I remember there was a comment that you made in the previous call when you -- which I wanted to clarify which was about the possibility or the interest in maybe discussing potential swap with Coca-Cola or even broader [indiscernible] and I was hoping you could clarify, maybe elaborate a little bit on that in the sense that should it come the day where in fact you decide to dispose that stake. And assuming that Heineken is a natural buyer for some of it or all of it, but assuming also and maybe they’re not willing to buy, who else would you engage with? And is it realistic to assume that given the play left, they could absorb such a larger investment [indiscernible] you will really only be the other large beverage players, [indiscernible] whether it’s Coca-Cola or to stretching maybe even Pepsi itself. But can you maybe explain your mindset on that and even elaborate on that comment that was made last time on this point.

Hi, Luca. Yes, I mean obviously there are pieces and theories circulating around in terms of obviously first what is the future of our Heineken investment and then as you pointed out what we could do with such a large amount of money. And we can have in a related way the dance of the elephants and the big M&A that is happening in the beverage world obviously specifically in the beer world. First, I would just reinstate or reinforce the message, Heineken is doing great, you saw this a few weeks ago when they came out with their numbers, very strong results, executing their strategy very well. The market again continues to reward them for that. And so, the risk of sounding a little bit like a broken record, we continue to be very, very happy investors, very happy holders of the shares, so, no catalyst that I can see in the near term or the medium term that we change our mind there. But obviously we look at what’s happening and we have to internally keep benchmarking Heineken versus other alternatives like the one that you described in terms of making a swap, which sounds so much easier than it would actually be. But no, I would say, this is interesting. I mean I was just reading this morning as probably many of you were in terms of ABI SAB now apparently going to divest operations in Central and Eastern Europe. I have no idea whether that’s something that might interest Heineken; those are all questions for them. But there is a lot of things going on. There is opportunity for Heineken to continue to grow and to improve their own business. So, I would really again reinforce the message that we are happy with the status quo without seizing to monitor what goes on out there. But you should really not expect any major news on that front any time soon.

Juan, maybe just to point on this, assuming that you will decide sale at some point, is it fair to say that you have no preference or who is going to buy, the only preference that you would have I would think is just to minimize your tax leakage if there is a scenario. Is that a fair assumption?

I think that’s fair. I mean we said before, this is a financial investment for us rather than a strategic one. So, following from that, you would have to assume that we’re indifferent about the buyer and whether Heineken is a natural buyer for the stake again, I think that’s a question for Heineken. But you’re right I mean we are definitely -- this is the financial investment for us.

Your next question comes from the line of Jeronimo de Guzman, Morgan Stanley.

Just a quick follow-up on what you just mentioned. I mean, is there a tax implication, if you sell the Heineken investment and transfer it to a different investment, or is that pretty much the same treatment as if you cashed out of the investment in terms of the capital gains? And then my main question was just on OXXO. You mentioned that ticket growth which was very strong which offset the traffic. Was that because of the same reason, the phone card issue, or was there something else that was helping you grow ticket at such a high level?

The OXXO, this whole setting [indiscernible] because the Mexican economic environment, I mean the comparable of the industry, even though we were better than the comparables, I think Mexico is in a strong move for the consumer at this stage. And we are being successful innovating in some categories. And as we have said to you before, we have -- we pursue different occasions for the consumer. And there some occasions where we’re very important as [Indiscernible] and some others were not as important, which are daily [Indiscernible]. And anything [Indiscernible] we’ve been able tackle the consumer and apparently I think the consumer is considering us as a major authority for their purchasing -- for the purchases in those categories. So, I think in those we’re receiving very high growth. And on the other hand, there are some territories in Mexico, the northern border state where growth we’re seeing very also important and the more you go to the south, the less important the growth is being within the stores. Juan, do you want to…

Yes, I think on the capital gains questions, I mean if you sell the shares more or less regardless of what you’re going to do with the proceeds, you would be subject to capital gains stack, which is 30% for corporations. And obviously given the strong appreciation of the shares since we received the equity back in 2010 that’s not -- it’s not an insignificant amount. Obviously if we were to dividend the proceeds out, there would incremental taxation based on each investor’s divided rate. But yes, that would be kind of in a nutshell.

Thanks and also just answer on the growth. I mean is there anything in particular of those elements, can I assume those elements were also still in the fourth quarter and third quarter; anything in particular that’s helping the ticket side accelerate this quarter?

No, I think water, were very strong in water, I think the very first -- I think the first quarter of last year was very -- we had a lot of rain, so probably some weather has been also helping us.

I think that’s accurate. I think we’re -- I don’t want to say glossing over but having read a lot of the things that have been written on retailers generally for this quarter, I don’t know that everybody is remembering as much the whole Semana Santa effect, right? I mean this quarter, we got the full benefit of the Easter Holiday; we’ve got the extra day of February. And to Eduardo’s point, it was warm time during the quarter, so, all of those things. When we look at the breakdown of categories, beverage is generally we’re doing well, Eduardo mentioned water. So, I think in that sense and also I take the opportunity to kind of make everyone aware that the second quarter, April when you have such a good March, April tends to softer, right, because of the Semana Santa thing. So, just to kind of tamper expectations that second quarter is going to be as strong as the first because I don’t think it will. And then of course, we will move into the second half of the year where comparisons are going to be tough because we’re going to be lapping 8s or 9s in terms of the second half of last year. So that’s all my thoughts.

[Operator Instructions] Your next question comes from Robert Ford from Bank of America Merrill Lynch.

I was wondering, you just finished the question up in the last comment that is could you just give us a sense of what the underlying comp is adjusted for the weekday [ph] and Easter for OXXO and Mexico. And then my question was really about fuel. And I was wondering if you could just give us your latest thoughts on the model for fuel and how you expect that business to scale given your earnings over the last year? And also, as you build densities, are you finding that you’re self cannibalizing and is that playing a role in the flat comp in fuel? And then lastly, if you could just comment on some of the nascent efforts by new entrants, both upstream and in gas station please?

Let me try to tackle your few questions. What we’ve been able to do is we’ve been able to come up with a strong brand. As you know where brand OXXO GAS also gas might be among the market, among the strongest and basically in three things, service, the other one is promotions that we have been able to implement promotions within our service stations and number three is that we sell liters for liters. And those few things combined we have been able to build a strong brand. Strong brand takes time with to develop. And I think that where we have enough density of the gasoline stations, the brand comes to life. It takes time but when it’s alive, our strong brand is reflected in the volume per service station and our volumes are very high because all those three things combined make our brand -- has a strong preference on the consumer. What’s our [indiscernible] growth, well our growth is gradually growing and growing closer where our gas station are, so we can transfer the value of the brand territorially among the neighbor territories. We’ll be doing this in a very disciplined way. Secondly in terms of margins, the way we’ve been developing this growth is through a very high deleverage operation, because we are not investing in major assets. What we are doing is really managing with current service station owners and partnering with them, so we could build together a stronger foundation for the future. So I think, in a nutshell that will be probably our strategy for gas stations. So far, we have not seen any move or any relevant or important move from owners into this market. There are still a lot of things to be learned a lot of things to be clear of how this reform will take place. But I think we are slowly and in a very disciplined way growing our position.

Hi Bob. This is Juan. I would just add to your question about building densities having an impact on or negative impact on the number. I don’t think that’s the case. I mean the one metro area where we probably have the highest density is here in Monterrey. And these stations here are some of the best performing. So, I think it has a lot more to do with what Eduardo mentioned in terms of the brand building. So for example, we mentioned a few months ago that we were building infrastructure to start growing in Chihuahua; more recently, I believe we’re increasing our scale in Ecatepec. And clearly it takes a while for consumer in those markets to kind of establish the link between and OXXO gas station and the fact that he gets more miles out of this tank and that the service is better and that there are these interesting promotions that he gets coupons when he fills and he can go on do a number of things for less money. So, it takes a while, and then by a while I mean probably more than a year to get to this, sometimes more than three years to get to that point where we’ve said we can double, or as much as double in some cases, the volume and then get the throughput where it needs to be and then get the returns to it seems to be. So it is a profit, but I don’t think anything we’ve done yet. I mean, I don’t think we’re over penetrating or cannibalizing ourselves by any stretch. You had a quick question at the beginning having to do with adjusting the comp sales for the calendar effects. Probably somewhere between one and two points, so almost 9%; maybe you can shave a couple of those to adjust for the calendar. But it’s still a very strong underlying, something that will be probably 7% on a like-for-like calendar.

Excuse me. Your next question comes from Antonio González from Credit Suisse Antonio González: Hi. Good morning, Eduardo and Juan, thanks for taking my question. I just wanted to follow up on the FEMSA Logística business. Last quarter, Juan, you mentioned that there were some I guess growth related expenses in Brazil et cetera. I just wanted to follow-up on what was the progress this quarter. Are things improving? I mean looking at the implied numbers by just stripping the rest of the FEMSA Comercio division; it seems like that EBITDA margin improved. So, I don’t know if it was a function of FEMSA Logística only or there is any other noise in that number. And I wanted to ask if you can share what are your thoughts if you have any projection that you can share in terms of what EBITDA contribution that the business could have this year or next. And just what are your latest thoughts now that you -- the improvement in disclosure, which by the way is very helpful for us. Are there any plans to get more details down the road on the Logística business, just obviously it captures a relevant portion of your annual CapEx et cetera? Thank you.

Well, Logística, what we are doing in Brazil we are really consolidating a lot of efforts to have a consolidated operation logistics with several factors. And in fact more vectors we have in Mexico, because the relation in Mexico doesn’t allow us to move freight as freely as we could do it in Brazil. Once the platform is in place and taking synergies and learning from territories and how complement one business with the other, there might be opportunities for growth. But I think so far what we are doing is we’re learning a lot; we are executing very well. And thanks for the scale that already that we have from the current operations or FEMSA Logística has. Thus it’s a major enabler to acquire and complement the business. And that’s really basically what we are trying to do in Brazil and in Mexico. And that’s why we have been doing those small acquisitions, so we could establish ourselves and start growing from that. I think we are very optimistic, even though the market in Brazil is very difficult, and we have a very difficult January; February and March were much better and we’re optimistic. I know you want to continue, Juan.

I think what you’re seeing and hear that the number when you do this adjustment that you do it kind of isolate the orders component, obviously, the first quarter was much better than the fourth one of last year. In Brazil, part of the growth that we’ve achieved in Logística has been horizontal. So, we’ve made some acquisitions there that had either brought us new capabilities or new territories. And there is always -- when you do those transitions, you lose some clients and then it takes a while to get them back. On top of the very tough backdrop, the macro backdrop where clients are trying to save money and it’s just harder to compete in such an environment. But I think to Eduardo’s point, I think the improvements that we’re seeing are coming in pretty evidently and pretty fast. It’s still a small operation in the greater scheme of things. I think if you look at how we evolved the whole dialog and discussion around drugstores, I mean first, when we started talking about drugstores, we didn’t talk about them that much and it was part of FEMSA Comercio for a long time. And once we’ve made this really large acquisition in Chile and the numbers really got to where they moved the needle, it became logical to strip it out and then disclose it as a separate entity. I think we’re not there yet for the logistics business. But once it gets to the right size and once it makes sense to provide you guys with more granularity, I am sure we’re going to go ahead and do that, but not just yet. Antonio González: Is there a number that you feel comfortable showing at this stage in terms of the annualized contribution to EBITDA, I don’t know if this year is to be considered normalized because of this situation in Brazil, both let’s say in 2017 or whatever; is there a number that you feel comfortable sharing or not at this stage?

I would rather keep that internal for a while. I mean obviously the number that you see [multiple speakers] and then again there is a number that you’re seeing, there is also the better component, they got the cooler business which is also large; we’re doing very, very well. We have very good market share in the U.S. We export to something like 50 countries. And it’s smaller than Logística but it’s not insignificant by any stretch. And then obviously there is a number of things in that number, so it’s hard to isolate. And obviously that’s why you’re asking me. But, I think it’s too small to really merit the number because also if I give you a number, then you’re going to ask me about whether that number is growing and how fast…

The good thing is I think they’re are very good bet; we’re learning and we are making progress. And I think we’re optimistic that probably -- I hope in the near future we’ll be able to disclose because importance of those businesses within FEMSA portfolio.

And also to keep in mind, I mean the business philosophy and the emphasis that FEMSA puts on generating returns in excess of the cost and the focus on positive EVA, [ph] I mean all of those things apply. And so you should all assume that this is a very profitable business that has great potential for value creation. But it’s a little bit early to start throwing numbers around.

And your next question comes from the line of Luis Miranda with Santander.

Just a quick question; could you give us the updated view on this [indiscernible] cards and what’s the current rate of new customers? I remember you have calculated last quarter you were running rate of close to 200,000 new issues per month? Thank you.

Yes. Remember [indiscernible] is a joint venture between [indiscernible] and OXXO; and this is a debit card which is very easy to open where we incorporating a lot of people to the banking system without very new regulation because there are very small amounts of pesos that could be managed in those accounts. And the beauty of that is that those debit cards you can cash out from any Banamex [ph] cashier or from the OXXO stores. We being very successful, we are now close to 4 million bank holders -- card holders, I am sorry. And one -- the Banamex, we are very happy that the use of those cards is -- they are very highly used compared with some comparables in the banking system. And we are growing at 200,000 new cardholders per month. And I think we are becoming -- I hope we can become -- we can incorporate a lot of people that were not being able to incorporate into the banking system. And although I cannot tell you that it’s a huge business because it is not but once we have a lot of people incorporated and those card holders, we should find a way how to leverage such a big population and such loyalty into our stores.

I would just add, Luis, I think the last time we talked about this, we added HSBC as the partner. So, right now we have almost all of the large banks for the correspondent banks. [Multiple speakers]

[Operator Instructions] We’ll go to Jorge Mauro with SPX Capital.

Thanks for taking my question; it’s on the fuel business, just a clarification. I mean, do you get your fixed margin per cubic meter or do you actually have operating leverage on the pricing level because what I am trying to understand is this impact we saw on your margins, the fuel business, it is just related to the inventories and then as such we should expect some normalization in the next quarter or is this would be recurring?

No, I mean the price is fixed. I mean the prices are same for everybody, regardless of how may gas stations you have. This is scheduled to change in 2018 when you will be able to set your price, based on basically market conditions, but right now the price is fixed. And obviously a lot of the cost structure is also fixed, right? So, the rent that we pay; the labor which you probably know, all gas stations in Mexico are full service, so labor is not an insignificant line item. Those are fixed. So when you have to reduce your prices by 3%, obviously that causes this operating deleverage that we’re talking. And I would expect until we cycle the price decrease, this is probably going to be in the numbers for second, third, fourth quarter. And that’s obviously assuming that this is the only change in the price mandated by the government basically.

Right. So, you don’t have a fixed margin, like a fixed amount of pesos per cubic meter?

No, not margin. No.

Your next question comes from Jose Yordan with Deutsche Bank.

Just a quick follow-up on the use of proceeds question from the bond, I just wanted to know if there was any change in your wiliness to buy or Coca-Cola’s willingness to sell additional shares in Coca-Cola FEMSA to you and might this be -- this potential use of proceeds be sort of revised -- it’s been in place since the last bond issue and nothing’s happened, so just any update on that would be useful. Thank you.

Yes, I mean it’s still I guess on the list and as we said before, there have been some conversations with KOS. [Ph] Already the prices have moved around, KOS has had a very nice run year-to-date. Total you have -- the buyer and seller have a different world views about value. But to be honest, there are so many things on the list in terms of potential M&A, high growth opportunities, high return opportunities that I would not put the 2% that we’ve talked about of KOS shares as the highest priority. It could happen. It might happen down the road but I wouldn’t say it’s on top of the list, Jose.

Next question comes from Alvaro Garcia with BTG.

My question is on seasonality in your operation in Chile. You mentioned that there was a seasonally weakest quarter of the year but I was wondering if you can give us some sort of ideas to how weak or may be put into context, is it similar to the OXXO seasonality in Mexico, any sort of color on the seasonality and then operation would be helpful? Thank you.

I was surprised to find that some of the business in Chile, some of them are very highly seasonal. And they’re very highly seasonal because of two factors, because of the summer in December and other one is December is December. So, I think we should find better ways to have a value proposition that is appealing for the consumers throughout the year. And currently, I would say in some of the Socofar operations, they are more seasonal than elsewhere. And I think there were really some challenges how to shape the value proposition, so we can have that proposition attractive to consumer throughout the year. But I think currently, I would say they are more seasonal than what we have been experimenting in the OXXO stores in Mexico and drugstores in Mexico. Colombia in the same list is not as Chile.

I think at the end of the day all the spending that takes place around Christmas and the holiday happens whether it’s warm or cold or still there are these differences where in order for the Socofar operations to reach the 6% EBITDA margin for the year, for this first quarter, I think we were probably closer Q4. So clearly, there should be some quarters where you do better than six. And then we’re going to see that over the next few months.

Ladies and gentlemen, that’s all the questions we have today. I’ll now turn the conference back to Mr. Padilla for closing, additional remarks.

Well, thanks for being with us. Thank you very much for all your questions.

Yes. Have a good weekend, guys. We’ll talk soon. Thank you.

All the best. Bye now.

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.