Good morning and welcome, everyone, to the FEMSA First Quarter 2018 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 and instructions will be provided at that time. During this 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'll turn the conference over to Eduardo Padilla, FEMSA's Chief Executive Officer. Please go ahead.

Good morning, everyone, and welcome to FEMSA's First Quarter 2018 Results Conference Call. Juan Fonseca and Maria Dyla Castro are also with us today. As we usually do, we will focus the call on the consolidated figures for FEMSA and on the results of FEMSA's Comercio divisions. Coca Cola FEMSA published its own results and held its conference call yesterday. So most of you are likely up to speed on their numbers already. We hope this call will contribute to your understanding of our performance during the period. As was mentioned in the press release, we believe there are a number of reasons to be cautiously optimistic in our results for the first quarter. FEMSA's commercial retail division showed solid growth trends across its income statement, although we must remember that some of that came from the Holy Week calendar shift, and we will likely give it back in the month of April. Nevertheless, profitability trends were extremely positive. We have a vision to deliver improved results for Mexico, which may be the first time that we are turning our corner in these key markets after much hard work, while the fuel division faced a low comparable base, and this helped it to deliver another quarter of gradual sequential recovery in profitability. And at Coca Cola FEMSA, we continue to see promising signs in our key Brazilian operations as well as a resilient demand on Mexico. The team again navigated a challenging consumer and cost environment across several of our markets and the new tax framework in the Philippines. Moving on to discuss FEMSA's consolidated quarterly numbers. Total revenues during the first quarter increased 4% and income from operations increased 3.9%. On an organic basis, total revenues increased 5.2% and income from operations decreased 0.8%. Net income decreased 77.6% in…

[Operator Instructions] Our first question will come from Luca Cipiccia with Goldman Sachs.

I wanted to start or ask predominantly about your comment regarding the drug stores in Mexico. Maybe if you can qualify that a little bit more with respect to sort of you mentioned we are turning the corner. Does that have to do more with what - your internal changes, organization, supplier relationship, or you're also seeing - and you're also saying consumer response somewhat sort of improving, even though since the salesmen have changed dramatically. But if you can maybe map out this confidence or comments that you made in the release about having turning the corner in the business between sales, internal changes, consumer responses and the different variables?

Okay. Hello, Luca. Basically, I would say it's more internal reorganization and the way we are now working in our logistics, our sales mix, that is more related with our own brands and that will be a way to expand margin. And - but on the other hand, those brands are cheaper, so that will affect the ticket as well. But I would say the consumer demand is weak because, as you can check, the entire figures for drug stores are not in the best environment now. They're, in fact, a little bit negative. But I think we've been able now to reorganize better to use our common platform better, came up with a better price structure and a better sales mix. So I think that really is something that we are happy that we have been able to set up structurally. And - but on the other hand, we are a little bit nervous that we still see kind of a weak demand. I don't know, if you want to add anything, Juan?

Thank you. Hi, Luca. Yes, I would just complement the answer. I mean, if you recall, the first couple of years, our growth rate in terms of the opening of new pharmacies was very, very aggressive. We entered Veracruz with a lot of new locations. We started opening stores in Mexico City. We started moving very, very fast, and at the same time, we were managing the three companies and setting up the supply chain. I think, in a way, we were doing a lot of things at the same time, and I think one of the changes that we made recently was to slow down a little bit the number of openings. As you know, we are running at a pace right now of about 10% in Mexico in terms of new openings as opposed to as high as 20 when we first began. I think there's also some gradual improvement in the southeast part of the country in terms of just the macro in the Pemex-related territories, which, as you know, have been pretty weak for a couple of years now, but at some point, things stabilize and begin to be less weak. And of course, whatever was mentioned in terms of the completion or finally having the tools that we've been building for a while more or less ready to be utilized, gradual improvement, I think, of brand knowledge in the parts of the country where we are just kind of entering. So I think it's a number of things, but definitely encouraging and hopefully, the next quarter, we have more good data points that begin to show a trend as opposed to just an isolated growth number.

Juan, maybe just 2 very quickly. So is the value proposition for the consumer you think getting better, like the reason why you should shop at FEMSA pharmacy as compared to some of your competitors. There is a macro element, there is sort of a back-end element. But if consumer facing - are those sort of - is the value proposition then, you think, is going to become more evident as we move forward?

I think really we move. When we acquire these companies, we try to set up different pricing schemes, and we didn't have the tools available to set up a good pricing strategy. And I think we probably made some - without doubt, we made some mistakes and probably, we did overprice some items and we underpriced some others. And I think - we believe we didn't have the right tools to do it. Little by little, I think we're in the process of setting up a better understanding of the consumer and understanding price elasticities and where the comparable prices of the competition are. And then, probably, during the year, I would say, Luca, we will be able to set up a better value proposition. But I think we are happy that now there are some tools, not all of them are ready. But we're in the process of having up them and having an integrated chain that is helping us really. It is taking more time than we thought, though, without a doubt. But I think we are confident that during the year, there will be some good things that we are doing, and sooner or later, the consumer will start noticing them in a better way.

And I think also the strategy that we are following of having smaller outlets that are located inside in the neighborhoods as opposed to just the main avenues and thoroughfares, which is most of what our competition does. So a part of it is obviously the size of the box and the mix within the box, which we've been fine tuning, but also the decision to get closer to the consumer as one of the differentiating factors so that people don't have to get on public transportation to go to the drug store, but rather a drug store, in a way, is coming to you.

We will continue on to Bob Ford with Merrill Lynch.

It's been a long winter, so I really like all that sunshine in your press release. Yes, I had a question about the margin improvements and of the some expense pressures. And you talk about a 40 basis point improvement in gross margin being attributable to services, and you specifically highlight financial services. And I was curious if that's some elements that sold out, so that I'm familiar with, or if we're talking about wire transfers or if it's something else? And then with respect to the SG&A pressure, you mentioned some relief in terms of electricity tariffs, and I was just curious how much of that is coming from your armored truck service or other elements there in SG&A and how we should think about that? And with respect to the financial services, how open-ended do you see that opportunity?

Hey, Bob. This is Juan. I think if you look at the gross margin expansion, really for a while, and by that I mean probably the last couple of years, the main drivers of gross margin expansion have been expansion of services with a bit of a highlight on the financial ones as well as commercial income. And so in that sense, I think this is a relatively typical setup for the P&L of OXXO. Financial services have been growing at 20-plus percent now for - at least a couple of years. We have talked -

And that's primarily corresponded banking so far. Right, Juan?

Yes, yes. And so we've talked about the number of [indiscernible], which is approaching 10 million cards out there, which is a very - it's a very flashy positive number. It talks about penetration, it talks about the bancarization of our customers, but really the part of the financial services that kind of put bread on the table has more to do with correspondent banking and how people are getting accustomed to basically banking at OXXO for their simple banking needs. So I would say that's not necessarily a departure from a trend, but rather more and more of what we've seen for a while. What I think is a bit of a departure from a trend is what you were highlighting on the SG&A side. Definitely electricity, as you know, the big culprits last year of the gross margin pressures. This first quarter, we saw lower tariffs. And as the year progresses, as you know, we've talked about this in the past, we're going to be bringing online some more of the renewable, the wind energy capacity. So even if tariffs eventually cannot bounce back and become less of a tailwind, we should be in a pretty good position based on our own ability to get lower cost energy from wind. But also I think the another culprit last year, as you recall, had to do with our efforts to reduce turnover in terms of the wages that we pay to the people at the store. I think that effort has broadened. I think it has become more comprehensive in the sense that we are now - for a long time, we have been evaluating and analyzing the pros and cons of having commission-based teams as opposed to employee-based teams at the stores. And I think more and more…

That's great to hear. And just one follow-up and that is in terms of wind, what proportion of your energy do you expect to come from renewables this year and when does that roll on?

I think it's around 40%, 50%.

I think like the 40%. So, as you know, the multi-year aspiration is that we're going to get to likely 80s, but that's still going to take a couple of years more. And most of that will come in the fourth quarter. Thank you, Bob.

Our next question comes from Antonio Hernandez of Barclays.

I have actually a couple of questions. First, what is your long-term target of profitability in the fuel division? And second question is, can you give more light on the line of other operating expenses, the change from last year to this quarter?

The fuel division, really, we are in the process of learning how sensitive the Mexican population is to prices, how sensitive it is to brand, and we are just in the process of understanding that. And I think we are installing some important tools within our systems to how to move and price accordingly, find the city or the region, and we are in the process of understanding that. I think one side, I would say that we have a very good brand, and we deliver liters by the liters. So that brand and that consumer recognition is very important. In the other hand, competition is increasing. So for me, it really is - I don't see a big margin expansion, I will see more that we will be able to serve good brands and our brand and expand in different regions - in the regions that we are, our brand is very important in northeast, is less important in the central part of Mexico. And I think our process really is to build the brand better and understand the consumer so we can be very sensible to pricing electricity and consumer demand.

Hi, Antonio. This is Juan. Just on the part of your question about the change in the other operating income line. Main reason for that actually comes mostly from Coke FEMSA. It's related to an extraordinary tax benefit in Brazil last year. So in the first quarter of '17, there was a big tax benefit in Brazil that we did not have this year. So that's the main driver.

Antonio Gonzalez from Credit Suisse has our next question.

Just wanted to ask a question on FEMSA Comercio and how you're seeing the M&A landscape across the region? I wanted to ask you, obviously, there was this recent transaction announced in Peru and I presume that it was a pretty sizable and unique asset, maybe valuation was not at the right range for you to participate. I just wanted to get your big picture thoughts on as these transactions have evolved in the region, whether you would be able to share any assessment or M&A opportunities have become more challenging to find and you'd be focusing more on organic versus inorganic opportunities across different soft segments of FEMSA Comercio? And also, I guess related to the same theme, can you please update us on whether your aspiration continues to be focusing on inorganic opportunities in LatAm ex-Brazil or is Brazil something that you are now considering more seriously or in detail?

Well, let me just - thanks for the question. In Chile, we are basically focusing in organic growth and evolving our value proposition. I think we are in a good - in a very good position and our team is doing a great job. In Colombia, there might be some opportunities, and we have to understand what kind of change will help us or not to enhance our valuable position and expand our brand in Colombia. So - and in Mexico, there are not many chains around. I mean, there might be some smaller chains, but I think we're more focused into building the systems and building the infrastructure, so we can be - have the tools to compete directly with the big guys here in Mexico. Referring to some of the places in Latin America, yes, Peru was something that we put an eye on it. But I think, as you said, the acquirer was the number one player. So the number one player acquired the second player. So the amount of synergy that he was able to capitalize, and there is no competition with relation in Peru. So for us, it was very difficult to build again those kind of synergies and with that kind of environment. And again, we have to be very disciplined. We are not going to invest where we don't see value creation. And the rest of Latin America, there might be some places where we are putting an eye on it. And I think, again, the focus will be growth and the influence of Socofar to enhance the value proposition of those particular targets. In Brazil - Brazil is a very sophisticated market. I would say it's the most sophisticated market in Latin America. I think probably Brazil and Chile are the more sophisticated, although Chile is very consolidated and Brazil is not yet, but they are very interesting regional players. We've been just watching how the regional players evolve. And in Brazil, I think we are less involved as we are trying to be involved in rest of Latin America. I don't know, if you want to compliment the words.

No, no. I mean, just it is fact that it is well known by everybody who is listening to this call that in Brazil, there is one particular player which historically has maybe taken the evaluations a little bit high, obviously, recently. That's not necessarily the case, but still, in this effort to be very, very disciplined, we found that in Brazil, we believe valuations tend to be on the high side. But I guess, short answer to your question is I don't think Brazil is off the table. But in terms of a sequence or a priority, we are definitely looking first closer to the Andean. Even though, unfortunately, as Eduardo described, it made no sense for us to pursue Peru beyond what we did.

We'll go to Lauren Torres with UBS.

Eduardo, you've been cautious, I think, heading into this year, specifically on Mexico, prior to the comments you made today. And I was just curious to get a perspective over the last couple months, if you're seeing any changes in trends. I ask that because you're still talking about a resilient consumer, same-store sales growth is still quite strong. So I don't know, if you could give us an update post Easter or if this is more of a second half event? But are you seeing changes in how consumers are consuming trends that your retail division, something that intentionally gives you a more cautious approach to this year than you had before?

Hi. I'm a little bit - I'm not fully confident that consumer is back. I'm a little bit nervous. I think there are trends that really probably are setting up that we may have a better second quarter. But again, our first quarter - the month of March was really very much held by the Holy Week installs in terms of Comercio during March. And the numbers that we're seeing in April probably will be a wash out of March and April because one will be compensating the other. And by the way, usually Holy Week in April is better than Holy Week in the March because of the weather. So getting back to the consumer, I think, the - for OXXO, the World Cup will help. The election environment will help us for the second quarter. But again, I'm still nervous that we don't know really how the inflation is coming down, which is a good thing. We might have probably good numbers for inflation this month of April. So I really - I wish I knew, I wish I knew.

Hi, Lauren. This is Juan. This is one of those periods where there are just so many variables. I mean, to Eduardo's point, inflation is coming down fast, and this bodes well for real wages and for the consumers' confidence, obviously. We did have a couple of quarters there at the end of last year where real wages turned negative. And right now, we're seeing some real growth on the wage front. So that's obviously positive. But if you look at the exchange rate, which has been more volatile than I can remember in a long time, from last week to this week, the peso lost basically MXN1 per dollar, right? We went from 18 to almost 19. And this has potential implications for inflation. So between now and the election, clearly, things are going to be volatile. And if they move in the wrong direction, that could end up pushing the consumer again to maybe slowdown on the consumption. Mexico, quite frankly, has been the rock star. If you look at the last two years, maybe even three years in terms of how much growth we have gotten here, but there are more data points that would support a cautious case as opposed to throwing caution to the wind again. So by the time we talk next after the second quarter, the election will have taken place, and we will have a clear picture. Right now, things are, like we said, a little bit better than we thought for the first quarter, but there are enough moving pieces that warrant continued caution, I would say.

By the way, the other thing that I would probably point out is really the openings of stores. We're not reducing the speed of our opening stores. In fact, we just - we're trying to be more even during the quarter. So that's why you've been seeing this trend of opening up more stores during the first quarter and not by the end of the quarter, but again, we are not reducing at all. In fact, we're increasing our - opening of the stores in all over Mexico with good results. And I would say that the trend - the ratio of good stores to bad stores has been very stable. And even though we might be cannibalizing ourselves, but I think we've been able to adjust the value proposition in certain regions in a better way. So I think in that part, I will be optimistic.

And it also tends to be a very defensive format. So even if things slow down, I think we're going to be in very good shape. But I think it's better to be cautious and then, if we're going to be wrong anyway, to be wrong in the right direction.

I would just then follow-up. I mean, obviously, I agree on the defensive nature of your products, but have you seen anything with respect to kind of frequency of purchase or trading down within products? I know the format and what you sell is somewhat limited, but no changes in behavior?

No major changes.

No. And in fact, if you look at the same-store sales breakdown, it's very good, right? I mean, still unchanged in terms of traffic and a ticket that is in line with inflation, which if you look at the historical data series, our ticket tends to be growing below inflation because of the effect of the small services ticket, which is very, very small. And this quarter, we actually matched inflation on the ticket and had, like I said, above 2% traffic, which is also very strong and probably somewhat related to [indiscernible], but no, the data is actually quite robust.

And we'll go to Alex Robarts with Citi.

I wanted to go back to the drugstore business, and I think it's really 2 questions, one on a top line and then a second one on profitability. I mean, this was kind of a softer than expected, at least for us, top line. And as you tell us about revenues growing 3.6% in the health division, just wondering about, and you commented on this sometimes in the call, but if you could give us a sense of what the trend was in Mexico and is it fair to assume that, in fact, sales fell in your business in Mexico and perhaps same-store sales growth was negative. I mean, you talk about - you alluded to the ANTAD drugstore number, which is negative. Just wanted to see if you were kind of in line with that. And it strikes me a little bit counterintuitive, I guess, the portfolio is resilient and I just wonder what you think is generally happening in the industry such that these sales trend seems to be negative. So - that's the first question. And the second one is on the margin, but I'd like to ask that after.

Yes Alex, this is Juan. No, I think on the drugstore front, obviously, you need to look at, and we don't provide the full breakdown, obviously. So we will try to give you a little bit of color in terms of Chile versus Mexico versus Colombia. I mean, as you know, Chile is by far the biggest driver of our health division and the comp was hard in the sense that last year, Chile was growing a little bit faster and also we had a very strong Chilean peso, several periods. So the same-store sales at some point last year in Chile where in the double digits, whereas right now, the currency is not really changing too much or it's not providing any distortion. So you should assume that both in Chile and Mexico, same-store sales were - we refer to them as flattish, so 0 point something, but they were not negative. Another thing that's happening in Chile this particular period, we had a bit of a reduction on the institutional side, which is important there. But I would say, stable, and the point that is I think more notable is that in Mexico, we're getting our act together and it's a better foundation from which to grow in terms of same-store sales in Mexico. And of course, Colombia, which has had the best performance of the three countries for a while now, it did decelerate a little bit from double-digit to high single-digit, but it's still very good. Unfortunately it's the smallest piece, right, so it's going to be a while, and hopefully, we can do a little bit of M&A, as Eduardo alluded to, down the road in Colombia, plus the organic growth, so that very fragmented market becomes more relevant down the road in our story. But no, I would not point to any kind of inflection point in the wrong direction, either in Chile or in Mexico. In fact, I would say in Mexico, hopefully, we are in the early stages of an inflection point in the right direction, right? So that would be my comment on same-store sales. What was your question on margins?

Sorry, but just - so in terms of market share, if ANTAD drugstores are down, you think - and you're flattish in Mexico, so you think you gain some - is it fair to say that you might have gained some market share?

Maybe at the margin, but we're so tiny, quite frankly. I mean, if you look at the national share, we probably have 4%. So we might --.

Probably I would add that the big change without a doubt are gaining market share from the - to independent.

And you also have a little bit of distortion. For example, there is one large player that you are all familiar with, which is really more of a little supermarket that happens to sell medicines. And so that probably brings a little bit of distortion into the numbers. But I would say we're very happy with the quarter we saw for pharmacies in Mexico in terms of the rationalization of the SKUs, that Eduardo described a few minutes ago, the improvement in the value proposition, the improvement in the supply chain are kind of bringing the pace of growth to the right levels. I definitely think there is a lot of confidence inside the company that better things are coming down the road.

Very helpful. The second one is on the margin, right. So when we think about the 4.3% operative cash flow margin for the business. I mean, Chile is higher than Mexico, you've given us some color in prior calls, but I just - just wondering about these - the Mexico piece as it relates to the higher expenses. I mean, you've kind of been clear with us for the last couple of years that there's been integration costs in Mexico with these 3 or 4 chains that you bought and that this is the year that those dissipate and we start to think about focusing on selling product and such, and then kind of you talk about the strengthening of the commercial team and the distribution capabilities in Mexico, which were kind of driving higher expenses. Is this kind of now - now that the integration costs are over, should we be thinking then kind of a new layer of or patch of higher expenses in the Mexico drugstore business or is that perhaps just the commercial team strengthening, just as whole general compensation, salary hike effort? So if you could kind of maybe give us some color about the length or the magnitude of this seemingly kind of new patch of expenses in Mexico drugstores?

As you correctly point out, I mean, if you look at the Chile operation in isolation, that's probably kind of a 6-ish percent type of EBITDA for a full year. The first quarter is always lower margin than that. But if you remember, I mean, Mexico was basically at 0 margin last quarter or a couple of quarters ago. So - in Mexico, we're definitely beginning to build from those types of levels. And we've built it - we've integrated the company, we've built the distribution centers, we've improved our own capability to go direct to the manufacturers in some cases, so we're lying a little bit less than wholesalers. But you also have to hire people and kind of strengthen - when we talk about the commercial teams basically, now that you have the tools, you need to make sure you have the people to use them. So there's a little bit of that. But the reason for the comment on the press release was that we expanded very nicely at the growth level, and we used a lot of that in the SG&A, and we were only left with 10 bps at the operating level. So that was probably above trend in terms of how much the gross margin expanded, but it was probably below trend or what I hope is below trend in terms of how much selling expenses grew relative to revenues. So I would expect down the road a more normalized kind of algorithm with gross margins expanding not necessarily 160 basis points per quarter and not giving back as much of that in the SG&A so that the overall profitability of Mexico can gradually converge to the levels of Chile in kind of the mid-single-digits and maybe even a little bit higher like 6% down the road, and that's going to take us a couple of years at least.

We'll go to Rodrigo from Scotia Bank.

A couple of questions. On the drugstore integration in Mexico, what's left to do? Are we now able to purchase as a single entity from labs and are we fully distributing internally? That's question number one.

Yes. We are now able to buy for all the three companies together. We're having that particular benefit. Now we have the - all the backbone now is integrated, which is a very good thing, and there are still tools to be implemented in merchandising, in pricing and logistics. But again, some of them, we have been able to - we might be - probably if OXXO in those things might be in level 5, probably the drug stores now are in level 2 and we are now - we've been investing in how to move from level 2 to level 3 in those operational tactics that will help us to enhance our value proposition, yes. But we are confident again - I'm sorry, it took more time than we thought, and it was a major effort really for integration.

No, I bet. And separately, a question that maybe touching on several fronts, but I understand you guys are partners in a FinTech company called Conectar. And I find that interesting, in that you also have OXXO pay as an initiative, while at the same time, you have 10 million debit cards in Mexico, which is always surprising. How does all this fit into your strategy? And obviously, if you can touch on what that implies in terms of your expectations for online retail and how that can impact you positively or negative going forward?

Well, basically, I think we usually see digitalization of the economy as an opportunity because again, our - type of business that we are in, the e-commerce is not really going to affect us directly in terms of most of the - the more planned the purchase is, the more the e-commerce will affect the retail industry. Here, our - I mean, multiple purchases are really something that are an urge to satisfy, and we're seeing that the more we can take the OXXO store outside the store, that will be an enhancer. So these things of trying to see how we really can connect the OXXO brand to some other things outside the store, those things I think that we're experimenting and trying to understand how to position ourselves. But we foresee those as an opportunity, we don't know exactly which is the one that will be in place in the 3, 5 years. But I think that should - we should place in some candles and betting on them to see which will be the one that will be good for us, and that will be the approach that we are taking into those terms.

I think I would just complement, Rodrigo. This is Juan. When you're talking about bill payment, for example, trust is a big part of the equation, right? And I think the OXXO brand has become very strong in terms of the consumers' willingness to use OXXO as a platform to pay. The investment in Conectar, some of it has to do with finding out if the consumer is also willing to use OXXO to pay without setting foot in the store, right, and just because they trust us and because that's what they do on a regular basis. The number of people and the type of people that are being basically allocated to the digital strategy continues to grow. And so you will hopefully continue to hear from us good developments there. I would just take the opportunity to comment because I know that it's on some of your top of mind, a quick update on the Amazon front, just because it's related, kind of confirming that this is the year where we will take - we are in the process of taking the number of stores that are part of the pilot - the Amazon Pilot to a significantly bigger scale. We now have several hundred stores that are operational with Amazon, up from a few dozen that we had the last couple of years. And throughout this year, we're going to be rolling out, and we'll give you the details as they come in, but we're going to be rolling out to all the platters and going pretty much national with the Amazon. I'm not saying that it's going to go to every store, but it's certainly going to be present across all territories by the end of this year, so we can put, I think, a check mark the terms of the results of that pilot and the fact that we are now rolling out in a much more aggressive way.

Great. That's a lot of good information on that. And then just finally, I guess, what will be the highlights from these learnings in these few stores that were tested on this Amazon JV? I mean can you share some just general comments on how you guys deal with that.

I mean, I think it gives the customer a very convenient alternative to pick up their package. As you know, a lot of the questions that we had and that I'm sure that Amazon had on their side had to do with how does this interact with the operation of the store, how can we ensure that this does not make the shopping experience less pleasant, how do we - every store is different almost. I mean, we have 16,000 different floor plans, so how many packages can you fit in each one of these stores, figuring out the economics of the relationship, right? I mean - and this had to do with cross-selling, so the average person that comes to pick up an Amazon package, do they buy something while they're there, and how does this insight on the amount of money that we need to be compensated for holding that packet. So a lot of operational stuff, but those questions seem to have been answered satisfactorily now.

We'll go to Carlos Laboy with HSBC.

Eduardo, to stay with this same theme, when you look at the surge of e-commerce in China and the important role that convenient stores are playing there, what might it tell you about other opportunities that you have? I'm thinking specifically about 3 areas, but maybe you can help us with what is the role of artificial intelligence, new store formats or even the rate at which you can open more stores faster?

The China phenomenon is really very much, I mean, - first of all, it seems like everybody is very much in the eye of the government and the use of cash is no longer required because everybody is in the eye of the Chinese IRAs, and there is no - no one is anonymous in China. So with that, I think that helps a lot to really to have a cashless society because everybody's in the radar screen of the government. Here in Mexico, it's different. So I think, basically, the level of informality here is very high. And we just have to be very much aware of those changes that really of what's going on in China and learn from it. In terms of AI, I think we need more what we should be doing and we are doing better and better exercises in using that to help our strategy. That analytic is something that we're investing a lot, and we're placing more effort to understand better the consumer, better the trend, to connect the consumer to those particular instances to the store, to segment better, and [indiscernible]. We are a very particular chain that all of our floor plans in close to 17,000 stores that we have, all of them are different. And the very same time, we can serve them in the very standardized way. We've been able to have these particular usage of the store and keep it standard. And by the more time and the more we can invest in data analytics and the more it can help us to understand the opportunity that we're seeing, the more we'll be able to segment better. And I think if you tell me what will be the greater opportunity that we foresee is how to connect data…

Our next question comes from Ulises Argote with JPMorgan.

Just one quick follow-up to the comment you made earlier about the presidential elections boding well for OXXO. Have you actually started to see any pickup on this front now that the campaigns have officially kicked off?

I think it's too early to tell really, but I think we will be more optimistic as the environment heats up really.

I think also. I mean the - because of the changes to the way that the campaigns are being carried out, the duration of the campaigns being significantly shorter, I would say at this point in other electoral cycles, probably you will see more activity in terms of rallies and people kind of coming - calling and traveling the country. So it's going to be more condensed in the next couple of months, 2.5 months. So it's a little bit earlier, as Eduardo said, but just historically, electoral years and World Cup years tend to be good at the margin, so we'll see.

Thank you. We have no additional questions in the queue. I'd like to turn the conference back over to our presenters for any additional or closing remarks.

Well, guys, thank you very much for your participation today. We're very grateful. Have a great weekend.

Thank you, everyone.

Thank you. Ladies and gentlemen, again, that does conclude today's conference. Thank you all again for your participation. You may now disconnect.