By Sarah Morland and Aida Pelaez-Fernandez
MEXICO CITY, April 23 (Reuters) - Shares in Mexican bottler Arca Continental jumped over 4% in early trading on Thursday after its volumes surpassed expectations and kept core profits steady, even after Mexico implemented a new health tax on sugary drinks.
The gains have so far added 13.9 billion pesos ($800 million) to the company's market value.
Arca is Latin America's second-largest bottler of Coca-Cola drinks and among the Americas' top distributors of snacks
and beverages including Sprite, Fanta, Powerade and various brands of still and sparkling water.
"All eyes were on Mexico's volume performance," said analysts at Santander, pointing to figures that surpassed its "already optimistic expectation for flat volumes."
Arca Continental posted volumes up 2% compared to the same quarter a year earlier, lifted by a near 10% increase for bottled water while colas still increased 1%.
This helped its earnings before interest, taxes, depreciation and amortization (EBITDA) hold broadly steady at 10.63 billion Mexican pesos ($613 million), surpassing the 10.20 billion pesos forecast of analysts polled by LSEG.
At JPMorgan, analysts also hailed "resilient" volumes despite the new tax in Mexico and solid figures for the U.S., and said they considered market expectations for 2026 were too conservative.
Arca is planning to boost promotion of Coca-Cola and Coke Zero ahead of the FIFA World Cup, which is being hosted across Canada, the United States and Mexico - the latter two bring in more than 80% of Arca's net sales.
Executives said in a call Arca plans to keep operating costs steady and hoped the massive soccer event as well as a focus on affordability would help recover demand in Argentina, which has seen a decline notably in its rural consumer base.
Though South America represented Arca's weakest performance in the first quarter, executives said they saw "tremendous opportunity" in Peru, where it is expanding its digital presence.
Arca announced in March that it will invest $1 billion in 2026, with half of the allocations going to its Mexican business.
($1 = 17.3637 Mexican pesos)
(Reporting by Sarah Morland and Aida Pelaez-Fernandez; Editing by Kylie Madry and Louise Heavens)
