Employee Benefits

12 Months Ended

Dec. 31, 2023

Employee Benefits [Abstract]

Employee Benefits

Employee Benefits

The Company has various labor liabilities for employee benefits in connection with pension, seniority and post-retirement medical benefits. Benefits vary depending upon the country where the individual employees are located. Presented below is a discussion of the Company’s labor liabilities in Mexico, which comprise the substantial majority of those recorded in the consolidated financial statements.

17.1 Assumptions

The Company annually evaluates the reasonableness of the assumptions used in its labor liability for post-employment and other non-current employee benefits computations.

Actuarial calculations for pension and retirement plans, seniority premiums and post-retirement medical benefits, as well as the associated cost for the period, were determined using the following long-term assumptions for Mexico:

Mexico	December 31, 2023		December 31, 2022		December 31, 2021
Financial:
Discount rate used to calculate the defined benefit obligation	10.20	%	9.90	%	8.00	%
Salary increase	4.75	%	4.75	%	4.50	%
Future pension increases	3.75	%	3.75	%	3.50	%
Healthcare cost increase rate	6.00	%	6.00	%	5.10	%
Biometric:
Mortality (1)	EMSSA 2009		EMSSA 2009		EMSSA 2009
Disability (2)	IMSS 97		IMSS‑97		IMSS 97
Normal retirement age	60 years		60 years		60 years
Employee turnover table (3)	BMAR 2007		BMAR 2007		BMAR 2007

Measurement date December:

(1)EMSSA. Mexican Experience of social security.

(2)IMSS. Mexican Experience of Instituto Mexicano del Seguro Social.

(3)BMAR. Actuary experience.

In Mexico, the methodology used to determine the discount rate was the Yield or Internal Rate of Return (“IRR”) which involves a yield curve. In this case, the expected rates for each period were taken from a yield curve of Mexican Federal Government Treasury Bonds (known as CETES in Mexico) because there is no deep market in high-quality corporate obligations in Mexican pesos.

In Mexico upon retirement, the Company purchases an annuity for the employee, which will be paid according to the option chosen by the employee.

Based on these assumptions, the amounts of benefits expected to be paid out in the following years are as follows:

	Pension and Retirement Plans		Seniority Premiums		Post-Retirement Medical Services		Total
2024	Ps.	701	Ps.	359	Ps.	18	Ps.	1,078
2025		400		262		19		681
2026		402		242		20		664
2027		544		234		22		800
2028		549		226		24		799
2029 to 2033		3,888		1,157		155		5,200

17.2 Balances of the liabilities for employee benefits

	December 31, 2023		December 31, 2022
Pension and Retirement Plans:
Defined benefit obligation	Ps.	15,560	Ps.	15,113
Pension plan assets at fair value		(14,061)		(14,324)
Effect due to asset ceiling		3,098		3,851
Discontinued operations		(195)		—
Net defined benefit liability	Ps.	4,402	Ps.	4,640
Seniority Premiums:
Defined benefit obligation	Ps.	2,416	Ps.	2,068
Seniority premium plan assets at fair value		(123)		(128)
Discontinued operations		(235)		—
Net defined benefit liability	Ps.	2,058	Ps.	1,940
Postretirement Medical Services:
Defined benefit obligation	Ps.	604	Ps.	556
Medical services plan assets at fair value		(95)		(88)
Discontinued operations		(49)		—
Net defined benefit liability	Ps.	460	Ps.	468
Total Employee Benefits	Ps.	6,920	Ps.	7,048

17.3 Plan assets

Plan assets consist of fixed and variable return financial instruments recorded at fair value (Level 1), which are invested as follows:

	2023		2022
Fixed return:
Traded securities	4	%	2	%
Bank instruments	16	%	13	%
Federal government instruments of the respective countries	47	%	52	%
Variable return:
Publicly traded shares	33	%	33	%
	100	%	100	%

In Mexico, the regulatory framework for pension plans is established in the Income Tax Law and its Regulations, the Federal Labor Law and the Mexican Social Security Institute Law. None of these laws establish minimum funding levels or a minimum required level of contributions.

In Mexico, the Income Tax Law requires that, in the case of private plans, certain notifications must be submitted to the authorities and a certain level of instruments must be invested in Federal Government securities among others.

The Company’s various pension plans have a technical committee that is responsible for verifying the correct operation of the plan with regard to the payment of benefits, actuarial valuations of the plan, and supervising the trustee. The committee is responsible for determining the investment portfolio and the types of instruments the fund will be invested in. The technical committee is also responsible for verifying the correct operation of the plans in all of the countries in which the Company has these benefits.

The risks related to the Company’s employee benefit plans are primarily attributable to the plan assets. The Company’s plan assets are invested in a diversified portfolio, which considers the term of the plan to invest in assets whose expected return coincides with the estimated future payments.

Since the Mexican Tax Law limits the plan’s asset investment to 10% for related parties, this risk is not considered to be significant for purposes of the Company’s Mexican subsidiaries.

In Mexico, the Company’s policy is to invest at least 30% of the fund assets in Mexican Federal Government instruments. Guidelines for the target portfolio have been established for the remaining percentage and investment decisions are made to comply with these guidelines insofar as the market conditions and available funds allow.

In Mexico, the amounts and types of securities in related parties included in the portfolio fund are as follows:

	December 31, 2023		December 31, 2022
Debt:
BBVA Bancomer, S.A de C.V.	Ps.	46	Ps.	9
Grupo Industrial Bimbo, S.A.B. de C. V.		18		5
Equity:
Grupo Industrial Bimbo, S.A.B. de C. V.		1		—

For the years ended December 31, 2023, 2022 and 2021, the Company did not make significant contributions to the plan assets and does not expect to make material contributions to the plan assets during the following fiscal year. There are no restrictions placed on the trustee’s ability to sell those securities. As of December 31, 2023 and 2022, the plan assets did not include securities of the Company in portfolio funds.

17.4 Amounts recognized in the consolidated income statements, the consolidated statements of comprehensive income and the consolidated statements of changes in equity

	Consolidated Income Statement								AOCI (1)
December 31, 2023	Current Service Cost		Past Service Cost		Gain or Loss on Settlement or Curtailment		Net Interest on the Net Defined Benefit Liability		Remeasurements of the Net Defined Benefit Liability
Pension and retirement plans	Ps.	489	Ps.	288	Ps.	(243)	Ps.	367	Ps.	1,311
Seniority premiums		345		21		(21)		178		117
Postretirement medical services		32		13		(14)		45		(29)
Total	Ps.	866	Ps.	322	Ps.	(278)	Ps.	590	Ps.	1,399
December 31, 2022
Pension and retirement plans	Ps.	534	Ps.	189	Ps.	(220)	Ps.	313	Ps.	1,686
Seniority premiums		328		21		(27)		150		38
Postretirement medical services		32		26		(29)		45		(35)
Total	Ps.	894	Ps.	236	Ps.	(276)	Ps.	508	Ps.	1,689
December 31, 2021
Pension and retirement plans	Ps.	390	Ps.	39	Ps.	(55)	Ps.	319	Ps.	1,757
Seniority premiums		290		1		(3)		114		853
Postretirement medical services		44		2		(24)		52		202
Total	Ps.	724	Ps.	42	Ps.	(82)	Ps.	485	Ps.	2,812

(1)Amounts accumulated in other comprehensive income as of the end of the period.

For the years ended December 31, 2023, 2022 and 2021, labor costs of Ps. 910, Ps. 854 and Ps. 684 have been included in the consolidated income statements in costs of goods sold, administrative expenses, and selling expenses. Net interest on the defined benefit liability has been included as part of interest expense (Note 19).

Remeasurements of the net defined benefit liability recognized in accumulated other comprehensive income are as follows:

	December 31, 2023		December 31, 2022		December 31, 2021
Amount accumulated in other comprehensive income as of the beginning of the period, net of tax	Ps.	1,661	Ps.	2,078	Ps.	2,099
Actuarial (gains) losses arising from exchange rates		(100)		(77)		11
Remeasurements during the year, net of tax		314		211		744
Actuarial (gains) and losses arising from changes in financial assumptions		223		(1,848)		(776)
Actuarial (gains) and losses arising from changes in demographic assumptions		(4)		(71)		—
Business Acquisitions		—		336		—
Return on plan assets		(92)		713		—
Changes in the effect of limiting a net defined benefit asset to the asset ceiling		(546)		319		—
Effect of settlement		(533)		—		—
Amount accumulated in other comprehensive income as of the end of the period, net of tax	Ps.	923	Ps.	1,661	Ps.	2,078

Remeasurements of the net defined benefit liability include the following:

•The return on plan assets, excluding amounts included in net interest expense.

•Actuarial gains and losses arising from changes in demographic assumptions.

•Actuarial gains and losses arising from changes in financial assumptions.

17.5 Changes in the balance of the defined benefit obligation for post-employment

	December 31, 2023		December 31, 2022		December 31, 2021
Pension and Retirement Plans:
Initial balance	Ps.	15,113	Ps.	8,015	Ps.	7,679
Current service cost		489		534		390
Past service cost		288		163		2,881
Interest expense		820		687		527
Gain on settlement		(243)		(280)		(2,884)
Remeasurements of the net defined benefit obligation		531		(2,073)		(42)
Foreign exchange (gain) or loss		(48)		(79)		28
Benefits paid		(1,504)		(1,146)		(564)
Business Acquisitions		—		9,189		—
Employees contributions		119		103		—
Plan amendments		(4)		—		—
Discontinued operations		(195)		—		—
Ending balance	Ps.	15,366	Ps.	15,113	Ps.	8,015
Seniority Premiums:
Initial balance	Ps.	2,068	Ps.	2,108	Ps.	1,763
Current service cost		345		328		290
Past service cost		21		7		836
Interest expense		191		160		124
Gain on settlement		(21)		(13)		(839)
Remeasurements of the net defined benefit obligation		66		(342)		112
Benefits paid		(254)		(180)		(178)
Discontinued operations		(235)		—		—
Ending balance	Ps.	2,181	Ps.	2,068	Ps.	2,108
Postretirement Medical Services:
Initial balance	Ps.	556	Ps.	647	Ps.	812
Current service cost		32		32		44
Past service cost		13		26		236
Interest expense		54		52		57
Gain on settlement		(14)		(29)		(271)
Remeasurements of the net defined benefit obligation		5		(136)		(191)
Benefits paid		(43)		(36)		(40)
Discontinued operations		(49)		—		—
Ending balance	Ps.	554	Ps.	556	Ps.	647

17.6 Changes in the balance of plan assets

	December 31, 2023		December 31, 2022		December 31, 2021
Total Plan Assets:
Initial balance	Ps.	14,540	Ps.	3,170	Ps.	3,001
Actual return on trust assets		522		(695)		152
Foreign exchange loss		(150)		60		—
Life annuities		6		(3)		17
Business Acquisitions		—		12,417		—
Benefits paid		(731)		(533)		—
Plan amendments		(126)		(101)		—
Employees´contributions		102		103		—
Employer´s contributions		130		133		—
Administration cost		(14)		(11)		—
Ending balance	Ps.	14,279	Ps.	14,540	Ps.	3,170

As a result of the Company’s investments in life annuities plans, management does not expect it will need to make material contributions to plan assets to meet its future obligations.

17.7 Variation in assumptions

The Company considers that the relevant actuarial assumptions that are subject to sensitivity and valued using the projected unit credit method, are the discount rate, the salary increase rate and healthcare cost increase rate. The reasons for choosing these assumptions are as follows:

•Discount rate: The rate that determines the value of the obligations over time.

•Salary increase rate: The rate that considers the salary increase which implies an increase in the benefit payable.

•Healthcare cost increase rate: The rate that considers the trends of health care costs which implies an impact on the postretirement medical service obligations and the cost for the year.

The following table presents the amount of defined benefit plan expense and OCI impact in absolute terms of a variation of 1% in the assumptions on the net defined benefit liability associated with the Company’s defined benefit plans. The sensitivity of this 1% on the significant actuarial assumptions is based on projected long-term discount rates for Mexico and a yield curve projection of long-term Mexican government bonds – CETES:

ctualiz
+1%:	Consolidated Income Statement						OCI(1)
			(Gain) or		Effect of Net		Remeasurements
Discount rate used to calculate the defined benefit			Loss on		Interest on the Net		of the Net Defined
obligation and the net interest on the net defined	Current		Settlement or		Defined Benefit		Benefit Liability
benefit liability	Service Cost		Curtailment		Liability
Pension and retirement plans	Ps.	644	Ps.	(199)	Ps.	250	Ps.	1,289
Seniority premiums		346		(17)		164		108
Postretirement medical services		37		(10)		37		(20)
Total	Ps.	1,027	Ps.	(226)	Ps.	451	Ps.	1,377
Expected salary increase
Pension and retirement plans	Ps.	834	Ps.	(227)	Ps.	413	Ps.	1,358
Seniority premiums		382		(20)		189		137
Total	Ps.	1,216	Ps.	(247)	Ps.	602	Ps.	1,495
Assumed rate of increase in healthcare costs
Postretirement medical services	Ps.	52	Ps.	(14)	Ps.	52	Ps.	(39)

-1%:							OCI(1)
			(Gain) or		Effect of Net		Remeasurements
Discount rate used to calculate the defined benefit			Loss on		Interest on the Net		of the Net Defined
obligation and the net interest on the net defined	Current		Settlement or		Defined Benefit		Benefit Liability
benefit liability	Service Cost		Curtailment		Liability
Pension and retirement plans	Ps.	830	Ps.	(232)	Ps.	468	Ps.	1,384
Seniority premiums		387		(19)		194		128
Postretirement medical services		52		(14)		52		(39)
Total	Ps.	1,269	Ps.	(265)	Ps.	714	Ps.	1,473
Expected salary increase
Pension and retirement plans	Ps.	711	Ps.	(199)	Ps.	313	Ps.	1,327
Seniority premiums		346		(17)		166		102
Total	Ps.	1,057	Ps.	(216)	Ps.	479	Ps.	1,429
Assumed rate of increase in healthcare costs
Postretirement medical services	Ps.	36	Ps.	(9)	Ps.	37	Ps.	(20)

(1)Amounts accumulated in other comprehensive income as of the end of the period.

17.8 Employee benefits expense

For the years ended December 31, 2023, 2022 and 2021, employee benefits expenses recognized in the consolidated income statements as cost of goods sold, administrative and selling expenses are as follows:

	2023		2022		2021
Wages and salaries	Ps.	97,751	Ps.	83,433	Ps.	70,238
Social security costs		15,941		13,511		11,737
Employee profit sharing		2,419		2,598		2,035
Post-employment benefits		910		854		684
Share-based payments (Note 15)		943		866		854
	Ps.	117,964	Ps.	101,262	Ps.	85,548