Breakfast category propels profit at Grupo Bimbo

by World Grain Staff
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MEXICO CITY, MEXICO — Operating income of the U.S. and Canadian baking business of Grupo Bimbo SAB de CV was 1.145 billion pesos ($84.4 million) in the third quarter ended Sept. 30, up 28% from 898 million pesos in the third quarter of 2013. Net sales were 24.741 billion pesos ($1.824 billion), up 21% from 20.4 billion pesos in the prior year quarter.

Operating margin for the U.S. and Canada business increased to 4.6% in the third quarter from 4.4% in the same period in 2013.

Breaking down the 21.3% sales increase for the U.S and Canada business, Bimbo said 21.9% reflected the incremental sales from the Canada Bread acquisition. Organic net sales in dollar terms fell 1.7%, reflecting in part the company’s divestiture of the Sara Lee brand in California.

“Organic performance in the quarter was affected by continued weakness in consumer spending as well as changing marketplace dynamics,” Bimbo said of the third-quarter sales in the U.S. and Canada. “However, the breakfast category and certain sweet baked goods lines saw continued momentum in volume growth, while bun sales and the expansion of the Beefsteak brand contributed to sales performance.”

Overall operating expenses as a percentage of sales for Grupo Bimbo rose 70 basis points to 44.1%, reflecting higher distribution costs arising from lower absorption of fixed costs in Mexico, the U.S. and Canada, reflecting weak volume performance, the company said.

“This was partially offset by ongoing efficiency initiatives in the United States, a more efficient cost structure in Europe and Latin America as well as the ongoing focus on cost reduction in Mexico,” Grupo Bimbo said.

Operating income in the first nine months of 2014 in the U.S. and Mexico was 2.273 billion pesos ($167.5 million), down 13% from 2.605 billion. The operating margin in the period fell to 3.5% from 4.4%. Nine-month sales were 64.704 billion pesos ($4.768 billion), up 10% from 58.602 billion pesos.

Net majority income of Grupo Bimbo in the third quarter was 1.917 billion peso ($141 million), up 20% from 1.597 billion pesos in the same period last year. Consolidated sales were 50.154 billion pesos ($3.698 billion), up 12%.

Year-to-date net majority income was 4.058 billion pesos ($299 million), up 31% from 3,104 million in the first nine months of 2013. Sales were 137.842 billion pesos ($10.164 billion), up 6%.

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