Bimbo buoyed by focused price, promotional strategy

by World Grain Staff
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Grupo Bimbo
Bimbo's strategic brands such as Sara Lee, Thomas' and Little Bites experienced growth.
MEXICO CITY, MEXICO — Operating income of the North American baking business of Grupo Bimbo SAB de CV (BBU) was 1.163 billion pesos ($67 million) in the first quarter ended March 31, up 240% from 342 million pesos in the first quarter last year. Net sales were 30.181 billion pesos ($1.738 billion), up 21% from 24.935 billion pesos.

First-quarter BBU operating margins were 3.9%, up sharply from 1.4% a year earlier.

The surge in quarterly sales reflected the exchange rate benefit and growth in strategic brands such as Thomas’, Sara Lee, Little Bites, Ball Park, Nature’s Harvest, Dempster’s and Barcel due to increased marketing investment, as well as focused price and promotional strategy, BBU said.

“Continued growth in the sweet baked goods, snacks, buns, flatbreads and frozen categories was offset by pressure in premium bread and private label,” the company said. “However, the branded mainstream bread category in the U.S. began to trend positively, benefited by new product introductions.”

Adjusted EBITDA for the North America baking business during the first quarter was 2.273 billion pesos ($130.9 million), up 76% from 1.294 billion during the first quarter last year. EBITDA margin widened to 7.5% from 5.2%.

Grupo Bimbo net majority income in the first quarter was 1.372 billion pesos ($79 million), up 58% from 871 million pesos in the first quarter of 2015. Sales were 56.638 billion pesos ($3.262 billion), up 13% from 50.048 billion pesos.

Bimbo’s Mexico business had operating income of 2.664 billion pesos ($153 million), up 18% from 2.259 billion pesos. Sales were 19.944 billion pesos ($1.149 billion), up 6%.

“Net sales in Mexico rose 5.9% over 2015, primarily driven by stronger volumes arising from a solid consumption environment, increased client penetration and positive performance in every channel and categories like buns, bread, cookies, confectionery and salty snacks,” Bimbo said. “This was partially offset by continued pressure in the sweet baked goods category.”
 
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