MEXICO CITY, MEXICO — Stung by the effects of depressed interest rates on multi-employer pension plan (MEPPS) liabilities, the U.S. and Canada operations of Grupo Bimbo SAB de CV sustained an operating loss of 1.881 billion pesos ($126 million) in the fourth quarter ended Dec. 31, 2014, compared with modest profits of 9 million pesos in the final quarter of 2013.

The non-cash charges largely wiped out operating income in the U.S. and Canada for the year — 392 million pesos ($26 million) in 2014, down 85% from 2.615 billion in 2013. Excluding special charges, mostly in the U.S. and Canada, Grupo Bimbo margins widened during the fourth quarter by 160 basis points.

Sales in the U.S. and Canada in the fourth quarter were 25.672 billion pesos ($1.72 billion), up 21% from 21.165 billion in the fourth quarter of 2013. For the year, sales were 90.375 billion pesos ($6.055 billion), up 13% from 79.767 billion in 2013.

The sales gain for the U.S. and Canada was attributed to the acquisition of Canada Bread (18.7% of sales) and foreign exchange benefits, but Bimbo described U.S. market conditions as difficult.

“While changing marketplace dynamics impacted performance in the United States, key categories such as sweet baked goods and breakfast saw continued momentum,” the company said. “Following a record 2013, net sales in the United States came under pressure with a more challenging competitive landscape.”

Interest expense at Grupo Bimbo during the fourth quarter was up 351 million pesos ($16.8 million), or 46%, from the fourth quarter of 2013, or 46%, because of debt taken on to acquire Canada Bread. Excluding the impact of the MEPPs charge, restructuring and other non-recurring expenses, operating income of Bimbo in the U.S. and Canada in the fourth quarter was 970 million pesos ($65 million), up 19% from 816 million pesos in the fourth quarter of 2013. For the year, operating income before other income and expenses in the U.S. and Canada was 4.86 billion pesos ($326 million), up 8% from 4.51 billion pesos in 2013.

With the BBU loss, Grupo Bimbo sustained a loss in its consolidated results for the fourth quarter. The company lost 231 million pesos ($15 million) in the fourth quarter, versus net majority income of 1.309 billion pesos in the same period in 2013. For the full year, the company had net majority income of 3.513 billion pesos ($235 million), down 18% from 4.283 billion pesos.

Companywide, profit before income and other income and expenses jumped 34% during the fourth quarter, reflecting margin expansion of 160 basis points to 9.5%. The improvement was attributed by Bimbo to lower general expenses in every region and the benefit of synergies and efficiency initiatives in the United States.”

Net sales were 51.12 billion pesos ($3.425 billion) in the fourth quarter, up 11% from 46.138 billion in the fourth quarter of 2013. For the year, sales were 187.051 billion pesos ($12.532 billion), up 7% from 174.6 billion pesos.

Mexico was Bimbo’s only region to record lower net sales in the fourth quarter — down 2% from the year-earlier period to 18.58 billion pesos ($1.245 billion). The company attributed the decline to “pressure on volume arising from the weak consumption environment and pricing initiatives taken in the fourth quarter of 2013 related to the excise tax.” Still the company cited successful sales efforts helping generate volume growth in bread, buns and cakes.

Elaborating briefly on its participation in MEPPS in the U.S., Bimbo described the programs as retirement plans created by the Taft-Hartley Act of 1947 designed to provide portability of benefits for workers who transition between employers within a single industry. Supported by multiple employers and maintained under collective bargaining agreements, BBU currently participates in 34 different MEPPs covering more than 15,000 BBU employees.