Bimbo's operating income in the U.S. and Canada increased 36% in the second quarter.
At 2.063 billion pesos ($109 million), operating profit was up from 1.52 billion pesos in the same period a year earlier. Net sales were 33.613 billion pesos ($1.779 billion), up 19% from 28.307 billion pesos.
For the six months ended June 30, operating income for the U.S. and Canada business was 3.226 billion pesos ($171 million), up 73% from 1.862 billion pesos in the first half of 2015. BBU sales were 63.794 billion pesos ($3.379 billion), up 20% from 53.242 billion pesos.
Bimbo said net sales in peso terms increased nearly 20% in the first half as a result of the exchange rate benefit, while dollar-denominated sales increased a slight 1%.
“Volume pressure in the private label bread category in the U.S. and competitive pressure in the bread category in Canada more than offset sales growth in strategic brands, the frozen business and the snacks category in the U.S., and solid performance of the buns category in Canada,” Bimbo said.
Even with the jump in earnings in the second quarter, BBU operating margins of 6.1% lagged Mexico considerably, at 15%.
Net majority income of Grupo Bimbo in the second quarter was 1.906 billion pesos ($101 million), up 10% from 1.729 billion pesos in the second quarter of 2015. Net sales were 60.626 billion pesos ($3.212 billion), up 14%.
For the six months ended June 30, Grupo Bimbo net majority income was 3.189 billion pesos ($169 million) up 23% from 2.6 billion pesos. Sales were 117.202 billion pesos ($6.21 billion), up 13%.
Bimbo said there was a 20 basis point expansion in the margin to 2.7%, attributable to solid operating performance, partially offset by a higher effective tax rate of 41.5%.
“This increase in the tax rate primarily reflected better earnings in the U.S., subject to a higher rate, as well as the cancellation of deferred income taxes due to losses in Brazil,” Bimbo said. “It is expected that these factors will remain present for the rest of the year.”
Bimbo said total debt as of June 30 was 74 billion pesos, which compared with 67.8 billion pesos as of Dec. 31, 2015. The company said the increase primarily reflected a 10% U.S. dollar revaluation that increased the Mexican peso value of U.S. dollar denominated debt.
“Average debt maturity was 8.1 years with an average cost of 3.9%,” Bimbo said. “Long-term debt comprised 96% of the total; 75% of the debt was denominated in U.S. dollars, 24% in Canadian dollars and 1% in Euros.
“The total debt to EBITDA ratio was 2.8 times compared to 2.9 times at Dec. 31, 2015. The net debt to EBITDA ratio was 2.7 times.”