HomeFoodBimbo profits in North America up 44% in 2021

Bimbo profits in North America up 44% in 2021

MEXICO CITY – Following a yr of document profits, gross sales and quantity, Grupo Bimbo SAB de CV in 2022 faces challenges from tight labor, inflation and uncertainty over client spending, stated Daniel Servitje, chairman and chief government officer.

Still, Mr. Servitje stated the corporate was “cautiously optimistic” concerning the outlook for the brand new yr.

“We are laser-focused on what we can control and believe we will overcome these challenges and succeed in the year,” he stated.

Operating revenue of the North America phase of Grupo Bimbo was 16.08 billion pesos ($794 million), up 44% from 11.2 billion pesos in 2020. The firm’s working margin widened 280 foundation factors throughout the yr to 9.1%, from 6.3% in 2020. Net gross sales in the area had been 176.3 billion pesos ($8.7 billion), almost unchanged from 176.4 billion a yr earlier however nonetheless up 22% from 144 billion in 2019.

Company-wide, Grupo Bimbo working revenue jumped 34% throughout 2021, energy the corporate attributed to “productivity savings across the value chain coming from past restructuring investments, distribution efficiencies and cost-cutting projects.” Bimbo additionally cited a $108 million non-cash profit from the adjustment of the corporate’s MEPPs (a number of employer pension plan) reflecting present rate of interest ranges.

While working margins widened, gross margins narrowed barely throughout 2021, stress the corporate attributed to “higher commodity costs across every region.”

In the fourth quarter, North America working revenue was 4.7 billion pesos ($232 million), up 29% from 3.64 billion pesos in the fourth quarter of 2020. Operating margin in the quarter was 9.3%, up from 8.2% in the fourth quarter of 2020 and in contrast with 3.9% in the fourth quarter of 2019. Net gross sales throughout the quarter had been 50.3 billion pesos ($2.48 billion), up 13% from 44.5 billion in the fourth quarter of 2019.

EBITDA margins in North America narrowed 170 foundation factors in the fourth quarter, reflecting inflationary pressures affecting commodities in addition to labor prices and shortages throughout the availability chain.

“This (inflationary pressure) was partially offset by favorable branded mix, productivity benefits from past restructuring investments and cost saving initiatives,” the corporate stated.

The sturdy fourth-quarter gross sales in North America, up 12.4% in US {dollars}, had been propelled by market share features, larger costs and “excellent in-store execution,” Bimbo stated. The firm continued, “Mainstream, premium buns and rolls, sweet baked goods and snacks categories outperformed, as did the modern channel.”

In a Feb. 22 name with funding analysts, Mr. Servitje stated Bimbo gained market share in North America in the fourth quarter “despite a very difficult operating environment.”

“Our front-line teams did an outstanding job navigating a number of challenges, which included the impact of weather-related events throughout the third and fourth quarters,” Mr. Servitje stated. “We successfully implemented productivity initiatives and price increases throughout our portfolio and saw volume growth and market share gains as we continue to be the first choice of our consumers in most categories. Our top-line run rate, when compared to pre-pandemic levels, continue to be very strong.”

Mr. Servitje attributed the brisk gross sales to sturdy client demand and investments the corporate has made and continues to make in its manufacturers. Private label enterprise was comfortable, and foodservice demand confirmed life throughout the quarter.

During the decision, Fred Penny, president of Bimbo Bakeries USA, stated the North American enterprise has raised costs twice — as soon as, on the finish of the summer season, and a second time in early 2022. Whether additional will increase will probably be essential is unimaginable to reply at current, he added.

“I think the retailers have recognized the need to offset some of the inflation pressures,” he stated. “Having said that, we’re working really hard to offset as much of the inflation as we can through all the options we have, cost-cutting, productivity, trade optimization, et cetera. And we’re going to continue to do that. As I think forward inflation, it’s a question mark in terms of is it going to get worse or not. And so, I wouldn’t want to opine on whether there will be another price increase. We’ll see. But clearly, we’ve needed to take pricing, and we’re going to continue to evaluate it as the year unfolds.”

Only just a few weeks after the second worth improve, Bimbo has not but seen client resistance to larger expense, Mr. Penny stated.

“But it’s not all equal,” he stated. “The categories are different. I think it’s going to take some more time to figure out whether we are going to see elasticity issues on the pricing. And I’d say also, it’s a complicated issue with everything going on — omicron coming down, school reopenings, etcetera, mask mandates being dropped. I think much of this has to do with how consumer behavior changes going forward. And we’ll have to wait and see for a few more weeks, if not months.”

Mr. Penny stated Bimbo was happy with the efficiency it achieved given the inflationary pressures the corporate has confronted.

“I think we’re going to have continued margin pressure, although I think we’re going to also have the opportunity to deliver improved top-line and bottom-line performance,” he stated. “The big question is, where does inflation go from here, does it get even worse than it already is? Can we cover it through whether it’s price or productivity or other efforts? I think that remains to be seen. But I’m confident we’re going to manage through the inflation pressures as best we can and hopefully continue to deliver fairly solid performance.”

Responding to a query, Diego Gaxiola, chief monetary officer, stated the worsening safety scenario in Ukraine poses potential hazards for Bimbo. He added that Bimbo is effectively hedged going into 2022.

“This is an additional risk, particularly for wheat,” he stated. “We do not disclose the specific hedges that we have by commodities, but as part of our hedging strategy, what I can tell you is that we ended 2021 with approximately 70% of the commodity needs that we have for the full year. Now this doesn’t mean that we will not see any impact because at the end we will continue to do the hedging strategy. And as wheat goes up, we will start to face inflation, probably more an additional inflation toward the end of the year and 2023.”

Grupo Bimbo internet majority revenue in 2021 was 15.9 billion pesos ($785 million), up 75% from 9.1 billion in 2020. Net majority margin widened to 4.6% from 2.8% in 2020. Net gross sales had been 348.9 billion pesos ($17.2 billion), up 5% from 291.9 billion.

Highlights of the yr included the corporate’s strongest return on fairness in 10 years — 15.2%. During the yr the corporate accomplished six strategic acquisitions, together with two in the United States, two in India, one in Spain and one in Brazil.

Fourth-quarter internet majority revenue was 4.82 billion pesos ($238 million), up 67% from 2.9 billion pesos a yr earlier. Net majority margin widened in the ultimate quarter of the yr to five%, up from 3.4% the yr earlier than. Net gross sales had been 97.45 billion pesos ($4.81 billion), up 15% from 84.8 billion.

The sturdy efficiency in the quarter was attributed to the corporate’s sturdy gross sales and working efficiency along with decrease financing prices and a decrease efficient tax price.



Please enter your comment!
Please enter your name here

Most Popular

Recent Comments