Milling & Baking News Corporate Profiles - 2015 - (Page 70)
Company Overview
Grupo Bimbo S.A.B. de C.V.
Amid tough sales trends, B.B.U. improves profit margins
A
determined and prolonged effort to improve U.S. profit
margins has yielded positive results for Grupo Bimbo
S.A.B. de C.V. over the past year, even in the face of weak
industry sales.
A large part of the improved profitability was the winding
down of restructuring charges that had been a mainstay of the
financial results of Bimbo Bakeries USA since its 2011 acquisition of the North American fresh bakery business of Sara Lee
Corp. In the second quarter ended June 30, restructuring charges at B.B.U. were 198 million pesos ($12.4 million), versus 607
million in the same period a year earlier. The reduction contributed to a 47% jump in quarterly operating profits.
The company's operating profit margins were the strongest
for a second quarter since the Sara Lee acquisition. At 5.4%,
2014 fiscal-year
sales -
$6 billion
(B.B.U.)
Chief executive
officer -
Daniel Servitje
Top brands -
70 \ October 2015
Sara Lee
Oroweat
Brownberry
Bimbo
Dempster's
the margins were 60 basis points better than in the same period
in 2014 and compared with 5.2% in 2013 and 3.8% in 2012.
Still the margins were significantly thinner than the 14.9% Bimbo earned in Mexico in the second quarter of 2015 or the 9%
operating margins posted by B.B.U. in the second quarter of
2011, before the Sara Lee transaction.
While overall baked foods sales were weak in the United States and Canada, B.B.U. sales were strong because
of a flurry of Bimbo acquisitions in Canada. These include
Canada Bread (in May 2014) and Saputo Bakery (February
2015). The Saputo acquisition for about $100 million was
far smaller than Canada Bread (about $1,700 million). The
Saputo business is centered mainly on snack cakes in Canada, which are sold almost exclusively in the retail market.
The business operates one manufacturing plant located in
the province of Quebec and had 642 employees at the time
the transaction closed.
Even more recently, Bimbo acquired Italian Home Bakery
Ltd., a family-owned Canadian bakery of fresh artisan bread
and rolls as well as frozen baked products. The acquisition was
completed in July. While terms of the transaction were not disclosed, the acquired business has annual sales of about C$11
million ($8.4 million), mostly in the Toronto area.
"The company has one production plant and, while small, it
reinforces our presence and production capacity in this part of
Canada and the U.S., complementing our frozen business," said
Daniel Servitje, chief executive officer of Grupo Bimbo.
I.H.B. operates a 70,000-square-foot baking plant in Etobicoke, northwest of Toronto. Among roughly 60 products baked
by I.H.B. are spacatto, or "split," Italian bread and rolls. Additionally, it offers an array of bread varieties, including a Calabrese line; ciabatta and Hearth & Health Selections. In addition to fresh baked food selections, I.H.B. has expanded its
frozen baked foods business in recent years and ships product
to retailers and food service chains throughout Canada.
Even after the multiple acquisitions in Canada, the United
States accounts for most of the business of B.B.U. As the largest U.S. baking company, Bimbo has faced challenges building
its business in a sagging market. Excluding the acquisitions,
B.B.U. sales have been under pressure. Fred Penny, president
of B.B.U., said the bread market was perhaps most challenging.
"I would say the following on the volume pressures, primarily
we have seen it in mainstream bread, traditional bread led really by private label," he said in a July call with analysts. "We
are a major provider of private label and private label has continued to trend negative in the category. So that has been one
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Corporate Profiles
Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - 2015
Milling & Baking News Corporate Profiles - 2015
Table of Contents
Editorial - With growth elusive, its pursuit only intensifies
Industry Review: Grain-based Foods
Industry Review: Packaged Foods
Can K-Cups kick-start soup?
Industry Review: Beverages
Industry Review: Meat and Poultry
Industry Review: Dairy
Industry Review: Confectionery
Industry Review: Food Service
Industry Review: Clean Label
Company Overview - Grupo Bimbo S.A.B. de C.V.
Company Overview - Campbell Soup Co.
Company Overview - Coca-Cola Co.
Company Overview - ConAgra Foods, Inc.
Company Overview - Flowers Foods, Inc.
Company Overview - General Mills, Inc.
Company Overview - The Hain Celestial Group, Inc.
Company Overview - The Hershey Co.
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