Baking&Snack - June 2012 - 14

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Bimbo’s Servitje sees improvement in late 2012
Despite significant margin pressure during the first quarter of 2012, Daniel Servitje, CEO of Grupo Bimbo, Mexico City, Mexico, anticipates bright prospects for the company later in the year, including for Bimbo Bakeries USA (BBU). During an April conference call, Mr. Servitje commented on the underlying US business, as well as progress Bimbo was making with the integration of the North American Fresh Bakery business of Sara Lee Corp., acquired in the final quarter of 2011. “Volumes in general are still weaker than in the year-ago period, but the rate of decline has slowed compared with the 2011 average,” he explained. “We are continuing to see positive momentum in certain categories such as sweet baked goods and English muffins. Additionally, we have started to roll out Sara Lee breads and buns in the Northeast region.” Still, a turnaround is not imminent, he said. “We expect a tough first half of the year, especially given the price on wheat and volume performance in the US, but the back half will show improvement,” he said. “Some important progress will be made, also, on the integration. But we are also committed to focus on our strategic initiatives to position ourselves as a low-cost producer and to drive sales and volume growth. Certain factors will remain uncertain, such as the commodity environment and the US consumer confidence, but I would say we have even more confidence today about our short- and long-term targets.” Bolstering that confidence, he noted, are real volume growth in Mexico, robust performances in Latin America markets and a strong recovery in the US. Since the acquisition of Sara Lee’s fresh bakery business, integration of information technology systems has headlined priorities in the US, but Mr. Servitje identified three additional areas of focus. “These are leadership, and the structure is already in place at all levels; sales growth, which will come from national and local customer alignment, as well as region-specific strategies; and productivity and synergy execution, which covers the synergies we had originally identified, as well as other costcutting opportunities while executing the manufacturing asset strategy,” he said. During the call, Gary Prince, BBU’s president and CEO, noted the recent announcement of four US plant closings to enhance efficiencies will be followed by further closings later this year. Additionally, the company mentioned it has started construction on a $75 million, 300,000-sq-ft bakery in Rockwall, TX. On the upside, BBU’s recent rollout of its Sara Lee brand is meeting expectations in the early stages. “I think it allows us to mix out in the Northeast. It gives us a national footprint,” Mr. Prince said. “We have a few more rollouts in the Southeast to do and in the Ohio-Pittsburgh area, but we anticipate getting those done later this year. We’ll have another national brand heading toward $1 billion when we do that.” Mr. Prince noted the build-out of the Sara Lee brand geographically does not diminish the value of the company’s diverse portfolio of bread brands. “We have brands that have rich histories in the regions they grew up in, and they have tremendous potential, along with the national brands,” he said. “So we have lots to work with. We’re really in the early stages. It takes months to get things organized in the field with our customers. They have long lead times, for instance, on listings and changes, that kind of thing. We’re really in the front end of getting positioned to get those brands working harder for us, pretty much in every region of the country. Whether it’s a regional brand — a Mrs Baird’s or Rainbo or Colonial or Stroehmann in the Northeast — along with Sara Lee on a national basis, we have lots to work with, and we’re quite bullish about our growth potential.” Mr. Servitje’s view of the BBU brand portfolio has only brightened in recent months. “I would say that we are more bullish on our brands with the integration of the two former companies than we were before,” he said. “Even though there are a lot of things that we are working on to get us through the integration process, at the end, the brands and the structure will be stronger as a result of this combination.” — Joshua Sosland, editor, Milling & Baking News

/ Baking & Snack / June 2012

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Baking&Snack - June 2012

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