Baking & Snack - June 2023 - 17

lion pesos ($271.3 million), up 4.8% from 4.65 billion a
year earlier. BBU's adjusted EBITDA margin was 10.3%,
unchanged from the year before. The adjusted EBITDA
figure, which excludes the effect of MEPPs, rose mostly
because of sales gains and productivity savings " across
the value chain, " Bimbo said.
" North America margin remained flat mainly due to
the strong sales performance and a favorable price and
product mix effect, which was offset by a higher inflationary
environment, including commodities and labor
costs, " Bimbo said.
Of the North American business, Mr. Servitje said,
" North America delivered strong top-line performance,
growing 15% in dollar terms, mainly due to the carryover
pricing effect since we experienced a volume pressure
as we cycled last year's Omicron surge. Despite the
challenging inflationary environment and a difficult
comparison base, we were able to maintain our adjusted
EBITDA margin at 10.3%. "
Mr. Servitje cited an " ongoing difficult labor environment "
among challenges the company was facing. While
Bimbo did not share figures on volume during the quarter,
Mr. Servitje implied they were under pressure.
" We are still expecting a solid 2023, more specifically
in the back half of the year, " he said. " We hope we'll start
to see volumes improving as we cycle the price increases
as well as realized productivity benefits throughout
our business. "
Addressing a question about a steep drop in commodity
prices relative to a year ago, Mark Bendix, president
of Grupo Bimbo, reminded the analyst that Bimbo
employs forward hedging, complicating the year-toyear
comparison.
" But our business has really remained resilient, " Mr.
Bendix said. " Obviously, you've seen we've delivered another
strong quarter, but we still have to be vigilant about
mitigating inflation. So that includes looking at strong
execution, cost savings initiatives and initiatives to have
productivity improvement in everything we do. And then
tying in with your extended question, this is, well, experiencing
elasticity that's well below historical levels. "
Mr. Bendix said Bimbo expects lower commodity
costs in the second half of 2023 but added that pressure
on the company's sales has not been evident.
" We did see some trade down to private label that has
flattened out, " Mr. Bendix said. " But I would tell you that
we're seeing consumers still under pressure because of inflation.
But we're also still seeing really nice growth in our
premium products and snacks. So, we need to be vigilant
and continue to look and see, but it hasn't been the migration
that you necessarily would have expected to private
label, and we've all been a little bit surprised by that. "
Grupo Bimbo net majority income in the first quarter
was 4.05 billion pesos ($225 million), down 9% from
4.47 billion a year earlier. The decrease was attributed to
the MEPPs benefit in the first quarter of 2022 together
with the profit from the Ricolino's discontinued operation
in 2022. Adjusted for these items, net majority income
in the first quarter was 42% and the company's
profit margin widened by 90 basis points, to 4.1%. Net
sales were 99.6 billion pesos ($5.5 billion), up 9.9% from
90.6 billion in the first quarter of 2022.
Grupo Bimbo's premium
bread products saw
strong growth in
Q1 of 2023.
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