Baking&Snack International - June 2012 - 12

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 confiheadlined 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 cost-cutting opportunities while executing the manufacturing asset strategy,” he said. During the call, Gary Prince, BBU’s president and CEO, noted that 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 US$75 million, 91,000-sq-m bakery in Rockwall, Texas, US. On the upside, BBU’s recent rollout of its Sara Lee brand is meeting expectations in the early stages. Mr. Prince anticipates having another national brand headed toward US$1 billion. 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

dence today about our short- and longterm 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

Canada Bread suffers volume declines
Industry-wide declines in North America bakery volumes caught up with Canada Bread, Toronto, Canada, the latest company to fall victim to the troubling trend. The volume declines hurt the company’s financial results for the first quarter of fiscal 2012. “Despite [the decline], we benefitted from our position in key categories, innovation and the strength of our brands,” noted Richard Lan, president and CEO. “We are addressing the challenges and improving profitability through increased marketing, consumer outreach and cost reduction.” During the quarter, Canada Bread closed two bakeries in the Greater Toronto area as it continues to consolidate production into its new fresh bakery in Hamilton, Canada. The company will close a third Toronto bakery in early 2013.

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June 2012

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Baking & Snack International Global Intelligence Report

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Baking&Snack International - June 2012

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