Milling & Baking News - November 7, 2017 - 12

Financial Results

Bimbo's Penny sees buoyancy in
commercial bread category
Continued from Page 1

said, "Overall, we had a good quarter."
"We're seeing some improvement,
some buoyancy in the total commercial bread category, with the total
category being slightly better than
it's been in prior quarters," he said.
"Relative to our performance, we've
experienced growth in the core bread
business and even more significantly
in our sweet goods category. And the
sweet goods category, overall, as a total category, is performing fairly well.
And it's really a combination of our
focus on strategic brands, some innovation and then the programming that
we've brought to the market."
On the other hand, bread pricing has
become no less competitive, he said.
"I know that I sound like a broken record on this, but the category continues
to be competitive, although, I would
say, that there hasn't been anything of
significance in one direction or another
in terms of the overall pricing we've
seen," he said. "My own view of it is
that it's more a combination of consumers probably feeling better over time as
the economy has continued to improve
and has been relatively solid. And I'd
like to think that it's what we're doing
in the marketplace with our products
and our programs."
Commenting on what Bimbo has
done in the marketplace, Daniel Servitje, chief executive officer of Grupo
Bimbo, noted a continued focus on
the company's strategic brands -
Artesano, Barcel, Little Bites and
Entenmann's mini cakes.

"We have gained market share in
categories like mainstream bread and
sweet baked goods," he said. "This
helped offset softness in our private
label business. At the same time, commodity and energy costs also provided
a bit of a tailwind this period, although
less than in the first half of the year."
Mr. Servitje said Bimbo made an
acquisition in the United States, but
he did not offer much detail. He said
Bimbo acquired a "small,
refrigerated bakery goods
maker."
"We're excited about
it because it comes with
a perfect complement to
our portfolio, as refrigerated represents a new
channel for us for our U.S.
business," Mr. Servitje
said. "And for Canada,
not only did volumes improve, but so did our dollar market share. And this
was particularly notable
in the branded portfolio
as well as in the tortillas
and breakfast categories."
Weaker margins at
Grupo Bimbo during the
quarter reflected higher
distribution costs in North America,
which in turn were related to weak
sales in the frozen category, which the
company said currently is in the midst
of a restructuring. A positive offset
were waste reduction initiatives.
Mr. Servitje noted four baking plants
have been closed in 2017 - two in

In face of adversity, Mondelez
posts earnings gain in quarter
DEERFIELD, ILL. - Mondelez International, Inc. managed to turn in a
solid third quarter on both the top and
bottom line, overcoming challenges
from hurricanes, earthquakes and
goods and services tax in India.
Net income in the third quarter ended Sept. 30 totaled $992 million, equal
to 66c per share on the common stock,
up sharply from $548 million, or 35c
per share, in the same period a year
ago. Net revenues increased 2.1% to
$6,530 million from $6,396 million.
"Organic net revenue increased 2.8%,
fueled largely by the strength of our
Power Brands, improving momentum
12 / November 7, 2017

Milling & Baking News

in emerging markets and strong performance in Europe," Irene B. Rosenfeld,
chairman and chief executive officer,
said during an Oct. 30 conference call
with analysts. "We estimate that our
top-line results included a net benefit
of approximately 60 basis points associated with recovery from the malware
incident as we recaptured some delayed
shipments from the end of Q2."
Ms. Rosenfeld said the company's
Power Brands grew 3.8% during the
quarter, significantly outpacing the category with Milka and Cadbury Dairy
Milk in chocolate and Oreo and belVita
in biscuits performing especially well.

Canada and two in the United States.
"In Canada, this is a process we initiated in 2014 after the acquisition when
we started with 16 plants," he said.
"And today, we generate the same
volume with 11 plants, and we're continuing with a transformation plan in
terms of the E.R.P. (enterprise resource
planning) and I.T. (information technology) platform migration processes.
That too, is near completion. Furthermore, we're redesigning our frozen
business to fully leverage our capabilities in a growing category. As a result,
adjusted EBITDA margin slightly contracted 10 basis points."
During
the
third
quarter Bimbo sales in
Canada were boosted by
new product launches,
including
Dempster's
whole grain with chia
as well as sales from the
company's recently acquired Stonemill Bakehouse business.
Net majority income
at Grupo Bimbo in the
third quarter was 1,709
million pesos ($89 million), down 33% from
2,537 million pesos during the third quarter last
year. Sales were 65,164
million pesos ($3,394
million), down narrowly
from 65,390 million pesos in the same
period in 2016.
Year-to-date consolidated income
was 4,203 million pesos ($219 million),
down 28% from 5,812 million pesos.
Nine-month sales were 196,584 million pesos ($10,233 million), up 7%
from 183,279 million pesos. MBN
"Our growth strategies continue to
gain traction," she said. "We're contemporizing our core by distorting resources
behind our Power Brands and by upgrading the well-being credentials of our portfolio. Our belVita brand continues to be a
standout. It's growing mid-single digits
globally, driven by our base breakfast biscuits as well as impactful line extensions
like belVita Protein and belVita Bites."
Ritz Crisp & Thins is exceeding expectations, and a new savory snack
brand, Véa, was launched during the
quarter and was, "off to a good start"
as the company ramps up distribution, Ms. Rosenfeld said.
While developed markets grew
1.6% during the third quarter, Ms.
Rosenfeld said the company's North
America unit is the only region
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Milling & Baking News - November 7, 2017

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