Milling & Baking News - May 3, 2022 - 22

COMPANY profile
GRUPO BIMBO SAB DE CV
TUES | 05 03 2022
Bimbo N. America sales, adjusted
operating income post wide gains
MEXICO CITY - A combination of
higher prices and volume growth in certain
categories helped lift adjusted operating
profits and sales at the North American
business of Grupo Bimbo SAB de CV
during the first quarter of 2022. The company
said another round of price hikes is
in the process of being introduced.
Operating income of Bimbo's North
American business was 4.24 billion pesos
($208 million), down 18% from 5.16 billion
pesos in the first three months of 2021.
Adjusted for differences in multi-employer
pension plan liability benefits in the 2022
and 2021 quarters, operating income was
up 13%, while the company's operating
margin narrowed 30 basis points, to 8%.
Bimbo said its margins were pressured
by higher cost of sales and an inflationary
environment in North America. For 2022,
the company recorded a $73 million cash
benefit related to the adjustment of its
MEPP liability related to interest levels. A
year earlier, the benefit was $109 million.
Bimbo sales in North America in the first
quarter were 45.58 billion pesos ($2.24 billion),
up 17% from 38.96 billion pesos in the
first quarter last year. Dollar sales were up
16%. In addition to successfully implementing
pricing increases in North America,
Bimbo said the company generated sales
volume growth in mainstream bread, buns
and rolls, sweet baked foods, and snacks.
" We grew share in most of our categories
despite a very difficult operating environment, "
Daniel Servitje, chairman and
chief executive officer, said in an April 27
conference call with investment analysts.
" We successfully implemented productivity
initiatives and a second price increase
across our portfolio, while experiencing
volume growth and market share gains as
we continue to be the first choice of our consumers
in most categories. "
Bimbo's adjusted EBIDTA in North
America was essentially flat in the first
quarter - up 0.1% from the same quarter
last year. Its adjusted EBITDA margin
narrowed 180 basis points to 10.8% from
12.6% in the first quarter last year. The
contraction, Bimbo said, mainly was due
SERVITJE SAYS RICOLINO SALE SHOWS
BIMBO FOCUS ON GRAIN-BASED FOODS
MEXICO CITY - The decision to sell the company's
Ricolino confectionery business in Mexico
reflects the centrality of grain-based foods in the
business model of Grupo Bimbo SAB de CV, said
Daniel Servitje, chairman and chief executive officer.
Mr. Servitje commented on the just-announced
transaction April 27 during a call with investment
analysts in connection with Bimbo's first-quarter
financial results.
Mondelez International has agreed to acquire
the Ricolino confectionery business from Bimbo for
approximately $1.3 billion. Ricolino is based in
Mexico City and makes candy bars,
truffles, panned chocolates, caramel,
lollipops, marshmallows,
hard and chewy candies, nougats
and gum.
" The strategic rationale
behind this decision is that we
22
MILLING & BAKING NEWS
are focusing on our core businesses - grain-based
foods, " Mr. Servitje said. " We plan to continue
to grow and further consolidate our position as
the largest baking company in the world. We sold
Ricolino at highly accretive multiples to nonetheless
a company that can take our beloved brands and
associates to new levels. "
Emphasizing the company's commitment to baking
and to maintaining a large presence in Mexico, Mr.
Servitje said half of Bimbo's $1.5 billion capital expenditure
budget for 2022 will be spent on baking projects in
Mexico, including a new plant in Monterrey, new baking
lines in Tijuana and " one of the fastest bun lines
in the world located in Toluca. "
In its earnings announcement, Bimbo
said it will use proceeds from the
Ricolino transaction to repay debt, to
cover the costs of capital investments
and other general purposes.
" This transaction strengthens our financial
profile as it is accretive for Grupo Bimbo while it
enhances our long-term focus in our core categories, "
said Diego Gaxiola, chief financial officer. " We
affirm our commitment and investments in Mexico,
where we will be investing around $750 million
during the year, a record that endorses our confidence
in the country. "
Responding to analyst inquiries, Mr. Servitje was
emphatic about the company's commitment to maintaining
a narrow emphasis, on baking and snacks.
" We have basically focused on becoming solely a
grain-based food company, a global one and one that
really takes the possibilities of our baking assets as
well as our salted snacks assets better in the future, "
he said. " ... We are not a conglomerate. We were not
even a sort of a broad food company that's operating
in many categories. We were just operating in
three. Now we are laser focused on two. " MBN
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Milling & Baking News - May 3, 2022

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