Milling & Baking News - May 3, 2022 - 23

TUES | 05 03 2022
to a higher inflationary environment,
including commodities, labor costs and
shortages across the supply chain. Bimbo
said these factors were partially offset
by favorable brand mix and productivity
gains from past restructuring efforts.
Diego Gaxiola, chief financial officer at
Bimbo, said Bimbo is raising its top-line
guidance for 2022 to low double-digit
growth from high single-digit.
" Considering this updated top-line
growth and the high inflationary environment
that we're facing, we maintain
the range of adjusted EBITDA at mid- to
high single digits, " he said.
Mr. Gaxiola said Bimbo is well hedged.
" Our main raw materials are wheat,
packaging and fats and oils, " he said. " As of
the end of the first quarter, we had already
hedged 85% of our mix for 2022. And we
continue to do so according to our policy,
which goes from 4 months up to 18 months. "
Fred Penny, president of BBU, said challenges
associated with inflation will play
out throughout 2022.
" We're in the process of implementing
another round of pricing, given what I
would call extraordinary run-up in many
of our input costs, " he said. " I think it's
important to note that not all of our input
costs are hedgeable. In some cases, we're
seeing significant runups in the short
term that we're going to have to deal with
in the back half of the year. In addition to
that, beyond the pricing, I would say that
we're aggressively going after any and all
productivity opportunities, mix management,
revenue growth management. "
He noted that inflation is not limited
only to commodities.
No signs have yet emerged consumers
are pushing back against the higher
prices, Mr. Penny said.
" To date, we've not seen any significant
elasticity impacts from the pricing actions
we had to put into the market, " he said. " I
will say that the additional pricing we're
being forced to take now, given the significant
inflation, is just out. And we're monitoring
that, and we will be monitoring
closely by category for potential impacts. "
Similarly, he said retailers have not
resisted higher prices " because they're
facing the same " inflationary pressures.
" We're putting another pricing into the
market in the near term here because we
have to, " he said. " And hopefully, we're
going to be able to execute that effectively. "
Net majority income of Grupo Bimbo
in the first quarter was 4.47 billion pesos
($219 million), up 10% from 4.05 billion
pesos in the 2021 first quarter. The company's
profit margin narrowed 30 basis
points. Inflationary costs and the smaller
MEPPs benefit pressured profitability but
largely were offset by overall strong sales,
efficiencies in selling and administrative
expenses, lower financing costs and an
overall tax rate of 34%, versus 37.7% the
year before. Sales were 93.32 billion pesos
($4.58 billion), up 18%.
" Top-line performance was exceptional,
as we reached a record level of sales for the
first quarter and gained market share in
several categories, " Mr. Servitje said about
the company's quarterly results. " Our
volumes grew across all organizations as a
reflection of the high demand we are experiencing
and that our brands are resonating
with our consumers. The salty snacks,
buns and rolls, snack cakes, bakeries and
confectionery categories outperformed, as
did our Mexico and Latin America regions
and our QSR business. " MBN
'THE ESSENCE OF GRUPO BIMBO'
MEXICO CITY - For decades, a carefully
considered strategy for mergers and acquisitions,
has been rigorously followed and represents " the
essence of Grupo Bimbo, " the company's chief executive
officer said.
In an April 27 conference call with investment
analysts, Daniel Servitje, chairman and chief executive
officer of Grupo Bimbo SAB de CV, explained the longstanding
approach the company has pursued in its
global mergers and acquisitions strategy. He made the
comments in response to an analyst question about
what Bimbo's decision to sell its Ricolino confectionery
business means for Bimbo's approach to M&A.
Mr. Servitje took advantage of the question to
describe the company's approach and explain why
Bimbo has made a number of smaller acquisitions in
recent years. He suggested that analysts don't necessarily
see the Bimbo approach toward M&A " from
the angle I see it. "
Historically, acquisitions by Grupo Bimbo in the
United States were made when the company chose to
" pursue a very clear strategy of taking advantage of
a fragmented market, whereby we could consolidate
our market position in the US and then afterward in
bakingbusiness.com
some other countries by making these acquisitions
that were quite large compared to our size then. "
He said Bimbo has not and is not making acquisitions
because " this is sort of in our blood, " as he
suggested has been implied by analysts. Instead,
the transactions followed a deliberate and strategic
decision-making
process and a
willingness to
do whatever is
necessary to
bring acquired
assets up to the
standards set by
Bimbo.
" After we (do)
these acquisitions,
we have to work tirelessly years and years and
years to fix ailing businesses, to invest in bakeries
that have not been invested in many, many years
and to fix distribution systems that were outmoded
or not taken care of, " he said. " And that explains the
essence of Grupo Bimbo. Grupo Bimbo is a company
that always has its goals (set) very clearly and that
has a long-term vision on how to develop the markets
where we are.
" And we play for the long haul. If you don't like
the long haul, well, that's who we are. But we are
very clear on what we want to achieve, and we
want to create value for our shareholders. And as
" We play for the long haul. If
you don't like the long haul,
well, that's who we are. "
- Daniel Servitje,
Grupo Bimbo SAB de CV
these big acquisitions happen, what we find then
is that there are many opportunities for inorganic
growth, but they are smaller in size from what they
were before. ...We will look at a lot of opportunity in
front of us. And if they fit with our strategy, if they
provide growth in the future or strong synergies,
we will look more closely at it. " MBN
MILLING & BAKING NEWS 23
GRUPO BIMBO SAB DE CV
http://www.bakingbusiness.com
Milling & Baking News - May 3, 2022

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