Milling & Baking News - November 2, 2021 - 10

TUES | 11 02 202 1
Gaining market share, BBU says
dollar sales strong; profits slip
MEXICO CITY - Strong sales of buns,
breakfast products, sweet goods and snacks
helped lift third-quarter results of the
North American business of Grupo Bimbo
SAB de CV. Announcing quarterly results,
Bimbo said the company gained market
share in mainstream bread but also faced
margin pressure because of cost inflation.
Operating income in North America
was 3.4 billion pesos ($167 million), down
27% from a year earlier but more than
double the 1.7 billion pesos of operating
income in the third quarter of 2019.
Operating margin in the third quarter
in North America was 7.7%, down from
10% a year earlier but well above the
4.5% margins during the period in
2019. Net sales were 44.3 billion pesos
($2.2 billion), down 4.6% from 46.4
billion pesos a year earlier but up 18%
from 37.6 billion in 2019. In US dollar
terms, third-quarter North American
sales were up 6% from the year before.
Boosting sales during the quarter
were pricing actions, trade spend optimization
and price/mix, Bimbo said.
Bimbo attributed the narrowing of
profit margins to higher inflation, including
commodities, labor costs and shortages
across the supply chain.
" This was partially offset by favorable
branded mix and productivity benefits
from past restructuring investments and
cost saving initiatives, " the company said.
Daniel Servitje, chairman and chief
executive officer of Grupo Bimbo SAB de
CV, in a call with investment analysts Oct.
28, said despite difficult comparisons, the
North American business " had a great
quarter. "
" We implemented price increases late
in the quarter, and given the outlook for
2022 with the significant inflation pressures
we are expecting, we are expecting
a second round of price increases and
additional productivity, " he said.
Responding to a question about market
share gains, Fred Penny, president
of Bimbo Bakeries USA, Horsham, Pa.,
discussed an environment conducive to
10
MILLING & BAKING NEWS
strength in breakfast products and buns.
" We're continuing to see fairly strong
market share gains, not in every category,
but most of our categories, " he said. " Breakfast,
I think, is a reflection of the continued
shift to consumption at home. Even though
we've cycled the most significant impacts of
the pandemic from a year ago in the quarter,
I think that there is a continued trend
of more consumption at home, and I think
breakfast is one of the categories, along with
buns, I would argue is another category
strategy focused on three principal objectives:
*
promoting health and well-being
through plant-based diets and nutritional
diversity;
* becoming a net zero-carbon and zero
waste business, advancing regenerative
agriculture;
* and strengthening its communities.
Additionally, the company renewed its
$1.75 billion revolving credit facility (RCT)
as sustainability-linked debt, marking the
company's debut in sustainable financing.
Diego Gaxiola, chief financial officer,
gave preliminary guidance for Grupo
Bimbo's financial performance for
2022. He said sales are expected to grow
mid-single digits. Despite a " tough
comparison given remarkable results
of 2021 and despite the high inflationary
environment, " he said adjusted
EBITDA should grow mid- to high-single
digits and margins should expand.
Capital expenditures of $900 million
are targeted for the new year, he said.
Net majority income of Grupo
Grupo Bimbo announced during the call that it has
acquired Popcornopolis, a maker of premium, readyto-eat
popcorn.
where the trend seems to be continuing. So
we feel good about that. Hopefully that will
continue as we move into 2022. "
Grupo Bimbo also announced a commitment
to achieving net zero carbon
emissions by 2050 and offered updates on
progress toward its sustainability goals.
The 2050 target, announced with the
company's third-quarter financial results,
was developed following Science Based
Targets initiative's (SBTi) framework, and
then validated by the group. SBTi is a partnership
between CDP (an environmental
non-profit), the United Nations Global Compact,
World Resources Institute (WRI) and
the World Wide Fund for Nature.
" By doing this, Grupo Bimbo has committed
to Business Ambition for 1.5°C and
joined the United Nation's Race to Zero
Campaign, the first coordinated attempt
to reduce carbon emissions on time, " the
company said.
Grupo Bimbo said the objective reflects
a commitment to make its business more
sustainable and is part of a sustainability
Bimbo was 4 billion pesos ($196 million),
up 12% from 3.6 billion in the
third quarter last year. Net sales were
88.2 billion pesos ($4.33 billion), up
2.9% from 85.7 billion a year earlier and
up 18% from 74.9 billion in 2019.
" I am very pleased with our third-quarter
results, " Mr. Servitje said. " Despite
challenging comparisons, the 6.5% pressure
coming from (foreign exchange) rates,
significant inflation and supply chain complexities,
we have sequentially reported
record sales and profits, and our free cash
flow has been consistently growing. Our
strong results are a reflection of our team's
dedication, global diversification, strong
consumer demand, investments in our
brands and pricing strategies. "
With the financial results, Bimbo said it
has acquired Popcornopolis, a fast-growing
popcorn brand " with a pristine reputation
for quality. "
" Popcornopolis produces premium,
ready-to-eat popcorn made with natural
and best-in-class ingredients, " the company
said. " This acquisition marks Grupo
Bimbo's entrance to the attractive popcorn
category in the US, which is an excellent
platform for innovation. " MBN
bakingbusiness.com
BIMBO BAKERIES USA
http://www.bakingbusiness.com
Milling & Baking News - November 2, 2021

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