San Pedro Garza García / MX. (gr) Gruma S.A.B. de C.V. reported its results for the first quarter 2016 (Q1/2016). Highlights: During Q1/2016 the Mexican group – worldwide leader in the production of corn flour and tortilla and a major player in wheat flour and staple foods – continued to deliver improvements in its financial results based on internal strategies oriented to value creation, while strengthening the leadership position of its products and brands. Sales volume rose 2 percent supported mainly by Gimsa. Net sales surged 17 percent, while operating profit and Ebitda increased 26 percent and 24 percent, respectively. Net sales and Ebitda benefited from better performance at most subsidiaries, especially Gruma USA, and from the weakness of the Mexican peso. Sales and Ebitda from non-Mexican operations represented 74 percent and 72 percent, respectively, of consolidated figures. The company reported 729 million USD of debt at quarter-end, representing a Gross Debt/Ebitda ratio of 1.3 times.
Consolidated Financial Highlights
| MXN in millions | Q1/2016 | Q1/2016 | Change |
| Sales volume (thousand metric tons) | 946 | 926 | 2% |
| Net sales | 15’831 | 13’522 | 17% |
| Operating income | 2’031 | 1’615 | 26% |
| Operating margin | 12.8% | 11.9% | 90 bp |
| Ebitda | 2’475 | 1’995 | 24% |
| Ebitda margin | 15.6% | 14.8% | 80 bp |
| Majority net income | 1’267 | 983 | 29% |
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Consolidated Results of Operations
Sales volume increased 2 percent to 946 thousand metric tons, driven in particular by Gimsa.
Net sales rose 17 percent to 15’831 million MXN, due principally to (1) the weakness of the peso, which benefitted sales from Gruma USA when stated in peso terms; (2) the aforementioned sales volume growth; and (3) price increases, to reflect higher raw material costs, especially at Gimsa.
Cost of sales as a percentage of net sales improved to 61.4 percent from 62.9 percent, reflecting better performance mostly at Gruma USA and Gruma Centroamérica. In absolute terms, cost of sales increased 14 percent to 9’712 million MXN due mainly to peso weakness, and the aforementioned sales volume growth.
Selling, general and administrative expenses (SG+A) as a percentage of net sales increased to 25.7 percent from 24.8 percent due mainly to higher expenses at Gimsa and Gruma Centroamérica, as well as a higher proportion of Gruma Corporation in the consolidated figures. In absolute terms, SG+A rose 21 percent to 4’064 million MXN mainly in relation to the effect of the weaker peso, and, to a lesser extent, to the aforementioned higher expenses at Gimsa and Gruma Centroamérica.
Other expense, net, decreased 12 million MXN to 24 million MXN due principally to gains on asset sales.
Operating income grew 26 percent to 2’031 million MXN, driven primarily by better performance at Gruma USA, the positive effect of the peso depreciation and, to a lesser extent, improvements at Gruma Centroamérica. Operating margin rose to 12.8 percent from 11.9 percent, led mostly by Gruma USA and, to a lesser extent, Gruma Centroamérica.
Ebitda increased 24 percent to 2’475 million MXN. Ebitda margin expanded to 15.6 percent from 14.8 percent.
Net comprehensive financing cost was 137 million MXN, an increase of 55 million MXN in connection with prior year gains on foreign exchange derivatives related to corn purchasing at Gimsa.
Income taxes were 578 million MXN, 114 million MXN more resulting from higher pre-tax income. The effective tax rate was 30.5 percent.
Majority net income was 1’267 million MXN, 29 percent more, driven mostly by better operational performance, especially at the U.S. operations, and the weakness of the peso.
Since 1949, Gruma S.A.B. de C.V., is one of the world’s leading tortilla and corn flour producers. With leading brands in most of its markets, Gruma has operations in the United States, Mexico, Central America, Europe, Asia and Oceania. Gruma is headquartered in San Pedro Garza García, Mexico, and has approximately 19’500 employees and 75 plants. In 2015, Gruma had net sales of 3.4 billion USD, of which 73 percent came from non-Mexican operations.
