Gruma: Net sales grew four percent in third quarter

Monterrey / MX. (gru) «Listen to your customer» is not only a business rule, it´s law. According to the conviction of Jairo Senise, chief executive of Mexican Gruma S.A.B. de C.V., the really successful law means to know the trick «to develop effective ways to listen to potential consumers», he told «The New York Times».

Gruma is one of the world´s leading tortilla and corn flour producers. The company was founded in 1949 and is engaged primarily in the production, marketing, distribution, and sale of tortillas, corn flour, and wheat flour. With leading brands in most of its markets, Gruma has operations in the United States, Mexico, Venezuela, Central America, Europe, Asia, and Australia and exports to about 50 countries worldwide. The company is headquartered in Monterrey, Mexico, and has approximately 17.000 employees and 88 plants. In 2006, Gruma had net sales of 2,8 billion USD, of which 67 percent came from non-Mexican operations. This days the company published the financial results of Gruma´s third quarter 2007. The results of operations in short (Q3/2007 versus Q3/2006):

Consistent with Gruma´s report this exchange rate is from September 30:
100 Euro (EUR) = 1.563,55 Mexican Pesos (MXN)
100 Mexican Pesos (MXN) = 6,39571 Euro (EUR)

  • Sales volume increased two percent to 1.078 thousand metric tons; this increase was driven mainly by Molinera de Mexico and, to a lesser extent, by Gimsa and Gruma Centroamerica.
  • Net sales increased eleven percent to 8.952 million MXN due primarily to higher prices in Gimsa and Gruma Corporation, which were oriented to offset higher raw-material costs. Sales from non-Mexican operations constituted 67 percent of consolidated net sales.
  • Cost of sales as a percentage of net sales increased to 67,5 percent from 65,9 percent, driven by Gruma Corporation, Gruma Centroamerica, and Gimsa. In absolute terms, cost of sales rose 13 percent due mainly to Gimsa and, to a lesser extent, Gruma Corporation and Molinera de Mexico.
  • Selling, general, and administrative expenses (SG+A) as a percentage of net sales improved to 26,8 percent from 28,2 percent, driven mainly by better absorption resulting from higher prices in Gimsa and, to a lesser extent, Molinera de Mexico and Gruma Centroamerica. In absolute terms, SG+A rose by five percent, driven mainly by Gruma Corporation.
  • Operating income increased eight percent driven mainly by Gimsa and, to a lesser extent, by Molinera de Mexico. Operating margin decreased to 5,7 percent from 5,9 percent driven mainly by Gruma Corporation and, to a lesser extent, Molinera de Mexico and Gruma Centroamerica.
  • Other income, net, was 613 million MXN, compared with an expense of 98 million MXN in the same period of 2006, due mainly to a gain on the sale of Banorte shares during third-quarter 2007 and, to lesser extent, to an extraordinary write-down of assets of 367 million MXN during third-quarter 2006. Gruma sold 25 million of Banorte shares, resulting in a gain of 735 million MXN.
  • Comprehensive financing cost, net, was 151 million MXN versus 74 million MXN in third-quarter 2006. The increase resulted mainly from losses of 79 million MXN related to raw-material hedging in Molinera de Mexico. Gruma´s share of net income in unconsolidated associated companies (e.g., Banorte) totaled 198 million MXN, 31 million MXN higher than in third-quarter 2006.
  • Taxes amounted to 458 million MXN, compared with an income of five million MXN in third-quarter 2006, due mainly to taxes related to capital gains on the sale of Banorte shares, and the recognition of valuation allowance for tax-loss-carry-forwards in Molinera de Mexico.
  • Gruma´s total net income was 715 million MXN, 50 percent higher than in third-quarter 2006 due mainly to the gain on the sale of Banorte shares. Gruma’s majority net income was 787 million MXN, 51 percent higher than in the same period of 2006.

Attention: A detailed description of the results Gruma S.A.B. de C.V. has printed as PDF file (9 pages | 300KB).