Monterrey / MX. (gr) Gruma S.A.B. de C.V. reported its results for the first quarter 2013. The company started to show significant improvements in 1Q13 resulting from initiatives undertaken to enhance value creation, as detailed in the last earnings report. Gimsa and Gruma Corporation were the primary subsidiaries contributing to the increase in Ebitda.
Consolidated Results of Operations Q1/2013 versus Q1/2012
Sales volume declined four percent to 1’032 thousand metric tons mainly driven by Gimsa.
Net sales were 13’058 million MXN, similar to 1Q12. Sales volume growth at Gruma Corporation and price increases implemented across the company were offset by the decline in Gimsa´s sale volume. To a lesser extent, consolidated net sales were also impacted by the effect of the Peso appreciation when converting Gruma Corporation figures to Peso terms. Sales from non-Mexican operations constituted 61 percent of consolidated net sales.
Cost of sales as a percentage of net sales improved to 68,1 percent from 71,0 percent, reflecting better performance at all subsidiaries and most significantly at Gimsa and Gruma Corporation. In absolute terms, cost of sales declined four percent to 8’895 million MXN, driven especially by the reduction in Gimsa´s sales volume.
Selling, general and administrative expenses (SG+A) as a percentage of net sales improved to 24,4 percent from 25,5 percent, driven mainly by Gruma Corporation. In absolute terms, SG+A declined four percent to 3’185 million MXN, reflecting the company´s efforts to optimize marketing and administrative expenses as part of the strategy to enhance value creation.
Other expense, net, represented a gain of twelve million MXN compared to an expense of 17 million MXN. The change was primarily due to gains on raw material hedging at Gruma Centroamérica and lower losses on natural gas hedging at Gimsa.
Operating income increased 121 percent to 990 million MXN driven by improvements at most of the company´s subsidiaries, in particular Gimsa and Gruma Corporation. Operating margin rose to 7,6 percent from 3,4 percent.
Net comprehensive financing cost was one million MXN versus 351 million MXN. The reduction mainly resulted from higher foreign exchange gains on Gruma´s Dollar denominated debt and lower losses on foreign exchange rate hedging related to raw material procurement.
Income taxes totalled 463 million MXN, 351 million MXN more due to higher pre-tax income. The effective tax rate was 46,7 percent.
Majority net income increased 149 percent to 209 million MXN, driven mainly by higher operating income, in particular at Gimsa and Gruma Corporation, lower comprehensive financing cost and higher ownership at the U.S. corn flour operations and Molinera de México in connection with the purchase of their minority stakes from Archer-Daniels-Midland. These improvements were partially offset by the devaluation of the Venezuelan bolivar during 1Q13, as reflected on the «discontinued operations» line.
