San Pedro Garza Garcia / MX. (gr) «Gruma has started the year on solid footing in the markets it serves, and ultimately safeguarding profitability. Our products continue to benefit from healthy client demand, and we remain nimble in our strategy to maximize shareholder value. In the U.S., Gruma continues to outpace market growth in its tortilla operation, while corn flour is showing positive recovery. In the rest of our global operation, we are diligently growing our presence with distributors, while early signs of a recovery in China are supporting our Asia and Oceania operations. Gruma ́s versatility and adaptability to the changing environment helped maintain stable volumes despite consumer weakness, while sales rose 4 percent on the back of a richer sales mix. Ebitda increased by 26 percent, which resulted in a 16.0 percent Ebitda margin and 27 percent growth in Ebitda per ton. We will continue to optimize our strategy over the course of the year in response to changes in the market environment,» Mexico’s Gruma S.A.B. de C.V. said in its statement for the first quarter 2024.
Consolidated Results Of Operations
Sales volume decreased 1 percent to 1,075 thousand metric tons compared to 1Q23 resulting from a volume contraction at Gimsa on the back of a tough YoY comparison with 1Q23, when it grew 8 percent on a relative basis. Net sales increased 4 percent to USD 1.6 billion mainly due to (1) a carryover of price adjustments from previous quarters; (2) the change to a more favorable mix in the US division; and (3) the benefit from a stronger Peso (MXN) exchange rate. Sales from non-Mexican operations represented 71 percent of consolidated figures. Cost of sales (COGS) decreased 1 percent to USD 1,033.1 million due to efficiencies in all divisions. As a percentage of net sales, COGS improved to 62.7 percent from 65.9 percent. Selling, general and administrative expenses (SG+A) increased 9 percent to USD 407.4 million due to (1) higher commissions paid, in line with higher revenues; (2) elevated distribution costs; and (3) higher marketing costs. As a percentage of net sales, SG+A increased to 24.7 percent from 23.5 percent. Other expense, net, was USD 0.9 million compared to USD 10.8 million last year. This resulted mainly from a change in valuations of Gruma ́s FX hedging positions. Operating income increased by 31 percent to USD 206.0 million. Operating margin expanded 250 basis points to 12.5 percent from 10.0 percent. Ebitda increased 26 percent to USD 264.4 million, and Ebitda margin increased 270 basis points to 16.0 percent from 13.3 percent. Ebitda from non-Mexican operations represented 82 percent of consolidated figures. Net comprehensive financing cost decreased 10 percent to USD 31.9 million, mainly due to a decrease in debt service reflecting lower net working capital needs, which translated into payment of debt. Income taxes were USD 63.1 million, a 35 percent increase compared to 1Q23, due to higher pretax earnings, resulting from the dynamics mentioned above. The effective tax rate for the quarter was 36.2 percent compared to 38.1 percent in 1Q23. Majority net income increased 46 percent to USD 111.0 million.
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