San Pedro Garza Garcia / MX. (gr) «The market dynamics and fundamentals for our business have unfolded better than expected during the first quarter of the year. We experienced resilient demand for both of our main products but led by the expansion in the US business, as a result of a positive performance from our “Better for You” product line and higher corn flour consumption in both the US and Mexico. We are pleased with our performance, which delivered consolidated sales growth of 25 percent and Ebitda growth of 28 percent stemming from the US division ́s performance. We remain committed to protect profitability going forward, which grew 22 percent in terms of Ebitda per ton, our internal profitability measure, but also cautious about a potential change in consumer behavior, for which we are prepared should it take place during the year,» Mexico’s Gruma S.A.B. de C.V. said in its statement for the first quarter 2023.
Sales volume increased 5 percent to 1,090 thousand metric tons compared to 1Q22 driven mainly by the U.S. division and GIMSA. Net sales increased 25 percent to USD 1.6 billion due to the transfer of incremental costs and expenses to the top line of the income statement; and higher sales volume. Sales from non-Mexican operations represented 73 percent of consolidated figures. Cost of sales (COGS) increased 27 percent to USD 1,044.8 million due to the impact of a higher overall rate of inflation on raw material costs in all divisions; higher labor costs; and sales volume growth. As a percentage of net sales, COGS increased to 65.9 percent from 65.3 percent. Selling, general and administrative expenses (SG+A) increased 17 percent to USD 372.2 million due to higher commissions paid, in line with higher revenues and volume growth; and elevated distribution and logistics costs. As a percentage of net sales, SG+A improved to 23.5 percent from 25.2 percent. Other expense, net, was USD 10.8 million compared to USD 3.7 million last year. The change resulted mainly from losses on GRUMA ́s FX hedging positions. Operating income increased by 36 percent to USD 157.8 million. Operating margin expanded 80 basis points to 10.0 percent from 9.2 percent. Ebitda increased 28 percent to USD 210.6 million, and Ebitda margin increased 20 basis points to 13.3 percent from 13.1 percent. Ebitda from non-Mexican operations represented 87 percent of consolidated figures. Net comprehensive financing cost rose by 130 percent to USD 35.2 million, mainly due to an increase in debt service reflecting greater net working capital needs and benchmark rate adjustments. Income taxes were USD 46.7 million, an 18 percent increase compared to 1Q22, due to higher pretax earnings, resulting from the dynamics mentioned above. The effective tax rate for the quarter was 38.1 percent compared to 39.3 percent in 1Q22. Majority net income increased 24 percent to USD 75.9 million.
For additional information please read the company’s PDF file below (404 KB):20230511-GRUMA-Q1-2023