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Grupo Bimbo: reports Q2/2015 results


Mexico City / MX. (gb) Grupo Bimbo S.A.B. de C.V. announced its results for the second quarter 2015, the three months ended June 30. Highlights: Net sales in the quarter rose 18.1 percent, reflecting the Canada Bread acquisition, organic growth in Mexico and FX rate benefit. Operating income in the second quarter and first half increased 22.2 percent and 36.7 percent, respectively; the margin expanded 80 basis points on a cumulative base. Consolidated Ebitda increased 21.6 percent, posting a record second quarter Ebitda margin in Mexico of 17.5 percent, a 170 basis points expansion. Net majority income grew 8.3 percent in the second quarter and 29.3 percent in the first half. The Company announced an agreement to acquire Panrico S.A.U., excluding the branded packaged bread category, in Spain and Portugal.

Net Sales

Mexico: Net sales in Mexico grew 5.3 percent from the year ago period, primarily driven by solid volume growth that reflected a better consumption environment and the Company’s commercial efforts, targeted promotions and product innovation. Performance improved across all channels and virtually every category, most notably in bread, buns, cookies, salty snacks and pastries, which more than offset the pressure in the sweet baked goods category. Sales in the first six months of the year grew 5.8 percent.

US + Canada: In the second quarter, net sales in the US + Canada region increased 31.4 percent, reflecting the Canada Bread and Vachon acquisitions, which accounted for 12.0 percent of growth, coupled with the benefit of a stronger US-Dollar during the period. Pricing initiatives taken in the quarter put pressure on overall volumes; notwithstanding, the sweet baked goods, breakfast and snacks categories saw continued growth. Cumulative sales rose 33.2 percent.

Latin America: Net sales growth, in both the second quarter and first half of 2015, was 10.3 percent in Latin America. The organic performance coupled with the acquisition in Ecuador and the benefit of the FX translation to Mexican Pesos in certain currencies contributed to growth. While volumes in some countries came under pressure in the context of a weaker consumption environment reflecting local economic conditions, Brazil, Colombia, Costa Rica, Nicaragua, Honduras and Panama outperformed in local currencies.

Europe: Second quarter net sales in Europe rose 13.5 percent, primarily driven by the UK operation acquired as part of the Canada Bread transaction. The bread category remained stable, which helped offset pressure in the cakes category arising from a more competitive environment. For the first six months of the year, net sales increased 18.0 percent.

Gross Profit

Consolidated gross profit in the quarter increased 18.1 percent to 28,296 million MXN, while the margin remained flat at 53.3 percent. Higher raw material costs in Mexico and Europe, resulting from higher FX rates, were fully offset by lower costs in the US + Canada region and Latin America. In the first six months of the year, gross profit rose 18.9 percent.

Profit Before Other Income And Expenses

Profit before other income + expenses totalled 4’372 million MXN, an increase of 10.8 percent. The 50 basis point contraction in the margin reflected higher operating expenses as a percentage of net sales, arising from: i) higher administrative expenses in the US + Canada region due to integration-related expenses of Canada Bread, partially offset by cost reduction initiatives in the US; ii) higher distribution costs and general expenses in Latin America, the latter related to IT investments in the region; and iii) higher general expenses in Europe due to the opening of a new plant in Guadalajara, Spain.

The solid 130 basis point margin expansion in Mexico reflected efficiencies across the distribution and manufacturing, as well as lower general expenses and cost reduction initiatives taken during the period.

For the first half of 2015, profit before other income + expenses rose 20.9 percent, with a ten basis point expansion in the margin.

Operating Income

Consolidated operating income in the second quarter grew 22.2 percent to 4’005 million MXN, while the margin increased 20 basis points to 7.5 percent. This primarily reflected the aforementioned benefits in Mexico and the US coupled with lower restructuring expenses in the US (198 million MXN versus 607 million MXN); these benefits were partially offset by IT integration-related costs of Canada Bread and one-time start-up costs in Europe related to the new plant in Spain.

Operating income in the first six months of the year rose 36.7 percent, with an 80 basis point expansion in the margin to 6.4 percent.

Comprehensive Financial Result

Comprehensive financing resulted in a 1’016 million MXN cost in the second quarter, compared to a 559 million MXN cost in the same period of last year, or 457 million MXN higher. This reflects the incremental interest expense related to the Canada Bread acquisition, as well as a higher MXN/USD FX rate which increased the Peso value of Dollar-denominated interest expenses.

Net Majority Income

Net majority income for the quarter increased 8.3 percent, with a 30 basis point contraction in the margin; this is primarily due to a higher debt related to the Canada Bread acquisition and a higher FX rate.

On a cumulative basis, net majority income rose 29.3 percent to 2’641 million MXN, with a 20 basis point increase in the margin to 2.6 percent, attributable to operating performance and virtually no change in the effective tax rate of 35.9 percent versus 35.8 percent in the first half of 2014.


Ebitda in the quarter increased 21.6 percent to 5’654 million MXN, while the margin expanded 30 basis points to 10.6 percent. In the first half of 2015, Ebitda and Ebitda margin rose 29.9 percent and 80 basis points, respectively.

Financial Structure

Total debt at June 30, 2015 was 64.2 billion MXN, compared to 62.2 billion MXN at December 31, 2014. Notwithstanding this rise, which was primarily due to a six percent US-Dollar revaluation that increased the Peso value of Dollar-denominated debt, the Company paid down 104 million USD in debt during the first semester, in line with its commitment to de-lever.

Average debt maturity was 8.5 years with an average cost of 4.4 percent. Long-term debt comprised 84 percent of the total; 74 percent of the debt was denominated in US-Dollars, 25 percent in Canadian Dollars and one percent in Mexican Pesos.

The total debt to Ebitda ratio was 3.1 times compared to 3.2 times pro forma Canada Bread at December 31, 2014. The net debt to Ebitda ratio was 2.9 times (Imgage Source: Grupo Bimbo).

About Grupo Bimbo

Grupo Bimbo is the largest baking company in the world in terms of volume and sales. Grupo Bimbo has 165 plants and approximately 1’700 sales centers strategically located in 22 countries throughout the Americas, Europe and Asia. Its main product lines include fresh and frozen sliced bread, buns, cookies, snack cakes, English muffins, bagels, pre-packaged foods, tortillas, salted snacks and confectionery products, among others. Grupo Bimbo produces over 10’000 products and has one of the largest direct distribution networks in the world, with more than 2.5 million points of sale, more than 52’000 routes and more than 129’000 associates.