Bimbo U.S. operating income eases 15% in Q2

by Eric Schroeder
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MEXICO CITY — Operating income of the United States business of Grupo Bimbo S.A.B. de C.V. was 796 million pesos ($59.1 million) in the second quarter ended June 30, down 15% from 934 million pesos in the second quarter of 2011. The decline came even as sales in the quarter surged to 20,706 million pesos ($1,538 million), up 80% from the second quarter last year.

Bimbo said U.S. gross margin in the second quarter was down 0.1 percentage point, from 50.2 in the second quarter of fiscal 2011 to 50.1 in the most recent second quarter. Certain efficiencies, including waste reduction initiatives undertaken in the production chain since the start of the year, almost fully offset higher raw material costs and lower average prices, Bimbo said.

Closer to the bottom line, B.B.U. margins tightened further.

Despite a sales jump of 80%, profit before other income and expenses rose only 22%. The associated profit margin (excluding other income and expenses), was 5.5%, versus 8.1% in the second quarter of 2011. The 2.6 percentage point contraction in margin reflected the “expected dilution from the Sara Lee operations, ongoing investments in modernizing the production platform and enhancing market penetration,” Bimbo said.

Grupo Bimbo operating expense as a percentage of sales rose 80 basis points versus the second quarter of 2011, to 45.2%. While operating expense for B.B.U. was not broken out in the financial results, Grupo Bimbo said the 80 point jump “primarily reflected the higher expense structure of the Sara Lee operations in the United States and Iberia, particularly the supply chain.”

Bimbo attributed the sales jump in its U.S. operations mostly to the inclusion of the North American Sara Lee bakery business in the 2012 quarterly results but said the sales jump also reflected favorable dollar-peso rates, which more than offset the slight decline in overall volumes.

“Strong core growth was delivered from the sweet baked goods and breakfast categories while the Mrs Bairds and Bimbo brands continue to outperform in the quarter,” Bimbo said.

 Group majority income of Grupo Bimbo was 888 million pesos ($65.9 million) in the second quarter of fiscal 2012, down 1% from 895 million in the second quarter of 2011. Sales were 43,266 million pesos ($3,213 million), up 43%.

For the six months ended June 30, group majority income was 1,492 million pesos, down 27% from 2,036 million pesos in the same period a year ago. Sales were 84,258 million pesos, up 41% from 59,664 million pesos.

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