As parent of by far the largest baking company in the United States, the announcement of Grupo Bimbo S.A.B. de C.V. financial results have become a bellwether event for the U.S. industry. It’s difficult to imagine a better barometer for the health and competitive landscape of baking than Bimbo’s details and commentary about the results of its U.S. business.
The latest results issued last week paint a picture of a company in transition, with the company’s U.S. sales in the second quarter ended June 30 surging 80% from last year, largely due to the inclusion of the newly-acquired Sara Lee North American fresh bakery business. Profits, excluding other income and expenses, rose only 22%, and the margin contraction was attributed to “the higher expense structure of the Sara Lee operations in the United States and Iberia, particularly the supply chain.”
In recent discussions with Milling & Baking News, Daniel Servitje, Grupo Bimbo chief executive officer, predicted improved U.S. operating margins over time. He has targeted a “seamless” Bimbo Bakeries USA by 2015, with Sara Lee fully integrated by that time. Given the magnitude of this transition as well as others occurring in the fresh baking industry, a positive augur in the financial results may be seen in comments by Bimbo about volume trends, which have recovered erratically from a difficult 2011. The company cited particular strength in the Mrs Baird’s and Bimbo brands and described volume declines in the quarter as “slight.”
It is difficult to overstate the importance of volume stability for baking as transitions unfold at Bimbo and elsewhere in the industry.