B.B.U. first-quarter earnings up sharply
by Josh Sosland
MEXICO CITY — Operating income of Bimbo Bakeries USA in the first quarter ended March 31 was 676 million pesos ($55.6 million), up 183% from 239 million pesos in the first quarter of 2012.
Sales were 18,216 million pesos ($1,497 million), up 2%, from 17,861 million in the first quarter last year. Grupo Bimbo S.A.B. de C.V., parent company of B.B.U., said U.S. sales growth in the first quarter would have been 4.8% but for the impact of foreign exchange.
“The benefit of market share gains due to opportunities in the marketplace, new categories and improvements across most of the portfolio were partially offset by the impact of foreign exchange,” Bimbo said.
Commenting on the improved profitability, Bimbo credited internal steps taken by the company rather than any competitive changes in the marketplace.
“In the United States lower costs reflected a more efficient manufacturing footprint as a result of the asset strategy, which fully mitigated higher raw materials costs in that operation,” Bimbo said.
Operating margins in the United States widened markedly to 3.7%, a 2.4 percentage point improvement from the 1.3% operating margin in the first quarter last year.
Contributing to the improved U.S. margins were “benefits obtained from synergies and waste reduction initiatives in the United States ($32 million),” the company said.
Still, at 3.7% the B.B.U. margins were far narrower than the 9.2% the company earned in Mexico. Profit margins were negative in Bimbo’s other regional segments, including a negative margin of 4% in Latin America (versus a positive 1.45 last year) and 8% in Iberia (versus a negative margin of 9% last year).
Despite the improved profitability in the United States, consolidated net majority income of Group Bimbo in the first quarter was 544 million pesos ($44.7 million), down 9% from 601 million in the first quarter of 2012.
Consolidated operating income was improved in the first quarter, up 16% from the first quarter last year. Accounting for the drop in net income was a sharp escalation in the effective tax rate estimated by Grupo Bimbo — 45.5%, versus 32.3% in 2012.
Consolidated sales were 41,674 million pesos ($3,426 million), up 1.7% from 17,435 million.