With sales up, Gruma Corp. profits jump

by Josh Sosland
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MEXICO CITY — Operating income of Gruma Corp., the U.S. and U.K. segment of Gruma S.A.B. de C.V., in the quarter ended March 31, was 496 million pesos ($41 million), up 93% from 257 million pesos in the first quarter last year. Sales were 6,575 million ($541 million), up 7%. Sales volume was up 3% to 404,000, bolstered in part by the U.S. tortilla business gain in food service and retail as well as the success of a “new softer wheat tortilla formula” introduced in December 2012. Gross margins improved to 7.5% from 4.2%, boosted by lower allowances, a shift toward higher margins products (wheat tortillas and fried products, versus corn tortillas) and lower marketing, distribution and administrative expenses.

Majority net income of Gruma S.A.B. de C.V. in the first quarter was 209 million pesos ($17.2 million), up 149% from 84 million pesos in the first quarter of 2012. Net sales were 13,058 million pesos ($1,074 million), essentially flat versus the year earlier period.

Gruma attributed the higher income to improved operating profits for Gruma Corp. and GIMSA (the company’s corn milling business in Mexico) as well as “lower comprehensive financing cost and higher ownership at the U.S. corn flour operations and Molinera de Mexico in connection with the purchase of their minority stakes from Archer Daniels Midland Co.” A drag on earnings was the devaluation of the Venezuelan bolivar during the first quarter of 2013, reflected in the “discontinued operations” line.

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