Bimbo Bakeries puts 'balance' in focus

by Eric Schroeder
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MEXICO CITY — When it comes to defining its priorities in the United States, Bimbo Bakeries USA believes in a focused, balanced approach.

“Our focus is balanced, both on growing our categories and our brands and in significantly improving our cost position,” Fred Penny, president of B.B.U., said in an Oct. 24 conference call with analysts to discuss third-quarter results. “And both on a year-to-date basis and in the quarter, in particular, I feel like the organization made good progress on both.

“Our volume actually was fairly strong in the quarter, a bit stronger than it had been year-to-date. But we’ve also got a fairly diversified portfolio with a significant sweet goods business. And so the answers are somewhat different by category.

“But I think we’re taking a balanced approach and we’re going to continue to do that. And I’m confident that we’ve got opportunities on both of those areas, both in terms of growth and in terms of becoming a much more productive company.”

The issues of pricing and promotional activity in the wholesale baking industry, and how consolidation has played a role, were a common theme during the conference call. Pressed on how B.B.U. and other bakers are addressing the issues, Mr. Penny conceded that it “remains to be seen how the industry ends up performing.”

“In my own view, it has been and still is that the customers and the consumers tend to determine promotional activity and pricing in the market by their ability to make choices,” he said. “So that remains to be seen. It’s clearly a different landscape, and it will, again, change going forward with these former Hostess brands being reintroduced. But I think it still remains to be seen how that all turns out.”

Operating income of Bimbo Bakeries USA in the third quarter ended Sept. 30 was 898 million pesos ($68.9 million), which compared with a loss of 424 million pesos in the same period a year ago. The largest driver of the operating loss in 2012 was a one-time charge of 1,037 million pesos associated with the withdrawal from two multiemployer pension plans (m.e.p.p.s).

Sales were 20,400 million pesos ($1,567 million), up 2% from 19,913 million in the third quarter last year.
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