Bimbo U.S. results clouded by special items
Search for similar articles by keyword: [Bakery
MEXICO CITY — Non-ongoing financial items ranging from integration charges to the reclassification of pension plan costs factored prominently in the U.S. earnings results of Grupo Bimbo S.A.B. de C.V. in the fourth quarter of 2013. Amid the murky profits picture, the company noted clearly upbeat sales trends during the quarter attributed to “positive performance across all channels.”
While the special items nearly erased profits for Bimbo Bakeries USA in the fourth quarter, operating profits for the full year more than doubled from 2012.
Operating income of the U.S. operations of Grupo Bimbo in the fourth quarter ended Dec. 31, 2013, was 73 million pesos ($5.5 million), down 86% from 506 million pesos in 2012. For the year, operating income was 2,679 million pesos ($201 million), up 140% from 1,118 million.
Integration costs during the quarter in the United States accounted for more than the entire decline from a year earlier — 451 million pesos, estimated by Bimbo as $34 million.
At the profit before other income and expenses line, U.S. operations earned 816 million pesos ($61 million) in the quarter, down 32% from 1,192 million pesos in the fourth quarter of 2013. Profit for the full year before other items was 4,510 million pesos ($338 million), up 19% from 3,791 million pesos.
Operating expenses as a percentage of sales in the fourth quarter rose 70 basis points from the year before because of higher marketing expenses, a reclassification of pension plan costs to the interest expense line and non-cash impairment charges. On the positive side, U.S. results benefited from synergies and waste reduction efforts in the United States valued by Bimbo at $20 million.
Net sales in the fourth quarter in the United States were 21,165 million pesos ($1,587 million), up 3.5% from 20,447 million pesos in the fourth quarter last year. Sales for the year totaled 79,767 million pesos ($5,982 million), up 1.1% from 78,927 million pesos in 2012.
Commenting on U.S. sales trends, Bimbo noted increased U.S. market penetration in the sweet baked goods category in the fourth quarter. Holding back sales growth was the impact of the company’s California divestiture of baking operations acquired from Sara Lee Corp. While up 1.1% in pesos, sales for the year were up 4.2% measured in dollars.
Driven by a sharply reduced effective tax rate, net majority income at Grupo Bimbo was dramatically higher in the fourth quarter and for the full year than was the case in the comparable periods of 2012.
Net majority income for the quarter ended Dec. 31 was 1,277 million pesos ($96 million), up 621% from 177 million pesos in the fourth quarter of 2012. Net sales were 46,480 million pesos ($3,486 million), up 2.7%.
Net majority income for the year was 4,384 million pesos ($329 million), up 116%. Net sales were 176,040 million pesos ($13,203 million), up 1.7%.
The effective tax rate in the fourth quarter of 2013 was 27%, versus 82.2% in the fourth quarter of 2012. Profitability also was boosted by strong results in Mexico during the quarter and year. Operating profits for Grupo Bimbo in Mexico were up 17% for the fourth quarter from the same period in 2012 and 21% for the year.
Bimbo said input costs in the United States in the fourth quarter were up from the same period in 2012 while they declined in Mexico.