U.S. tortilla business contributes to Gruma earnings plan

by Eric Schroeder
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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 June 30, was 563 million pesos ($44.5 million), up 72% from 327 million pesos in the second quarter last year.

Sales were 7,341 million ($580.1 million), up 9%. Sales volume was up 9% to 432,000, driven by “extraordinary” sales of corn/grits at the company’s European operations and, to a lesser extent, by U.S. operations, which grew 2%.

“In the U.S., corn flour sales volume raised mostly due to retail promotions and new snack customers,” Gruma said. “The tortilla business experienced growth driven by the food service segment in connection with the launch and roll-out promotions for wraps dishes, increased promotional activities and new store openings by several restaurant chains customers. Also, volume growth reflects increased business among restaurant chains and large distributors where Gruma has taken share from competitors. In retail tortillas, the new softer wheat tortilla formula that was rolled out nationally in early December 2012 continued to perform well, offsetting lower corn products sales volume, which resulted from weight-outs, s.k.u. (stock-keeping unit) rationalization programs and intensified competition from supermarkets’ in-store tortillerías in the Southwest.”

Operating margins improved to 7.7% from 4.9%.

Majority net income of Gruma S.A.B. de C.V. in the second quarter was 226 million pesos ($17.9 million), down 48% from 437 million pesos in the second quarter of 2012. Net sales were 13,578 million pesos ($1,072 million), down 1% versus the year earlier period.

Gruma attributed the decline in income to higher net comprehensive financing costs, the deconsolidation of the Venezuelan operations and higher income taxes.

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