Gruma earnings climb 61% in fiscal 2013

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 year ended Dec. 31, 2013, was 2,249 million pesos ($169 million), up 61% from 1,398 million pesos in fiscal 2012.

Sales were 28,330 million pesos ($2,129 million), up 6% from 26,771 million pesos. Sales volume was up 3% to 1,651,000 tonnes.

For the fourth quarter ended Dec. 31, operating income was 569 million pesos ($42.7 million), up 31% from the same period a year ago. Net sales in the quarter increased 2% to 6,876 million pesos, up from 6,770 million pesos. Sales volume increased 1% to 407,000 tonnes from 405,000.

“(Sales volume was) driven by the corn milling operations in the U.S. and Europe,” Gruma said. “In the U.S., corn flour sales volume rose in connection with increased sales of snack flours and higher retail sales. In Europe, volume grew mainly due to sales of grits to new customers in Northern Africa and higher sales of byproducts for animal feed.

“U.S. tortilla sales volume declined in connection with the measures implemented to improve profitability, such as: (1) weight-out in some corn product presentations; and (2) the s.k.u. rationalization program, including the reduction of snack products we were acquiring from third parties and the elimination of very low margin sales volume for food service, among other initiatives.”

Cost of sales as a percentage of net sales improved to 64.2% from 65.5% in the fourth quarter, driven mainly by U.S. tortilla operations and the European operations, Gruma said.

“The improvement at the U.S. tortilla business resulted mainly from the shift and focus toward high-margin, high-volume products (as in the case of wheat tortillas), and reductions on allowance spending,” Gruma said. “Europe improved due to lower raw material costs, production efficiencies in connection with increased automation at the tortilla business, and savings in packaging. In absolute terms, cost of sales was flat at 4,416 million pesos.”

Operating margins improved to 10.1% from 6.3% during the quarter.

Majority net income of Gruma S.A.B. de C.V. in the fourth quarter was 2,097 million pesos ($157.5 million), up 541% from 327 million pesos in the fourth quarter of 2012. Net sales were 13,666 million pesos ($1,026.5 million), down 2% versus the year earlier period. For the full year, majority net income was 3,163 million pesos, up 184% from 1,115 million pesos in fiscal 2012. Net sales were 54,106 million pesos, down 1% from 54,409 million pesos a year ago.
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