Gruma corn flour, tortillas make inroads in United States

by Jeff Gelski
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Mission tortillas, Gruma
In the U.S., Gruma's tortilla operations benefitted from tortilla industry growth.

MEXICO CITY — Gains in the United States helped Gruma Corp. to sales volume of 436,000 tonnes in the fourth quarter of 2015, which was up 5% from 415,000 tonnes in the previous year’s fourth quarter. Net sales grew 3% to 9,561 million pesos ($523 million) from 9,277 million pesos ($508 million).

In the United States, corn flour and tortilla operations benefitted from tortilla industry growth, especially among non-Hispanic consumers. Corn flour increased as a result of snack business growth. The tortilla operations, retail in particular, benefitted as Gruma continued to increase secondary displays on perimeter locations of retail stores.

Raul Cavazos, Gruma
Raul Cavazos, c.f.o. of Gruma

“We are gaining clients from competitors (in the United States),” said Raul Cavazos, chief financial officer of Mexico City-based Gruma S.A.B. de C.V., in a Feb. 25 earnings call. “We are converting traditional tortilla or tortilla chips or snack producers to the use of corn flour, and because of that we’ve been experiencing important growth in the Northeast region of the U.S.”

Operating income for Gruma Corp. in the fourth quarter dropped 2% to 1,080 million pesos from 1,097 million pesos after an increase in expenses of 322 million pesos due mainly to impairments of assets related to The Netherlands tortilla plant and losses on corn hedges.

Gruma Corp. is part of Gruma S.A.B. de C.V., which posted net sales growth of 17% and sales volume growth of 4% in the fourth quarter of 2015. Sales of 15,164,000 million pesos ($836 million) compared with 12,907,000 million pesos in the fourth quarter of the previous year. Sales volume rose to 977,000 tonnes from 941,000 tonnes. EBITDA jumped 25% to 2,490 million pesos ($137 million) from 1,986 million pesos.

Discontinued operations resulted in a non-cash charge of 4,249 million pesos, which were in connection with the write-off of the indirect net investment related to Molinos Nacionales, C.A. (MONACA), and Derivados de Maíz Seleccionado, DEMASECA, C.A. (DEMASECA), as well as accounts receivable from MONACA owed to some of Gruma’s subsidiaries. Majority net loss in the fourth quarter was 2,685 million pesos in connection with the write-off.

Gruma expects capital expenditure to be about $350 million this year, Mr. Cavazos said.
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