Gruma USA income eases in first quarter

by Eric Schroeder
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Gruma tortillas
Gruma's tortilla business rose 2%, driven by both the food service and retail channels.

MEXICO CITY — Operating income at Gruma USA totaled 1,247 million pesos ($66.3 million) in the first quarter ended March 31, down 3% from 1,287 million pesos in the same period a year ago. Net sales increased 2% to 9,394 million pesos ($499.7 million), up from 9,255 million pesos.

Sales volume increased 2% to 334,000 tonnes, up from 327,000 tonnes in the same period a year ago. Operating margin, meanwhile, fell to 13.3% from 13.9%, reflecting increases in cost of sales and corn hedging losses.

“By segment, corn flour sales volume rose 2%, driven mainly by higher sales to manufacturers of tortilla-related products (most notably taco shells) due to the successful launch of new items at large restaurant chains; food service distributors, as they continue to benefit from growth at small Mexican food restaurants and small tortilla companies; and retailers, especially in connection with increased promotions and the entry of Maseca to the dollar store channels,” Gruma said. “The tortilla business rose 2%, driven by both the food service and retail channels. Food service benefited from the recovery of volumes lost last year in connection with the s.k.u. rationalization process and from better performance at some large restaurant chains. In retail, volume growth benefited from organic growth of our Super Soft flour tortillas; the launch of new types of corn tortillas introduced last September, particularly our Street Taco tortilla; and expansion of gluten-free tortillas in the east and north central regions of the U.S.”

Maseca corn flour, Gruma
Corn flour sales volume rose 2%, driven mainly by higher sales to manufacturers of tortilla-related products.

Cost of sales as a percentage of net sales climbed to 57.4% from 56.9% in the first quarter, Gruma said, driven by higher leases in connection with a new plant in Dallas and higher depreciation for assets that will no longer be used when the current Dallas tortilla plant ceases operations.

Gruma said it incurred $58 million in capital expenditures during the first quarter, allocated mostly to the United States (in connection with the construction of a tortilla plant in Dallas, the expansion of a corn flour plant in Indiana and the expansion of a tortilla plant in Florida), to Mexico (for the expansion of a tortilla plant near Monterrey and the reopening of a corn flour plant in central Mexico), to Europe (in connection with the construction of a tortilla plant in Russia and technology upgrades for packaging automation, especially at a flatbread plant in England), and to Asia (for the expansion of a tortilla plant in Malaysia).

Overall, majority net income at Gruma S.A.B. de C.V. in the first quarter ended March 31 was 1,282 million pesos ($68.2 million), up 1% from 1,267 million pesos in the same period a year ago. EBITDA was 2,697 million pesos, up 9% from 2,475 million pesos, while sales increased 12% to 17,677 million pesos from 15,831 million pesos. 
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