MONTERREY, MEXICO — Operating income at Gruma USA in the third quarter ended Sept. 30 totaled 1,392 million pesos ($72.9 million), up 1% from 1,384 million pesos in the same period a year ago. Net sales at Gruma USA increased 3% to 10,070 million pesos ($527.4 million) from 9,754 million pesos.
“At Gruma USA, sales volume rose 4%, driven mainly by the corn flour operations, partially affected by reductions at the food service channel for the tortilla business where we continue to rationalize low-margin s.k.u.s (stock-keeping units),” Raul Cavazos Morales, chief financial officer, said during an Oct. 18 conference call with analysts. “Net sales increased 3% due to growth in sales volumes. Net sales grew at a lower rate than sales volume because of the effect of the adoption of IFRS 15 and the change of the sales mix toward corn flour. EBITDA rose 4%, and EBITDA margin improved 10 basis points to 17.3%. Excluding the negative effect of Hurricane Florence of $550,000, EBITDA margin would have increased 20 basis points.”
Mr. Cavazos Morales said Gruma’s corn flour unit in the United States increased 10% in terms of volume during the third quarter, which reflected the company’s ability to take market share from competitors.
“This is because of our price, because of our quality, because of our services, because of everything that is favoring the client,” he said.
Gruma said operating margin at Gruma USA declined to 13.8% from 14.2% during the third quarter. Cost of sales as a percentage of net sales improved to 58.2% from 56.6% in the third quarter, Gruma said.
Gruma said it incurred $40 million in capital expenditures during the third quarter. During the quarter, the company allocated expenditures to the United States (in connection with a tortilla plant in Dallas that started operations in August and capacity expansions at a tortilla plant in Florida), to Europe (in connection with packaging automation at a plant in The Netherlands and at one of its plant in England) and to Mexico (for a tortilla plant near Puebla and capacity expansions at a tortilla plant in Tijuana).
Elaborating on the tortilla plant in Dallas, Mr. Cavazos Morales said the facility is operating with eight production lines, which is about 25% of production capacity. He said Gruma hopes to have 14 production lines producing tortillas and other products by mid-year 2019, which would put the plant at about 50% of production capacity utilization.
Overall, majority net income at Gruma S.A.B. de C.V. in the third quarter was 1,275 million pesos ($66.6 million), down 23% from the same period a year ago. EBITDA was 3,023 million pesos ($157.9 million), up 8% from 2,802 million pesos, while sales increased 8% to 18,488 million pesos ($966.3 million) from 17,135 million pesos.