MONTERREY, MEXICO — Operating income at Gruma USA in the third quarter ended Sept. 30 totaled 1.99 billion million pesos ($93.81 million), up 11% from 1.79 billion pesos in the same period a year ago.
Net sales at Gruma USA increased 10% in the third quarter of fiscal 2020 to 13.96 billion pesos ($657.94 million) from 12.71 billion pesos.
“Tortilla sales volume rose 5% driven largely by the strong trend on food at home resulting in a 10% increase in the retail channel,” Raul Cavazos Morales, chief financial officer, said during an Oct. 29 conference call with analysts. “Corn flour was impacted by stockpiling of some customers during the previous quarter. Net sales increased 10%, coming mostly from higher average selling price linked to a better sales mix, the retail tortilla business and the change between channels favoring retail over foodservice.”
EBITDA rose 10%, and EBITDA margin improved 10 basis points to 18.9% versus last year.
Gruma said operating margin at Gruma USA improved 20 basis points to 14.3%.
Cost of sales as a percentage of net sales improved to 56.2% from 57.8%.
Gruma said it incurred $50 million in capital expenditures during the third quarter. During the quarter, the company allocated expenditures to capacity expansions at its tortilla plant in Dallas to add new production lines for corn and wheat tortillas, as well as flatbreads; and, to a lesser extent, a water treatment system at its corn flour plant in Evansville, Ind.; expansion of a tortilla plant in Spain; and additional snack and wheat tortilla production capacity at a tortilla plant in Monterrey, Mexico. Gruma said capital expenditures also were allocated to maintenance and general technology upgrades across the company.
Through the first nine months of fiscal 2020, Gruma has allocated approximately $100 million to capital expenditures, well below the $200 million to $250 million that was projected for the full fiscal year. Mr. Morales said the company now expects to allocate about $150 million to $160 million for the full year.
Elaborating on the changes to potential spending, Mr. Morales said Gruma has had to delay to opening of a new production facility planned for Indianapolis. Instead of opening this year, the company now plans to open the plant by the end of the second part of fiscal 2021 or the beginning of the third quarter of 2021.
Despite slowing its spending Gruma is finding ways to accommodate surging demand for its products, Mr. Morales said, including ramping up production at its Tijuana and Monterrey facilities to supply areas of the United States where demand is strong. In addition, Mr. Morales said Gruma is considering restarting a facility in Omaha, Neb., that was shuttered three years ago.
“With a very small investment — we are talking about maybe something about $8 million — the idea is just to restart the operation of this facility in Nebraska in Omaha,” he said. “We are expecting that this facility will start operations by the first quarter of 2021. We have some production lines. We are repairing some areas of the roof of the facility, and we are making some fine-tune of the production lines. Then with a very small amount, we will increase the production capacity through this facility beginning next year.”
Overall, majority net income at Gruma SAB de CV in the third quarter was 1.65 billion pesos, up 26% from 1.3 billion pesos a year ago. EBITDA was 3.95 billion pesos, up 20% from 3.3 billion pesos, while sales rose 17% to 23.47 billion pesos from 20.05 billion pesos.