MONTERREY, MEXICO — The continued penetration of tortillas as an established and familiar core ingredient coupled with its popularity among consumers seeking healthier lifestyle trends, spurred strong earnings and sales at Gruma USA in fiscal 2020.
In the year ended Dec. 31, 2020, Gruma USA had operating income of 7.08 billion pesos ($338.1 million), up 15% from 6.14 billion pesos in 2019. For the fourth quarter ended Dec. 31, operating income increased 9% to 1.73 billion pesos ($82.8 million) from 1.59 billion pesos.
Net sales at Gruma USA increased 11% in fiscal 2020 to 48.96 billion pesos ($2.34 billion), up from 43.93 billion pesos a year ago. Net sales in the fourth quarter increased 9% to 11.97 billion pesos ($571.1 million) from 11 billion pesos.
Gruma said operating margin improved 10 basis points to 14.5% during the fourth quarter.
Cost of sales as a percentage of net sales improved to 58.4% from 57.5% in the fourth quarter. Gruma said the improvement reflected significantly higher health care costs and worker’s compensation expenses, arising from the effect of the pandemic; and, to a lesser extent, higher wheat flour costs, higher depreciation reflecting the addition of production capacity, and overtime and temporary staff to meet demand.
“We are growing everywhere in all the markets we are participating,” Raul Cavazos Morales, chief financial officer, said during a Feb. 25 conference call with analysts. “And basically, what we can tell you is that in the US, we’ve been working about 100% toward capacity utilization in our tortilla business as well as in the corn flour (business). In some particular period of times, some lines are stopping because (of lack of workers). But generally speaking, what we see is that we are now working with 100% production capacity while we are leveraging additional production capacity for the future growth of the demand in the US as well as in Europe.”
Gruma said it spent $60 million on capital expenditures during the fourth quarter and $164 million for the full year. During the fourth quarter, the company allocated expenditures to the expansion of a tortilla plant in Spain, capacity expansions at a tortilla plant in Dallas, advances in the construction of the new plant in Indiana, additional wheat flour tortilla production capacity at a tortilla plant in Monterrey, Mexico, and maintenance and general technology upgrades across the company.
During the call Mr. Morales said Gruma is exploring the idea of expanding beyond tortillas, most likely in the area of flatbreads.
“We are now expecting to start operations in the US to produce some different product lines — naan, pita, no gluten,” he said. “…We want to have a new brand, a new division, for sure, Mission brands for this kind of product. We have a very good market. We are very pleased with the market with these products. We’ve got very good results. And the northeast of the country in the US is a very, very high consumer area for these kind of products.
“Also, we’ve been experiencing a tremendous growth on pizza bases in Asia, in Australia. We are producing not only for the retail, which is growing, but also in a very important way, we are providing pizza bases for most of the pizza, let’s say, restaurant chains in that area. Now we are introducing these products in the US. We will start to also offer to the market the pizza bases as well as in Europe. That’s what we are doing.”