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Grupo Bimbo US performance hindered by pressure in private label

Vince Bamford

By Vince Bamford+

27-Jul-2016
Last updated on 27-Jul-2016 at 14:30 GMT2016-07-27T14:30:17Z

US brand growth has been offset by private label pressure, said Grupo Bimbo
US brand growth has been offset by private label pressure, said Grupo Bimbo

Pressure on volumes in the US private label bread market has offset growth in Grupo Bimbo brands, the company has reported.

Sales from the group’s North American segment have grown 19.8% year on year in the first six months of 2016 to Mex $63.8bn ($3.4bn), although the company said the growth was largely down to the benefit of the exchange rate.

Expressed in dollars, sales rose less than 1% year on year as the company came under pressure in the US private label category and the Canadian bread market.

Grupo Bimbo said this had counteracted growth in North American brands, adding its US frozen snacks had performed well, as had its pastries business in Canada.

Mexico

The business reported strong results from its Mexican segment, where sales rose 6.5% year on year to Mex $39.9bn ($2.1bn).

Volumes grew across all channels, said Bimbo, which highlighted good performance of brands including Oroweat, Tia Rosa, Marinela and Barcel.

The company also reported recovery in its sweet baked goods business as a result of promotional activity and effective execution at point of sale.

Grupo Bimbo consolidated H1 2016 results

Net sales: +13.4% to Mex $117.2bn ($6.2bn), reflecting organic growth in Mexico, and benefits of currency exchange in North American and Europe

Operating income: +32.8% to Mex $8.7bn ($460m)

Adjusted EBITDA: +27% to Mex $12.6bn ($670m)

Latin America

The Latin America segment grew 6.9% to Mex $12.4bn ($660m) despite challenging economic conditions and currency issues, said Grupo Bimbo.

Volume sales were healthy in some countries, particularly Brazil, and the company had benefited from a reduction in returns and the launch of a new coconut bread.

Europe

Sales from Grupo Bimbo’s European segment rose 13.6% to Mex $4.1bn ($218m), with the company attributing this to the benefit of the exchange rate. It added that volumes in Ibera remained under pressure, which offset newly launched products.

The company last week announced the completion of its acquisition of Spanish bakery business Panrico SAU. First announced a year ago , the deal includes Panrico’s donuts, packaged cakes, pastries and cookies but excludes packaged bread.

US segment Bimbo Bakeries has this week launched organic bread brand Eureka nationally.

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