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Big Brands > Grupo Bimbo

Change of tack: Bimbo switches focus from restructuring to efficiency gains

Vince Bamford

By Vince Bamford+

29-Apr-2016
Last updated on 29-Apr-2016 at 13:45 GMT2016-04-29T13:45:39Z

Bimbo Bakeries has this month launched a new Extra Grainy range
Bimbo Bakeries has this month launched a new Extra Grainy range

Grupo Bimbo says it now has a major opportunity to boost the efficiency and productivity of its US and Canada business after concluding restructuring work.

A key focus for the company’s North America division would be improving efficiency, Grupo Bimbo told analysts after reporting its financial results for the first quarter of 2016.

Increased marketing investment and more effective promotional activity has combined with currency exchange benefits to bring a 21% year-on-year hike in net sales of the North American business, it announced earlier this week .

And in a conference call with analysts, Fred Penny, president of Grupo Bimbo American arm Bimbo Bakeries, said the business was moving into a new stage in its development.

Major restructuring work

It had undertaken major restructuring work in the period following its acquisition of Sara Lee in 2010, he said. This included a number of bakery closures, some new builds and “significant” work in integrating route systems that had resulted in the restructuring of thousands of routes and a net reduction in route numbers.

As we came out of that in 2015 we are now moving into what I refer to as an organizational effectiveness and efficiency timeframe,” added Penny. “We still have a lot of productivity opportunity across our supply entire chain which we will get to through bakeries running better, routes running more efficiently and lower return rates.

Opportunity to lower costs

We have a lot of opportunity to drive costs out of the system and be a more efficient company,” he said. “That’s what a lot of our associates have been focused on and we are seeing evidence of it in our Q1 results. And I expect that to continue.”

Penny added there would still be some restructuring work to be done in order to make the supply chain more efficient, although “not the kind of work we did previously with bakery closures”.

The business had also benefitted from portfolio rationalization, he said.

Bolt-on acquisitions

In terms of the wider Grupo Bimbo business – where currency and strong growth in Mexico and Latin America brought a 13.2% hike in net sales in Q1 - CEO Daniel Servitje said bolt-on acquisitions were possible in the coming year.

We are always looking for different opportunities arising the market,” he added.

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